Sexuality and FeminityJob Losses Closing Door to Female Homeownership
Heavy job losses in March are raising the specter of more missed mortgage payments. Men suffered the worst unemployment, but women"s personal finances tend to be more precarious, which could put them in the middle of the next foreclosure wave.
Heavy job losses in March are raising the specter of more missed mortgage payments. Men suffered the worst unemployment, but women"s personal finances tend to be more precarious, which could put them in the middle of the next foreclosure wave.
In the face of escalating unemployment--663,000 jobs disappeared in March--financial advocacy groups are bracing for a new wave of housing foreclosures that some expect to hit female owners particularly hard.
"For women with subprime loans, a brief stretch of unemployment can have serious financial repercussions," said Emmett Gross, director of the Milwaukee office of the Washington-based Association of Community Organizations for Reform Now, the nation"s largest community organization of low- and moderate-income families known as ACORN, sponsor of an anti-foreclosure campaign. "Even in good times, both spouses had to work full time, often overtime as well, to meet the payments. For young, single mothers and older women with subprime loans, the loss of a low-wage job can mean that they will never be able to afford to own a home again."
In the week of March 31, the average interest rate on a 30-year-fixed rate mortgage dropped to 4.61 percent, the lowest in a decade, according to the Mortgage Bankers Association. A year ago it was more than 6 percent.
"But the monthly payment might still be too expensive for an unemployed woman," said
Michael van Zalingen, director of homeownership services at the Neighborhood Housing Services of Chicago, a nonprofit organization that creates opportunities for people to live in affordable homes. "This is especially true if the lender has refused to reduce the overall amount of the subprime loan to the current market value of the home. A bill to allow bankruptcy judges to modify mortgages has stalled in the Senate, so more homeowners may lose their properties."
The April 3 employment report by the Bureau of Labor Statistics showed a jobless rate of 8.5 percent in March, the highest level in more than a quarter century.
Since the start of the recession in December 2007 the economy has shed 5.1 million jobs for a total of 13.2 million.
Finances Besieged
Although layoffs have spared more adult women than adult men--the unemployment rate for women was 7 percent compared to 8.8 percent for men in March--the jobs report catalogued the myriad ways in which women"s financial status is under siege.
People who have been jobless for six months or more rose to 3.2 million in March. The number of people who are working part-time because full-time jobs are unavailable increased by 423,000. Employment in retail trade, and state and local government--sectors that employ large numbers of women--lost 59,800 jobs.
In February, 290,631 properties--1 in every 440 residences across the nation--received a foreclosure filing, an increase of nearly 30 percent from February 2008.
The monthly total was 6 percent higher than in January, when the Obama administration began exploring ways to overcome the problem, said RealtyTrac, a research firm in Irvine, Calif.
Many of those facing foreclosure are women.
Although more men than women hold mortgages, a gender analysis of 10 million mortgages in 2007 conducted at the request of Women"s eNews by the Chicago Reporter, an investigative magazine, found female borrowers almost twice as likely to hold subprime loans.
About two-thirds of sub-prime loans have adjustable rates, which, after an introductory period of relatively low rates, increase rapidly, in some cases every few months.
Job loss makes it more difficult to meet the escalating payments, leading to foreclosure.
An analysis of foreclosures among homeowners with subprime loans in Wisconsin from 2000 to 2008 by Professor Russell Kashian, an associate professor of economics at the University of Wisconsin-Whitewater, found that a 1 percent increase in a county"s unemployment rate increased foreclosures by 3 to 9 percent.
"Any Change Spells Trouble"
"Any change in employment spells trouble for women because they generally earn less than do men and have less of a financial cushion," said Gross, of the Milwaukee ACORN office.
"The subprime foreclosure crisis, which began in 2006, is far from over," said Carey Ebert, president of the Washington-based National Association of Consumer Bankruptcy Attorneys, an organization of more than 3,500 lawyers.
African American women have been the hardest hit. The Chicago Reporter"s analysis found that more than 35 percent of mortgages to African American women were high-cost loans, the highest percentage of any race-gender category. The unemployment rate of African American women and men was 13.3 percent in March, compared to 11.4 percent for Hispanics and 7.9 percent for whites.
The severity and breath of job losses in March will test the Obama administration"s plan to help troubled borrowers either refinance their homes or modify their mortgages.
One incentive is a $75 billion carrot to encourage lenders and mortgages servers to modify troubled loans voluntarily by decreasing the interest rate and/or the total amount of the loan. The lender reduces the mortgage to 38 percent of the borrower"s income and the federal government matches additional payments to further limit the monthly payments to 31 percent of a borrower"s income.
However, the monthly payments may still be too high if the lender has refused to reduce the overall amount of the loan to the current market value of the home, a process known as cram down. Many homeowners have had to file for foreclosure despite lower interest rates.
Plan Expands Mortgage Credit
The plan also tries to increase credit available for mortgages in general by giving $200 billion of additional financial backing to mortgage giants Fannie Mae and Freddie Mac.
Another sign of deepening recession was a Labor Department report that showed the total number of workers filing for unemployment compensation jumped to 669,000 the last week of March, setting a record for the 10th straight week. A total of 5.73 million workers are receiving jobless benefits.
Ohio, which had the 10th highest unemployment rate in the nation in February, encourages homeowners to seek help from the state"s foreclosure prevention program before they fall behind in mortgage payments.
Lenders are often wary about renegotiating loans with homeowners whose unemployment compensation is about to expire, said Jennifer Flatter, legislative liaison with the Ohio Department of Commerce, one of the participating agencies.
More than 67,000 residents have received information, counseling and legal assistance since Governor Ted Strickland, a Democrat, established the Save the Dream program in 2007.
States typically provide 26 weeks of unemployment benefits, an average of about $350 a week. In 2008, Congress added 20 extra weeks of benefits in all states and an additional 13 weeks for people in states hardest-hit by unemployment. Many states, however, require full-time work. Employees, most often women, who work part-time because of child and elder care responsibilities often don"t qualify for this lifeline.
Despite the steep job cuts in March, some experts are hoping that unemployment will level off in the second quarter. Challenger, Gray and Christmas, a Chicago outplacement firm, reported April 1 that the number of planned job cuts dropped 19 percent to 150,411 in March from February"s planned job cuts of 186,350. The most recent projection of job cuts was the lowest since October.
Sharon Johnson is a New York freelance writer.
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