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I feel the need to to give a “Surgeon Generals” type warning: in no way do I nor Mortgage Master condone the outdated underwriting guidelines used in the “old days”.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.
What’s for dinner?
Thanks for the trip down memory lane, Rhonda.
Back in the early 70’s there was a “score” sheet on the desk of all of the loan approval staff (I was in banking back then). There were extra points given for currently owning vs currently renting, and points for being male vs female. So technically they didn’t deduct if you were female, they just added points if you were male.
I still remember the day pressure started regarding giving males the edge on loan approvals. It was in 1973 and they didn’t discontinue the “score” sheet. They just told everyone not to leave them out on the desks where people could see them. They had to be put inside the desk if you left your desk for any reason.
After my Dad passed away, I was helping my Mom buy a house and both our names were on the mortgage application. They inadvertently thought I was a man and her husband, and we were were getting letters to “Mr. and Mrs. Ardell D..” 🙂 My Mom picked up the phone to tell them I wasn’t her husband and I told her to put down the phone (knowing about the score sheets and preference given to couples). I told her there was plenty of time to correct that after she got her house.
No doubt in my mind that she wouldn’t have gotten that mortgage if they knew she was a single Mom and I was her daughter. She paid that mortgage off in 10 years…20 years ahead of time.
Wow Ardell, I’ve not heard of the score cards before and I’m so glad that you were able to help your Mom!! 🙂
Very interesting Rhonda and as always, very well written.
Thanks Nick 🙂
Well, as that one politician lady said two or so weeks ago—-“Being a woman may no longer be considered a pre-existing condition.”
That is so the #BESTLINEEVER.
Who said that??? Enquiring minds want to know…
omg. “For too long….and in too many ways…”
I can’t believe you Seattle peeps weren’t all over this!
Rhonda
you are right on about lenders only counting like 50% of a woman’s income, back in the ol’ days.
i entered the re biz in 1978 and my father was in re for approx. 15 years prior to when i started.
i believe, this pratice was ended by federal fair housing laws that were passed 1974 1975 ish.
there were several new fair housing laws dealing with a variety of issues around this time.
not coincidentally, the real estate market in the SF Bay Area started to take off in the late 1970s.
i believe a big part of rising property values in the SF Bay Area and i imagine elsewhere can be atrributed to fully counting a woman’s income as same as the man’s income.
Arn
“…fully counting a woman’s income as same as the man’s income”
LOL! When I first read that I thought he said “fully counting a woman’s income as some of the man’s income”. 🙂
I can remember from my days as a fledgling Oregon escrow officer ( and youthfully reveling in considering myself a “feminist”) I happened to see a document a customer showed me. It was her deed and mortgage from a home she’d owned in the mid-west. Since she was over the age of 25 and single at the time she purchased the home , the documents showed her name and then described her as “spinster”. A long was indeed.!
Wow… when I started in the industry I back in 86 I worked for a title company in the recording department. If a couple were married, the deed would often state something like: John and Mary Smith, his wife.
I would think that the addition of being allowed to factor woman’s income for qualifying would have caused housing prices to increase-similar to what happened with the subprime boom except for that the women really DID make the income!
This is the funniest thing(and saddest) I’ve read in a long time.
Yeah… I’m glad things have changed!
Here’s an article from Ken Harney that’s relevant to this post… so I thought I’d share: http://www.latimes.com/business/realestate/la-fi-harney-20110612,0,7194091.story
Interesting article, Rhonda. Thanks for sharing it. I just did a podcast with a few people on Fair Housing issues, and that is an awesome example. I’ll post it in the comments over on YouTube.