The National Housing Act of 1934 created the Federal Housing Administration to insure long-term mortgages, transforming American home finance during the Depression. By guaranteeing lenders against loss, it made the low-down-payment, long-term, fully amortised mortgage the norm and put home ownership within reach of millions. The FHA's underwriting manuals favoured new single-family houses in racially homogeneous suburbs and discouraged lending in older, mixed and minority neighbourhoods, embedding discrimination into housing finance. The Act thus helped fund the mass suburbanisation of the postwar United States.
By rewriting the terms of the American mortgage it powered suburban expansion, while its discriminatory underwriting entrenched the residential segregation that shaped the twentieth-century metropolis.
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