The NATIONAL HOUSING ACT of 1934 led to the creation of which entity to stimulate private credit?

The NATIONAL HOUSING ACT of 1934 was a significant legislative measure designed to address the severe housing shortage during the Great Depression. One of its primary goals was to stimulate private credit in the housing sector to promote homeownership and improve living conditions.

The Federal Housing Administration (FHA) was created as a result of this act. The FHA's role was to provide insurance for mortgages, thereby encouraging lenders to issue more loans by mitigating their risk. By providing this insurance, the FHA made it easier for potential homeowners to qualify for loans, as lenders were comforted by the reduced risk of default. This in turn led to an increase in housing construction and sales, contributing to economic recovery.

Other entities mentioned, such as the VA (Veterans Affairs) and USDA (United States Department of Agriculture), while also involved in financing and supporting housing initiatives, were established later and are focused on specific demographics or types of housing. The FNMA (Federal National Mortgage Association), commonly known as Fannie Mae, was created later in 1938, to further enhance the secondary mortgage market, but it was the FHA that directly emerged from the National Housing Act of 1934 to stimulate private credit in the housing market.