what does the home owners loan corporation do

The Home Owners Loan Corporation (HOLC) was established during the Great Depression in response to the widespread wave of foreclosures and housing crisis. It aimed to provide relief to struggling homeowners by offering assistance through loan refinancing and extensive mortgage programs. The primary goal behind the creation of HOLC was to stabilize the housing market, prevent further foreclosures, and help homeowners keep their homes.

Loan Refinancing Programs

As part of its initiatives, the Home Owners Loan Corporation offered loan refinancing programs to eligible homeowners. These programs allowed homeowners to replace their existing mortgages with new ones that had lower interest rates, longer repayment terms, and reduced monthly payments. The objective was to provide homeowners with more affordable and manageable loan terms, making it easier for them to avoid foreclosure and keep their properties.

Property Appraisal and Mortgage Mapping

The HOLC implemented an extensive property appraisal system to assess the value of homes across the country. This appraisal process aimed to classify neighborhoods based on their risk and assign corresponding mortgage grades. By mapping neighborhoods with color-coded ratings, commonly known as “residential security maps,” HOLC aimed to encourage responsible lending practices and prevent redlining. These maps eventually became a crucial tool in understanding urban demographics and discriminatory housing practices.

Mortgage Loans and Amortization

HOLC offered mortgage loans directly to homeowners through its extensive network of local banks and lending institutions. These loans followed a standardized amortization schedule, enabling homeowners to gradually pay off their debts through regular monthly payments. The loan structure was designed to be more favorable and affordable for struggling homeowners, providing them with the opportunity to maintain their homes while overcoming financial difficulties.

Foreclosure Prevention and Counseling

The Home Owners Loan Corporation recognized the importance of preventing foreclosures and the devastating impact they had on individuals and communities. To address this, HOLC provided foreclosure prevention counseling services to homeowners facing financial hardships. These counseling sessions aimed to educate homeowners about their options, including potential loan modifications, refinancing, or other alternatives to foreclosure. The goal was to empower homeowners with knowledge and resources to navigate financial challenges and protect their homes.

Legacy and Impact on Housing Policies

The Home Owners Loan Corporation played a crucial role in stabilizing the housing market during its existence from 1933 to 1951. Its efforts helped millions of homeowners avoid foreclosure, preserving their properties and preventing further economic turmoil. Moreover, the HOLC’s property appraisal and mapping practices brought significant attention to housing discrimination, eventually leading to the Fair Housing Act and other anti-discriminatory legislation. The HOLC’s legacy serves as a reminder of the importance of proactive housing policies and support systems during times of crisis.


The Home Owners Loan Corporation was established during the Great Depression to provide relief to homeowners facing the threat of foreclosure. Through loan refinancing programs, property appraisal systems, and mortgage loans, HOLC aimed to stabilize the housing market and assist struggling homeowners in keeping their properties. Additionally, HOLC played a pivotal role in raising awareness about housing discrimination, fostering the development of fair housing policies. The organization’s work left a lasting legacy and serves as a vital reminder of the significance of proactive housing interventions during times of economic hardship.