Women Dominate Subprime Borrowing

The Consumer Federation of America said it released the results after analyzing data on 4.4 million mortgages originated nationwide in 2005. The CFA study found that women earning more than double the area median income were twice as likely to receive subprime loans than men with similar earnings.

“This over-representation of women in the subprime mortgage pool exists for all types of mortgages but is especially true of refinance and home improvement loans which are more likely to be subprime and predatory mortgages,” the study said.

Despite higher credit scores and similar incomes, women were found to be significantly over-represented in the pool of subprime mortgages, the study revealed. And although women make up 30 percent of borrowers for all types of mortgages, they represent 39 percent of subprime borrowers — a 29 percent over-representation.

“Evidence suggests that women have slightly higher credit scores on average than men and similar credit usage patterns, yet the fact that women are more likely to receive more expensive mortgages at all income levels undercuts the lending industries calm assurances that borrowers are priced based on their creditworthiness,” commented CFA Director of Housing and Credit Policy Allen Fishbein in the announcement.

The gap broadened for African American women, who are five times more likely, and Latino women, who are four times more likely, to hold a subprime purchase mortgage than white men, the study reported.

The National Association of Professional Mortgage Women told MortgageDaily.com in an e-mailed statement that education is key to narrowing the gap.

The group said steps its taken to improve the gender gap include a voluntary fair lending best practices agreement with the U.S. Department of Housing and Urban Development as well as outreach and education programs.

Michigan Mortgage Brokers Association President Pava Leyrer told MortgageDaily.com it would be interesting to see the age correlation to this study, as she has seen in today’s market that it’s typically the women who handle the details of homeownership.

Leyrer said of the younger professional women and couples that apply for a mortgage, the women appear to be more astute at controlling the budget.

“The more mature senior citizen … tend to get offers and believe them faster, and I think maybe that is the factor, women tend to believe what they are told and trust quicker than the men,” Leyrer said.

Unless they have been told something else or have someone they can trust they don’t know the bad offers or the scams when they see them and don’t feel comfortable questioning someone unless (they) are an A-type personality.”

A better educated mortgage workforce will “help ensure fair lending for all,” NAPMW added.