Although severe crises in housing markets contributed to both the Great Recession of 2007 and the Great Depression of the 1930s, the role that housing-related financial frictions played in the crises has yet to be explored. This column investigates the impact that foreclosures had on the supply of new home mortgage loans during the housing crisis of the 1930s. It shows that an increase in foreclosed real estate on a building and loan associations’ balance sheets had a powerful and negative effect on new mortgage lending during the 1930s.
Federal Housing Administration Loans
Full article: From the Subprime to the Exotic: Excessive Mortgage Market Risk and Foreclosures
Collateral damage: Foreclosures and new mortgage lending in the 1930s
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