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Well Worth SavingHow the New Deal Safeguarded Home Ownership$
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Price V. Fishback, Jonathan Rose, and Kenneth Snowden

Print publication date: 2013

Print ISBN-13: 9780226082448

Published to Chicago Scholarship Online: May 2014

DOI: 10.7208/chicago/9780226082585.001.0001

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PRINTED FROM CHICAGO SCHOLARSHIP ONLINE (www.chicago.universitypressscholarship.com). (c) Copyright University of Chicago Press, 2021. All Rights Reserved. An individual user may print out a PDF of a single chapter of a monograph in CHSO for personal use.date: 02 August 2021

The Patchwork Mortgage Market in the 1920s

The Patchwork Mortgage Market in the 1920s

(p.9) Chapter 2 The Patchwork Mortgage Market in the 1920s
Well Worth Saving

Price Fishback

Jonathan Rose

Kenneth Snowden

University of Chicago Press

This chapter examines the rapid expansion of the mortgage market during the 1920s and identifies the weaknesses built into it that created problems for lenders and borrowers during the 1930s. Mortgage credit grew rapidly during the decade to finance the post-World War I housing boom of the 1920s. A variety of lenders, including building and loan associations, life insurance companies, savings banks, and commercial banks, offered a menu of mortgage contracts. The result was a patchwork mortgage market, consisting of several different types of first and second mortgages. The structure of each contract contributed to the wave of delinquencies during the 1930s, as many borrowers were required to refinance short-term balloon loans under difficult circumstances, while those with longer-term B&L contracts were required to make larger payments than expected. As a result, all of the common contracts of the 1920s became quite unpopular during the 1930s.

Keywords:   Mortgage contracts, Housing boom, Building and loan associations, Life insurance companies, Savings banks, Commercial banks, Balloon loans, Share accumulation loans

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