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Unformatted text preview: using Administration (FHA) was created by the passage of the National Housing Act of 1934. With the passage of the Department of Housing and Urban Development Act, Public Law 89–174, all of the functions, powers, and duties of FHA were transferred to the control of the secretary of HUD. FHA was initially established as
Dynasty School (www.dynastySchool.com) 5-19 REAL ESTATE FINANCE
an experimental agency to help the national housing industry through the creation of a mutual fund for insuring mortgages made by private lenders. Many of the agencies that were created during the post Depression era have disappeared–but not the FHA. It has become a self–sustaining and standard setting agency for the federal government. The purpose of FHA is threefold: (1) to upgrade the nation's housing standards; (2) to promote wider home ownership; and (3) to provide continuing and sound methods of financing home mortgages. But the majority of the financial community that was active in the financing of real estate looked upon FHA as governmental intrusion into the private financing of real estate, and it was not accepted as an answer to the housing problems. The following are a number of important secondary results: Comprehensive system of valuing property and rating loan risk. Minimum standards of construction – referred to as Minimum Property Requirements(MPR). Scientific subdivision planning to help protect against neighborhood deterioration and confirm to environmental standards. Stimulation of mortgage investment on a nation wide basis. Long–term, lower interest rate loans. The federal government was determined to make FHA a strong force in the financing of real estate. In 1938, the federal government set up an agency to sell bonds in the open market. The funds raised would be used to purchase mortgages insured by FHA from private lenders. The agency created for this purpose was the Federal National Mortgage Association (Fannie Mae). This made the federal insurance of mortgag...
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This note was uploaded on 12/30/2010 for the course SOC 101 taught by Professor Zhung during the Spring '10 term at Punjab Engineering College.
- Spring '10