Economy/Economic Policy

In Subprime Fallout, Women Take Heavy Hit

Thursday, January 14, 2010

Mortgage lending data doesn't track a borrower's gender as well as her credit history. But an extensive research analysis suggests women have been unfairly stuck with subprime "toxic" debt said to be for high-risk borrowers. The first of three parts.

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Evidence Shows Discrimination

women subprime mortgages housesKeest adds that anecdotal evidence does show a pattern of gender discrimination, and that even without the element of discrimination mortgage problems are particularly troublesome for women.

"Because women, if they have assets at all, tend to have their assets concentrated in home equity far more often than men do," she said.

"We see a lot of low-wage babysitters and home health aides who were just managing to stay afloat before they got less-than-desirable loans, but who are now financially devastated," said Meghan Faux, co-director of the Foreclosure Prevention Project for South Brooklyn Legal Services in New York City. "They've lost the affordable housing that they had before their home purchases and now they have lost their homes, too."

Women were only 14 percent of homebuyers in 1995, but make up more than a quarter of them today, reports the Washington, D.C.-based National Association of Realtors.

Parallel patterns of income, gender and racial discrimination have been alleged or probed in a number of instances: litigation filed by the U.S. Department of Justice; research conducted by the New York-based National Council of Jewish Women; a class-action lawsuit brought last June by the Baltimore-based National Association for the Advancement of Colored People against subprime lenders; and a July report by the National Council of Negro Women and the National Community Reinvestment Coalition, both in Washington.

 

In 2007, the Chicago Reporter conducted a gender analysis of 10 million mortgages for Women's eNews and found 21.4 percent of women got high-cost loans, compared to 17.3 percent of men. A follow-up analysis found that in 2008, both sexes were even more likely to get subprime loans, with high-cost loans representing 23.4 percent of mortgages taken out by women and 18.9 percent of those taken out by men.

Greater Risk for Women of Color

In 2006, a report by the Washington-based Consumer Federation of America found that during that year--at the height of the subprime boom--upper-income Latina and black women were four to five times more likely to receive subprime loans than upper-income white men. One third of female borrowers received high-interest subprime loans, compared to a quarter of male borrowers.

The Consumer Federation of America report found that the borrowers most likely to receive subprime loans were moderate-to-high-income women of color such as Davis, who is African American and earned $65,000 a year before losing her job as a social worker.

Because women earn less than men (77 cents on the dollar) and are more likely to work part time instead of full time, they often have a harder time qualifying for prime-rate loans that are less expensive than subprime ones, reports the New York-based Ms. Foundation for Women.

In conversations with Women's eNews, a dozen housing-rights groups across the United States said that women account for the majority of the borrowers who they are now working to help since the mortgage industry's collapse.

"It wasn't just women that shady lenders were looking for, but particular kinds of women," said Nina Simon, a former housing counsel for the Washington-based AARP, the powerful lobbying group for people over 50. "They would target black women, Latina women, single women and elderly women, too. One mortgage broker is on record as saying, 'It's time to go granny hunting!'"

Whether they were selling subprime loans or other risky mortgage products, lenders could buy information on a homeowner's age, race and income from data collection agencies and use this information to target the type of women they wanted to pitch.

This three-part series was funded by the Nation Institute.

Molly M. Ginty is a freelance writer based in New York City.

For more information:

"Women are Prime Targets for Subprime Lending," Consumer Federation of America
http://www.consumerfed.org/pdfs/womenprimetargetsstudy120606.pdf

"Lenders Maintain Racial Mortgage Gap," Chicago Reporter
http://www.chicagoreporter.com/index.php/c/Web_Extras/d/Lenders_Maintain_Racial_Mortgage_Gap

"Taking a Toll: The Effects of Recession on Women," U.S. Congressional Committee on Health, Education, Labor and Pensions
http://users.frii.com/clsfcdsl/takingatoll.pdf

"Assessing the Double Burden: Examining Racial and Gender Disparities in Mortgage Lending," National Community Reinvestment Coalition
http://www.community-wealth.org/_pdfs/articles-publications/cdfis/report-ncnw-ncrc.pdf

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