So, in essence, begins "Busted: Life Inside the Great Mortgage Meltdown," by New York Times economics reporter Edmund Andrews. The entire book is succinctly summed up by its first sentence: "If there is anybody who should have avoided the mortgage catastrophe, it is me."
Andrews goes on to inform the reader that he has covered the economy journalistically, including the Asian and Russian recession of the 1990s, the dot-com bomb of 2000, and the goings on at the Federal Reserve since 2003. Yet in 2004 he "joined millions of otherwise sane Americans in what we now know was a catastrophic binge on overpriced real estate and reckless mortgages."
"Busted," from the title on through to the last chapter, "God Save Us All," does tend toward hyperbolic extremes in both its choices of verbiage and its placing of blame equally on the shoulders of consumers and the banking industry. But perhaps that is appropriate, for a book about the extreme irony of an economics reporter who actually penned several stories in 2004 about the dangers of easy mortgage lending.
Some might argue, myself included, that we American real estate consumers — myself included again — should all be issuing a collective "my bad" for the role our own unsustainable mortgage decision-making and willful suspension of disbelief as to the what-goes-up-must-come-down reality of skyrocketing home values.
Andrews agrees, but assumes super-duper responsibility for his personal mortgage screw-ups, given that he was so close to the center of the mortgage universe that Andrews actually had the occasion to spill the details of his personal mortgage meltdown to former Fed Chairman Alan Greenspan in a face-to-face meeting.
"Busted" is a retelling of Andrews’ personal tale of mortgage woe, which, like most mortgage melodramas, arose more from the events and characters involved in the hard-up homeowner’s personal life than any massive financial cataclysm. Andrews didn’t get laid off. He got divorced, and then he got remarried.
His divorce diverted about half of his income to spousal and child support. But he felt the need to kickstart his new life by installing his new wife and their blended set of children in a "stately brick home" that cost him nearly half a million dollars, despite the hit he’d taken to his income and the fact that his new wife was unemployed.
Andrews acknowledges that the home purchase was illogical, but notes how easy it was to make such a gamble, aided by a "don’t ask, don’t tell" loan in which neither his massive family support obligations nor his wife’s lack of income were even asked about by the lender, much less disclosed by Andrews, the borrower.
He goes so far as to call the purchase "a gamble" that he took because "the money was there, and I was in love."
So starts the mortgage memoir. And it goes on to relate the events of Andrews’ troubled new marriage (money problems) and troubled new mortgage (made seemingly better, but eventually worse by a couple of refis intended to manage escalating credit-card payments.
Andrews excels at using sober hindsight to illuminate the strange logic and true costs of the mortgage manipulations and debt gyrations that seemed so shrewd and commonplace just a couple of years ago. …CONTINUED