Federal Home Loan Bank Act of 1932 Law and Legal Definition

Federal Home Loan Bank Act of 1932 (“Act”) is a U.S. federal legislation passed under President Herbert Hoover to assist individuals by creating a system that provided low cost funds to banks to use in mortgage and loan creation. It is the primary federal regulation of the housing and savings and loan industry. This Act was designed to lower the cost of home ownership. The provisions of the Act are found under 12 USCS §§ 1421 et seq.

The legislation passed by the U.S. government in 1932 in response to the failure of the banking system. The Federal Home Loan Bank Board that supervised federal savings and loan institutions was created pursuant to this Act.

The Act also set up a system of federally chartered home loan banks for the purpose of placing long-term funds in the hands of local institutions in order to alleviate the pressing need of home owners for low-cost, long-term installment mortgage money and to decrease costs of mortgage money with a resulting benefit to home ownership in the form of lower costs and more liberal loans. [Association of Data Processing Service Organization, Inc. v. Federal Home Loan Bank Board, 568 F.2d 478 (6th Cir. 1977)].

The Act was notably amended by Financial Institutions Reform, Recovery and Enforcement Act of 1989. Pursuant to the amendment, the regulation of thrifts was transferred to the Office of Thrift Supervision.