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The Incredible HOLC? Mortgage Relief during the Great Depression


  • I am indebted to the NBER, particularly including Daniel Feenberg and Claudia Goldin, for their generous assistance in collecting the sample of HOLC loans used in this paper. The views presented are solely those of the author and do not necessarily represent those of the Federal Reserve Board or its staff.


This paper examines the relief provided by the Home Owners’ Loan Corporation (HOLC), a New Deal program that purchased and refinanced over 1 million distressed residential mortgages. I document that the HOLC paid relatively high prices for its mortgages, most likely in an effort to encourage lender participation and stimulate the housing market. The consequence was that lenders were able to remove poorly performing assets from their balance sheets at attractive prices. While this meant the HOLC’s ability to seek principal reductions was somewhat limited, borrowers still received significant relief through the terms of the HOLC’s more modern and forgiving mortgage contracts.