Beware the Myth

In the Spring 2009 issue of Shelterforce, now available to view online at www.shelterforce.org, Nandinee K. Kutty, an author and economist who works in housing and urban policy worries that […]

In the Spring 2009 issue of Shelterforce, now available to view online at www.shelterforce.org, Nandinee K. Kutty, an author and economist who works in housing and urban policy worries that despite the Homeowner Affordability and Stability Plan and Making Home Affordable, housing discrimination will continue to plague the market, as will the myth that the housing crisis resulted from extending homeownership and home mortgage credit to historically underserved groups.

Kutty argues that “Fair lending is the law,” and “it’s not option or something we practice only when it’s convenient for banks,” and that “we are where we are because of decades of discrimination.”

While those in the Rooflines sphere are likely to agree with her, the story’s overall takeaway is an important one to repeat over and over again because there are myriad external forces working to distract the country with false explanations for the economic meltdown. Kutty refers to the “myth” that lending to so-called irresponsible borrowers caused the crisis and worries that this myth will only make the suddenly-frugal banks tighten their purse strings even more, making loans they’re only “comfortable with,“thus resulting in even more discrimination.

It’s a frightening, but all-too-imaginable scenario, particularly in a time when while we have an administration that understands the collapse of the housing market, there are still very loud, very false voices perpetuating “the myth.”

In her piece, Kutty microscopically examines the history of lending discrimination as well as exploring the various forces that led up to the foreclosure crisis:

There are several places where we can look to find the real culprits in the current economic crisis. They include the decades of housing and lending discrimination that led to the exponential growth in abusive subprime loans; the lack of adequate regulations in the mortgage lending sector; the deregulation in the financial sector including the mortgage lending sector; the failure to enforce existing consumer protection laws; the 2000 law that ensured that credit default swaps would remain unregulated; the 2004 SEC decision to allow the largest brokerage firms to borrow more than 30 times their capital; the unchecked close relations between rating agencies and companies packaging mortgages and selling securities; and the failure of the SEC to oversee the brokerage firms as they got further invested into subprime debt. These are the culprits of the economic crisis.

Related Articles

  • About 25 people in three ragged rows, outdoors under a tree, with houses across the street behind them. They are of mixed ages, genders, and skin tones, and all are smiling. Many hold posterboard signs, some of which read "People Over Profit/Greedy Landlords," "Build Tenant Power," "Support the Bleecker Terrace Tenants Association," and "Capital Crossing/2nd most Code Violations in Albany." Other signs are not legible.

    In Upstate New York, the Fight for Good Cause Continues

    July 12, 2024

    This week, Ithaca became the latest city to opt into New York’s new Good Cause Eviction Law. What are tenant organizers doing to make the law work better for their communities?

  • How Policy Can Help Tenants Purchase Their Homes, a Webinar

    July 3, 2024

    Laws that give tenants the ability to purchase their own apartments are popping up across the country. In this webinar, a panel of folks who have been reporting on, fighting for, and using these policies offer their perspectives on this powerful anti-displacement tool. 

  • TOPA Needs Capital to Succeed

    July 2, 2024

    TOPA helps prevent displacement and build tenant power in D.C. Affordable capital is critical to its success.