Real Estate & Property Law
Women Got More Subprime Mortgages
Posted Jan 15, 2008 7:07 PM CDT
By Martha Neil
Women were more likely than men to receive subprime mortgages in recent years, according to studies by consumer and housing organizations.
While some of the disparity can be accounted for by factors such as the lower incomes earned by women, overall, compared to men, it appears that discrimination--especially against women who are also members of racial minority groups--may also be a factor, according to the New York Times.
“The striking thing is that the disparity between men and women actually goes up as income rises,” says Allen Fishbein of the Consumer Federation of America. Among those defined as high earners—that is to say, people earning twice the median income—black women are up to five times more likely than white men to receive subprime mortgages, the newspaper notes.
Since subprime mortgages--high-cost loans generally made to borrowers with questionable credit qualifications, at interest rates at least three points above prime--are more likely than standard mortgages to be foreclosed upon, it is also likely that women are disproportionately represented among homeowners facing foreclosure, experts say.
Subprime loans reportedly represent only 13 percent of existing home loans but account for 55 percent of foreclosure starts, according to the Mortgage Bankers Association.
As discussed in earlier ABAJournal.com posts, a mortgage meltdown fueled by an explosion of dubious lending practices and outright mortgage fraud in recent years has brought about record-breaking foreclosure statistics and a worldwide credit crunch. Resulting litigation among those who are losing substantial sums of money in the crisis could be "bigger than Enron," at least one lawyer predicts.
The situation has fueled efforts to impose increased mortgage industry regulation, and sparked criticism that those in charge were asleep at the switch as a predictable mortgage lending debacle gathered steam for years. Amped-up efforts in Florida and elsewhere to prosecute the most serious cases criminally have included some lawyers among the defendants.
In addition to putting struggling homeowners at risk of losing their homes, the crisis has also reportedly put at least one major mortgage lender at risk of bankruptcy prior to an announced merger with another big bank.