Well Worth Saving
How the New Deal Safeguarded Home Ownership
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.
About the Author
Price Fishback is the Thomas R. Brown Professor of Economics at the University of Arizona and a research associate of the NBER. He is the author or editor of several books, including "A Prelude to the Welfare State" and "Government and the American Economy", both also published by the University of Chicago Press.
Jonathan Rose is an economist with the Fderal Reserve Board of Governors and lives in Washington, DC.
Kenneth Snowden is associate professor of economic history at the University of North Carolina at Greensboro and a research associate of the NBER.
Reviews
"For 'Well Worth Saving', Price Fishback, Jonathan Rose, and Kenneth Snowden have assembled compelling new data to reassess the costs and benefits of the Home Owner's Loan Corporation, developing the broader intellectual history of housing support and relating their findings to the recent financial crisis in the United States and current government programs aimed at providing relief to distressed mortgage holders. This is a well-executed and thorough work" – Kris James Mitchener, Santa Clara University
"The recent foreclosure crisis rekindled interest in the Home Owners' Loan Corporation (HOLC) beyond historians of the Great Depression, with many commentators and policy makers viewing HOLC as a model for a policy response. With 'Well Worth Saving', Price Fishback, Jonathan Rose, and Kenneth Snowden offer a new history of the program alongside an economic analysis of its costs and benefits. This is a highly useful, well-organized, and interesting book which will be of great interest and use both to researchers and policy makers" – Paul Willen, Federal Reserve Bank of Boston
