[NYTr] Anita Hill: Women and the subprime crunch

[All the News That Doesn't Fit]

sent by Ed Pearl

The Boston Globe - Oct 22, 2007
http://www.boston.com/news/globe/editorial_opinion/oped/articles/2007/10/22/women_and_the_subprime_crunch/

Women and the subprime crunch

By Anita F. Hill

There was a time when purchasing a home was something
only married couples did. However, increasingly,
single, widowed, and divorced women with and without
children are making the choice to purchase a home on
their own. Yet, the economic and social consequences of
subprime lending practices on them are subjects few are
discussing.

Women have become a key component in the real estate
market. Last year in Massachusetts, over one-third of
first-time home buyers were single women and nearly
one-quarter of all home buyers were single women.

Women borrowers are overrepresented in the subprime
lending market according to studies done by both the
Consumer Federation of America and the National
Community Reinvestment Coalition. Across the economic
spectrum, women receive less favorable terms than
similarly situated men on home purchase, refinance, and
home improvement loans. The studies also show that the
gap between women and men receiving subprime loans
actually increases as women's income increases.

Elderly women are prime targets of refinance and home
improvement subprime lenders. Women on average live
longer than men and have a greater chance of living
alone. Rising property taxes and medical expenses make
older women on fixed incomes particularly susceptible
to lenders who promise money for necessary repairs, but
instead exact huge fees and charge inflated interest
rates.

African-American women, who represent half of African-
American home purchase borrowers, are particularly
vulnerable. In fact, there is evidence that subprime
lenders charge black women and Latinas higher rates and
fees than same-race men and white men, again,
regardless of income and across all loan types.

For women, the impact of problems in the lending
industry crosses age, class, and racial lines as well
as neighborhoods.

Because of subprime lending, they are in danger of
losing ground in their effort to reach economic self-
sufficiency for themselves and in many cases for their
children. Older women, who have seen the equity in
their homes depleted, are in greater jeopardy of
becoming dependent on family or social services. Single
women, who are likely to earn less, have more
dependents, and to spend a higher percentage of their
income on housing, are thus less able to absorb the
cost of an escalating, inflated subprime loan payment.
Along with foreclosure, loss of savings, impaired
credit and even bankruptcy are predictable
consequences. Greater Boston service providers are
already seeing an increase in family homelessness and
it appears that a larger number of the newly homeless
families are headed by women.

Why would a woman commit herself to the uncertainty of
a subprime loan? The most obvious answers are that they
want to create stable home environments, build
financial equity, and enjoy the tax advantage of home
ownership. Too often, as single women and especially as
single parents, credit may seem hard to obtain,
notwithstanding the fact that, on average, women have
higher credit scores than men. Subprime lenders may
even counsel them that conventional loans are
unavailable to them and that subprime loans are their
only recourse. In some cases, brokers who promised
borrowers "the lowest possible rates" gave borrowers
higher priced loans and extravagant fees. The current
crisis is a result of a slowing home sale market,
declining prices, and monthly mortgage payments that,
in many cases, have spiked so precipitously that
borrowers' income could not possibly cover them.

Blaming the victims is both unwarranted and unhelpful.
It will not solve the economic or social problems
caused by the tide of foreclosures that officials are
struggling to forestall.

Not until 2004 did the Federal Reserve require subprime
lenders to provide any specific data on their loans.
Even today, they resist any effort to provide
information of the risk profiles of borrowers. What we
do know is that many women who qualified for
conventional loans did not get them and that they and
others were being fleeced.

A former loan officer testified about how she marketed
subprime mortgages: "If someone appeared uneducated,
inarticulate, was a minority, or was particularly old
or young, I would try to include all the [additional
costs] CitiFinancial offered."

According to Attorney General Martha Coakley, weak or
subprime credit has led to 25,000 foreclosure actions
in Massachusetts in the past 12 months. If the trend
continues, many more women will join those who have
already lost their homes. These women represent all
ages, all races, and all socioeconomic classes. Some
are single mothers and their children range from
infants to baby boomers. As a threat to women, this
crisis is a threat to us all.

[Anita F. Hill is a guest columnist and professor of
law, social policy, and women's studies at Brandeis
University and a visiting scholar at Wellesley College,
the Newhouse Center for the Humanities, and Wellesley
Center for Women.]

(c) Copyright 2007 Globe Newspaper Company.