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Why Your Mortgage Is So Complicated: The History and Opportunity of the Modern Mortgage

Alex Rampell

Following the Great Depression's widespread defaults, New Deal reforms replaced volatile balloon-payment structures with the modern fixed-rate mortgage and established government-backed entities like Fannie Mae and Freddie Mac. The current 2018 industry structure relies on a fragmented chain of intermediaries, including national banks, brokers, and servicers, where single loans involve dozens of parties and generate significant fees through complex securitization. Critics argue this 100-year-old model is inefficiently expensive, suggesting that removing unnecessary middlemen and digitizing manual processes could substantially reduce consumer costs.