March 9, 1950
THIS OCCASION marks another step in the successful completion of the work of the Home Owners' Loan Corporation. It has already paid off the last of its $3,500 million of bonded indebtedness. It is now making its first repayment, of $26 million, to the United States Treasury on the $200 million advanced by the Government in 1933 as capital stock.
Today the HOLC is over 95 percent liquidated. Through earnings on its loans, it has paid its own administrative expenses, and offset the real estate losses which it had to meet. It is now expected that when the HOLC is fully liquidated, the Treasury will have been repaid its capital advance in full, plus a surplus of several million dollars.
The Home Owners' Loan Act was one of the emergency measures passed during the first days of the Democratic administration in 1933. Foreclosures on city homes were then running at the rate of 1,000 every day.
In 3 years the HOLC refunded the overdue mortgages of more than 1 million families with long-term loans at lower interest rates. These loans, with later advances, amounted to nearly $3 1/2 billion.
Not only did these funds save families from foreclosure. At the same time, they enabled banks, insurance companies, savings and loan associations and other real estate investors to exchange defaulted mortgages for $2 3/4 billion in cash and Government bonds. This new life blood saved many hundreds of financial institutions--permitting them to pay off their depositors or investors as necessary and to remain in business.
Furthermore, the HOLC program aided city and town governments in meeting their payrolls and keeping up their essential services. As payment for the overdue taxes of HOLC borrowers, local governments received nearly half a billion dollars in less than 3 years.
In all these ways the HOLC program was an outstanding example of the intelligent investment of public funds to meet urgent depression needs--helping to save homes, businesses, and local governments from the disastrous effects of widespread unemployment and loss of income.
The families whose homes were saved were encouraged to hold on to their properties and repay their loans. In the depression years, they scrimped and sacrificed to meet their monthly payments; in later years, when times were better, they often made payments in advance--many paying off their debts in full far ahead of schedule.
When the HOLC was started some .people expressed the fear that the experiment of direct Government lending to homeowners in default on their mortgages and taxes might cost the Treasury huge losses. But those who supported the program had faith in the future. They knew that through vigorous public and private action the downward spiral of depression could be reversed, and that these loans would be sound assets which would be repaid in full. That is what happened.
The record of the Home Owners' Loan Corporation illustrates a lesson that has been proved time and time again in recent years. It is that by wise use of its powers, the Government can engage in broad programs of social benefit--and conduct them efficiently and without waste of public funds.
The Home Owners' Loan Corporation was successful in terms of dollars and cents. But, much more important, it was successful in terms of human values--in helping hundreds of thousands of families to maintain themselves as self-reliant homeowners, secure in their hard-earned property, and free of the threat of eviction through no fault of their own.
We should all be proud of this demonstration of bold and constructive Government action for the good of the whole country.
THIS OCCASION marks another step in the successful completion of the work of the Home Owners' Loan Corporation. It has already paid off the last of its $3,500 million of bonded indebtedness. It is now making its first repayment, of $26 million, to the United States Treasury on the $200 million advanced by the Government in 1933 as capital stock.
Today the HOLC is over 95 percent liquidated. Through earnings on its loans, it has paid its own administrative expenses, and offset the real estate losses which it had to meet. It is now expected that when the HOLC is fully liquidated, the Treasury will have been repaid its capital advance in full, plus a surplus of several million dollars.
The Home Owners' Loan Act was one of the emergency measures passed during the first days of the Democratic administration in 1933. Foreclosures on city homes were then running at the rate of 1,000 every day.
In 3 years the HOLC refunded the overdue mortgages of more than 1 million families with long-term loans at lower interest rates. These loans, with later advances, amounted to nearly $3 1/2 billion.
Not only did these funds save families from foreclosure. At the same time, they enabled banks, insurance companies, savings and loan associations and other real estate investors to exchange defaulted mortgages for $2 3/4 billion in cash and Government bonds. This new life blood saved many hundreds of financial institutions--permitting them to pay off their depositors or investors as necessary and to remain in business.
Furthermore, the HOLC program aided city and town governments in meeting their payrolls and keeping up their essential services. As payment for the overdue taxes of HOLC borrowers, local governments received nearly half a billion dollars in less than 3 years.
In all these ways the HOLC program was an outstanding example of the intelligent investment of public funds to meet urgent depression needs--helping to save homes, businesses, and local governments from the disastrous effects of widespread unemployment and loss of income.
The families whose homes were saved were encouraged to hold on to their properties and repay their loans. In the depression years, they scrimped and sacrificed to meet their monthly payments; in later years, when times were better, they often made payments in advance--many paying off their debts in full far ahead of schedule.
When the HOLC was started some .people expressed the fear that the experiment of direct Government lending to homeowners in default on their mortgages and taxes might cost the Treasury huge losses. But those who supported the program had faith in the future. They knew that through vigorous public and private action the downward spiral of depression could be reversed, and that these loans would be sound assets which would be repaid in full. That is what happened.
The record of the Home Owners' Loan Corporation illustrates a lesson that has been proved time and time again in recent years. It is that by wise use of its powers, the Government can engage in broad programs of social benefit--and conduct them efficiently and without waste of public funds.
The Home Owners' Loan Corporation was successful in terms of dollars and cents. But, much more important, it was successful in terms of human values--in helping hundreds of thousands of families to maintain themselves as self-reliant homeowners, secure in their hard-earned property, and free of the threat of eviction through no fault of their own.
We should all be proud of this demonstration of bold and constructive Government action for the good of the whole country.