Primary Purpose Of The Federal Housing Administration (FHA)

Faced with this economic decline, came other factors that included unemployment and lack of confidence in banks (Church 100). Restoring faith in banks across the United States was one goal for FDR. As depositors lost confidence in the national bank, over $1,000,000,000 was taken out in cash and hoarded (Boardman 64). The Emergency Banking Act closed all banks for four straight days, and put them under inspection by the national government (Schraff 52). Banks were put under meticulous scrutiny by the Treasury Department. The U.S. government demanded that all hoarded gold be returned and all of the $1,000,000,000 was deposited (Boardman 65). Banks were allowed to open only under a strict system of licensing (Schraff 52). Another banking program was The Federal Deposit Insurance Corporation, or FDIC, which was created by Congress to guarantee deposits up to $5000 (Gupta). In the case

The major policy initiatives that were implemented by HUD during the Great Depression were different supporting different projects by trying to increase the homeownership. Some of these projects were Fannie and Freddie, State HFA, Emergency Homeowners Loan Program and the First-time Homebuyer Tax Credit. Fannie and Freddie are exclusive, however they do receive assistance from the government. The Emergency Homeowners Loan Program (EHLP) gives help to mortgage holders who encountered a decrease in wage and confronted dispossession because of unemployment, having employment but not making enough to making ends-meet, or an emergency that was medical in nature. A refundable expense credit made accessible to citizens that were obtaining their first home was the First-Time Homebuyer Tax Credit program. The State FHA was another one, The reasons for supporting such activities were to offer some budgetary help to the residents to empower them when they were either getting ready to purchase a home or settle other obligations. The impacts were to keep

On August 14th 1935, the Social Security Act was passed. The SSA was designed to combat the widespread poverty among senior citizens. It has also provided retirement payments for workers plus benefits for widows, orphans, and the needy. This program was able to set the requirements needed for Medicare and Medicaid, two other tax-payer funded programs to help the elderly and the needy. The stock market was not regulated when it crashed back in 1929. That changed as well during Roosevelt’s first term. The Securities and Exchange Commission was established to help regulate the stock market. The SEC is still active today investigating unfair trading on the New York Stock Exchange. The Tennessee Valley Authority was created in 1933 to help the Tennessee valley region hit hardest by the depression. The goal of the TVA was to help the economy in this area. To this day it is still federally owned corporation and is the largest provider of electricity in the United States. To this day TVA is a major employer in the area. Some of the other programs created during the first 100 days of office include the Federal Housing Administration and the Federal Communications Commission. Both agencies are still active to this day with the FHA helping regulate mortgages and the FCC regulating telecommunications companies including Verizon, ATT, Qwest and Comcast. There also were some programs that had its effect on the economy but they are no longer in existence today. Two of the new

Both era’s had also decided to create a new banking system in order to help the economy and thus the public. Wilson created the Federal Reserve Act/Board which appointed twelve regional reserve districts each with its own central bank. The board was able to create paper money backed by commercial paper in order to make sure the amount of money in circulation could be increased as needed. Franklin Roosevelt similarly established the Glass Steagal Banking Reform Act which spawned the Federal Deposit Insurance Corporation which insured that there were individual deposits up to $5000. The act had ended the bank failures and saved the money of many unemployed. The two era’s had always attempted to assist the farmers. Wilson made credit available to farmers at low rates of interest with the Federal Farm Loan Act of 1916, as well as authorized loans on the security of staple crops with the Warehouse Act of 1916. The New Deal had created the Agricultural Adjustment Act of 1933 which made millions of dollars available to help farmers meet their

The early New Deal was successful and received support. Many Acts were published to slowly relief the country from the depression. Franklin’s program first addressed the banking crisis and the financial industry. Federal Deposit Insurance (FDI) was established to guarantee bank deposits, while Securities and Exchange Commission (SEC) regulated the stock market. Roosevelt also provided relief for the unemployment citizens. The Federal Emergency Relief Administration gave funds to state and local agencies. Hopkins, assigned as the director of FERA, spent nearly $1 billion on creating jobs for more than 4 million men and women. Besides, the New Deal also promoted United State economic recovery. In May 1933, the Agricultural Adjustment Administration (AAA) was settled by the Congress in order to boost farm products to a level that farmers could restore their purchasing

The National Housing Act created the Federal Housing Authority (FHA), which provided long-term mortgages with low down payments, making homeownership more accessible to a larger portion of the population. The Emergency Banking Act closed and reorganised banks to restore confidence in the banking system and prevent further bank failures. These measures helped stabilise the financial sector and restore public trust in the banking system. The legislation that Congress passed to ease mortgage distress helped the farmers and homeowners of America, by easing the debt that hung over their heads (Doc

Congress initiated the National Recovery Review Board on March 7, 1934 with the supervision of Clarence Darrow to investigate some of the monopolistic tendencies within the codes. Darrow’s findings showed that the NRA promoted big monopoly tactics of big business. Another big issue during FDR’s time in office was the agricultural recovery. The two main problems were the “increasing number of mortgage foreclosures on farms and the fact that farm purchasing power in terms of industrial goods farmers had to buy, was at its lowest level ever” (290). FDR came up with a serious of strategies on March 27, 1933 he began to focus on agencies that dealt with agricultural credit in the Farm Credit Administration. Congress passed the Emergency Farm Mortgage

These series of economic policies, called the New Deal they were very successful during those five years. The Civilian Conservation Corps was created in 1933 to help reduce unemployment.This work relief program provided jobs for many Americans during the Great Depression. The CCC was responsible for building many public works and created structures and trails in parks across the nation.The Federal Housing Administration was a government agency created to help with the housing crisis.The FHA was designed to regulate mortgages and housing conditions.The Home Owner's Loan Corporation was created in 1933 to assist in the refinancing of homes.The Social Security Act was designed to help the widespread poverty among senior

These panics contributed to the failure of banks and businesses alike. In 1907 banks extended too much credit to consumers in order to keep up with the increase in spending activity. The currency available to the public was depleted soon after. Banks could no longer conduct loans or pay out money from existing accounts. This led to the loss of their security and their complete collapse. Financial crisis of this type had happened before but this time it led to the creation of the Federal Reserve Act. President Woodrow Wilson signed the act in December of 1913, and established the Federal Reserve board, but their purpose and oversight were not clearly defined. Originally the Federal Reserve banks role was to control the discounted rate at which other banks could lend each other money. Over the years the Federal Reserve’s powers have grown (Federal Reserve System

With troubling incidents like the stock market crash of 1929, reform was highly necessary to never have a relapse of these events in the future. Historian Allan Nevins says that the New Deal was the epiphany the government needed to possess greater responsibility for the economic welfare of its citizens. It made the government initiate attempts to reorganize the economic turmoil and restore the people’s faith in banking system which was successful with the Emergency Banking Relief Act and Bank Holiday. Congress allotted for the Treasury Department to weed out the unfit banks and reopen the stable banks, significantly lowering bank failures. Especially with measures like the Glass-Steagall Act it offered assurance and insurance to citizens with a compensation of 5,000 dollars in the case of an inconvenience of their bank and since the creation of the FDIC there were no incidents in which a depositor has lost its insured funds. Many of the legislations passed under the Reform point remained for fifty years to prove the reliability and effectiveness like the Securities and Exchange Commission that regulated stock market activities and prevented another large scale crash to occur, keeping the economy at bay. And the Social Security Act of 1935 to reinforce the sensation of

Not only did blockbusters manipulate neighborhoods, they also affected the credit markets in Kansas City, making it difficult for blacks to find fair mortgage rates. Large down payments and notes were given to blacks who were never able to keep up with payments. These families’ homes were quickly foreclosed on, and then real estate brokers would quickly sell the home to another black family who was also unable to keep up with payments. This cycle would continue, and the broker would sell the house over and over again (Colby 76). I wonder what happened to these families that found themselves in over their heads and then were left homeless. Where did they turn? What were their options?

Loans at the time were nonamortizing and required a balloon payment at the expiration of the term. Mortgages were available to a limited client base, with home ownership representing about 40 percent of U.S. households. Many of these short-term mortgages went into default during the Great Depression as homeowners became unable to make regular payments or find new financing to pay off balloon payments that became due. The United States government intervened in the housing market in 1932 with the creation of the Federal Home Loan Bank (FHLB). The FHLB provided short-term lending to financial institutions (primarily Savings and Loans) to create additional funds for home mortgages. Congress passed the National Housing Act of 1934 to further promote homeownership by providing a system of insured loans that protected lenders against default by borrowers. The mortgage insurance program established by the National Housing Act and administered by the Federal Housing Administration (FHA) reimbursed lenders for any loss associated with a foreclosure up to 80 percent of the appraised value of the home. With the risk associated with default on FHA-backed mortgage loans reduced, lenders extended mortgage loan terms to as long as 20 years and LTVs of 80 percent. In 1938, Federal National Mortgage Association (FNMA) was established

The banking industry as a whole after the stock market crashed was going bankrupt due to not being able to carry the “bad debt” that was created from using customer money to buy stock. Because the banks were out of money, they were unable to cover customer withdrawals from their bank, causing many bank customers to lose all of their savings. With the uncertainty of the future of the banking industry, many people withdrew all of their savings, which caused more than 9,000 banks to close their doors and go out of business (Kelly). Due to the effects of the Great Depression, and the collapse of the banking industry, the government created regulations to prevent similar failure in the future. For Example, the SEC, (or Securities Exchange Commission), which regulates the sell and trade of stocks, bonds and other investments was created as a result of The Great Depression. The FDIC (or Federal Deposit Insurance Corporation), was created to insure bank accounts so that that the consumer would be protected if the bank were to go out of business (Kelly). The Great Depression's effect on the banking industry led to many useful changes to the banking industry and helped restore confidence in banks in the American people.

Prior to the 1980s, individuals who were poor credit risks effectively had only two choices for obtaining a mortgage to purchase a home. Those alternatives were ob- taining a home loan insured by either the Federal Housing Administration (FHA) or the Department of Veteran Affairs (VA). Borrowers with good credit histories, so- called prime borrowers, would typically seek financing for a new loan directly from a bank, savings and loan, or other financial institutions.

To create more security for banks and depositors, President Roosevelt and his administration founded the Federal Deposit Insurance Agency (FDIC). This provided assurance to depositors and account holders that, even were banks to fail, a federally guaranteed insurance fund would cover losses so that depositors would not lose their money. This created more stability for banks and the economy. For this funding to function effectively, a policy would need to be in place to ensure that insurance funding would be available.