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Housing Act Of 1934 Research Paper

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Having exposed ourselves to some of the legislation and actions taken to address the housing problem, we can now see how effective they were, starting with the National Housing Act of 1934. The National Housing Act of 1934 gave rise to the Federal Housing Administration (FHA), revolutionizing mortgage practices during the Great Depression. Its primary objectives were to enhance housing standards, establish mutual mortgage insurance, and mitigate foreclosures. In the 1930s, the housing market was in disarray, with thousands defaulting on mortgages daily. A staggering 50% of all mortgages in the U.S. were arrears by 1933. Loan terms were burdensome, demanding a 50% down payment and full repayment within five years, devoid of any amortization structure. Amidst the chaos, the …show more content…

It also played a crucial role in stabilizing and stimulating the housing market, facilitating homeownership for a wider demographic. It persists today with lower down payment requirements and credit score flexibility. Even though the act did expand homeownership, it perpetuated racial discrimination. Encouraged redlining, redlining denied loans and mortgage backing to black communities, contributing to long-lasting wealth disparities. The Housing Act of 1937 did little to address the housing needs of the poor, including many African Americans living in the slums. It established the United States Housing Authority (USHA) which provided $500 million in loans for low-cost housing projects nationwide. USHA was instrumental in planning and constructing housing for defense workers during WWII. It also stabilized housing markets and provided a pathway to homeownership for generations of Americans. But mortgage rules were also used to deny loans to African Americans and keep them in segregated neighborhoods, inspiring redlining ( the action of refusing to make federally insured

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Redlining is the act of denying someone a loan or insurance because they live in an area that is considered a financial risk. The practice of redlining began in 1934 when the Federal Housing Administration created “residential security maps” for many cities to determine the safety of real estate investments in that neighborhood (Bourne). Existing black and latino neighborhoods were already deemed “unsafe” due to high crime rates and high poverty rates. Redlining forced minorities to live in specific areas and deprived those neighborhoods of funding so that they wouldn’t be able to thrive (Bourne). Because of their inability to thrive because of the neighborhood that they lived in, they are subjected to certain jobs, poor health opportunities,

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