Well Worth Saving
Well Worth Saving

Author: Price V. Fishback

Publisher: University of Chicago Press

Published: 2013-10-04

Total Pages: 190

ISBN-13: 022608258X

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The urgent demand for housing after World War I fueled a boom in residential construction that led to historic peaks in home ownership. Foreclosures at the time were rare, and when they did happen, lenders could quickly recoup their losses by selling into a strong market. But no mortgage system is equipped to deal with credit problems on the scale of the Great Depression. As foreclosures quintupled, it became clear that the mortgage system of the 1920s was not up to the task, and borrowers, lenders, and real estate professionals sought action at the federal level. Well Worth Saving tells the story of the disastrous housing market during the Great Depression and the extent to which an immensely popular New Deal relief program, the Home Owners’ Loan Corporation (HOLC), was able to stem foreclosures by buying distressed mortgages from lenders and refinancing them. Drawing on historical records and modern statistical tools, Price Fishback, Jonathan Rose, and Kenneth Snowden investigate important unanswered questions to provide an unparalleled view of the mortgage loan industry throughout the 1920s and early ’30s. Combining this with the stories of those involved, the book offers a clear understanding of the HOLC within the context of the housing market in which it operated, including an examination of how the incentives and behaviors at play throughout the crisis influenced the effectiveness of policy. More than eighty years after the start of the Great Depression, when politicians have called for similar programs to quell the current mortgage crisis, this accessible account of the Home Owners’ Loan Corporation holds invaluable lessons for our own time.

Guaranteed to Fail
Guaranteed to Fail

Author: Viral V. Acharya

Publisher: Princeton University Press

Published: 2011-03-14

Total Pages: 233

ISBN-13: 1400838096

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Why America's public-private mortgage giants threaten the world economy—and what to do about it The financial collapse of Fannie Mae and Freddie Mac in 2008 led to one of the most sweeping government interventions in private financial markets in history. The bailout has already cost American taxpayers close to $150 billion, and substantially more will be needed. The U.S. economy--and by extension, the global financial system--has a lot riding on Fannie and Freddie. They cannot fail, yet that is precisely what these mortgage giants are guaranteed to do. How can we limit the damage to our economy, and avoid making the same mistakes in the future? Guaranteed to Fail explains how poorly designed government guarantees for Fannie Mae and Freddie Mac led to the debacle of mortgage finance in the United States, weighs different reform proposals, and provides sensible, practical recommendations. Despite repeated calls for tougher action, Washington has expanded the scope of its guarantees to Fannie and Freddie, fueling more and more housing and mortgages all across the economy--and putting all of us at risk. This book unravels the dizzyingly immense, highly interconnected businesses of Fannie and Freddie. It proposes a unique model of reform that emphasizes public-private partnership, one that can serve as a blueprint for better organizing and managing government-sponsored enterprises like Fannie Mae and Freddie Mac. In doing so, Guaranteed to Fail strikes a cautionary note about excessive government intervention in markets.