Most people assume home mortgages have been around forever.
But it wasn’t until the 1930s — and then thanks to insurance companies and the Federal Housing Administration — that long-term mortgages for home purchases came to be.
Insurance companies, not banks, started mortgages. And it wasn’t because they wanted to make money by charging interest but because they figured they would own the properties if the borrowers did not make their payments.
In 1934, the FHA initiated a new type of mortgage to help pull the country out of the Depression. Back then, only about 40 percent of Americans owned their homes. If they had a mortgage, it was limited to 50 percent of their home’s value and they likely made payments for three to five years, at the end of which they would have to pay it off in a lump sum.
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