ABSTRACT
The gradual evolution of a major housing-oriented role of the Federal Government in national credit markets had its origin in the fact that the free market, failed to respond appropriately or adequately to the housing needs of the Nation. This fact reached its dramatic demonstration in the collapse of the entire housing economy, during the Great Depression of the early 1930's. The Federal Home Loan Bank Act of 1932 authorized the establishment of a system of Federal Home Loan Banks, with functions roughly analogous to those of the Federal Reserve system. The Act established a Home Owners’ Loan Corporation (HOLC), headed by a Board of Directors composed of the members of the Federal Home Loan Bank Board. HOLC’s mission was to refinance home mortgages in default or process of foreclosure, and even to make loans to permit owners to recover homes lost through foreclosure or forced sale.
