By this point, anyone who has been paying attention to the news (or has a mortgage) knows that America's well on its way to a credit crisis. But I, for one, hadn't really thought about the impact that the subprime mortgage market was having on women in particular until I read this Op-Ed by Anita Hill in the Boston Globe.
Titled "Women and the Subprime Crunch," Hill's piece asserts that women -- especially elderly and African-American women -- are getting offered worse mortgages than men and are overrepresented in the subprime lending market. Referencing studies done by the Consumer Federation of America and the National Community Reinvestment Coalition, Hill asserts that "across the economic spectrum, women receive less favorable terms than similarly situated men on home purchase, refinance, and home improvement loans." And this is becoming a bigger deal because, as Hill points out, more and more women have been purchasing homes -- last year in Massachusetts, she says, over a third of first-time home buyers were single women, and almost a quarter of all home buyers (again, in Massachusetts) were single women.
But who are all these women with subprime mortgages? First, as Hill points out, many of these women are elderly -- since they tend to live longer than their men, they've got a greater chance of living alone and finding themselves responsible for managing their finances (which, unfortunately, still is a responsibility often left to the husband while he's alive). With medical bills and rising property taxes looming, these elderly women are prime targets for subprime loans that, as Hill puts it, "promise money for necessary [household] repairs, but instead exact huge fees and charge inflated interest rates."
Then there are African-American women, who Hill claims represent a full half of African-American home purchase borrowers. She says that there's evidence that "subprime lenders charge black women and Latinas higher rates and fees than same-race men and white men ... regardless of income and across all loan types."
The consequences are, unsurprisingly, bad -- older women "in jeopardy of becoming dependent on family or social services," younger women who lose "ground in their effort to reach economic self-sufficiency for themselves and in many cases for their children." And then there are the more universal side effects: foreclosure, loss of savings, impaired credit and sometimes bankruptcy.
The obvious question is why these women are taking out such high-risk loans. (One could also ask that question of Americans as a whole, but that's a totally separate article.) Hill believes it's partly because of these single women's ambitions -- they want "to create stable home environments, build financial equity and enjoy the tax advantages of home ownership" -- but also partly because some subprime lenders feel no moral qualms about lying to would-be homeowners about what mortgages they actually qualify for. (What's especially weird is that, as Hill points out, on average, women have better credit scores than men, but tend to end up with worse mortgages.) This does make sense, though, to my cynical side -- if you've got a group of people who, again on average, tend not to be financially well educated, why wouldn't you take advantage of them if it meant you could collect a higher interest rate? As a former loan officer (quoted by Hill) put it while testifying about marketing 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." Yikes.
In fact, Hill points out that it wasn't until 2004 that the Federal Reserve required subprime lenders to "provide any specific data on their loans." And even today, Hill writes, "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."
I don't personally own a home, but it seems to me that the subprime lending market, combined with America's overall "get it now, pay for it later" mentality, has gotten us into quite a mess, with plenty of blame to go around. But it also seems unfortunate that subprime lending companies have taken specific advantage of single women in order to make a profit.
(Today's New York Times contains an article about attempts to regulate the subprime lending market -- click here.)