A Brief History of the FHA:
Founded over 70 years ago as a part of the National Housing Act of 1934, the FHA (Federal Housing Administration) was created to address the housing needs caused and highlighted by the Great Depression. Rampant foreclosures and a drastic drop in the housing market caused by a catastrophic failure in the banking system were addressed via comprehensive restricting of the federal banking system.
The FHA was created with the goals of meeting the needs of the American people by improving housing standards and conditions, stabilizing of the housing market, and by insuring mortgages. Prior to this act, most mortgages were under 10 years in length with very high down payment requirements (about 50 percent down) - well out of the reach of many Americans. The new regulation in interest rates and more friendly payment terms allowed for greater homeownership - increasing the market for single family homes in the process.
In 1965, the FHA became a part of HUD (the Department of Housing and Urban Development) and offers a wide range of housing loans such as adjustable rate mortgages, fixed rate mortgages, energy efficient mortgages, graduated payment mortgages, mortgages for condominium units, and growing equity mortgages. The FHA's emergency financing provided significant relief for cash-strapped properties during the inflation and energy crisis of the 70's. The FHA was also there during the 80's steadying falling house prices, especially in oil producing states where private mortgage insurance carriers had pulled out.