The Federal Response to Home Mortgage Distress: Lessons from the Great Depression

By Wheelock, David C
Publication: Review - Federal Reserve Bank of St. Louis
Date: Thursday, May 1 2008

HEADNOTE

This article examines the federal response to mortgage distress during the Great Depression: It documents features of the housing cycle of the 1920s and early 1930s, focusing on the growth of mortgage debt and the subsequent sharp increase in mortgage defaults and

foreclosures during the Depression. It summarizes the major federal initiatives to reduce foreclosures and reform mortgage market practices, focusing especially on the activities of the Home Owners' Loan Corporation (HOLC), which acquired and refinanced one million delinquent mortgages between 1933 and 1936. Because the conditions under which the HOLC operated were unusual, the author cautions against drawing strong policy lessons from the HOLC's activities. Nonetheless, similarities between the Great Depression and the recent episode suggest that a review of the historical experience can provide insights about alternative policies to relieve mortgage distress.

(JEL E44, G21, G28, N12, N21)

To read all of this article, sign in or sign up for membership. It's quick, simple, and free.

In addition, make sure to read these articles:

Low-rate mortgage plan generates hope

Home builders and industry analysts say a proposal to offer federally subsidized mortgage rates as low as 4.5 percent could go a long way toward ......

The Fed ponders reform

The following editorial appeared in the St. Louis Post-Dispatch on Monday, June 18: X X X The chairwoman of the FDIC this week offered some ......

Fed official warns of an upsurge in home foreclosures

Mar. 28--WASHINGTON -- With millions of Americans facing the prospect of sharply rising mortgage payments, borrowers and their hometowns could face an upsurge in home ......

Interest rates fall; economist disagree of effects

Dec. 5--A plunge in mortgage interest rates has triggered a burst of applications for refinancing that real estate industry analysts hope will fuel home sales ......

Dodd tackles mortgage lending reform

Sep. 24--WASHINGTON -- Congress moved closer last week to adopting reforms to the Federal Housing Administration that advocates believe will help hundreds of thousands of ......

Related Resources

Press Releases

Bush Plan to Ease Foreclosures Supported by Home Builders.

WASHINGTON -- A plan put forth today by President Bush to limit foreclosures by working with key mortgage lenders and investment firms to freeze ......

Senate Passes Housing Stimulus Bill, National Association of Home Builders Urges House to Quickly Follow Suit.

WASHINGTON -- The National Association of Home Builders (NAHB) today applauded the Senate for voting overwhelmingly to pass badly needed housing stimulus legislation and called ......

NeighborWorks America Applauds the Obama Administration's Efforts to Combat Foreclosure.

Cites the Importance of Nonprofit Foreclosure Counseling for Homeowners in Danger of Losing Their Homes WASHINGTON -- NeighborWorks America applauds President Obama, the U.S. Department ......

Beware of Adjustable Rate Mortgages

Risky mortgage products are still being sold. You must decide whether they offer the best way for you to finance your home.

Why Hasn't the Housing Market Destroyed the Economy?

A couple of months ago, during the subprime lending crash, the speculation was on whether the housing market would bring down the entire economy. So ...

Refinancing Your Adjustable Rate Mortgage (ARM)

A friend was talking about her adjustable rate mortgage, and how she had checked into moving it over into a conventional fixed rate...

Urban homeownership still lags behind national average. (Outfront).(Brief Article)(Statistical Data Included)

Contrary to popular belief, homeownership rates in most major cities did not increase as fast as the U.S. average during the 1990s, and in some ...

A pig in our python?(NEWS)

AS THE SUB-PRIME MORTGAGE slump unfolds in the US, the question on the industry's mind in Australia has been whether and how the situation will ...

Forms and Agreements

Copyright © 1999 - 2010 AllBusiness.com, Inc. All rights reserved.
No part of this content or the data or information included therein may be reproduced,
republished or redistributed without the prior written consent of AllBusiness.com.
Use of this site is governed by our Copyright and Intellectual Property Policy, Terms of Use Agreement and Privacy Policy.

Provided by ProQuest, LLC. All rights Reserved.
You may not repost, republish, reproduce, package and/or redistribute the content of this page,
in whole or in part, without the written permission of the copyright holder.

Information and opinions on AllBusiness.com solely represent the thoughts and opinions of the authors and are not endorsed by, or reflect the beliefs of,
AllBusiness.com, its parent company D&B, and its affiliates.

Featured Videos