Federal mortgage insurance, not private profit, first promoted large-scale tract homebuilding

Evidence

Though the legislation won support principally as a prime-the-pump measure, the loan-guarantee provisions indirectly gave the government considerable power to shape the homebuilding process. To reduce the risk of loss, the FHA only insured mortgages on homes that met certain standards, and FHA officials used the power to establish minimum standards as a prod to innovation. The FHA quickly decided to promote large-scale construction for people of modest incomes. As a December 1934 circular explained, “the Administration seeks to encourage that type of operative builder who looks upon the production of homes as a manufacturing and merchandising process of high social significance and, who, preferably, assumes responsibility for the product from the plotting and development of the land to the disposal of the completed dwelling units.” That was exactly the way Levitt and Sons operated in the late 1940s. — Adam Rome, The Bulldozer in the Countryside, 106

Categorization

• XREF: connects to: Federal mortgage insurance programs made postwar homeownership cheaper than renting — Adam Rome, The Bulldozer in the Countryside:…, 76; Federal policy enabled tract developers to take most of the housing market — Adam Rome, The Bulldozer in the Countryside:…, 121

Broader Connections

• Federal policy enabled tract developers to take most of the housing market #corroborates (0.95) — Adam Rome, The Bulldozer in the Countryside, 121