The Borrowers’ Good Deal
The Borrowers’ Good Deal
This HOLC delivered relief to borrowers by lengthening loan durations, lowering interest rates, and by requiring no principal payments for the first three years. However, HOLC modifications did not generally grant significant reductions in borrowers’ total debts. The chapter uses an extended example, based on the case of HOLC borrower Joshua C. from Chapter 1, to demonstrate how loan payments on the HOLC contract compared to loan payments on other contracts typical of the 1920s and 1930s. Nevertheless, despite the HOLC’s relative generous loan terms, large portions of HOLC borrowers were delinquent in the late 1930s, in part due to the still-depressed economy. As a result, in 1939 the HOLC granted lower interest rates and the Mead-Berry Act allowed extensions on loan durations, therefore helping to limit the ultimate HOLC foreclosure rate to 19 percent.
Keywords: Loan relief, Loan duration, Loan delinquency, Interest rates, Payments, Debt reduction, Refinancing, Extensions, Mead-Berry Act, Loan servicing
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