Nationally-Recognized, Quality Local Journalism..

Click here to stay informed and subscribe to the Mountain State’s Trusted News Source.

Click #isupportlocal for more information on supporting our local journalists.

Learn more about HD Media

The unsung hero behind mortgage lending in America

(BPT) - If you’ve ever purchased a home, you’ve probably at least considered a 30-year fixed-rate mortgage. It’s the most popular type of mortgage loan in the U.S. But this wasn’t always the case. The 30-year mortgage was a product of the Great Depression — and the Federal Home Loan Bank System, which was formed more than 90 years ago to help increase homeownership in America, was a key player in bringing it to fruition.

The FHLBank System was created by the federal government in 1932 to promote mortgage lending by thrifts and insurance companies in response to the economic devastation of the Great Depression. Previously, mortgages typically could be “called due” after three to five years if the bank didn’t choose to extend, resulting in the demand for a balloon payment. Obviously, this would wreak havoc during a financial crisis, and the new FHLBank System began working to support the creation of a true 30-year fixed-rate, fully amortizing mortgage loan (meaning a loan with the principal and interest paid down via equal payments over the life of the loan), that would provide more stability for everyone.

Recommended for you