Home Owners' Loan Corporation
Encyclopedia
The Home Owners' Loan Corporation (HOLC) was a New Deal
agency established in 1933 by the Home Owners' Loan Corporation Act
under President Franklin D. Roosevelt
. Its purpose was to refinance home mortgages currently in default to prevent foreclosure
. This was accomplished by selling bonds to lenders in exchange for the home mortgages. It was used to extend loans from shorter loans to fully amortized
, longer term loans (typically 20–25 years). Through its work it granted long term mortgages to over a million people facing the loss of their homes.
The HOLC stopped lending circa 1935, once all the available capital had been spent, and began the process of liquidating its assets. HOLC officially ceased operations in 1951, when its last assets were sold to private lenders. HOLC was only applicable to nonfarm homes, worth less than $20,000. HOE also assisted mortgage lenders by refinancing problematic loans and increasing the institutions liquidity. When its last assets were sold in 1951, HOLC turned a small profit.
HOLC is oft-cited as the originator of mortgage redlining
, although, this claim has also been disputed. The racist attitudes and language found in the appraisal sheets and Residential Security Maps created by the HOLC likely gave federal support to existing private sector bias and racial antipathy (Crossney and Bartelt 2005; Crossney and Bartelt 2006).
New Deal
The New Deal was a series of economic programs implemented in the United States between 1933 and 1936. They were passed by the U.S. Congress during the first term of President Franklin D. Roosevelt. The programs were Roosevelt's responses to the Great Depression, and focused on what historians call...
agency established in 1933 by the Home Owners' Loan Corporation Act
Homeowners Refinancing Act
The Homeowners Refinancing Act was an Act of Congress of the United States passed as part of Franklin Delano Roosevelt's New Deal during the Great Depression to help those in danger of losing their homes...
under President Franklin D. Roosevelt
Franklin D. Roosevelt
Franklin Delano Roosevelt , also known by his initials, FDR, was the 32nd President of the United States and a central figure in world events during the mid-20th century, leading the United States during a time of worldwide economic crisis and world war...
. Its purpose was to refinance home mortgages currently in default to prevent foreclosure
Foreclosure
Foreclosure is the legal process by which a mortgage lender , or other lien holder, obtains a termination of a mortgage borrower 's equitable right of redemption, either by court order or by operation of law...
. This was accomplished by selling bonds to lenders in exchange for the home mortgages. It was used to extend loans from shorter loans to fully amortized
Amortization (business)
In business, amortization refers to spreading payments over multiple periods. The term is used for two separate processes: amortization of loans and amortization of intangible assets.-Amortization of loans:...
, longer term loans (typically 20–25 years). Through its work it granted long term mortgages to over a million people facing the loss of their homes.
The HOLC stopped lending circa 1935, once all the available capital had been spent, and began the process of liquidating its assets. HOLC officially ceased operations in 1951, when its last assets were sold to private lenders. HOLC was only applicable to nonfarm homes, worth less than $20,000. HOE also assisted mortgage lenders by refinancing problematic loans and increasing the institutions liquidity. When its last assets were sold in 1951, HOLC turned a small profit.
HOLC is oft-cited as the originator of mortgage redlining
Redlining
Redlining is the practice of denying, or increasing the cost of services such as banking, insurance, access to jobs, access to health care, or even supermarkets to residents in certain, often racially determined, areas. The term "redlining" was coined in the late 1960s by John McKnight, a...
, although, this claim has also been disputed. The racist attitudes and language found in the appraisal sheets and Residential Security Maps created by the HOLC likely gave federal support to existing private sector bias and racial antipathy (Crossney and Bartelt 2005; Crossney and Bartelt 2006).