Seen in the SF Chronicle today:
Interest-only loans were the dominant home finance instrument before the Depression. Sharply declining property values, coupled with the fact that the principle was never paid down, contributed to widespread foreclosures in the 1930s. That led to the introduction of the amortizing loan, in which the principle is paid off during the life of the loan.
Interesting. And if you want more details on other things that happened to the mortgage industry in the 20th century, here's a useful link.
