Sonia Sotomayor, Barack Obama’s nominee for a seat on the Supreme Court, 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.
Sotomayor’s tenure on the State of New York Mortgage Agency preceeded the current mortgage crisis by close to two decades, so she can’t be held directly responsible for our current problems. But in many ways, her approach to home ownership mirrored–or perhaps foreshadowed–the policies that led to the housing boom and bust.
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.
To put it differently, Sotomayor seems to have viewed the purpose of the agency as a way of expanding homeownership to groups that were historically under-represented among homeowners. So she wound up fighting battles against those who thought that SONYMA should be mainly about reducing the cost of mortgages for the middle class.
In the end, Sotomayor’s view became national policy. Expanded homeownership beat out competeing visions of the purpose of government mortgage assistance, to disastrous effects. Sotomayor was just ahead of her time.