• Men apply for mortgages more than women. Females were found to be four times less likely than men to be the primary mortgage applicant.
• Overall, when women got through the door, they stood a nearly equal chance with men of having their mortgages originated (approved).
• When race and income were considered however, minority women as well as minority men had a much lower opportunity to have a mortgage approved. These disparities have an impact on gender.
• Variations exist among lenders in their rates of taking, and granting, mortgages to women.
• A large amount of small lenders neither originated, nor took, applications from non-White racial groups. About half (15) of the 29 small-category lenders had zero or one origination to Black females. Nine lenders made no loans to Black females ( another six originated only one application). The lack of lending activity was worse for Hispanic and Other females. Twenty-one of the 29 small lenders (nearly three-fourths) originated zero or one loan to Hispanic women. For Other females, 22 of the small lenders were in this low lending category.

In 1994, the number of all home purchase mortgage applications for New Jersey was 111,449. For every woman who applied for a home purchase mortgage loan in 1994, four men applied. This female-to-male application ratio of 0.25 was consistent for both the state and top 50 totals. On its face, this suggests that there is an access differential for women. This statistic may reflect both the demographic and cultural situation. The application ratio appears to be consistent, if not better, than the statewide rate of female-headed householders to married-couple families which is one-to-five. The Census ratio is rough—it does not account for New Jersey’s 756,529 non-family households—but it does suggest that the one-to-four female-to-male application ratio does not provide dramatic evidence of a gender-influenced differential. The study did not examine co-applicants. The female-to-male application ratio and Census household information combined might indicate a noteworthy, gender-influenced trend: in married-couple family households, it appears that men are more likely to be the lead home purchase mortgage applicant. Consequently, there may be many women left undetected by this study. More research is needed to confirm the degree of female participation in mortgage lending.

Nearly 82% of all applications resulted in originations (granting of mortgages.) A total of 91,065 originations were made. Comparing the state and top 50 lending institutions shows the percentages of origination to be nearly consistent. The data shows that about 80% of all female applications are originated, with similar rates for men. Unlike the female-to-male application ratio, the female-to-male origination ratio is close to one-to-one for both the state totals and the top fifty (0.98). This suggests that, both in the state and among the top 50 institutions, female applicants as a whole—once their applications have been submitted—are as likely as their male counterparts to have their applications granted. However, there are differences in origination rates among racial and income groups. In addition is the variation among lenders in rates of issuing mortgages.

In looking at mortgage activity rates among the top 50, there was a wide difference in the volumes between these institutions. Although it is useful to examine the performances of individual lenders compared to industry norms, the behavior of lenders should be considered in the context of the size of the volume of their mortgage activity.

The top 50 institutions varied dramatically by the volume of applications and originations received. Seven of the top 50 have originated from 2,000 to over 3,200 mortgages to women and men per institution. These seven large volume lenders comprise nearly one-fifth of all mortgages made by the top 50. These institutions in order of their origination volume were Chase Manhattan Mortgage Corporation, PNC Mortgage Corporation of America, First Fidelity Bank, Summit Bank, Collective Bank, Hudson City Savings Bank and United Jersey Bank. These larger lenders are followed by fourteen medium size institutions which have originated between 400 and over 1,300 loans to females and males. Of these medium lenders, only four made more than 1,000 loans. Nearly three-fifths of the top 50, however, are small lenders which make between 100 and almost 400 mortgages to both sexes.

Within the top 50 institutions, there was some variation in the market share and percentages of female applications and originations as well as ratios comparing the performances of females to males. First Fidelity Bank led the top 50 in applications received from women with 802 while PNC Mortgage Corporation of America led the pack in mortgages granted with 606 originations. The Trust Company of New Jersey had the least experience with women. It ranked lowest on applications received (11), and mortgages originated (8). The female share of all applications received ranged from 37.7% from Midlantic Bank to 11.1 % at Spencer Savings Bank. On the origination side, mortgages granted from female applications ranged between a high of 100% at Trenton Savings Bank to a low of 50% at Minotola National Bank. Female-to-male rates of origination also varied. At Monarch Savings Bank, women had a 25% better chance than men of getting a mortgage (1.25 ratio.) This contrasted with the experience at Minotola where women has almost a 30% less chance than men to get a loan (0.71).

As was previously stated, the percentages and rankings of mortgage activity by, and to, women must be looked at within the scope of how many applications and loans are made. Despite being at, or near the top, in absolute numbers of female applications and originations respectively, First Fidelity’s 72% approval rate of female applications was about 9% below the top 50 standard of 80.9%. First Fidelity placed 39th in the ratio of female-to-male origination ratios (0.95), performing slightly below the top 50 norm of 0.98. Although all applications received from females were approved at Trenton Savings Bank, this institution only made 35 mortgages to women. Monarch Savings Bank, while having the most favorable percentages of originations to women versus men, only granted 19 mortgages to females.

Among the large volume originators, most performed well when gender was considered. These included: Chase, PNC, First Fidelity, Collective and Summit. Four of these lenders ranked among the top five in applications received and mortgages originated to women, with Summit Bank dropping to the next-five tier and being replaced by United Jersey Bank. PNC, First Fidelity and Collective scored near, or exceeded the state and top 50 mean on female-to-male application ratios of 0.25 (range of .20 - .30) and origination ratios of .98 (.95 - 1.00). While Chase was a low-end outlier on the female-to-male application ratio, this institution gave women their best chance among the top five group, of their mortgages being made, with a female-to-male origination ratio of 1.05 which exceeded the state and top 50 means.

Some of the larger lenders could do better in terms of attracting women applicants. Summit Bank, Hudson City Savings Bank, Provident Savings Bank, and Chase Manhattan Mortgage Corporation all had female-to-male application ratios below 25% of the top 50 norm of 0.25 Again, however these large lenders are among those which received most of the female applications (in absolute numbers). While it is important to note these institutions for their high- or low-application ratios, application and origination data combined provide a more complete picture of a lenders’ performance vis-à-vis women. A geographic analysis would also enhance our understanding of application ratios: the low-ratio banks may be located in areas comprised of mostly married couple households. These households appear less likely to have a female as lead applicant, and the low bank female-to-male application ratios may reflect this.

Are larger institutions more favorable to women? Chase Manhattan Mortgage and Natwest Bank of New Jersey rank well above the origination ratio mean but below the application ratio mean—these institutions appear favorable to women once they submit applications, but the problem may be the rate of getting them in the door. Ocean Federal Savings ranks well above the application ratio mean and Midlantic Bank has the top application ratio overall, for both small and large institutions. These two larger institutions receive more female applications than their industry peers and originate loans to women at a higher rate. Longitudinal and geographic analysis would yield additional insight into their institutional lending patterns.

At the state and top 50 levels, women were denied for mortgages about 25% more often than men. This figure conflicts somewhat with the origination rates between women and men which are basically similar. It is difficult to utilize the "denial reason" variable to shed light on denials because lenders are not required to list a denial reason, and have the option of listing up to three. Women and men were denied mortgages for the same three leading reasons: debt-to-income ratio, credit history and "other’ reasons.

There was variation in the female-to-male denial ratio among individual lenders. Again, some of this may be attributed to the size of the data set: only one lender (First Fidelity) in the top 50 institutions denied over 500 applications; only 10 denied over 100 applications. On average, institutions in the top 50 denied only 64 total applications.

In comparing lending activity by the variables of race, income and gender there were differences demonstrated. Whites applied much more frequently than all other racial groups and correspondingly had the highest absolute number of originations. At each income level, every financial institution received applications from, and originated mortgage credit to, the White applicants. In contrast, at the low-income level, approximately one of every two financial institutions received no applications from Black or Hispanic or Other applicants. As the income level of minorities rose however, the number of financial institutions receiving no applications from these groups decreased.

On average, as income level increased more financial institutions originated mortgage loans to males than to females of all cohorts. As income rates increased, the application rates for all female cohorts, decreased. Correspondingly, as incomes rose, females were more likely to have their mortgages granted. Usually at the low- and moderate- income levels, origination rates for females, especially minorities, outpaced that of males. It should be noted that for the individual institutions within the top 50, the data set for the variables of income, race and gender were small. As was mentioned, many of the banks had not received applications from low-income minorities. In addition, there were often 100% origination rates among these institutions for each breakdown. This perfect origination rate usually meant that there were a small number of applications, usually one.

Comparing statewide lending rates by gender within each racial group, showed some differences. Application rates of White females compared to White males were highest at the low income level (31.1%), but never exceeded the rates of White males. As income rose, the rate of white female applications decreased. Relatedly, origination rates were higher for White females compared to White males at the low- and moderate-income levels, and declined slightly at the next two higher income levels. White females maintained the highest origination rates for all female cohorts. Origination rates for White females peaked at moderate-income, and decreased at both middle- and high-income levels.

For Blacks, there were differences and similarities in the rates of application and origination compared to Whites. Applications from Black females also decreased as income rose. However, the percentage of all Blacks filing applications who were females exceeded its White female counterpart significantly and at the low-income level exceeded that of Black males. At the low-income level, Black women filed almost 60% of all applications received from Blacks. This was almost double the rate of White low-income women. At the moderate income level, Black women submitted an almost equal number of applications, accounting for almost half of all Black applications received. Again, the percentage of moderate-income Black females submitting applications was over 60% higher than that of White women in the same income range. Black females maintained the highest application rates for all female racial groups, while their origination rate was the lowest at all income levels except for moderate-income where they ranked third. Since at lower-income levels, females account for a large proportion of the applications made by Blacks, race and income disparities have a negative effect on gender

Origination rates at the statewide level for Black females ranged between 8.7% and 17.4% lower than for White females at the same income levels. Origination rates for Black females were the lowest at every income level except for moderate-income where they ranked next to last. Statewide, the rates of Black women receiving mortgages exceeded that of Black males at all income groupings except for middle-income. Black females attained the highest origination rate at the high-income level. For the top 50 institutions, Black women had better rates of getting mortgages at the low- and moderate-income levels and less of an opportunity at the middle and high levels.

There may be explanations for these racial discrepancies which cannot be determined because of the limitations of this research. Some examples are the following. There are many more White, than non-White applicants, which can skew the data. Within this larger pool, there is a possibility of having more applicants with better qualifications, e.g., more credit-worthy, than in the smaller non-White group. Median family income for minorities (with the exception of Asians) is lower than that for Whites. Minority income may be clustered at the lower end of each income group and non-minority at the high-end. In New Jersey, Blacks have a higher rate of households headed by females than do Whites (41.3% and 12.4% respectively). The branch institutions with non-existent lending activity to non-Whites may be geographically underrepresented in minority areas and overly represented in areas with little minority population. It is beyond the scope of this research to conclusively define why lending to minorities lags behind that of Whites. However, it is a concern that requires attention by lenders and the community.

At both the state and top 50 totals, Hispanic female applications were filed at a lower rate than for White and Black women, except at the high-income level where the rate exceeded that of White women. Hispanic women also followed the trend of lower applications rates as incomes rose. Statewide, origination rates for Hispanic women rose with each income group, with the exception of a dip at the moderate income level. State averages also showed origination rates were higher for Hispanic females compared to Hispanic males at the low-income and high-income levels. For the top 50, Hispanic female origination rates generally agreed with the state total, with the exception at the moderate income level where Hispanic females rates were lower. At the high income level, the top 50 made more favorable mortgage decisions to Hispanic women than institutions statewide, with a 10.4% higher origination rate. Origination rates for Hispanic females decreased slightly from low- to moderate-income levels. Hispanic females attained their highest origination rate at the high-income level, with a jump of between 6.1% and 14% over the middle income rate at the state and top 50 totals, respectively. Hispanic high-income females had the highest rate of applications originated compared to all other racial groups within the top 50, with over 90% of mortgages made.

Although Black women had higher rates of filing mortgage applications, Hispanic women had their mortgages originated at a higher rate at comparable income levels, with the exception at the moderate-income level. This result occurred despite Hispanics having mostly lower family income at most Census breakdowns than Blacks. Future research in this area, could attempt to look at differences in income between female Blacks and Hispanics.

Other females which comprised various ethnic groups including Asian, showed some differences. Application rates for Other females followed the pattern of decrease as income levels rose. The rate of applications filed by Other females was behind Blacks at all incomes and lower than Whites at the low- and moderate-income levels. The rate of Other female applications ranged, at the state level, from a low of 13.9% at high-income to a peak of 25.5% at moderate-income.

The origination rate for Other females compared to Other males rose slightly at each income level, with statewide origination rates at 71.9% for the low-income level and 78.8% at the high-income level. For the top 50, the jump between the low and high-income levels was more steep, with rates of 69% and 83.7% respectively. Origination rates for Other females was higher than for Black and Hispanic women, except at the high-income level where Other fell behind Hispanic. Other females had their highest origination rates at the high-income level.

Among the seven large lenders with total originations of more than 2,000 loans, application and originations rates varied both favorably and negatively from the top 50 and statewide means. Some of the lower variances may be explained due to the possibility of higher rates of more risky applications because of the larger number of overall applications received. However, the differences among these institutions by racial/ethnic and income groups, should be more thoroughly investigated by future researchers.

The analysis of application rates by region shows that northern New Jersey has the highest application rates, followed by the central region, with the southern region of the state having the least amount. This is also consistent with Census demographics of the statewide population dispersion. The comparison between the percent of female applicants and the percent of male applicants shows that each region has similar ratios to the statewide ratio. The statewide ratio of female-to-male applicants is .25, with northern NJ at .25, central NJ at .24, and southern NJ at .25. Therefore, regional analysis by application rates shows no significant difference in lender behavior.

The regional origination rates are within the means for the state. The statewide percent of female originations per female applicants is 79% while male originations per male applicants is 81%. The differences on a regional basis are relatively small. For females, the rates vary from 78%-81% and those for males range between 79%-82%. The largest disparity falls in northern NJ with a 3% differences between genders, while central NJ shows no difference, and southern NJ shows a 1% difference. Again, it can be concluded that analysis on a regional basis shows no significant difference in lender behavior.

Analysis of application rates by census tract reveals a trend, which mirrors the finding from the income variable detailed above. As the income level by tract rises, less women apply. This finding may also be due to more higher-earning applicants consisting of married couples where the male is the lead applicant.

Origination rates by census tract were fairly equal. The data shows that the lowest origination rates occur in the lower income census tracts with a steady upward trend as income tract level rises. However, within each census tract, the female-to-male origination ratios were fairly equal.

The qualitative part of the study consisted of two focus groups. The first was conducted with the staff of NJCA’s Loan Counseling Program. The seven staff (loan counselors and supervisors) represented all regions of the state served by NJCA. The goals of the session were to gain more insight into how the lending process is structured; discuss possible differences in accessing mortgages between men and women; learn about the services provided by NJCA to help women through the lending process; examine how female clients are treated by the financial institutions the NJCA works with, and discuss outreach services provided.

Participants in the second focus group were eight women of varying marital and economic backgrounds who had gotten mortgages, or were trying to become "mortgage-ready" through the Loan Counseling Program. The aim of this session was to hear first-hand of the women’s experiences in going through the mortgage process and to provide recommendations about which lending practices were working and those needing to be implemented or improved.

Below are the common themes which emerged from the two focus groups.

Both groups strongly stressed the need for education among clients. In order to play an active and knowledgeable role in the mortgage process, it is necessary for clients to be able to ask the right questions and to access the right information to check the validity of the answers.

The main area in which there was a discrepancy was the issue of discrimination. Among the counselors, there was not a feeling that their female clients experienced any discrimination from the lending institutions. However, the female clients expressed a common sense that they did encounter gender discrimination in previous dealings with lending institutions. The discrepancy between these two perceptions may arise from the difference between the treatment counselors and clients receive from lending institutions. A counselor, with his/her training, experience and position, would be less likely to encounter difficulties with lending personnel. A client however, is more vulnerable because she lacks the professional sophistication of a loan counselor, and the lenders are aware of this vulnerability. A bank would be much less likely to hassle a CRA-activist than a private citizen.

Perception of discrimination may be a factor in limiting women’s access to credit. The perception may make women less likely to begin the application process.

Both the counselors and the clients remarked that realtors and underwriters and their relationships to banks and mortgage companies were significant in the lending process. These actors have an ability to influence the process and the individuals involved in it. In studying the issue of access to credit, the role of these intermediaries must be considered.

Both counselors and clients expressed their beliefs that NJCA plays an important role in the lending process. The main areas that they facilitate the process are in educating the client, clearing credit problems, processing the paperwork, negotiating with the banks, and trouble-shooting when problems arise.

The counselors and the clients recognized the issue of credit as one of the most onerous in the lending process. First it is important for a client to have reliable information about their credit history and its implications in the process. Secondly, clients must have the understanding of how to go about cleaning up their credit and the means to do it. It is important to acquire the relevant information, interpret it accurately, and react accordingly. This comprehension will allow the client to be an active participant in the process.

Both groups asserted that banks do not promote CRA loan products effectively. Market forces influence a lender’s decision about whether or not to market a product that results in a lower profit margin. This may result in some resistance in marketing CRA loans. In addition, there seems to be some ignorance among lending institutions about the available CRA loan products and their eligibility requirements. This may further limit accessibility to these loans.