Bankers Open Vaults To Women Seeking Mortgages Once All But Shut Out, They Get Approved More Often Than Men

Sheila Fearing, a free-lance court reporter, quit waiting for Prince Charming when she turned 30. But she still wanted her castle in the suburbs, even if she had to apply for a 30-year mortgage on her own.

“I was sure the mortgage people would laugh at me as soon as I walked through the door,” said Fearing, who assumed that as a single, self-employed woman she would not be taken seriously.

“None of my women friends were buying homes on their own,” she said. “My parents got their house from my grandparents. It was pretty scary for me.”

Her concern, it turned out, was unfounded.

An analysis of mortgage data shows that women have the edge over men in obtaining loans for single-family home purchases, despite a common perception that they face discrimination by lenders. They stand a better chance of getting a mortgage approved than men do.

Recently, the Wall Street Journal reported that women “may still have a more difficult time buying a house than single men.” Indeed, income and loan values for single women buyers trail men.

But that does not appear to affect their approval rates.

Fearing’s experience seems to bear that out. Three weeks after she applied for a loan, she was approved to buy her dream house: a three-bedroom rambler in St. Anthony, near St. Paul, Minn.

Not surprisingly, high approval rates fuel the unprecedented growth in home purchases by single women. About 14 million now own their own homes, a figure that has doubled in 25 years.

Appealing to these legions of new home buyers is a growing cottage industry of services, from brokers who specialize in finding homes for women to inspectors who offer home maintenance lessons.

“I would say every year for the last 16 years I see more and more women clients,” says real estate agent Sara Kinney.

In the late ‘70s and ‘80s, Kinney recalls helping women make the first tentative step to buy condominiums, popular for their security and low maintenance. Today she assists many of those same clients, who are switching to single-family homes.

Kinney’s female clients have changed in other ways. She is seeing more professional single women with “substantial incomes” buying expensive homes, as well as married women on moderate incomes applying for loans alone because their husbands have bad credit.

“In my experience, the home is very important to women, and they are more conservative with their money,” Kinney said. “They budget carefully.”

Women lower-risk? Major credit reporting firms such as TRW say they do not track credit worthiness by gender, and thus are unable to say which sex is the better saver.

Nationally, women have made strides in securing refinancing and home improvement loans, two other areas in which their approval rates outstrip those of men, according to the Mortgage Bankers Association in Washington, D.C.

Those gains for women buyers occurred over a short span.

Until the mid-1970s, according to the association, it was legal for lenders to discriminate based on gender.

When Nancy Beck started writing loans in the 1970s, for example, the Veterans Administration required her women clients to sign an affidavit promising not to bear more children.

At most lending institutions, it was rare for women, especially those of childbearing age, to qualify.

Women often lacked credit cards in their name or substantial personal savings. Banks feared they would stop working if they became pregnant. Thus, women’s incomes were discounted or their loans denied.

Changes to the Equal Credit Opportunity Act barred such forms of discrimination in 1977, and more women buyers trickled into the housing market. From 1987 to 1992, the portion of conventional 30-year mortgages held by single women doubled to 15 percent.

As for Beck, she rose to vice president at Chase Manhattan Mortgage in Minneapolis, and says that her company has a policy of omitting an applicant’s race and ethnicity, so that underwriters - who grant final approval on loans - look solely at finances.

“What matters to us really is putting good loans on the books that perform,” Beck said. “If we were reticent about providing money to lend, we wouldn’t be working. It’s in everyone’s best interest to make loans that perform.”

The rapid increases in loan approval rates for women is so new that scant studies have been done to predict future growth and its effect on individual lives, neighborhoods and communities.

For Fearing, the results are clear.

“I definitely didn’t expect things to turn out so well,” she said.