Quote:
Originally Posted by dewilson58
I'm not old enough, but I think it was during President Roosevelt's time with "they" ended front-end loaded interest loans.
Prior to, installment loans (mortgages are a type of installment loan) could require 100% of the interest over the term of the loan had to be paid prior to any principal reduction. What a real screw. Government stepped in and stopped this practice by banks. Some credit houses continued the practice for a number of years, but I think the loopholes have been closed.
Maybe there is a historian on ToTV who knows if it was during the Roosevelt era.  |
The Direct Reduction (DR amortized loan) grew largely out of the The Federal Home Loan Act of 1932. Part of the recovery packages of the Roosevelt administration. From that time on, the principal home lenders( largely S&L') adopted the DR method . Prior to that date almost all loans were short term "Baloons" . There were a variety of methods used for Home Finance in the pre 32 years but all were less fair to the borrower than the DR method in use for the last 88 years.