Home Owners Loan Corporation

Franklin D Roosevelt

Definition and Summary of the Home Owners Loan Corporation
Summary and Definition: In March 1933, millions of people faced the loss of their homes due to large-scale unemployment and by wage reductions in the Great Depression. Many borrowers were unable to meet mortgage payments resulting in a wave of foreclosures and homelessness. The Home Owners Loan Act of 1933 and the Home Owners' Loan Corporation Act was passed by Congress on June 13, 1933  and created the Federal Home Loan Bank Board (FHLBB). The FHLBB was directed to establish a new federal agency,  the Home Owners Loan Corporation (HOLC) to provide emergency relief to lower mortgages, to help stabilize real estate that had depreciated, to stop foreclosures and provide relief for troubled mortgage lenders.

Home Owners Loan Corporation
Franklin D Roosevelt (FDR) was the 32nd American President who served in office from March 4, 1933 to April 12, 1945. The HOLC agency was created as part of FDR's New Deal Programs that encompassed his strategies of Relief, Recovery and Reform to combat the problems and effects of the Great Depression.

   
  

Home Owners Loan Corporation Facts for kids
The following fact sheet contains interesting facts and information on Home Owners Loan Corporation for kids.

Facts about the Home Owners Loan Corporation for kids

Home Owners Loan Corporation Fact 1: The Home Owners’ Loan Corporation was a federal program established in 1933 to provide relief to troubled mortgage borrowers and their lenders.

Home Owners Loan Corporation Fact 2: The Home Owners’ Loan Corporation (HOLC) operated by purchasing mortgages from private lenders and issuing new mortgages to the borrowers.

Home Owners Loan Corporation Fact 3: The HOLC provided relief by offering lenient terms for HOLC mortgages and the reduction of the principal debt owed.

Home Owners Loan Corporation Fact 4: The HOLC granted long-term mortgage loans to nearly 1 million homeowners who were facing loss of their property.

Home Owners Loan Corporation Fact 5: Background history: Prior to the Great Depression mortgage loans typically required high down payments, typically 35% or more, and had repayment terms of between 5 to 10 years. A large "balloon" payment was made at the end of the loan.

Home Owners Loan Corporation Fact 6: Background history: As the economic crisis deepened and unemployment soared homeowners were increasingly unable to meet the balloon payment, had to either refinance the loan or face foreclosure. A middle-class house worth $5,000 in 1926 was worth only $3,300 in 1932.

Home Owners Loan Corporation Fact 7: Background history: The number of mortgages had dropped from 5,778 in 1928 to just 864 in 1933 and the average value of homes fell between 30% - 40%. Foreclosures jumped from 150,000 in 1930 to 250,000 in 1932.

Home Owners Loan Corporation Fact 8: Background history: Many banks had failed, dragging homeowners down with them. To meet their own debts, banks had called in "balloon" payments and liquidated the mortgages. With banks needing liquid assets (an asset that can be converted into cash quickly) and no home insurance to protect the owners, the mortgage industry was in chaos

Facts about the Home Owners Loan Corporation for kids

Facts about the Home Owners Loan Corporation for kids
The following fact sheet continues with facts about Home Owners Loan Corporation for kids.

Facts about Home Owners Loan Corporation for kids

Home Owners Loan Corporation Fact 9: The June 1933 Home Owners Loan Act authorized $200 million to set up the Home Owners Loan Corporation (HOLC) with authority to issue $2 billion in tax-exempt bonds.

Home Owners Loan Corporation Fact 10: The money raised in tax-exempt bonds enabled the HOLC to save endangered mortgages by offering financing up to 80% of assessed value, to a maximum of $14,000.

Home Owners Loan Corporation Fact 11: The HOLC offered money at 5%, allowed up to twenty-five years for repayment and provided insurance for its loans through the Federal Housing Authority and the Federal Savings and Loan Insurance Corporation

Home Owners Loan Corporation Fact 12: Instead of a short-term, interest-only loan, the HOLC loans would be fully amortizing over 15 years, meaning that when the last payment was made, the debt was extinguished and the borrower owed nothing further to the bank and owned the home free of any debt, ending the practice of "balloon" payments

Home Owners Loan Corporation Fact 13: The HOLC rejected over 800,000 mortgage applications because the household was not in dire need or because the borrower was not likely to repay the loan

Home Owners Loan Corporation Fact 14: The HOLC ceased its lending activities in June, 1936, by the terms of the Home Owners' Loan Act.

Home Owners Loan Corporation Fact 15: The HOLC helped to stabilize and rationalize the mortgage process and mortgage loans became more affordable for many more Americans

Facts about Home Owners Loan Corporation for kids

Home Owners Loan Corporation for kids - President Franklin Roosevelt Video
The article on the HOLC provides detailed facts and a summary of one of the important events during his presidential term in office. The following Franklin Roosevelt video will give you additional important facts and dates about the political events experienced by the 32nd American President whose presidency spanned from March 4, 1933 to April 12, 1945.

Home Owners Loan Corporation (HOLC)

● Interesting Facts about HOLC for kids and schools
● Summary of the Home Owners Loan Corporation in US history
● Home Owners Loan Corporation (HOLC) of important, key events
● Franklin Roosevelt Presidency from March 4, 1933 to April 12, 1945
● Fast, fun facts about the
HOLC for kids
● Foreign & Domestic policies of President Franklin Roosevelt
● Franklin Roosevelt Presidency and HOLC for schools, homework, kids and children

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