There’s a new study by the Consumer Federation of America CFA (a nonprofit advocacy org.) that found a third of women in the boom year of 2005 got mortgages with interest rates over 7.66 percent (well above the average prime mortgage rate of 5.87 percent). Whoa! How is it that women typically have better credit scores than men and yet still pay a whole heck of a lot more for mortgages than their y-chromosome brethren? Thousands upon thousands of dollars more, over the course of a loan – that’s the penalty for womanhood.
And a real Prada-boot-kick to this not-too-surprising revelation about women is that wealthier women are victimized the most: fifty percent more likely to be saddled with more expensive loans than their male equivalents. Women wound up paying as much as between 7.5 percent to 9.5 percent interest rates on home loans. You can’t build wealth from home ownership with those kinds of numbers.
Women get stuck into sub-prime and high-cost loan ghettos while at the same time the guys, some with lower credit scores, get good rates and aren’t jammed with the junk.
Allen Fishbein of CFA noted in his “Women Prime Targets” study: “Women are significantly over-represented in the pool of subprime mortgages. Although women make up 30.0 percent of borrowers for mortgages of all types, they make up 38.8 percent of subprime borrowers – a 29.1 percent over-representation. 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 sub-prime and predatory mortgages.”
And Allen’s colleague, Nancy Register, Associate Director of Consumer Federation of America says: “The high levels of sub-prime lending among women compromise their ability to steadily accrue equity by paying off their mortgage – one of the easiest and most effective pathways to building wealth in America.”
As you know, creating wealth from your mortgage is what I am all about. These kind of statistics really put a frown on me.
But, it gets worse: The study shows that women of color, women who are African-American and Latino, have the highest incidence of sub-prime jamming.
Allen Fishbein of CFA noted in the study, “African American women earning double the area median income were nearly five times more likely to receive sub-prime home purchase mortgages than white men with similar incomes and Latino women earning twice the area median income were about four times more likely to receive sub-prime purchase mortgages than white men with similar earnings. African American women make up half the African American purchase mortgage borrowers and Latino women make up nearly a third of Latino home purchase mortgage borrowers.”
And this sucks because women are in the driver’s seat in the Latino and African-American surge in home ownership.
Girls, this really gets me mad. This sexist and racist home lending practice doesn’t have to be. Hey, I certainly don’t do it at my desk. And you don’t have to take it when you are sitting at any lender’s desk. So, you ladies need to be informed and stop taking the crap. You don’t need to be hooked up with a guy to get a good mortgage. Forget the ball and chain. You just need to get smart and get tough on this. If the home-finance world sucks then it’s the borrower’s job, that means you, to make sure it doesn’t suck. I sincerely believe that. The borrower has to do some hard work too to get out of this sexist bind. She has to familiarize herself with what exactly they are doing at the underwriter’s desk. We all have to get the best intel on lending practices and procedures and act as our own best advocate. The borrower needs to shop around and get tough with the lender to get the best rate.
Right now, the real news is that CFA’s findings raise important public-policy concerns, since adjustable rate mortgage rates are on the rise and monthly payments reset upward this year and next. And adjustable rate mortgages were the predominant product in the sub-prime market. With all the panic as borrowers foreclose, and as bankrupt lenders close up shop, it will be ever more difficult for the ladies to get themselves out of the sub-prime market. Sustainable terms of a prime loan will be more rare than ever. With the new lending guidelines now being implemented, and the new scrutiny by brokers, there’s a lender backlash that is going to make underwriters like me have to do some fancy foot work in the days ahead to get women and even men out of the sub-primes so that they can hold on to their homes.
