Sotomayor Contributed to Mortgage Crisis

I continue my comments on Sonia Sotomayor today by pointing to an article about Sotomayor’s role in the mortgage meltdown (thanks again to Jim Pfaff.)

John Carney writes:

Sonia Sotomayor… served on the board of a New York State agency charged with providing discounted mortgages to middle and low income homebuyers from 1987 to 1992. During the time, she was a consistent advocate of pushing the agency to provide more mortgages to low-income home buyers. In short, she advocated the kind of aggressive lending practices that helped create the mortgage meltdown. …

The agency, which is called SONYMA, is a local version of Fannie Mae and Freddie Mac. It initially provided mortgage insurance to first time homebuyers, mostly on middle-income housing. It expanded into lower-income homebuyers and then into directly buying mortgages in an attempt to push down mortgage rates. During her time on the agency’s board, Sotomayor was a consistent critic of its activities, according to this story in the New York Times. And her critique was always the same: not enough loans were being insured on homes for lower-income and minority buyers.

As Carney notes, while Sotomayor’s participation preceded the major bubble, the sorts of policies she (and many others) advocated led directly to the mortgage crisis.

For a more complete account of how federal policies created the mortgage bubble and subsequent bust, read Thomas Sowell’s The Housing Boom and Bust.