Jan 21 2008
FDR Would Have Solved This Mess
When FDR took office, the nation was seeing an average of 1,000 foreclosures a day.
During his first year in office, Roosevelt created the Home Owners Loan Corp., or HOLC, to help debt-laden borrowers pay off their mortgages. The HOLC took borrowers out of their high-interest loans and put them into 15-year loans – financed through federal bonds – with rates fixed at about 5 percent. Unlike many government bureaucracies, this was specifically designed to be a short-term program, intended to extend loans for three years and then oversee those loans for an additional 15 years.
With the HOLC and the Federal Housing Administration, the Roosevelt administration virtually created the long-term loan, which soon evolved into the 30-year, fixed-rate mortgage.
It’s unlikely such a plan could pass today’s government–but no matter how dire times seem, they’re not as bad as the great depression days. At least not yet…
Leave a Reply
You must be logged in to post a comment.