When the United States faced the Great Depression during the 1930s, one of the biggest problems faced by the average American family is getting sufficient funds in order to pay their bills and rent. As a result, there has been a rise on the number of families losing their homes to private financial institutions and creditors through a payment default and subsequent foreclosure. This eventually caused a rise in the rate of homeless people living in the country.
As a response to this, the US Government passed a bill in 1934 known as the National Housing Act. Through this act, the Federal Housing Authority was established in order to provide the residential standards as well as its conditions for the general public, to provide sufficient and affordable financing through a mortgage and loan program in order for American families to be able to finance their purchase of a home, and to provide leverage for the mortgage market in the United States during this time.
The Beginnings
At first, the National Housing Act was solely made for the purpose to regulate the interest rates implemented by private financing and mortgage companies on loans and mortgages taken out by the public in order to provide them the necessary funds in order to purchase their homes. During this time, banks only provided short-term loan programs to the American public. The implementation of the National Housing Act has caused a major restructuring to occur within the entire banking industry. Not only were there more mortgage options now available to the American public, but the terms and conditions of these mortgage and loan programs have also been modified in order to allow more individuals to become eligible to take out a loan or mortgage in order to gain the needed financing to purchase a home.
The result of this restructuring saw a great improvement in the statistics of the population living in the United States during the Great Depression. Despite the period being called as such, the US Government had notice a steady decline in the number of homeless people in the country resulting from the increase of families being able to purchase their own homes. This not only improve the quality and standard of living the American public had during this period. It had also provided a great contribution to the economy of the United States, allowing it to get back on its feet and eventually end the Great Depression.
The Federal Housing Authority Today
In 1965, the Federal Housing Authority was merged with the Department of Housing and Urban Development. Currently, the Federal Housing Authority insures roughly about five million single family mortgages taken out all over the United States. As a self-funded government agency, the Federal Housing Authority and the Department of Housing and Urban Development had made it their objective to contribute to the growth of the American economy through the encouragement of home and community development nationwide.
The Federal Housing Authority Bonds
In order to achieve this goal, the Federal Housing Authority now provides bonds to potential home buyers through the different financial institutions and creditors throughout the country. These bonds offered by the Federal Housing Authority are able to provide the borrower from any payment defaults resulting from the borrower being unable to pay the agreed schedule of payments when the mortgage was taken out. To maximize the ability of the Federal Housing Authority to contribute to the economic growth of the country, these bonds are now being offered to members of the American public who have never owned a house and senior citizens whose credit score and standing have been computed by the Veterans Administration to be considered as eligible for the acquisition of the Federal Housing Authority Bonds.
