Another Part of the Story

Perhaps the difficulty that African-American borrowers experience when they apply for a loan is not merely about race, as many have suggested, but also about the economic differences between men and women.

Advocates often compare how capital is allocated within communities.  Who is getting loans, and who is not? The income status of a borrower is very relevant, as is the income status of the surrounding neighborhood.  HMDA data is set up to allow for those kinds of questions.  We also look at borrower race.  HMDA data can provide answers for many of these questions, too.

I decided to use one of the lesser-utilized data points in HMDA to do some initial descriptive research about how race and sex interact in the mortgage marketplace. HMDA allows applicants to indicate their sex and the sex of their co-applicant. Most borrowers fill out the data. I looked at a set of originated loans made in Charlotte, North Carolina in 2008.

This is just an initial take and the findings are only descriptive. I can’t draw any inferences for policy with these numbers because there are so many other variables that aren’t captured here.

In loans originated by African-American borrowers, women are almost as likely as men to be listed as the lead applicant. Women applied for 3,306 of the 6,713 mortgage loans taken out by African-Americans in Charlotte in 2008.  That is about half of all new loans. In instances where white borrowers made loans, women made only 30.4 percent of the applications. In most of the instances when an African-American woman took out a loan, there was no male co-borrower.  Only 605 of those 3,306 loans listed a male co-borrower (18 percent), and in 2,612 instances there was no other applicant at all.  The rest are instances when the other borrower was also female, or when the application was taken over the phone and the sex status of the co-borrower was not known.  White woman are more likely to have the support (29.1 percent) of a male co-borrower, although the numbers show that it is still an exception rather than the rule for both.

African-American women are more likely to apply as single heads of households, and minority neighborhoods have a greater share of single head of household families.

It is even true that the share of African-American women seeking a loan that are single grows higher in higher-minority neighborhoods.  The discrepancy grows in minority neighborhoods.  In communities where more than half of all residents are African-American, women 52.8 percent of all approved applications.  The prevalence of women as lead household financial decision-makers is more prominent in minority neighborhoods, regardless of borrower race.  White women were more likely to file for a mortgage without a co-applicant when they lived in a majority-minority neighborhood as well.

Women-only borrowers are taking out modest loans.  The average loan amount was much less – just $154,000, compared to almost $190,000 – in African-American households.

I don’t have the numbers, but I believe that there is a lot of data out there to suggest that women are paid less than men, after controlling for job type.

The data includes first-lien loans on owner-occupant single-family homes purchased with a conventional prime loan in 2008.