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Mortgages and Women — This Isn’t the 50s!

A recent article in Glamour magazine warns women that even if they are smart and make a lot of money mortgages can get them into trouble. The article tracked the travails of three women who all end up concluding that renting is the way to go and that home ownership was a mistake for them. The idea is that, unlike for men, owning a home means more to women than just an investment — and that emotional response leads us to make silly decisions about real estate and mortgages. Okay, I’m going to throw up now…..

I have a problem with both the conclusions the writer draws and the facts of the piece–there are too many things that don’t make sense. The first example is a woman who makes nearly $100,000 a year, did not get a stated income or sub-prime loan, and had a mortgage payment of about $2300 per month. That is a reasonable housing expense ratio by most underwriting standards. Yet the author decides that the lender’s decision was irresponsible and that it had some duty to save the homeowner from herself.

And there are other details about the story that leave unanswered questions. First, it states that the homeowner’s reason for missing payments was getting bronchitis, then breaking a wrist — but this borrower lives in California, where everyone has state disability insurtance. And she is a nurse, which means she probably has decent medical benefits. Finally, the homeowner bought her property with nothing down but the lender foreclosed anyway–after about a year she owed them over $32,000 in arrearages–equivalent to more than a year of mortgage payments! That’s a long time to have a free roof over your head. And finally, one more fact that smells funny–with no equity the lender doesn’t usually foreclose unless the borrower is completely unable or unwilling to work through a retention plan. Don’t think we got the whole story, just the usual “blame the lender” theme.

The lesson? Don’t believe everything you read, and don’t let a magazine tell you you are incapable of making a smart financial decision.

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