The National Housing Act of 1934

During the American Great Depression, U.S President Roosevelt created New Deal programs aimed at easing the pain of rampant unemployment and the lack of adequate housing. The act which dealt with housing was known as the National Housing Act of 1934 created to make housing and home mortgages more affordable. This, of course disregarding inner cities and other unintended consequences. But the National Housing Act was beneficial in the creation of the Federal Savings and Loan Insurance Corporation and the Federal Housing Administration.

The Federal Savings and Loan Insurance Corporation was responsible for administrating the deposit insurance for savings and loan institutions in the United States of America. Established in 1934, it was discontinued due to the savings and loan crisis of the 1980s and when the Financial Institutions Reform, Recovery and Enforcement Act came about in 1989.

Before the National Housing Act came about, the use of refinancing was non existent for many unemployed borrowers who were not able to make mortgage payments. The end result was a foreclosure on the home(s) which happened many times causing the housing market to crash. Let it be known that the banks collected on the loan collateral (foreclosed homes) however, short - costing property values resulted in a lack of assets. So there was very little faith in backing the U.S government and few loans were issued meaning very few homes were purchased.