From an e-mail I received:

Hi Jason;

What I have heard about mortgages prior to the great depression is that
the only mortgages available were interest only balloon payment mortgages.
From what I understand, fully amortized 30 year fixed rate loans are a
post-depression financial instrument, and most likely a result of the depression.

In the US prior to 1929, when a mortgage reached maturity, the borrower
would go to the bank and explain that they did not have enough money
to satisfy and pay off the balloon. The bank would say “No problem. Just
continue making the monthly interest only mortgage payment.” And so this
would continue for a number of years after the maturity date.

In 1929, the US was a borrower nation and a lot of financing that backed loans
originated outside of the US. (Conspiracy Theorists blame the Rothschilds
for causing the stock and bank collapse.) When the stocks cashed in 1929,
all of the banks called all of these interest only balloon mortgages all at once,
and that is what displaced so many home owners.

The rest of the world was greatly affected and watched as the worlds leading
economy collapsed.

I’m not sure of lending in Germany in the 1930’s. If there were similar lending
practices in Europe as there was in the US, this might help explain why
borrowers were chasing lenders to pay off debt with worthless fiat currency
during Germany’s period of hyper-inflation.

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