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Distribution Analysis Of 2006 Subprime Rate Loans
Gender distribution Of Subprime Rate Loans
All racial groups had a high number and percent of men
and women without co-applicants that made up a significant
portion of the subprime rate loan population in 2006. Rising
real estate costs and home property values apparently
prompted many single persons to enter the real estate
market. Some entered for the sake of homeownership while
others might have made speculative investments, suspecting
that home prices would continue to rise. Either way, with a
single income, many single borrowers might have sought
more creative ways to obtain home loan financing.
The mortgage market accommodated this market segment
with loan features that made it easier to qualify. Loans, such
as 2/28 and 3/27 adjustable rate mortgages (ARms) started
with low teaser rates for the first two or three years of the loan
with a rate reset in later years. In all instances the rate resets
will produce significant mortgage payment increases. Other
non-traditional loan features, such as, pay option ARms,
interest only and underwriting features like “no income” and
“no asset” verification enabled borrowers to “buy now, but
borrow trouble later. “
The gender distribution of subprime rate loans and as a
pattern indicator of mortgage defaults and foreclosures might
have a significant impact on policy discussions at the federal,
state and local level. Single men or women without children
who might have difficulty making mortgage payments is one
thing, but if a large portion of the subprime rate borrowers
are single men or women head of households with children,
the implications of mortgage foreclosures become much
more bleak. Families with children could become homeless.
The 2006 gender distribution of subprime rate loans
show a pattern whereby males without co-applicants and
females without co-applicants (presumably single) had a
higher frequency and higher average spread than males
or females listed as primary borrowers. There is however,
very little disparity between single men and single women
in the percent and average spread on subprime rate loans.
The frequency of subprime rate loans for males without coapplicants
and females without co-applicants was almost
even at 32.60% and 32.21%, respectively. The same is true
for the average spread on loans made to males without coapplicants
and females without co-applicants at 5.23% and
5.24%, respectively.
However, a much wider disparity exists when females were
listed as the primary borrower compared to when men were
listed as primary. The frequency of subprime rate loans with
females as the primary borrower was 29.55% with an average
spread of 5.20%. By contrast, when men were listed as the
primary borrower, the percent of subprime rate loans was
only 18.62% with an average spread of 5.03%. (Table 6)
TABLE 6: GENDER AND 2006 LOANS WITH A SPREAD
Page 19 of 27 The Demographic Impact of the
Subprime Mortgage Meltdown