In the first national study on the subject, the Consumer Federation of America has documented that women -- no matter whether their incomes and credit scores are higher than men's in the same market -- are more likely to be put into higher-cost subprime mortgages when they buy or refinance a home.

After examining case files on 4.4 million randomly selected mortgages originated in 2005 and available through the federal Home Mortgage Disclosure Act (HMDA) database, CFA researchers found that:

• Women earning double the median income for their area nonetheless are 50 percent more likely to be charged subprime mortgage rates than men with comparably high incomes.

• One third of all women in the 2005 sample took out mortgages with rates higher than 7.66 percent -- far above the 5.87 average prime rate for that year -- compared with one of four men.

• Minority women -- African-American and Latino -- were the most likely to be charged subprime rates, even if their incomes were well above average. African-American women earning two times the area median income were five times more likely to be placed in subprime mortgage programs than white men with incomes double the area median. Latino women were four times more likely.

• The gap between mortgage rates charged minority women and white men "increased as income rose."

Allen Fishbein, director of housing and credit policy for CFA, said that despite the statistical fact that on average "women have slightly higher credit scores than men and similar credit usage patterns," they are "more likely to receive more expensive mortgages at all income levels."

The "implications are huge," said Fishbein in an email. Within the African-American community, for example, women comprise 50 percent of all home purchasers. Within the Latino community, they comprise 31 percent. White women, by contrast, account for 28 percent of purchasers.

"The fact that many of these (minority women) purchasers are paying upwards of 7.5 percent or more is a tremendous drag on their ability to create wealth through homeownership. We estimate that on a typical home it would mean that they would pay an additional $85,000 to $185,000 on their mortgage."

The study blames "discretionary pricing" by brokers and retail loan officers, calling gender discrimination in mortgages "the latest extension of disparate treatment by lenders."

CFA suggests that women may be easier to steer to higher cost loans because traditionally they may have "less confidence about their level of financial knowledge and education," which "may disadvantage them when they negotiate the terms of their mortgage.

Compounding this, according to CFA, "the lending industry has historically placed high barriers to women in the mortgage marketplace." Prior to enactment of the 1968 Fair Housing Act, for instance, "single women were considered poor risks" for mortgages in general, and prior to the 1974 Equal Credit Opportunity Act, "most women needed a co-signer to become mortgage borrowers," and even married women "could not obtain mortgage credit on their own."

The report demands more aggressive enforcement of existing federal fair lending and fair credit laws -- with a new emphasis on gender pricing discrimination -- plus tougher regulatory oversight and enforcement at the state level.

Published: December 11, 2006

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Kenneth R. Harney writes an award-winning, nationally-syndicated column on housing and real estate from Washington, D.C. He is also managing director of the National Real Estate Development Center, a professional education company. He is a past member of the Federal Reserve Board's Consumer Advisory Council, a committee that by federal statute reviews all Fed actions on home mortgage, consmer credit and banking industry regulation. He served as a member of the U.S. Department of Housing and Urban Development's Working Group on Computerized Loan Origination (CLO) systems, and is a member of the Editorial Board of the Fannie Mae Foundation's journal, Housing Policy Debate. He is the author of two books on mortgage finance and real estate.