Ken Snowden, UNCG Econ Professor, On the Mortgage Mess

UNCG Econ Professor Ken Snowden is a co-author of an upcoming book about lessons to be learned from the Great Depression that might be applied to our current mortgage mess.  An excerpt can be found at the Freakonomics blog:

For the past four years, the U.S. has faced a housing crisis that shows no signs of ending.  The situation was similar in June 1933 when the Home Owners’ Loan Corporation was created to address the nation’s last severe mortgage crisis.  Some have suggested that a new HOLC could help resolve the current crisis, but their characterizations of the HOLC have been incomplete.  Our goal here is to summarize recent research that provides a fuller picture of the HOLC and its impact on housing markets in the 1930s.        

Between 1933 and 1936 the HOLC bought and then refinanced one million severely delinquent mortgages, representing roughly one-tenth of the nation’s nonfarm owner-occupied homes.  The total amount refinanced was $3 billion, or about 20 percent of the outstanding mortgage debt on one- to four-family homes in 1933.  A program of similar proportions in 2011 would refinance 7.6 million loans worth $2 trillion. 

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