Federal Housing Administration

FHA

Quote from FDR

"First, it will help states in fixing unsafe housing conditions and increase the amount of secure housing for low-income families. Second, the government will give the proper funds to public housing agencies and grant them responsibility and flexibility as long as the appropriate accountability is present. The Federal Government alone can not provide housing for each and every citizen individually, but it will support and protect the actions of these citizens so that they can create new housing and neighborhoods" (National Housing Act 1934).

Creation and Background

The FHA was created by the National Housing Act which went into effect on June 28, 1934 as a part of Franklin Delano Roosevelt's New Deal (Federal Housing Act). Its purpose was to bring stability to the housing market by insuring banks, mortgage companies, and other lenders so that more new homes could be built and old ones could be repaired (Griffith). Any borrowers with worthy credit could receive low risk and long term loans (FDR and Housing Legislation).

Impact and Reaction

Thanks to the FHA, the number of homeowners has skyrocketed in the US since the time it first came into existence. Before it, Americans mainly just rented and only 4 in 10 households owned homes, many construction workers had lost their jobs, and the terms for mortgages were outrageous. Mortgage loan terms often required down payments that were more than 50% of the property’s market value. The rest of the money was paid over a period of 3 to 5 years that ended in a balloon payment where a large amount of money had to be paid all at once. FHA loans had lower down payments, no balloon payments, and a much longer period for paying back the rest of money with as much as time as 15 to 30 years. People were more attracted to these loans and it encouraged many people to buy and own their own homes. The housing market began to come back out of the dumps and it helped create more construction jobs as new houses were built or old ones were repaired. The program was very well received by the American public and it stimulated the economy.

Big image
The FHA was just one part of the New Deal, a plan created by FDR to help pull the US out of the Great Depression. The political cartoon above shows the many different programs that FDR used to help America "try and get better".

Works Cited

"Federal Housing Act - Ohio History Central." Federal Housing Act - Ohio History Central. N.p., n.d. Web. 14 Feb. 2016.

"The Federal Housing Administration Saved the Housing Market." Name. N.p., n.d. Web. 14 Feb. 2016.

"Franklin D. Roosevelt Presidential Library and Museum." Franklin D. Roosevelt Presidential Library and Museum. N.p., n.d. Web. 14 Feb. 2016.

"History of the Government Sponsored Enterprises." History of the Government Sponsored Enterprises. N.p., n.d. Web. 14 Feb. 2016.

"History of the Government Sponsored Enterprises." History of the Government Sponsored Enterprises. N.p., n.d. Web. 14 Feb. 2016.

"The New Deal - AP U.S. History Topic Outlines - Study Notes." The New Deal - AP U.S. History Topic Outlines - Study Notes. N.p., n.d. Web. 14 Feb. 2016.

A political cartoon that portrays FDR as a doctor with Congress as his helper taking care of a sick Uncle Sam. Digital image. Affordable Housing Institute Developing Affordable Housing Ecosystems Worldwide. David Smith, 2 Oct. 2008. Web. 14 Feb. 2016.

A poster that is partially blue with the words "How To Have The Home You Want" on it. Digital image. Rowellsapushistory. Lakes AP US History, 22 Mar. 2009. Web. 14 Feb. 2016.

A poster with a picture of a house with the words "How to Improve Your Property" on it. Digital image. Rowellsapushistory. Lakes AP US History, 22 Mar. 2009. Web. 14 Feb. 2016.

"Records of the Federal Housing Administration [FHA]." National Archives and Records Administration. National Archives and Records Administration, n.d. Web. 14 Feb. 2016.

"1935's House of Hope: Sacramento Built 'Lucky Manor' to Save the Local Economy." Valley Community Newspapers Inc. Valley Community Newspapers Inc, 24 Feb. 2011. Web. 14 Feb. 2016.