I had lunch the other day with a buddy that's been in the real estate lending business for over 40 years. We both shared stories about how times have changed since he and I began putting people into homes. In fact, some of the things he remembered would seem oh-so out of place today. Actually, they'd be illegal.

He told me of a couple who applied for a home loan at his Thrift who were, overall, good candidates for a mortgage. Yes, in those days, they indeed did have Loan Committees and they would in fact review loan applicants at these meetings and give the ol' thumbs up or thumbs down. This happened in the early 60's.

The couple had established a banking relationship with the Thrift and had established some good credit. The amount of money the couple wanted to borrow seemed about right, but they were really at their debt limits. The problem? According to the Loan Committee, since they were at their debt limits and she was of childbearing age it was quite possible she would become pregnant. Another mouth to feed meant more expenses which made the Committee nervous. So they asked the couple to sign an affidavit promising not to have any children for at least two years or until the husband got a raise sufficient to care for a new addition to their family.

Can you imagine? If a lender tried that today they would be put on double-secret probation after they were sued for all they were worth, then drawn, quartered and burned at the stake. The interesting side note? The couple agreed with the Committee, signed the affidavit not to have kids and to get a big raise.

Another time, an elderly couple was denied a loan because the Loan Committee wasn't sure how long the "man of the house" was going to live. He was well into his 80's and in obvious failing health. They were afraid that should they make the loan and he died it would be difficult to get their house or their money back. Or if they did make a loan, make a short-term note for only a couple of years. He was turned down because he was old.

And of course, there were too many times when a black person was denied a loan because of his or her color -- many knew to not even bother applying at a "white" bank. The same can be said for any woman applying by herself. "Go find yourself a nice little husband to take care of you and quit all this borrowing money nonsense."

These stories just blew me away. I couldn't even begin to think how I could work that way. "I'm sorry ma'm. But you're too old to get a loan from me, odds are that you'll be dead before I make any serious money" or "I'll make a loan to you but you can't have any more babies now, do ya' hear?"

We've come a long, long way since then. And there's always the underlying fact that there is still some degree of discrimination going on somewhere. But goodness, I hadn't truly understood the changes we've made until I listened to some of these stories. Wow.

Published: September 24, 2004

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, a veteran Mortgage Banker, successful Real Estate Consultant and author of Your Guide to VA Loans, Mortgages 101: Quick Answers to Over 250 Critical Questions About Your Home Loan, Who Says You Can't Buy a Home!, and Mortgage Confidential: What You Need to Know That Your Lender Won't Tell You, is a former columnist and Contributing Editor with San Diego-based Mortgage Originator Magazine. Reed is President of CD Reed Mortgage Bankers, Austin, TX and is a Past President of the Austin Mortgage Bankers Association.