Policy

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.

  • In a city square, perhaps a park, four workers in white protective jumpsuits and wearing masks lift a tent into the back of a garbage truck, while three others look on. Nearby are other tents and jumbled personal belongings, blankets, and clothes. In the foreground, a throw pillow printed with the words "But first, coffee" lies in the dirt.

    Criminalizing Homelessness Doesn’t Work, Study Finds

    July 3, 2025

    The analysis shows that these laws, including bans on sleeping outside, don't reduce homelessness. Why are they on the rise?

  • Close view of parts of a tattered flag. The red and white stripes are seriously frayed and can't be resewn. The blue background is faded in places to a light blue.

    Trump’s Big Ugly Bill Is a Loss for Housing

    July 2, 2025

    The tax bill includes a significant expansion of the Low-Income Housing Tax Credit. However, its other provisions, especially cuts to Medicaid and SNAP, are so harmful that the affordable housing field should not be celebrating.

  • Two very similar apartment buildings side by side fill the frame, with a strip of blue sky above. The one on the left has been renovated and painted a putty color, and looks fresh and clean. The one on the right looks old and dirty and has missing windows and broken masonry.

    What Happens if Trump Kills Section 8?

    June 30, 2025

    The Trump administration wants to nearly halve funding for federal rental assistance and make the states figure out how to distribute what’s left. Tenants, landlords, and housing providers say the fallout would be catastrophic, spiking homelessness and destabilizing communities.