Women In Housing-2015

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26 | Th e M Rep o RT Feature as men. Wealth, as defined by Dr. Chang, includes liquid and non- liquid assets. Interestingly enough, these very items are among the information requested on a bor- rower's loan application. In addition to just the ac- cumulation of these assets, she emphasizes that these assets are not simply static values. Many of these assets are 401Ks, IRAs or Retirement plans. However, because of the income differ- ences between genders and fewer years of contributions for women, the total value of these assets is smaller for women. She calls these assets "wealth escalators" and they translate into the accumulation of wealth at a faster rate than seen as the result of normal salary increases. Dr. Chang also asserts that women are more likely to suffer from a larger debt burden due to a variety of issues includ- ing: child care, social norms and lower pay. As a result, women have far less disposable income to contribute to wealth escalators, such as savings and investments. In part this may explain why the denial rates for women are higher at the higher income levels. Dr. Chang also looked at wealth by race. According to her, black and Hispanic households (whether headed by a male or female), "hold significantly less wealth than white households." Furthermore she found that, "Asians and other racial groups have the highest wealth …" Hispanic households were found to have the least wealth, even lower than that of blacks. Overall, the wealth gap for women is substantially greater than the income gap that deprives them of obtaining financial security. Can mortgage lenders make an impact? A s mortgage lenders, we are interested in making as many sensible mortgages as we can because it improves the bottom line. In addition, be- cause we recognize the positive impact that homeownership has on individuals, communities and the nation, we accept the moral responsibility of making loans whenever it is financially sound. It is clear from the variances between male and female denial rates that income is not the overall driver. While further research is needed, the identification of the wealth gap between men and women most likely plays a part. What changes can we make to approve more loans for women? For one thing, we can hire more female loan officers and reach out to women's groups and other largely female populations to source applications. Are there changes to the cur- rent credit criteria possible? One thought is to allow women to receive the benefit of the reduc- tion in taxes from the mortgage tax deduction as a "gross-up" in calculating income and qualifica- tion so that rather than using just gross income, we would add an amount equal to their tax benefit when calculating the income and DTI ratio. We allow this for such items as Social Security and other non-taxable income, so why not consider it in this case? Additional products could also be considered. For example, the industry could consider bringing back the "buy-down" loans that were commonly used when interest rates escalated to 17 and 18 percent. Although the notes on these loans carried the 17 percent interest, there was an agreement that this amount would be reduced for a number of years, increasing 1 percent each year. The difference between the note payment and the reduced payment came from a reserve funded by another party. In this case however, the buy-down could be funded not only by a third party, but by the lender, who could be rewarded by some other type of incentive, such as a reduction in reserve requirements. As mortgage lenders we have to realize that business from women can be an opportunity to expand the number of loans we make. We must acknowl- edge, however, that despite the struggle to achieve equity, loan applications made by women may require changes in our credit culture to overcome the financial discrepancies built up over time. Income Group Denial rate Females Denial Rate Males No gender provided Group 1 $0-50,000 28% 27% 38% Group 2 $50,001-$75,000 18% 18% 24% Group 3 %75,001-$125,000 15 % 13.5% 18% Group 4 >$125,000 13% 11% 13% Race Female No. Applicants Male No. Applicants % of applicants that were female American Indian/Alaskan Natives 106,721 209,804 33.7% Asians 808,531 2,103,058 27.8% Blacks 1,358,632 1,654,427 45.1% Native Hawaiians/ Pacific Islanders 62,290 139,911 30.8% Whites 11,283,787 29,899,380 27.3% Table 1: Female Applications Per Race Compared to the Number of Male Applications Per Race. Table 2: Denial rates for applications Rebecca "becky" Walzak is the president of rjbWalzak Consulting, an innovative leader in operational risk management programs in all areas of the consumer lending industry. Her expertise is in loan quality assurance and risk management, with more than 30 years' experience in the financial services industry. She is also EVP, director of regulatory compliance with Mortgage TrueView, a data-driven business intelligence and risk management solutions provider for loan originators and servicers.

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