Written By: Bonnie Wilt-Hild, Op-Ed Writer
The mortgage universe of 25 years ago was quite different than it is today. Around this time I took my first mortgage banking position. It was as a Loan processor in the Equity Lending division of a big bank in Baltimore City, Maryland. Although the position implied the processing of second mortgage applications, more particularly Home Equity Lines of Credit, it was actually a closing position whereas I completed the closing documents for HELOC’s. Things were quite different back then from a lending perspective so, I thought given the changes within the mortgage industry over the past three years, I would share some of the most recent 25 year history of mortgage lending with those of you who began your careers in the industry within the most recent 10 years. Now I am sure, a lot of you think that what you have been seeing recently with regards to due diligence in underwriting standards as well as limiting the use of documentation waivers is restrictive, not to mention insane, but after you read this, I am sure you will find that history inevitably repeats itself, as it has in the mortgage lending industry.
First I would like to state that it wasn’t all bad when considering the burden of documentation standards in the 80’s, quite frankly no one really knew any better so full documentation was the norm. All files contained full Verification of Employment’s, Deposits and in some instances Loan because believe it not, there were actually still quite a few creditors that did not report to credit repositories. Speaking of credit repositories, there was no credit scoring in the mid to late 80’s hence no minimum credit score requirements. Everything was manually underwritten and in a lot of cases placed on the shelf and serviced by the originating bank of savings & loan. It was also around this time that many banks and S&L’s began applying for deposit insurance through FDIC and FSLIC so federal oversight of banks and S&L’s where overall soundness was concerned was just really taking off.
There was a secondary market, so just like today loans were being sold to investors on the secondary market but in most instances, were underwritten by the investor, which was not big deal because there were only 4 real programs to underwrite, FNMA, FHLMC, FHA and VA, just like today. PMI cases had to be sent to the MI provider to be underwritten because there was no online cert’s because there was no internet (really, the World Wide Web did not exist but we had MTV so it wasn’t a total bust). We couldn’t fax packages to MI companies either because honestly there were no fax machines and when they did surface, no one really trusted them so it was pretty taboo to fax and verification to an employer or deposit institution for completion, it was all done by mail. Bringing me to the final typed 1003 which was exactly as implied, we rolled them into a typewriter and typed them.
At this point I suppose a lot of you are thinking things like with no internet, how did we order case numbers for the government loans, provide good faith estimates as well as a TIL or even get a file submitted for that matter. Well, quite frankly all of the documents were and typed, including closing documents, in my case on an old IBM Selectric ball writer. Handwritten 1003’s were really handwritten and so were the good faith estimates usually. The TIL’s were usually completed in the office, not in the field because calculating an APR required the use of a monster size tabulating machine which honestly wasn’t something that a LO could carry around in their pocket. We did finally get really nifty Texas Instruments calculators around ’88 which were desk top calculators which could do the job and of course the LO’s got the Hewlett Packard’s. Case numbers were just as time consuming as the final typed 1003’s because you needed to call into one of HUD’s local field offices to obtain one. Yea you heard
correctly, telephone and field office. Up until the rise of the HOC, HUD had field offices in each city and if you needed a case number you needed to call between 9:00a.m. and 1:00 pm.
This doesn’t sound like a big deal but when you consider every lender that wanted to obtain a case number for a property in the geographical locations covered by that particular field office were also calling for a case number at the same time, well let’s just say sometimes it could take a couple days to get through. The way one would make this happen was to put your phone on speaker and dial continuously until you got the recording which said your call would be taken in the order received. Once there, well you just waited until someone picked and gave you the case number. Now remember everyone, we lived in a far more person oriented world back then, there were no cell phones,
or internet dating so once the individual working the case number assignment desk picked up (in the Baltimore field office it was usually a girl named Cheryl) you usually just struck up conversation and chatted for about 10 minutes or so before you got to the business of ordering case numbers (this really is why it took 60 days to close a purchase).
Having no internet or online tools had other impacts on how we did business as well. For instance, there was no AUS, everything was manually underwritten. FHA loan amounts were calculated by hand using the old acquisition method which included a mind numbing 97/95/90 calculation including allowable closing costs and concluded with and UFMIP of 3.8% being added to the top (so for those of you who think the 2.25% UFMIP is tough, enough whining already). Mortgagee letters were mailed to lenders and there was no email so if you needed a document or had to send a closing package somewhere it was usually done via courier.
Now with all of this, I am sure you are thinking how in the world did we get anything closed and my answer is I don’t know however, I can just assure you we did and honestly had a lot of fun doing it. It may have taken a little longer but I like to think those closed loans were full of integrity as were the mortgage professionals that produced them. Sure some things have changed for the best and will hopefully never repeat themselves, think 80’s big hair and shoulder pads, but as other things come full circle, I look forward to a return to the past and think that the integrity piece is long overdue. As always happy underwriting.
About The Author
Bonnie Wilt-Hild - As an op-ed writer, Bonnie holds mortgage underwriting position as the Senior FHA DE Underwriter for a major lending institution. With over 25+ years of senior-level FHA/VA Government underwriting experience, Bonnie is considered the "Queen of FHA Loans".