The other day, I received an email from someone who wanted to verify some surprising things he had heard about the “old days” of mortgage underwriting. Before I go on any further about the details of the discussion, I feel the need to to give a “Surgeon Generals” type warning: in no way do I nor Mortgage Master condone the outdated underwriting guidelines used in the “old days”. It is interesting to see how much lending practices have changed over the years…for the better.
From Curious George:
“Heard some interesting historical information from a long time veteran of the real estate industry today. I seems that at one time, for a woman’s income to be considered when she and her husband were purchasing a home, she needed a note from her doctor stating that she either had a hysterectomy or was going through menopause. Apparently the fear was that if she became pregnant and couldn’t work for some time, they would not be able to pay their mortgage. Then with the development and legalization of the birth control pill, the banks reconsidered and allowed 50% of her income to be used. Eventually banks agreed to 100% of a womans income to be used.
Seriously though, I thought this was interesting. Maybe you can confirm this. It would be interesting to see how all of that affected home prices. I’ll bet with people being to qualify for larger loans, prices got driven up.”
I’ve been trying to find information about this on-line and although I can find plenty about racial discrimination, I’m having a challenging time digging up on how women’s incomes were considered “back in the day”. HUD and FHA’s websites glorify how their part in rescuring the American Dream during the Great Depression…I’m hard pressed to find early underwriting guidelines.
I decided to use my walking encyclopedia of all things mortgage to check the facts of this “almost unbelievable” depiction of lending history: my 85 year old father-in-law who spent sixty years in local real estate, Bob Porter. The first six years (fresh out of the Navy in 1945) selling real estate in North Seattle for Mutual Realty, Broadmor Realty and McPhersons while attending Seattle College (now named Seattle University). The next twenty-two years were spent as a broker/owner of Southend Brokers with several branches in King County. His resume continued as President of Pacific West Mortgage headquartered out of Burien and most recently as Chairman of Mortgage Master in Kent until his retirement in 2005. Now that you know some of Bob’s background, here’s his response to “Curious George”:
“That’s right. The industry led by FHA and VA would consider a wife’s income for short term debt such as car payments. Professional women, teachers, lawyers, doctors and business owners income could qualify for mortgage payments on a case by case basis without a letter from their doctor. Taking loan applications took a lot of diplomacy. We would be sued for discrimination if we asked a woman for a doctors letter today.”
It’s hard to believe that underwriting guidelines were impacted by various forms of birth control and the progression of women’s rights.