Read more.Īs the FHA sought to improve the accuracy of its real-estate appraisal to enable its affiliate agency, the Home Owners’ Loan Corporation (HOLC), to standardize their mortgage lending process, avoid undue risky lending, and bail out homeowners, Hoyt’s racial hierarchies became a crucial tool. The FHA employed a new chief economist, Homer Hoyt, whose (1934) dissertation entitled “One Hundred Years of Land Values in Chicago: The Relationship of the Growth of Chicago to the Rise of Its Land Values, 1830–1933,” ranked various races and nationalities by order of “desirability.” Hoyt ranked Anglo-Saxons and Northern Europeans, including English, German, Scots, Irish, and Scandinavians as the most desired racial stock, followed by Northern Italians, Czechs, Polish, Lithuanians, Greeks, “Russian Jews of the lower class,” South Italians, and “Negroes and Mexicans” as the lowest class.

To help reverse the plummeting housing market at a time of massive job losses and unemployment, foreclosures, and overall economic depression, the new FHA sought to boost the market for single-family homes. The National Housing Act of 1934, which created the Federal Housing Administration (FHA) in response to the Great Depression of the late 1920s and early 1930s, was a direct response to the banking crises and failures of the late 1920s that resulted in drastic fall in home loans and ownership.

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