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- Women Targeted by Subprime Lenders
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- Women Targeted by Subprime Lenders
Women Targeted by Subprime Lenders
- By Budgeting Help
- Published 09/25/2007
- Financing
- Unrated
Women Targeted by Subprime Lenders
In addition to some of the unethical activities in the subprime market (see "The Subprime Fallout: Lending Practices"), some consumer group have also found discriminatory practices with regard to types of loans that are given to would-be home buyers.
In a study by the Consumer Federation of America (CFA), a consumer advocacy organization in Washington D.C. found women are targeted for subprime considerably more than men. Women receive subprime loans more often than men---especially Black or Latino women, who make up the majority of single-female homebuyers in the United States.
The disparity in subprime lending occurs regardless of credit ratings. Although lenders claim women have riskier credit profiles, credit reporting agencies like Experian have demonstrated men have slightly higher credit scores than women on average.
Women did tend to earn less than the median income level in a given geographic area when compared with men and married couples, which substantiate greater risk in lending. However, when comparing those whose incomes were well-above the median income, the disparity of subprime loan offerings is even worse; women are 46.6% more likely to receive subprime loans than men in the same income bracket.
The CFA suggested a number of factors relate to the overrepresentation of women in subprime lending. Overall, women still make less money which limits monthly payments, and lower wealth, which affects how large of a down payment can be made. Historically, women have also had to deal with greater rejection rates and being targeted for other forms of predatory lending, including home improvement loans and equity stripping among elderly women.
Additionally, women have expressed a lack in their financial knowledge when surveyed. The CFA claims lowered financial self-efficacy can have negative ramifications during the negotiation process, which will have long-term effects on mortgage payments, interest rates, and acceptable down payments.
As women are nearly as financially independent as men, they need to be aware of potential discriminatory practices. Additionally, self-efficacy or confidence about complex financial transactions need to be fostered in women or such targeting practices will continue.
Keep in mind, that even with tighter regulations and changes to the industry, subprime loans are still legal. You should remain aware of these practices as lenders (or related real estate professionals) may attempt them on you.
References
Federal Trade Commission. FTC Consumer Alert: Avoiding Home Equity Scams
Federal Trade Commission. FTC Education Effort Focuses on Home Equity Loan Fraud
Consumer Federation of America. Women are Prime Targets for Subprime Lending
Federal Trade Commission. FTC Testifies on Enforcement and Education Initiatives to Combat Abusive Lending Practices.
In a study by the Consumer Federation of America (CFA), a consumer advocacy organization in Washington D.C. found women are targeted for subprime considerably more than men. Women receive subprime loans more often than men---especially Black or Latino women, who make up the majority of single-female homebuyers in the United States.
The disparity in subprime lending occurs regardless of credit ratings. Although lenders claim women have riskier credit profiles, credit reporting agencies like Experian have demonstrated men have slightly higher credit scores than women on average.
Women did tend to earn less than the median income level in a given geographic area when compared with men and married couples, which substantiate greater risk in lending. However, when comparing those whose incomes were well-above the median income, the disparity of subprime loan offerings is even worse; women are 46.6% more likely to receive subprime loans than men in the same income bracket.
The CFA suggested a number of factors relate to the overrepresentation of women in subprime lending. Overall, women still make less money which limits monthly payments, and lower wealth, which affects how large of a down payment can be made. Historically, women have also had to deal with greater rejection rates and being targeted for other forms of predatory lending, including home improvement loans and equity stripping among elderly women.
Additionally, women have expressed a lack in their financial knowledge when surveyed. The CFA claims lowered financial self-efficacy can have negative ramifications during the negotiation process, which will have long-term effects on mortgage payments, interest rates, and acceptable down payments.
As women are nearly as financially independent as men, they need to be aware of potential discriminatory practices. Additionally, self-efficacy or confidence about complex financial transactions need to be fostered in women or such targeting practices will continue.
Keep in mind, that even with tighter regulations and changes to the industry, subprime loans are still legal. You should remain aware of these practices as lenders (or related real estate professionals) may attempt them on you.
References
Federal Trade Commission. FTC Consumer Alert: Avoiding Home Equity Scams
Federal Trade Commission. FTC Education Effort Focuses on Home Equity Loan Fraud
Consumer Federation of America. Women are Prime Targets for Subprime Lending
Federal Trade Commission. FTC Testifies on Enforcement and Education Initiatives to Combat Abusive Lending Practices.