A new study has revealed some apparent differences in the success rate of female and male mortgage applicants.  The Woodstock Institute, a non-profit research organization, conducted a study based on Home Mortgage Disclosure Act (HMDA) data in the six county Chicago region and found that applications for either purchasing or refinancing a home were less likely to be approved if submitted by a female.  The same was true of applications submitted by a female with a male cosigner when compared to applications from a male applicant with a female cosigner.

"We would expect to see no significant difference in the origination rates for male-headed joint applications and female-headed joint applications, since the backgrounds of both borrowers on joint applications are considered by mortgage lenders," said Spencer Cowan, vice president of research at Woodstock Institute. "The fact that there are such large disparities raises troubling questions about potentially discriminatory underwriting."

The Institute says that the wealth gap between men and women is well documented; one study showed that single women between the ages of 18 and 64 have a median wealth that is 49 percent of that for single men and 12 percent of the median for couples.  The differences for women of color are even greater.  That same study suggests that the wealth gap would persist even if the gap in income between men and women and between whites and persons of color did not exist. 

Since homeownership is the most common means of wealth creation, women are disadvantaged here as well.   They are three times as likely to be custodial parents with greater expenses and less opportunity to save.  That and their lower income means they are less likely to have a significant down payment, income to qualify for more valuable properties (and thus greater appreciation) and more likely to have received subprime loans during the housing bubble, and this made sustainable homeownership more difficult and, by increasing the cost of homeownership, reduced the wealth-building effects.

The study examines women's access to mortgages following the housing collapse to see if they now have substantially equal access to mortgages in the absence of the subprime products that had been disproportionately marketed to them.  The Institute examined data on applications both those originated and denied for conventional, FHA and VA loans between $20,000 and $800,000 intended as first liens on one-to-four family units.  Applicants had incomes between $20,000 and $999,000.  The study included 58,870 applications for home purchases and 198,522 applications for refinancing.

Controlling for loan-to-value ratio, the Institute found that female mortgage applicants were about 8 percent less likely overall to have home purchase mortgages originated than were male applicants.  Those disparities, however, may reflect the influence of demographic characteristics which vary systematically between female and male applicants.  For example, 77 percent of female applicants for purchase mortgages had no co-applicant versus only 52 percent of male applicants; 71 percent of female applicants for refinance mortgages had no co-applicant versus 32 percent for male applicants.  The more likely presence of children in single-women headed households may also put female applicants with no co-applicants in a significantly different family and financial situation than are male applicants with no co-applicants.

To control for those potentially confounding demographic factors, the study ran an analysis on a subset of the data consisting of joint applications with a male applicant with a female co-applicant or a female applicant with a male co-applicant. In this subset, there were 21,432 purchase applications and 111,304 refinance applications.  Female-headed joint applications overall were 24 percent less likely to have purchase mortgages originated, and 39 percent less likely to have refinance mortgages originated, than were male-headed joint applications. The disparities applied across all racial categories with the largest found in African American female- headed joint applications which were 34 percent less likely to be originated than were African American male-headed joint applications for purchase and 44 percent less likely for refinancing. Latino female-headed joint applications were 19 percent less likely to have purchase mortgages originated and 29 percent less likely to have refinance mortgages originated than were Latino male-headed joint applications.

The Institute references a Department of Housing and Urban Development disparate impact analysis which found that female applicants for mortgages, both purchase and refinance, are significantly less likely to have loans originated than are male applicants.  Even when the analysis is limited to applications with either a female applicant and male co-applicant or male applicant with a female co-applicant, reducing the probability that the applicant is a single parent, the disparity remains and appliances among all racial and ethnic categories.  The Institute says such a consistent set of findings showing a significant disparity in women's access to mortgage credit is troubling and warrants further investigation.

The Woodstock Institute study admits a flaw in that the HMDA data does not contain key categories of information such as credit scores, overall debt-to-income ratio or appraised values and says without those data points, it is not possible to determine whether female-headed joint applications are denied while male-headed joint applications with similar qualifications are approved.  It urges the Consumer Financial Protection Bureau (CFPB) to expeditiously finalize enhancements it is permitted under Dodd-Frank to make to the HMDA data to include at a minimum the applicant's credit score, debt-to-income ratio, and the appraised value of the property.  That additional data could show more clearly whether there was disparate impact or some legally defensible justification for the disparities shown in its study.  "If disparities for women persist with those additional data, additional fair lending training, supervision and enforcement will be needed," the study concludes.