Collateral Damage: The Impact of Foreclosures on New Home Mortgage Lending in the 1930s
Foreclosures led to severe disruptions in home mortgage lending during the recent Great Recession and the Great Depression of the 1930s. It is difficult to measure these impacts in the modern market where origination, funding and servicing are separated within complex lending structures, but during the 1930s local building & loans (B&Ls) combined all three functions. We measure the impact of foreclosures on new mortgage lending using a panel of all B&Ls in 4 states. The foreclosure overhang explains about 30 percent of the drop in new mortgage lending by B&Ls as the housing crisis intensified between 1930 and 1935.
We are using some data that was collected and digitized under prior projects. With that in mind, we appreciate support from National Science Foundation Grants SES-135744, SES-1061927, SES-0921732, SES 0617972, SES 0214483, SES-0080324, and SBR-9708098. Fishback has received funds from the Koch Foundation to provide support for research on state governments’ responses to the Great Depression and the New Deal and to bring prominent economic historians to campus to give talks and interact with students. He was also the Executive Director of the Economic History Association from 2012 to 2017 and received in-kind support to provide him with a course off and/or graduate support for his duties and for research. To the best of his knowledge, no one with whom he has worked or from whom he has received funding has a financial, ideological, or political stake in the research. The views presented in this paper are solely those of the authors and do not necessarily represent those of the Federal Reserve System, its staff, the National Bureau of Economic Research, or the CEPR.
Price Fishback & Sebastian Fleitas & Jonathan Rose & Ken Snowden, 2020. "Collateral Damage: The Impact of Foreclosures on New Home Mortgage Lending in the 1930s," The Journal of Economic History, vol 80(3), pages 853-885. citation courtesy of