Study Finds Evidence of Gender Discrimination in Loan Approvals

Women are less likely to be approved for mortgage loans than their male counterparts, even when loan-to-income ratios are equal, according to a new study from the ""Woodstock Institute"":http://www.woodstockinst.org/, a Chicago-based nonprofit research and policy organization.

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The disparity was more pronounced among certain races.

Researchers surveyed first-lien, single-family purchase and refinance applications for loans ranging between $20,000 and $800,000 from applicants with incomes ranging from $20,000 to $999,000 for the year 2010. All applications reviewed were for Chicago-area applicants.

In all cases, researchers controlled for loan-to-income ratios, but the study did not mention other loan qualifiers.

The findings reveal an 8 percent disparity between the likelihood of a woman and man with similar loan-to-income ratios receiving a purchase loan and a 21 percent disparity among approval rates for male and female refinance applicants.

The study also found that when men and women file jointly, applications with a male head and female co-applicant are more likely to be approved than those with the reverse.

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""We would expect to see no significant difference in the origination rates for male-headed joint applications and female-headed joint applications, since the backgrounds of both borrowers on joint applications are considered by mortgage lenders,"" said Spencer Cowan, VP at the Woodstock Institute.

Instead, the Institute found female-headed purchase applications were 24 percent less likely to be approved than male-headed applications. Female-headed refinance applications were 39 percent less likely to be approved, according to the Institute.

The disparities were greater among African-American applicants but less prevalent among Latino and Asian applicants. For purchase applications, female-headed applications for white buyers were 22 percent less likely to be approved than male-headed applications from white borrowers. For African-Americans, this rate jumped to 34 percent.

However, for Latino and Asian applicants, the disparities were 19 percent and 12 percent, respectively.

In general, female-headed refinance applications fared worse than female-headed purchase applications, but the prevalence of disparity among races followed the same trend, with African-American applicants receiving the most discriminating treatment and Asian applicants receiving the most gender-neutral treatment.

Female-headed applications from white couples were 37 percent less likely to be approved. Female-headed applications from African-American couples were 44 percent less likely to be approved, and female-headed Latino and Asian applicants were 30 percent and 29 percent less likely to be approved, respectively.