Is Gender Bias an Issue in Loan Applications?

March 15, 2013

Initial findings from a Woodstock Institute study of 257,000 purchase loans and refinancings originated in the Chicago area in 2010 indicate that gender bias may play a role in denials.

Based on 2010 Home Mortgage Disclosure Act data, researchers found that purchase applications with a woman as the primary borrower and a man as the co-borrower were 24 percent less likely to be approved than if a man applied as the primary borrower. The figure rises to 39 percent for refinancing applications.

Purchase and refinance applications with an African-American woman as the primary borrower and a black man as the co-borrower were 34 percent and 44 percent, respectively, less likely to be approved than applications with an African-American man as the primary borrower.  Moreover, applications with African-American women as primary borrowers were less likely to be approved than those headed by women of other ethnic backgrounds.

"It's unlikely that there isn't some element of discrimination," concedes Woodstock vice president of research Spencer Cowan.  "It may be totally unconscious."

Consumer advocates, too, suspect gender bias.  "There are lots of different things that could be contributing to it," acknowledges Diane Thompson of the National Consumer Law Center, "but it suggests to me that it's part of the long-established tradition of discriminating against women."

Reserving judgment for now, the researchers say the findings underscore the need for additional loan data -- such as age, credit scores, and appraised property values -- to be reported to the federal government to provide a more complete picture of lending patterns.

Source: "Woodstock Institute Finds Gender Bias in Joint Home Loan, Refinancing Approvals," Chicago Tribune (03/12/13)

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