home

Single Women Shut Out

The Housing Scene by by Lew Sichelman
by Lew Sichelman
The Housing Scene | January 8th, 2016

In the 2006 romantic comedy "Failure to Launch," Matthew McConaughey played a 35-year-old man still living at home with his parents and showing little interest in moving out on his own. If that film were made today, it could just as easily be about a woman.

According to an analysis of Census Bureau data by the Pew Research Center, a larger share of young women are living at home with Mom, Dad or other relatives than at any point since the 1940s. That is, 36.4 percent of women ages 18 to 34 resided with family in 2014. (A larger share of young men in that age group -- 42.8 percent -- are living at home. But that percentage does not surpass the highest rates on record like the women's share does.)

"You'd have to go back 74 years to observe similar living arrangements among American young women," says Richard Fry, a senior researcher at the Pew Research Center. "Young men, too, are increasingly living in the same situation, but unlike women, their share hasn't climbed to its level from 1940, the highest year on record." (Comparable data on living arrangements are not available prior to 1940.)

Fry explains the increase by pointing out that today's young women are more likely to be college students, and less likely to be married, than those of earlier generations. Students and singletons are both more likely to live with family.

Some numbers to back up those statements: Today, five times more young women are likely to be enrolled in college than in 1940. And in 2014, 45 percent of female college students lived with family. At the same time, while marriage tends to mean living independently of Mom and Dad, more young women today are delaying marriage than their predecessors. In 2013, only 30 percent of young women were likely to be married, compared with 1940's 62 percent.

But mortgage industry expert Becky Walzak suspects there's more at work here than demographics. She says the home loan approval process still looks down on women. Not overtly, she says, but underwriters still perceive women as "lesser" than men.

Based on her deep-dive read of data collected under the Home Mortgage Disclosure Act, Walzak says women "are less able to meet (underwriting) standards then men." And the process is even harder on black women, who are often the primary applicants on loans to African-Americans.

For one thing, notes Walzak -- a mortgage finance veteran who now operates her own consulting firm -- women are seen as less reliable because they often interrupt their careers for any variety of reasons, but primarily to have children and then care for them.

For another, women aren't usually able to save as much money for a down payment as men. "Their wealth is largely less," she explains of women who've taken time off. "Not just dollars (earned), but when they go from working to not working, any retirement savings that would have been set aside that is based on pay is forfeited. So, depending on how much time they take off, they can be several years behind men."

The mortgage expert also points out that women's spending patterns are often different from men's. Generally speaking, she says, women tend to carry more debt.

Another factor, noted in Fortune magazine, is student debt. Women tend to have a greater albatross around their necks in the form of student debt than men: $20,000 vs $14,000, according to the magazine.

"It's because of these factors that single women are not being approved as often as single men for a loan," says Walzak. "It's not discrimination in any shape or form. But the business needs to figure out how to understand women, how to evaluate them more fairly and then try to do something about it."

Many women's organizations focus on pay equality. And while that's an important issue, Walzak believes that the mortgage sector "has to make it easier for single women heads-of-households to buy homes. Why can't we as an industry figure out some kind of credit policy or new product that meet their needs?"

Meanwhile, according to the National Association of Realtors (NAR), the share of first-time buyers -- men, women and married couples -- among all mortgages declined in 2015 for the third consecutive year. It's now at its lowest point in nearly three decades.

The long-term average shows that first-timers account for almost 40 percent of all primary home purchases. But the rookie share dipped last year to 32 percent -- down from 33 percent in 2014, and the lowest since 1987, when rookies accounted for just 30 percent of sales.

NAR Chief Economist Lawrence Yun calls first-time buyers "the missing link" that's slowing the housing recovery.

"There are several reasons why there should be more first-time buyers, including persistently low mortgage rates, healthy job prospects for the college-educated, and the fact that renting is becoming more unaffordable in many areas," he said. "Unfortunately, there are just as many high hurdles slowing first-time buyers down. Increasing rents and home prices are impeding their ability to save for a down payment, there's scarce inventory for new and existing homes in their price ranges, and it's still too difficult for some to get a mortgage."

home

Short Takes: Reluctant Sellers, Equity Gains, FICO Scores

The Housing Scene by by Lew Sichelman
by Lew Sichelman
The Housing Scene | January 1st, 2016

If you've wondered why more homes are not on the market in your area, especially since would-be buyers are jumping all over themselves to find houses, the latest "homeowner sentiment survey" by Berkshire Hathaway HomeServices could offer some clues.

Some 71 percent of owners polled said real estate seems to be heading in the right direction. But 73 percent of the owners who are considering selling said prices have yet to reach prerecession levels, and 61 percent said queasiness about the economy is keeping them sidelined.

"Though home prices around the country have recovered much of the ground lost during the downturn, 'contemplators' are telling us they want more confidence in the decision to list," said Gino Blefari, CEO of HSF Affiliates (the real estate network to which Berkshire Hathaway HomeServices belongs). "They're also telling us they need more information about their markets, pricing and specific home improvement in order to list."

Only 6 percent of current owners surveyed realized that the current low inventory of houses for sale makes for a seller's market. Even so, many said the shortage holds little meaning to them. The most common reasons for holding off selling? "Waiting for the right opportunity" and "haven't found my ideal home yet."

Here's an interesting tidbit from the National Association of Realtors' latest profile of homebuyers and sellers:

If you bought your house eight to 10 years ago, at the height of the housing recession, you only have around $3,000 in equity to put into your next place. But if you purchased within the last year, in this largely recovered market, you've already accumulated $31,000 in equity, on average.

If you bought two to three years ago, your gain so far is $30,000, again on average. And if you took the plunge four to five years ago, you've made a tidy $35,000.

As they say, timing is everything.

If you determined your credit score using an online portal, chances are you have no clue of your actual creditworthiness, whether you paid a fee or not.

Credit scores are used by most lenders to determine whether you are a good risk. For the most part, they use scores formulated by FICO, an analytics software company. But even within similar groups of lenders, such as mortgage companies, each company might use different scoring algorithms produced by FICO. The FICO formula one lenders uses could very well differ from another's.

But nearly two-thirds of the people polled in a recent study believed they received a true FICO credit score online, when they actually did not. (The study was conducted by independent research firm BAV Consulting.) And 8 out of 10 people said they thought the score they got was the one used by lenders.

The problem is that the mathematical formulas used by each scoring company are unique, and they create credit scores for consumers that are often significantly different from their true FICO scores -- sometimes by 100 points or more.

Such large score discrepancies can lead consumers to over- or underestimate how a lender will view them.

"Because other credit scores look similar to FICO scores, consumers have no way of determining, through the credit score itself, whether or not it's a FICO score," says FICO executive James Wehmann. "Credit scores are unlike other products; the consequences of not recognizing credit scores from different companies can be much more serious. ... If the majority of consumers are confused about these non-FICO credit scores being provided to them, then millions of Americans are likely to be mistaken about their actual creditworthiness."

The good news is that anyone with a consumer credit account has access to his or her true FICO score, for free, through the FICO Score Open Access Program. To learn more, go to fico.com and search for "Open Access."

home

Short Takes: Mortgage Watchdogs, Home Equity and a New Scam

The Housing Scene by by Lew Sichelman
by Lew Sichelman
The Housing Scene | December 25th, 2015

Uncle Sam may or may not be watching you. But if you have a mortgage, your lender could be.

Black Knight Financial Services is an analytical and data firm that has deals with 23 of the top 25 loan originators, and all of the top 25 mortgage servicers. The company recently introduced new software that can reveal any number of things about your personal situation.

If you put your home up for sale, for example, the program can flag your account with your lender or servicer. That way, Black Knight officials said at a recent press briefing, you can be contacted and offered a new loan on your new place -- before you even find it. Or maybe they can allow you to carry your old loan with you to help cover the cost of the new residence.

Another possibility: If you stop paying your recurring monthly bills such as cable, cellphone or utilities, the software will mark your account for the lender, who can call and ask what the company can do to help you out. Lenders know that pretty soon, in such cases, you'll start getting behind on your mortgage; perhaps an offer of help to manage your finances -- say, reworking your mortgage so your monthly payment is lower -- can protect them from losing you to foreclosure.

And how about this: The software will tell lenders and servicers if you place subsequent liens on your property. That way, they'll know if your debt-to-income ratio has exceeded their particular benchmark. If it does, they can start to watch your account very carefully.

Black Knight says it tracks postings 24/7 from 3,000 courthouses nationwide to collect the data to support this scenario.

"If such a program was in place a decade ago, when people took out an 80 percent first mortgage, a 20 percent second mortgage and a 25 percent home equity loan -- all with different lenders who didn't know of the others -- there may not have been a housing recession," a Black Knight spokesman told me.

OVERALL, HOMEOWNERS SITTING PRETTY

While some people always struggle to get into homeownership, folks on the other side of that "velvet rope" have it made, according to Ben Graboske of Black Knight Financial Services.

"If you are a homeowner today, life is good," says Graboske.

As an indication that current owners are in "really good shape," take note that home equity in the last year has grown by $1 trillion nationally, bringing the total to $7.6 trillion. Of that, says Graboske, $4.5 trillion is sitting there ready to be tapped, even with today's super-tight lending standards.

And that's just for the people who have one of today's 30 million active mortgages. There's no telling how much equity mortgage-free owners are sitting on.

According to Graboske, owners are tapping into their equity at great numbers these days. But if that sounds like people are pulling too much money out of their homes, as they did in the run-up to the housing recession that brought the economy to its knees, have no fear.

The average home equity loan taken out by owners is $67,000. But even after that, the average borrower still has 32 percent of their equity left.

Another sign of the strength of the house market: Put the typical primary mortgage and home equity loan together, and the total loan-to-value ratio is a mere 68 percent -- a ratio almost every lender can live with. Better yet, the average credit score of a home equity borrower these days is 782, the "highest on record," says Graboske.

DON'T FALL FOR LATEST DOOR-TO-DOOR SCAM

Your home alarm system may alert you and the authorities about a would-be burglar scratching at your rear window. But it will do nothing to protect you from the latest scam making the rounds these days. In fact, the criminals are taking advantage of alarm systems to get into homes, according to the Federal Trade Commission.

How's that work, you ask? Simple, really. A fake sales agent knocks on your door, claiming he's there to upgrade your system. If you are gullible enough to allow him in -- and many people are, it seems -- he yanks out your system and installs a completely new one. Then he asks you to sign a document, which just happens to be a new contract.

Most people don't know they've been scammed until they get a call from the original home security company -- or until they start receiving bills from two outfits.

If you think you've been had, here's what the consumer watchdog agency says to do:

-- If the salesperson says he works for your current company and that he wants to upgrade your system, or he claims your company has gone out of business and that his firm has taken over their accounts, check his ID. Call your current company using the phone number on the paperwork you already have.

-- It's always safer to say no to salespeople before they enter the house than to ask them to leave once they are inside. So do your due diligence at the door, not in the hall or kitchen. And if they won't leave, call the cops.

-- Always beware of limited-time offers: "today only," for example, or "Act now to protect yourself from crime sprees in your neighborhood." Report such high-pressure tactics directly to the FTC at ftccomplaintassistant.gov.

Next up: More trusted advice from...

  • Bunion Season
  • Poking and Clicking
  • Friends Like Angel
  • How Confident Are You About Retiring?
  • How To Find a Retirement Investment Adviser
  • Volatile Markets Put Personal Planning to the Test
  • Training Techniques
  • Aiding Animal Refugees
  • Contented Cats
UExpressLifeParentingHomePetsHealthAstrologyOdditiesA-Z
AboutContactSubmissionsTerms of ServicePrivacy Policy
©2022 Andrews McMeel Universal