Women More Likely than Men to be Denied Mortgages in Chicago

A study conducted by Spencer M. Cowan of the Woodstock Institute from 2011 to 2013 in the Chicago six-county region has found that women are more likely to be denied mortgages than men.

The study builds on previous research that examined the effects of gender, race, and ethnicity on loan origination rates. This research affirmed that “regardless of the race or ethnicity of the applicant or purpose of the loan (purchase or refinance), female-headed applications were significantly less likely to result in loans being originated than male-headed applications.”

With these findings in mind, the 2011 to 2013 study focused on three additional factors contributing to the inconsistency between loan origination rates for men and women: the income level of the borrower, the type of loan applied for, and the geographic location of the property within the Chicago region.

The study established, “Mortgage applications from most women and women with co-applicants are less likely to be originated than mortgage applications from men and men with co-applicants, even controlling for loan-to-income ratio.”

Specifically, women in Chicago were 14.5 and 17.4 percent less likely than men to have purchase loans and refinance loans originated, respectively. Additionally, female-headed applications were 28.3 percent less likely to be approved for purchase loans, and 27.2 percent less likely for refinance loans than male-headed ones.

The study found that the low-income category was the only one in which the origination rate skewed in favor of women. Cowan suggest a reason for this may be the gender gap in earnings, because low-income women may be more likely than men to have consistent, conventional work histories in low paying jobs and thus, better credit scores.

The study goes on to reiterate, “Moderate-, middle-, and upper-income female applicants, however, were all less likely to have purchase or refinance loans originated than male applicants.”

Based on the results the study has four recommendations:

• Mortgage lenders should examine their mortgage lending processes to detect and correct potentially discriminatory practices.
• Regulators should further investigate possible gender discrimination in mortgage lending practices, particularly for lenders with above-average disparities.
• The Consumer Financial Protection Bureau must expeditiously finalize enhancements to the Home Mortgage Disclosure Act.
• Policies to reduce the gender wage gap should be expanded and enforced.