Back in the 1930s, a home mortgage was structured in a completely different manner, than the mortgages so issued in today's market, of which, back then, a typical mortgage required a significant down payment of 50%, of which usually an interest-only mortgage was thereupon issued, for a length of time of just five years, in which, in order to complete the purchase of that home, a balloon payment of that other 50% was so paid, upon that date. As might be expected, mortgage terms such as that, pretty much closed out from the owning a home for those that were middle income and lower; but this also meant that overly exuberant speculation on homes, was absolutely minimal, as the wherewithal to purchase a home, necessitated both wealth as well as a serious investment of equity in such.
The government, in order to make homes more affordable to the general public, eventually became the primary source of guaranteeing mortgages to its citizens, via the creation of both the Federal Home Loan Mortgage Corp as well as the Federal National Mortgage Association, which along with more lenient terms in regards to a down payment so required, as well as mortgages encompassing a far greater length of time to amortized such, as in a typical time span of 30 years, so provided an opportunity for a far larger percentage of Americans to purchase their own home, as the affordability of such, accomplished through these mortgages, was a quantum improvement over previous terms so issued.
Of course, as in just about anything, there are pluses and minuses; of which, the biggest plus in this revamping of the mortgage market thus created the real opportunity for more Americans to be personally invested into what for a wide swath of those Americans became their most important and abiding asset, which is their own home. On the other hand, when down payments are a very low percentage of a commodity which is quite expensive, and of which, takes a considerable period of time, to own free and clear, this does lend itself to those situations in which some people ultimately are unable to make their payments, because of illness, because of lost of income, or various other reasons, and hence subjecting those people to the foreclosure of that property. Additionally, in any program, in which mortgages are in essence being backed or being bankrolled by the government, loans so being initiated may be or have the tendency to be of more questionable quality, because those so originating those loans, are more concerned about their own personal profit, as compared to the soundness or sensibility of such.
While America would like to be the industry leader in home ownership, as a percentage of its citizenry, so owning, it is ultimately disappointing to note that in 1990, for instance, as reported by urban.org, Italy and the USA had about the same home ownership rate of 64.2% and 64%, respectively; whereas in 2015 those rates were 72.9% and 63.7%, respectively. This so seems to signify that America which prides itself upon the attainment of that American dream for all of its citizens, has not been able to successfully accomplish such, by virtue of that fact that home ownership has stagnated in recent years. While, the government has done its good part to help its citizens in the financing of their homes, what it has failed to do, though, is to effectively see that more of those citizens have the financial means, wherewithal, and opportunity, via their income and wealth, to actually successfully do so.