Forthcoming. The Influence of the Home Owners’ Loan Corporation on Housing Markets During the 1930s. Review of Financial Studies

Problems with mortgage financing are widely considered to be a major cause of the recent financial meltdown. Several modern programs have been designed to mimic the Home Owners ’ Loan Corporation (HOLC) of the 1930s. We analyze the impact of the HOLC on the nonfarm rental and owned home markets for over 2,800 counties in the United States in the 1930s. In sparsely populated counties, where financial markets were not as well developed as in larger cities, the HOLC stimulated demand for owned housing more than it influenced supply. In rental markets the HOLC appears to have contributed to an increase in supply. (JEL D78, E62) Problems with mortgage financing are considered to be a major cause of the 2007–2008 financial meltdown (Gorton 2009). A large share of the “toxic The authors are indebted to Larry Neal, Joseph Mason, Michael Haines, and Paul Rhode for their help in ob