The Federal Housing Administration (FHA) was created by National Housing Act of 1934. The FHA set standards for mortgages, properties, and buyers and insured loans originated by qualified lenders. While the FHA provided reassurance to mortgage lenders and created liquidity for the housing market, HOLC helped to avert default in the U.S. by refinancing defaulted loans. The Home Owner’s Loan Corporation (HOLC) raised capital by issuing bonds and buying FHA-insured mortgages. Subsequently, the HOLC purchased these toxic financial instruments; they reconstructed mortgages. These new mortgages provided homeowners with fixed rates, long holding periods, lower down payments, and amortized monthly. After HOLC had been disbanded, the Federal National
