The Home Owners' Loan Corporation (HOLC) was a New Deal agency established in 1933 by the Homeowners Refinancing Act under President Franklin D. Roosevelt. Its purpose was to refinance homes to prevent foreclosure. It was used to extend loans from shorter loans to fully amortized, longer term loans (typically 20-25 years). Through its work it granted long term mortgages to over a million people facing the loss of their homes.
The HOLC stopped lending circa 1935, once all the available capital had been spent. HOLC was only applicable to nonfarm homes, worth less than $20,000. HOLC also assisted mortgage lenders by refinancing problematic loans and increasing the institutions liquidity. When the HOLC ended its operations and liquidated assets in 1951, HOLC turned a small profit.[1][2]
HOLC is oft-cited as the originators of mortgage redlining. Recent research has suggested that the institution itself did not redline or discriminate on the basis of borrowers' race and ethnicity. The racist attitudes and language found in the appraisal sheets and Residential Security Maps created by the HOLC likely gave federal support to existing private sector bias and racial antipathy (Crossney and Bartelt 2005; Crossney and Bartelt 2006).
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