By Molly M. Ginty
Friday, January 15, 2010
Women's expansion into home ownership coincided with a rush of complicated high-risk instruments onto the mortgage market. That turned a cornerstone of financial security into a dream crusher. The second of three stories.
Davis borrowed $20,000 more than she owed on the new loan and used the extra money to settle her debts.
"I refinanced because I was desperate and felt it was my only way out," said Davis. "But in my rush to fix my finances, I placed too much trust in a shady mortgage broker, who had me sign a loan without having a lawyer explain the fine print to me."
Katherine Porter, an associate professor at the University of Iowa College of Law in Iowa City, said that studies show half of borrowers mistakenly believe that lenders are legally obligated to give them the most favorable rates. "Women may be especially prone to make this false assumption. They may be less adversarial in their business dealings and may place more trust in their so-called financial professionals," she said.
Davis' original lender sold her mortgage to a new company and Davis says that company will not answer her calls or e-mails about wanting to modify the terms of her loan.
The 2008 Congressional report "Taking a Toll: The Effects of Recession on Women" found women were statistically less likely than men to rebound after financial setbacks.
The average net worth of an unmarried woman is $12,900; less than half the $26,850 net worth of an unmarried man.
The Congressional report noted that although women have held on to jobs better than men in the recession, their wages are falling six times faster then men's. While women's jobless rate is lower than men's, women's unemployment rate is rising 15 percent faster.
Women are more likely than men to work for minimum wage and less likely to have health benefits or retirement plans through their jobs, if they manage to hold onto those jobs as the U.S. recession drags on.
The report noted that as a result of women's financial instability, women are 20 percent more likely than men to experience anxiety about the recession and that mortgage worries are a leading cause of women's anxiety.
Kathy Lovelace of Tampa, Fla., is one of many borrowers ensnared by subprime debt.
"I feel like I'm on the verge of a nervous breakdown," said Lovelace, 51, who didn't realize until after she signed her radio-advertised subprime loan that it would triple her monthly mortgage payments, up from $1,000 to $3,000. "I can't concentrate, can't sit down and can't sleep because all I do is worry about keeping my house."
Lovelace, who spoke with Women's eNews in a phone interview, owns a three-bedroom house that she built in 1998 and refinanced in 2006.
She says she doesn't know where she will live weeks or months from now because the recession has left her not only unemployed, but facing foreclosure.
"When this happens to women in their 50s and 60s who are nearing or past retirement, it's particularly unfair," said Maeve Elise Brown, co-founder and director of Oakland's Housing and Economic Rights Advocates in Oakland, Calif. "They have little hope of restoring their credit or starting over at this point in life."
This three-part series was funded by the Nation Institute.
Molly M. Ginty is a freelance writer based in New York City.
"Women are Prime Targets for Subprime Lending," Consumer Federation of America
"Lenders Maintain Racial Mortgage Gap," Chicago Reporter
"Taking a Toll: The Effects of Recession on Women," U.S. Congressional Committee on Health, Education, Labor and Pensions
"Assessing the Double Burden: Examining Racial and Gender Disparities in Mortgage Lending," National Community Reinvestment Coalition
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