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Edmund Andrews writes about his credit crisis
May 14, 2009 6:03 PM   Subscribe

My Personal Credit Crisis. By Edmund Andrews, economics reporter for the New York Times. I felt foolish, ashamed and angry.... Why had I been trying to live a lifestyle that I couldn’t afford? Why had I tried to keep up the image of a conventional suburban family man, when nothing about my situation was conventional? How could I have glossed over the fact that we had been spending about $3,000 more than we were earning, month after month after month? How could a person who wrote about economics for a living fall into the kind of credit-card trap that consumer groups had warned about for years? Via Brad DeLong.
posted by russilwvong (203 comments total) 33 users marked this as a favorite

 
> As for me, I had two utterly compelling reasons for taking the plunge: the money was there, and I was in love.

Sure, blame everything on women and money.
posted by The Card Cheat at 6:07 PM on May 14, 2009 [3 favorites]


How could a person who wrote about economics for a living fall into the kind of credit-card trap that consumer groups had warned about for years?

May I be the first to offer the theory that most of the people who write about economics for a living have been deluding themselves and their audiences for many years and this just provides an obvious example?
posted by wendell at 6:09 PM on May 14, 2009 [83 favorites]


That was great, though I was hoping for this Women and Money myself.

As for Mr Andrews, I'm sure a great many Americans would like to be in a position where they could "accidentally" spend an extra $3000 per month "without noticing."
posted by rokusan at 6:10 PM on May 14, 2009 [4 favorites]


I think you got it, Wendell. "People who write about economics" are the chiropractors of reporting.
posted by rokusan at 6:10 PM on May 14, 2009 [11 favorites]


Is this the line for the schadenfreude?
posted by Joe Beese at 6:12 PM on May 14, 2009 [13 favorites]


> Edmund L. Andrews is an economics reporter for The Times.

Those who can't don't do know, teach report.
posted by you just lost the game at 6:22 PM on May 14, 2009 [1 favorite]


I look at something like this, and I think "Gosh, I could've qualified for a $500,000 house then too. And now he's gone eight months without making a payment and yet they still have their house?"

I guess I was the dumb one for buying something I could afford and staying there.
posted by mr_crash_davis mark II: Jazz Odyssey at 6:24 PM on May 14, 2009 [23 favorites]


I started reading this article hoping that it would make me more sympathetic toward people who found themselves in similar situations.

As I walked out of the settlement office with my loan papers, I couldn’t shake the sense of having just done something bad . . . but also kind of cool.

Hasn't worked as well as I'd hoped.
posted by box at 6:24 PM on May 14, 2009 [6 favorites]



Sure, blame everything on women and money.


I believe there is a school of thought that posits that life ain't nothing but.
posted by louche mustachio at 6:25 PM on May 14, 2009 [20 favorites]


Yeah, but it's a school of thought that has pretty much been discredited. A few years later, the author of its most famous maxim produced a revised version.
posted by box at 6:31 PM on May 14, 2009


Is this the line for the schadenfreude?

No, that line starts right here, but you're going to have one hell of a long wait.
posted by metagnathous at 6:33 PM on May 14, 2009 [4 favorites]


Eponysterical.
posted by Decimask at 6:33 PM on May 14, 2009


(Oops--here's a dirty version, for the benefit of people who read mortgage crisis threads for the Ice Cube links.)
posted by box at 6:34 PM on May 14, 2009 [3 favorites]


Why exactly am I supposed to feel guilty about this situation? You did something outrageously stupid, and it's fucked up your life. This happens every day of the week down in the ghetto, but somehow that doesn't make headlines quite as often. But because you're a NYT reporter with upper-middle class pretensions, this is a catastrophe.

Why should I be at all concerned that you're losing your home? I don't own one and probably won't for at least ten years. The math here seems to be that if you do the responsible thing you win the privilege of bailing out the people who fucked up. So basically you're asking me to mortgage my future, my childrens' future, and probably even my grandchildrens' futures to pay for this kind of folly.

Why, in short, am I not supposed to tell you to fuck off? Because I'm having a lot of trouble seeing the downside.
posted by valkyryn at 6:34 PM on May 14, 2009 [30 favorites]


The frosted-crystal shade on a beloved Italian floor lamp was cracked. The dog had gnawed the leg on her Biedermeier chair.

Diddums.
posted by dydecker at 6:36 PM on May 14, 2009 [7 favorites]


I've read through this article twice now, and the self-deception ("I just thought I could beat the odds"), logical fallacies ("If you always paid your debts on time before, the theory went, you would probably keep paying on time in the future"), ignored warning bells ("Yet for all that, I was stunned at how much money people were willing to throw at me"), misinformation that could have been debunked with one simple Google seach ("Don’t worry...The value of your house will be higher in five years") and flat-out horseshit ("I am here to enable dreams") is truly staggering. It's like a print version of Bad Idea Jeans.
posted by The Card Cheat at 6:36 PM on May 14, 2009 [9 favorites]


But because you're a NYT reporter with upper-middle class pretensions, this is a catastrophe you can write a book about it and pay it off that way:

Edmund L. Andrews is an economics reporter for The Times and the author of “Busted: Life Inside the Great Mortgage Meltdown,” which will be published next month by W.W. Norton and from which this article is adapted.
posted by nangua at 6:41 PM on May 14, 2009 [5 favorites]


> I was beginning to wonder whether she had any clue about how money worked.

Oh shit...COMEDY GOLD. I haven't laughed that hard in weeks. Cast no stones, buddy.
posted by Stonewall Jackson at 6:42 PM on May 14, 2009 [8 favorites]


Why exactly am I supposed to feel guilty about this situation? You did something outrageously stupid, and it's fucked up your life. ... Why should I be at all concerned that you're losing your home? I don't own one and probably won't for at least ten years. The math here seems to be that if you do the responsible thing you win the privilege of bailing out the people who fucked up. So basically you're asking me to mortgage my future, my childrens' future, and probably even my grandchildrens' futures to pay for this kind of folly.

OK, OK, Rick Santelli.

I actually think this was a pretty honest, candid article, and I don't see where its author asks you to feel guilty, or where he attempts to deny responsibility for what he did. If you're so completely certain that you'd be immune to making similarly foolish decisions in a climate where everyone around you was encouraging you to make them, you're a better person than me. (Or deluding yourself.)
posted by game warden to the events rhino at 6:44 PM on May 14, 2009 [18 favorites]


The guy made some boo boos, but:

The only problem was money. Having separated from my wife of 21 years, who had physical custody of our sons, I was handing over $4,000 a month in alimony and child-support payments.

You do what? This guy is forced to hand over two thirds of his take home pay to his ex-wife? No wonder he's in trouble! His gross income must work out to about $110k (based on $6.6kish take home per month), so buying a $300k property was hardly unrealistic for the income, yet his resources were being hammered by an incapacitating alimony settlement.
posted by wackybrit at 6:48 PM on May 14, 2009 [4 favorites]


The only problem was money. Having separated from my wife of 21 years, who had physical custody of our sons, I was handing over $4,000 a month in alimony and child-support payments. That left me with take-home pay of $2,777, barely enough to make ends meet in a one-bedroom rental apartment.

On top of buying a house with an inflated price because of cheap money, which he qualified for.
posted by Brian B. at 6:50 PM on May 14, 2009


I think you got it, Wendell. "People who write about economics" are the chiropractors of reporting.

Agreed about the financial writers, but as someone who has been helped immensely by a chiropractor, let's change that to something truly useless. Like Drug Czar. Financial writers are like the Drug Czars of reporting.
posted by zardoz at 6:51 PM on May 14, 2009 [2 favorites]


This is supposed to make me hate this guy, right?
posted by dead cousin ted at 6:51 PM on May 14, 2009 [1 favorite]


box: "for the benefit of people who read mortgage crisis threads for the Ice Cube links."

total derail... but I can't resist...

He was on Frrrresh Air, promoting something or other, and Terry Gross asked him, in the whitest way possible, "Is your name pronounced ice-CUBE? Or is it ICE-cube?" And my man said, "I'ma have to meditate on that one."

posted by Joe Beese at 6:53 PM on May 14, 2009 [47 favorites]


this story is a great metaphor as to why the fourth estate is in the process of collapse.
posted by localhuman at 6:55 PM on May 14, 2009 [6 favorites]


How could I have glossed over the fact that we had been spending about $3,000 more than we were earning, month after month after month?

Because you're self-indulgent and kind of stupid?
posted by orange swan at 6:55 PM on May 14, 2009 [7 favorites]


Man. Fuck love if it means buying property I can't afford. Why do I know so many people who have gone broke buying a house with their significant other? It's such a symbolic "we're doing this to start a life together" decision that has nothing at all to do with any practicality.

Actually, fuck homebuying altogether. I'd rather rent and save the rest of my money.
posted by Afroblanco at 6:55 PM on May 14, 2009 [3 favorites]


Probably just because I'm going through the process of home-buying again right now, but I couldn't bring myself to read the whole thing. The second time he calls up his broker and the broker comes up with a plan involving a 'nasty mortgage' ... I bailed.

But I agree with the game warden.
posted by These Premises Are Alarmed at 6:58 PM on May 14, 2009 [1 favorite]


> Why do I know so many people who have gone broke buying a house with their significant other?

Watch this and feel your blood run cold.
posted by you just lost the game at 6:59 PM on May 14, 2009 [36 favorites]


The Money Pit? Man, that gave me nightmares for years.
posted by box at 7:00 PM on May 14, 2009 [1 favorite]


Having separated from my wife of 21 years, who had physical custody of our sons, I was handing over $4,000 a month in alimony and child-support payments. That left me with take-home pay of $2,777, barely enough to make ends meet in a one-bedroom rental apartment.

My god, does this really happen? They take away 60% of your monthly income?! Holy shit. Fuck marriage altogether.
posted by Afroblanco at 7:01 PM on May 14, 2009 [12 favorites]


My god, does this really happen? They take away 60% of your monthly income?! Holy shit. Fuck marriage altogether.

Sometimes, kinda, yeah.

Better be sure.
posted by spirit72 at 7:08 PM on May 14, 2009 [1 favorite]


Yeah, his old wife is getting $4000 a month plus a house - no wonder his new wife is pissed off she has to work to pay for it
posted by dydecker at 7:09 PM on May 14, 2009


So, the guy walks out of his mortgage lenders office with a $2500 monthly payment, a net take-home pay of $2777, and an unemployed spouse, and he thinks he's getting away with something? Fuuuuuuuuuuck.
posted by zinfandel at 7:10 PM on May 14, 2009 [6 favorites]


My god, does this really happen? They take away 60% of your monthly income?! Holy shit. Fuck marriage altogether.

This is what a prenup is for.
posted by stavrogin at 7:11 PM on May 14, 2009


Good grief. I've read the article. Nowhere in this man's account buying a house and getting the financing for it is there any mention of him and his wife sitting down and working out a budget to figure out if they could manage to carry the house they wanted to buy.

I don't know why I ever read these articles about how people got into trouble financially through mismangement. There's never anything new to be learned from such an account and they just piss me off.
posted by orange swan at 7:12 PM on May 14, 2009 [1 favorite]


He was left with a take-home pay that was roughly $2777 more than a lot of people are making right now. Fuck him.
posted by five fresh fish at 7:13 PM on May 14, 2009 [2 favorites]


My god, does this really happen? They take away 60% of your monthly income?! Holy shit. Fuck marriage altogether.

The majority of that is almost certainly the child support for two sons, of whom the wife apparently has primary custody and pays all child-related expenses. Without the kids the alimony would almost certainly be less than half.
posted by fatbird at 7:15 PM on May 14, 2009


spirit72: "Better be sure."

Marriage is either the most comforting or most punishing of human institutions.

Choose wisely.
posted by Joe Beese at 7:17 PM on May 14, 2009 [5 favorites]


So much hate here. The NYT reporter isn't asking for sympathy. He's not stupid, in retrospect, about the situation he's in. It's brutal and honest and direct and it sent chills down my spine in that "it could happen to me or someone I love" kind of way.

He does a great job expressing the craziness of the mid 2000s mortgage market. No one else was going to say he couldn't borrow $500,000, if he wanted it, it's his. And here's this nice mortgage broker practically handing you the money, why wouldn't you take it? It's ultimately a failure of personal responsibility, of course, but the financial system sure encouraged it.
posted by Nelson at 7:19 PM on May 14, 2009 [11 favorites]


My god, does this really happen? They take away 60% of your monthly income?! Holy shit. Fuck marriage altogether.

The majority of that is almost certainly the child support for two sons, of whom the wife apparently has primary custody and pays all child-related expenses. Without the kids the alimony would almost certainly be less than half.


I'd like to add that portion that's alimony is almost surely temporary until his ex-wife can get a decent job. Having one spouse stay home with the kids is a financial risk that both people in the marriage take, not just the one who stays home. (I'm assuming that if his ex had a decent salary herself, he'd pay child support only. Correct me if I'm wrong.)
posted by zinfandel at 7:23 PM on May 14, 2009 [1 favorite]


...I was handing over $4,000 a month in alimony and child-support payments. That left me with take-home pay of $2,777...
On a $120,000 salary, that means he has absolutely nothing deducted for retirement savings or any sort of 401k plan, either. This guy seems a little challenged where finances are involved.
posted by Robin Kestrel at 7:23 PM on May 14, 2009 [1 favorite]


I am still so grateful that the house my ex and I bought a few years before we split was the cheapest decent place we could get in this city, with a mortgage small enough for either one of us to carry on one income. (The mortgage broker was aghast at our restraint.) At that time, I was thinking that meant "if either of us is unemployed for a long time." Now I'm not all that sure what he was thinking.

(For those following along: no pre-nup, I made a deal for his share of equity and got title, and there are no alimony payments on either side.)

As far as this guy's story goes: he's honest, I'll give him that, but this seems like yet more evidence that smart people are very good at fooling themselves. If you're reasonably bright and well-educated, it always seems that you'll find a way to get over any apparently transient economic problem. The trust of financial institutions goes a long way toward feeding that delusion, too.
posted by rosebuddy at 7:27 PM on May 14, 2009 [3 favorites]


Heh. I always felt like home buying was some kind of huge scam during the boom years. Not like I had enough money for one at the time to buy one, though (although given what I know now I'm sure I could have gotten a mortgage and paid it each month, but that would mean having ZERO savings)
posted by delmoi at 7:37 PM on May 14, 2009


> And here's this nice mortgage broker practically handing you the money, why wouldn't you take it?

Speaking as someone who looked into the idea of buying a house when the market was at its peak, with everyone from my parents to our friends urging us to buy, part of the reason my wife and I got suspicious and decided against it was because various institutions were so eager to "give" us money. I've nothing against home ownership - it seems to be working out pretty well for my homeowner friends, and if I lived in a city where I could actually afford it, hell yes I'd buy one - but, as always, if something seems too good to be true, it almost certainly us.
posted by The Card Cheat at 7:38 PM on May 14, 2009 [2 favorites]


So much hate here. The NYT reporter isn't asking for sympathy. He's not stupid, in retrospect, about the situation he's in.

Ughh. It was 2005 when I knew the housing market was overpriced. Having worked in the construction industry during college summers around that time, it was obvious to me and all my bosses that This Would Not Last. People who were in tune with what was going on were not fooled: a disaster is much more noticeable to those on the breaking edge of it as compared to those who are in suburban NY writing econ articles.

He took a loan based on the premise that an already inflated home value would go up even more. He did this not as an un-informed consumer, but as an effing NYT economics reporter. I would actually rather have my old bosses as reporters on the economy rather than this guy, because I think they probably have a better grip on the reality of things.

//wrote more, redacted.
posted by localhuman at 7:40 PM on May 14, 2009 [6 favorites]


Okay, personal story time... I had just finished reading this article and getting my schadenfruede good and cold earlier this evening when my phone rang. I initially thought it was my bank guy calling, as I'd called him last week, before the CD, made entirely out of wedding gift money was due to expire. Actually, it was someone who worked with him, trying to get me to decide what I wanted to do with the money. He laid out the CD options (ugh, 12 month terms for shit) and money market accounts, each with a little interest rate bonus attached for being a loyal customer. Great. I write down all the numbers etc, explain that I'm really risk averse and only use these financial tools to hedge against inflation etc, until we decide what we want to do with the money. I'll get back to him on what I decide within the next day or so.
"so you said you're risk averse" the bank guy says. "no, I'm highly risk adverse". I say. "have you considered an equity CD hybrid?" No, what's that? "it's a CD that's a 5 year locked in variable rate return, not FDIC insured, linked to the S & P 500."
Then I got a little terse in stating that I did not want my money to have any connection to the monkeys on wall street, and that I wasn't particularly happy about it being remotely goverened by the fed etc. etc. AND HE STILL TRIES TO SELL ME on it. It was so orthogonal to they way I think about savings, it just hurt my brain explaining it.
20 minutes after I got off the phone with him I realized... he either didn't know what adverse meant, or he didn't know what risk meant.
posted by Cold Lurkey at 7:41 PM on May 14, 2009 [21 favorites]


. . .as compared to those who are in suburban NY writing econ articles.

Just fyi Silver Spring, MD, is outside of Washington, DC.
posted by mlis at 7:50 PM on May 14, 2009


> And here's this nice mortgage broker practically handing you the money, why wouldn't you take it?

Because when you borrow money, you have to pay even more of it back? When you invest your money in anything other than an FDIC insured bank*, there's a chance that the money, or at least some portion of it, ain't coming back. Yet most people don't seem to make even the most rudimentary of expected value calculations.

Using a large portion of your assets to purchase a house is no different than taking all of your money and investing it in any other financial instrument. While the probabilities of that instrument failing vary greatly whether it's a house, stock, bond, etc., it's always above zero.

There are far too many people that either don't understand this or understand the risks and do it anyway. I don't really feel bad for either of these cases.

*Technically even this has some non-zero probability of failure, but if the government is defaulting on bank insurance, you've got larger problems to deal with.
posted by christonabike at 7:50 PM on May 14, 2009


> I would actually rather have my old bosses as reporters on the economy rather than this guy

Quoted for truth. I mean, the title of this article should actually be "I Really Suck At My Job." The best part is how it leads off;

"If there was anybody who should have avoided the mortgage catastrophe, it was I. As an economics reporter for The New York Times..."

Like we're supposed to snap to attention and salute as soon as he says "The New York Times." Yeah, great job on the oversight there, guys.
posted by you just lost the game at 7:50 PM on May 14, 2009 [2 favorites]


I had to check that this Mortgage broker wasn't the same who handled our suburban Maryland mortgage, because the lines were very much the same. No worries about our low income. Tack on a second mortgage to avoid the big down payment. Don't worry about the ARM and balloon payment, because you'll be able to refinance before it comes due. When the real estate market was booming, you feel like a fool to continue paying money to a landlord. And who doesn't want a bigger place for the new baby?

Within a year we were drowning, not realizing the many little ways in which a new home and a new baby would eat into our income, and there was no cushion with two mortgages to pay. At least we have a better ending, deciding to sell and move away when our 2nd child was born. Lucky us, it was the summer of 2005 and prices were still high. If we'd stayed, the rate would have adjusted this year, and given that recent sales in the neighborhood show 5 bank owned properties, and prices lower than what we paid, I'm guessing that "no problem" refinance wouldn't materialize.
posted by saffry at 7:51 PM on May 14, 2009 [4 favorites]


He took a loan based on the premise that an already inflated home value would go up even more. He did this not as an un-informed consumer, but as an effing NYT economics reporter. I would actually rather have my old bosses as reporters on the economy rather than this guy, because I think they probably have a better grip on the reality of things.

As he says, not only was he their columnist, but he'd written articles on the housing bubble.

Sympathy is unwarranted, but understanding isn't. I'm reminded of what one columnist wrote about Bernie Madoff, in response to the question "how could all of Wall St. not know that he was running a Ponzi scheme? That there was something dirty going on with his perfectly consistent returns?" The answer was that they did know, and they thought that they could get in and get out before the music stopped. They were gambling, and Andrews acknowledges that he was gambling too--successfully, as it turned out, since everything survived long enough for him to take out an ugly mortgage to cover credit card debt and then refinance into a safe monthly payment.
posted by fatbird at 7:54 PM on May 14, 2009


As someone who has made a quasi-career of spending beyond the means, I can relate in a way. However, I have no one to blame except meself. I can't blame the mortgage broker for giving me the loan, the credit card company for extending me the credit, the grocery store letting me run the tab, etc. Ultimately, I made the choice. Personal fiscal accountability: to take a look at the incoming cash and the outgoing spend.
posted by mnb64 at 8:05 PM on May 14, 2009 [3 favorites]


There's the rub, Cold Lurkey. These are salesmen, not experts. They will twiddle and jiggle whatever terms they can to get you to buy their highest-margin product, and more often than not, don't even realize how badly they're about to fuck you over. They don't understand what they're selling, they only understand this has more commission attached to it than that, and to meet their quota, they have fucked you up the ass sidewise with a samurai sword.

These people aren't hired based on their knowledge of financial instruments and investing practice. They're hired because they're glad handers, they make the customers feel good, and can sell a ketchup popsicle to a woman with white gloves. They don't care what they sell or how they sell it, so long as it earns them a ton of money.
posted by Slap*Happy at 8:06 PM on May 14, 2009 [6 favorites]


refinance into a safe monthly payment

Except he hasn't made that payment in eight months. Which, by the way, if you ever find yourself in this situation, the advice seems to be this: If you know you're going to stop paying on your mortgage (ie, you can see that no matter what in three months or whatever you're going to be unable to keep paying) stop paying ASAP, and then stay in the house as long as humanly possible. That lag period will give you an opportunity to build up enough savings to pay the deposit/have a bit in the bank for your next home, a rental.
posted by maxwelton at 8:08 PM on May 14, 2009 [1 favorite]


BTW, doesn't anybody remember Casey Serin? Or are so many people facing foreclosure now that he's no longer special?
posted by Afroblanco at 8:08 PM on May 14, 2009 [1 favorite]


If there was anybody who should have avoided the mortgage catastrophe, it was I. As an economics reporter for The New York Times...

Leaving aside economics, he's a reporter at the NYT and he doesn't know that sentence should end, "it was ME?"

Jesus.
posted by drjimmy11 at 8:17 PM on May 14, 2009 [7 favorites]


I'm 31, single, and making a modest living as a university lecturer, visual artist and occasional truck driver. While I have no problem living within my means, I have plenty of student loans to pay down and credit card debt held over from grad school. I'll probably never make much more money than I do now. Saving is difficult. Home ownership seems like a distant fantasy.

It's all okay because I have nobody else depending on my income. Still, I'd love to have a family someday, and to be able to provide a life that some woman, somewhere, might want to be a part of.

I think under the right circumstances I could easily have been talked into a sketchy mortgage.
posted by ducky l'orange at 8:24 PM on May 14, 2009 [6 favorites]


This is like one of those riveting and horrifying "true life" junkie memoirs. It starts out reasonably enough, a personable voice, a backstory you can relate to. But all of a sudden the narrator's like, "So then I injected the heroin into my eyeball," and you're like, wait a second, what the fucking fuck? What were you thinking?
posted by bookish at 8:38 PM on May 14, 2009 [18 favorites]


I used to be kind of bad with money, in a small stupid college/early 20s way, and I used to date someone who was bad with money in ways that, it now occurs to me, were extremely and eerily similar to those of Andrews. Reading this makes me more glad than ever that I am far away from both of those things now. I don't exactly sympathize with Andrews, but I do give him props for honesty. Sure, it's easier to be honest when you have a book deal, but it's never entirely easy.

Of course, allowing Andrews the grace of being only human does cut significantly into one's ability to feel morally superior to him.
posted by newrambler at 8:46 PM on May 14, 2009 [1 favorite]


None are so blind as those who will not see.
posted by five fresh fish at 8:51 PM on May 14, 2009 [1 favorite]



This is like one of those riveting and horrifying "true life" junkie memoirs.



So, are debt-sorrow stories going to replace addiction memoirs as the main way upper-middle class people get people to feel sorry for them? Damn.

Anyway, at least he's in a better position than Balzac. He had a 15-year romance-by-letter with a married Polish noblewoman. When her husband died, Balzac nearly killed himself raising enough money to build a dream house for them to live in. She came to Paris, married him, and was completely indifferent and hostile to him. He was completely crushed and died 5 months later Rumor says i he died of caffeine poisoning from drinking tens of cups of coffee so he could write all night and fiance the building of the house.

Also, he wrote in a white robe.
posted by The Whelk at 8:57 PM on May 14, 2009 [13 favorites]


Wow, there are so many typos in my last comment that I'm actually kind of impressed.
posted by The Whelk at 8:58 PM on May 14, 2009 [6 favorites]


I've heard the caffeine overdose story and always wondered if it was true...(and I heard it was 50 cups of coffee....really!!)
posted by supermedusa at 9:00 PM on May 14, 2009


Seconding maxwelton's advice. I had a friend who suffered a messy divorce and ran into problems paying his mortgage. When he contacted them to try and reach an agreement, he was told there's nothing they could do until he missed a payment (they explicitly stated that they couldn't legally tell him to skip a payment, but there's nothing they could do until he was at least 30 days late).

Maybe things have changed now, but the lesson then (18 months ago?) was to stop payment as soon as you realized you weren't going to be able to pay down the road. Not only does it give you a bit of savings if you need to find someplace else to live, but it's also the fastest way to getting the mortgage holder to work with you and avoid the foreclosure.
posted by ShadowCrash at 9:02 PM on May 14, 2009


doesn't anybody remember Casey Serin?

I can divide my understanding of Pre-Casey Serin and Post-Casey Serin, whose story hit the housing blogs in September 2006.

Before then I bought the line that there was some froth in some markets but the retrenchment would be mild, or maybe at worst like the early 90s pullback (which wasn't so mild in some markets).

After learning that a total schmuck could take out $2.1M in loans to buy 8 properties just on his signature, and integrating that with the sheer number of flippers active in 2004-2006, I knew the party was going to be over and a Japan-style collapse was coming.

Shoulda shorted every lender that lent to Serin. They, or their parent companies, all went to $0.
posted by toroi at 9:04 PM on May 14, 2009


Now wait a minute. I live in a log cabin on 15 acres in the Rockies of north Idaho.

For years, I have resisted the well intentioned advice of others to "leverage." In those years I have divorced, put 3 kids through college and taken a $20k pay cut.

I sleep well every night. I read this article and reached for a Xanax by the end. He didn't invest in hedge funds, day trade, or play derivatives. All he did was work his ass off and try to provide for his family. He "bought" the conventional wisdom that has flooded my mailbox for years and the blogs, and everywhere else. I was a "contrarian."

Does that make me "smarter" than he? I don't think so.

We have reached the point where "schadenfreude" can include members of every family. I have looked through mountains of magazines, watched "This Old House," and wondered why I don't have granite counter tops Mexican tile, yadda yadda. I surely could have done it had I "leveraged."

No, I feel for the guy. It gives me no great pleasure that I sleep peacefully and he has a pit in his stomach, waiting for the ax to fall.

I am fortunate that my surroundings include people who have no indoor plumbing. On the other hand, the past ten years has seen 100's of million dollar mountain 5,000 sq ft "retreats" built by out of state (California) money. All have dignity.

I don't see that this guy did anything wrong. Except to buy into what was the conventional wisdom of the time. For many years I was "sub genius" by not being fruitful and multiplying. Now I am a genius because I didn't. All I did was avoid variable APR loans. I did see the writing on the wall. I could be living in luxury. Everyone in the world wanted to "give" me money because I had an 800 credit score.

No, very decent, smart, hard working people are in deep shit these days. It does not make me feel good that I'm not. For so many years I was "dumb." Now I'm smart? All I have is the same funky cabin and elk tearing up my garden. Never had the granite counters, Viking Range, sprawling decks, etc. Could have. And it was very difficult going against the "grain" of the time. "You only have ONE bathroom?"

I just hope the millions facing this shit can find happiness in a "downsized" life. If I'd had it, I can only imagine the blow to self esteem. I have many highly educated urban friends facing the same thing. It hurts to witness.

Most did not make "reckless" decisions. Everyone else was doing it. Climbing higher and higher. More, more, more. Not Donald Trump more (ugh) but just better. The financial industry provided the means and the persuasion. The Fed followed suit. I felt dumb because I didn't have twice what I do.. Shit, I kept half my IRA in CD's! Who does that?

There are surely people who played their financial lives like a casino. But there are others Like this guy, who merely tried to provide a "decent" life for their family. Who could well afford their devalued homes now, at a decent interest rate. Let all the financial geniuses raise their hand. And make the newest infomercial.
posted by private_idaho at 9:09 PM on May 14, 2009 [31 favorites]


Am I supposed to feel dumb or smart for sticking to choices I could afford and performing basic risk assessment?
posted by mazola at 9:09 PM on May 14, 2009 [4 favorites]


You marry someone who has never had a job on the assumption that she will magically find one a cut above service industry to help you cover your mortgage payments.

There's a lot of stupid here, but that takes the cake.

I'm one of those worry-warts who'd like to start a family some day but not without a significant financial cushion for house and college payments. And I'm supposed to bail out all of these assholes who couldn't be bothered to act like adults?

/bitter
posted by bardic at 9:11 PM on May 14, 2009 [3 favorites]


I don't see that this guy did anything wrong. Except to buy into what was the conventional wisdom of the time.

As a financial reporter, it was ostensibly this guy's job to figure out that "the conventional wisdom of the time" was FUCKING INSANITY.
posted by Stonewall Jackson at 9:18 PM on May 14, 2009 [4 favorites]


I don't see that this guy did anything wrong. Except to buy into what was the conventional wisdom of the time

Not just "of the time", but of modern economics, which was designed to totally elide the central importance of land as a form of capital distinct from financial and physical capital.

The best-selling non-fiction book of the 19th century was Henry George's "Progress & Poverty", which laid out how & why the more productive a society gets the poorer it can become. In response to the burgeoning politcal movement of the Single Taxers who sought to tax land wealth more, neo-classical economics was created & funded by the rentiers and they soon seized the high ground of the Establishment.

Reduce mortgage down payments from 50% to 20%? Home prices go up.
Start qualifying borrowers based on total household income? Home prices go up.
Mortgage rates go down? Home prices go up.
Baby boomers boosting household formation rates? Home prices go up.
Allow mortgage and property tax deductions? Home prices go up.
Productivity increases result in wage gains? Home prices go up.
Cut income taxes across the board? Home prices go up.
Allow piggyback 80/20 financing? Home prices go up.
Allow non-amortizating balloon/negative-am loans? Home prices go up.
Abandon debt-to-income limits by allowing stated income liar loans? Home prices go up.

The above list is basically a recap of the last 60 years of the property market.
posted by toroi at 9:27 PM on May 14, 2009 [8 favorites]


May I be the first to offer the theory that most of the people who write about economics for a living have been deluding themselves and their audiences for many years and this just provides an obvious example?

Much as I tend to agree in the general sense, there were exceptions, and these were the people who were warning that the system was headed for a fall. And naturally, people ignored them.

For instance, I'm currently listening to an NPR interview with Gillian Tett, who was warning about problems with the derivatives market years ago.

White doesn't change the fact that the reporters that got the most publicity were the ones who bought into the hype.
posted by happyroach at 9:37 PM on May 14, 2009


speaking of economists featured in the upcoming NY Times Magazine "debt" issue:

MYRON SCHOLES
is still "giving talks around the world and running a hedge fund."
posted by Hammond Rye at 9:44 PM on May 14, 2009 [2 favorites]


>he doesn't know that sentence should end, "it was ME?"

This stopped bugging me after I imagined him saying "It was I!" with great emphasis, and then tossing the edge of a shiny cape over his shoulder.
posted by darth_tedious at 10:05 PM on May 14, 2009 [8 favorites]


It does feel like someone who's crashed and burned at personal finance shouldn't be allowed to write as an economics reporter. I mean, you wouldn't take your car to a mechanic who was in a horrible accident because he failed to maintain his own brakes, right?

That being said, it does seem like 90% of the guy's problem is that horrible ruinous alimony/child support payment. They're really giving his ex and children everything and throwing him the scraps, which is pretty unfair (and I especially hate alimony, which has almost no place in a world with gender equality and is never applied fairly.)
posted by Mitrovarr at 10:17 PM on May 14, 2009 [1 favorite]


"Using a large portion of your assets to purchase a house is no different than taking all of your money and investing it in any other financial instrument. While the probabilities of that instrument failing vary greatly whether it's a house, stock, bond, etc., it's always above zero."

You forgot to include cash. There is a non-zero risk that inflation will make your cash worth less than when you first acquired it, possibly significantly less.
posted by krinklyfig at 10:50 PM on May 14, 2009 [1 favorite]


This was a lot like the economic circumstances that have sent my parents into bankruptcy.

Except my dad has dementia.

That said I really think it's rather amazing that so many people tracked what happened to my dad. The RE mortgages are actually quite manageable, it was the consumer debt that laid him low, but the end effect is pretty similar. The entire economy was wrecked by people acting as though they had dementia.
posted by dhartung at 11:06 PM on May 14, 2009 [1 favorite]


Metafilter: Wow, there are so many typos in my last comment that I'm actually kind of impressed.
posted by Rumple at 11:19 PM on May 14, 2009


That being said, it does seem like 90% of the guy's problem is that horrible ruinous alimony/child support payment.

I'd say not. It's not like the amount of the payment was a surprise after he was already stuck in the mortgage. You don't have to be some sort of economic expert to realize that $33,324 in take-home pay is not enough to pay for a $460,000 house.

Andrews mentions several sorts of unfairnesses visited on him in the article, for which he has my sympathy. But not for this ruinous example of premeditated bad judgment.

On the other hand, I thought the story was entertaining and also instructive about how others found themselves in similar messes. I hope he sells many books.
posted by grouse at 11:30 PM on May 14, 2009 [1 favorite]


What the hell? When did MeFi fill up with Santellians? ClusterStock put this up as well, and I think it must be a first that MeFi and finance blog commenters have the same opinion.

A ClusterStock comment points out that the piggyback loan was actually what killed his chances of repaying. He could pay the initial $333,700 loan at 5.625% (though not when the rate jumped) with his net post-alimony pay. Assuming a decent second income, they could have barely made it through. The second loan meant there was surely no way to pay.

I think there are a few issues here. And it's great that he now sees his mistakes. Unfortunately I don't think anyone will really learn.

First is the faux conservation. PT Barnum foresaw this issue a century ago in his "Art of Money Getting." People "fancy they are so wonderfully economical in saving a half-penny where they ought to spend two pence, that they think they can afford to squander in other directions". By scrimping on meaningless items for themselves, they spent extravagantly in other areas.

Second is the 'keeping up with the Joneses' attitude. The alimony payments killed his chances for 'keeping up' but he never did the math. Barnum was on top of this as well. In the same introduction he says that those aiming to live within their means "Men and women accustomed to gratify every whim and caprice, will find it hard, at first, to cut down their various unnecessary expenses, and will feel it a great self-denial to live in a smaller house than they have been accustomed to...."

Third is the consumption based on future earnings. This is usually more troublesome for younger folk. Andrews got a double dose of this both with the 'housing prices will go up' line, as well as ignoring his alimony payments. It's not always a bad thing, mind you, when people succeed. But any wrong step can ruin you. If you continue the same expenditures before and after you make it big it shouldn't matter much. The Obamas are guilty of this themselves. But they succeded, and so avoid the disaster. Barnum actually commented on this as well, but I can't seem to find the passage.

Anyhow, I hope that this gets reported on more and that people reflect on themselves. But I doubt it. Barnum was talking about these exact problems 130 years ago.
posted by FuManchu at 11:38 PM on May 14, 2009 [16 favorites]


Metafilter: but, as always, if something seems too good to be true, it almost certainly us.
posted by joe lisboa at 11:51 PM on May 14, 2009


[sic]
posted by joe lisboa at 11:51 PM on May 14, 2009


What the hell? When did MeFi fill up with Santellians?

So if if someone with $33,324 in take-home pay takes out a $460,000 mortgage, later writes about what a bad idea it was, and we agree with him, suddenly we're Rick Santelli? Really?
posted by grouse at 11:53 PM on May 14, 2009


DrJimmy11: "If there was anybody who should have avoided the mortgage catastrophe, it was I. As an economics reporter for The New York Times..."

Leaving aside economics, he's a reporter at the NYT and he doesn't know that sentence should end, "it was ME?"

Jesus.


Actually, Mr. Reporter is correct on this point (though he doesn't seem to know much about how money works). The I is a predicate nominative and takes the subjective case. See explanation here.

Or maybe you were being sarcastic?
posted by whimsicalnymph at 12:07 AM on May 15, 2009 [11 favorites]


I, too, am a bit surprised at the reaction here, but it goes to show you never can tell. I read the article and felt no schadenfreude at all - rather, my stomach churned as I read it. Engaging in destructive self-deception strikes me as such a painfully human failing. I felt a pang of recognition here - I strived hard to ignore my own academic problems the first three years of college, but eventually it caught up with me.

I had imagined many folks would also identify with Andrews' narrative in some way, however small or faint. I had supposed that lots of people would have lied to themselves with bad consequences at one point or another. But perhaps not.
posted by Conrad Cornelius o'Donald o'Dell at 12:09 AM on May 15, 2009 [2 favorites]


FuManchu: Thanks for the Barnum link -- I've got to read that book.

The two books I read which luckily kept me out of the dot-com and housing bubbles were:
1) The Great Crash of 1929 by Galbraith
2) Extraordinary Popular Delusions and the Madness of Crowds by MacKay (written in 1852).
posted by benzenedream at 12:49 AM on May 15, 2009 [3 favorites]


Given the economic crisis writ large, I'm not unopposed to reasonable legislation to help out people who are struggling. I can't give you exact numbers, but if a household with a total income of 50K/year needs to renegotiate their mortgage on a modest home worth 200K or so, stretch it out another ten years maybe, to make ends meet, that seems perfectly reasonable. (The last thing banks want anyways is to take back a house from someone.)

Somebody buying a house with the understanding that his unemployed wife will start pulling down 80K/year selling perfume at Macy's? Knowing that for the first five years he'll be cutting it close, and that in five years he literally won't be able to pay the mortgage given his expected income?

That doesn't make me Santelli. Not by a long shot.
posted by bardic at 12:59 AM on May 15, 2009


Fascinating but disturbing article, thanks for posting it.

To clarify some misconceptions I'm reading in this thread: just because the guy writes about Economics for a living doesn't imply either 1) he's a an expert in Economics nor, 2) Personal Finance.

Each of the two are very, very different specialities, just as writing about either in a clear, lucid and well structured manner (which he does well, I'm sure we'd all agree) is a completely different skillset as well.

I've worked in banking for about twenty five years and have known many very, very talented colleagues who couldn't put a noun and verb together in the written form to save their lives.

The guy is a writer, one who clearly never completely and deeply assimilated what he was writing about, at least to the point that he could externalise this knowledge and critically examine his own situation. But lack of knowledge wasn't the only issue that created this problem.

Here is the statement that revealed it all to me. When he dropped in to see Bob the friendly loan officer, whom he quoted during their initial negotiations (bold emphasis is mine):

“Who am I to tell you that you shouldn’t do what you want to do? I am here to sell money and to help you do what you want to do. At the end of the day, it’s your signature on the mortgage — not mine.”

Writer didn't buy a mortgage. A mortgage was sold to him.

All this other chatter about the liar loan, the piggyback, divorice, alimony, new wife's employment status is just static. Heartbreaking to read, certainly, being repeated across the country in tens of thousands of variations, absolutely. But the single relevant point leaping out at me from this article is he clearly didn't know what he was purchasing. He just signed the paperwork when it was presented so he could get what he wanted.

Now I'm not defending Bob the broker man at all for his role in all of this, but a Banker's first obligation is to his customer. He must put his customer's interests above all others, especially his own. Accepting this basic premise helps the observer understand many of the at times perplexing decisions bankers make.

The mortgage broker revealed his hand when he told the Times writer he was selling something. Selling for who? Acting in who's best interests?

The Times writer just didn't grasp this single concept: Bob the friendly loan officer was looking out for someone else at that point.

Who was Bob looking out for? His customer. And the Times writer wasn't Bob's customer. The Times writer was someone Bob could sell something to.


And I certainly don't mean to make Bob sound like a nasty chap; he does indeed seem to try to help the guy out later, but the last thing Times writer needed was more debt. Times writer desperately needed to strengthen his personal balance sheet, to immediately correct his negative cash flow, and all friendly Bob offered was more debt.

posted by Mutant at 1:06 AM on May 15, 2009 [6 favorites]


Which makes me wonder -- with all the foreclosures, maybe it's not all that strange that banks aren't actually evicting delinquent payers. Because if someone still lives in the house it's probably "safer" so to speak than one sitting totally empty waiting for local kids to break in and have parties and such.

I wonder what insurance companies would think of all this.
posted by bardic at 1:10 AM on May 15, 2009


Bardic, as it happens, banks refusing to foreclose properties (or refusing to take possession of foreclosed properties) is a serious problem.
posted by Conrad Cornelius o'Donald o'Dell at 1:17 AM on May 15, 2009 [2 favorites]


he clearly didn't know what he was purchasing

I think he did. I'm not going to read the article but in the first half of this decade nobody had gone broke buying house(s), regardless of (in)ability to pay. Quite the opposite, in fact.

The mortgage broker revealed his hand when he told the Times writer he was selling something. Selling for who? Acting in who's best interests?

The broker's, duh.

As the NPR show The Giant Pool of Money explored, there was a "Savings Glut" -- which I guess was really a rising tide of money supply -- and a long-depressed national housing market that in areas outside the dotcom high-wage zone hadn't appreciated much in 10+ years. The combination sparked a subeconomy that spun up like a supercell coming off the Gulf of Mexico. . .
posted by toroi at 1:29 AM on May 15, 2009 [1 favorite]


So, I read the comments before reading the article... and I thought I knew what to expect, and was willing to keep an open mind but...

This guy really needs to go back to first grade maths and be fired from his job for bringing the name of the NYT into disrepute - if this is the calibre of the NYT's economics reporters.


The first paragraph have 'idiot' written all over it, where he falls from normal mortgage, to liars loan to undeclared loan... considers an overall 6.2% rate 'low', and then borrows more than TEN TIMES his take home annual salary with repayments of 90% of his current take home?!!
"I couldn't shake the sense of having just done something bad". Damn right.


And, oh god, the blaming and penny pinching whilst haemorrhaging money on expensive things ... like catching raindrops when the damn has burst... Sure stopping your wife from buying fresh cheese is going to make a huge difference, when you rent a beach house for $1600 despite already realising you are badly in debt, and are spending thousands on Xmas gifts and clothes... Top economics tip: stop spending money that you do not have, and have no hope of ever repaying!

I hope his book advance goes some way toward paying of some of his debts, but somehow I doubt it, they probably just spent it on fresh cheese and speeding tickets. And something tells me that the book market may be somewhat full of 'I screwed up and now I have a huge mortgage' books.
posted by nielm at 2:09 AM on May 15, 2009 [2 favorites]


bardic --- Actually, Andrews' information comes up with a "Yes you may be qualified" for the gov't repayment restructuring plan Santelli was bitching about. So shudder at the thought that being judgemental of Andrews means you and Santelli agree. Or maybe you could consider that Santelli is not the right-wing partisan that he was made out to be. The first-level requirements are:

  • Is your home your primary residence?
  • Is the amount you owe on your first mortgage equal to or less than $729,750?
  • Are you having trouble paying your mortgage?
  • Is your payment on your first mortgage ... more than 31% of your current gross income?

    Mutant -- I agree with you at some level. The math wasn't even looked at by most people getting or giving these mortgages. But consider the stock broker in the 60s who refused to buy shares on his clients behalf which were trading with low dividend rates. I realize that people ALWAYS claim that "it's different this time," but the reason that works is because occasionally it IS different. And did you not hear stories of investment bankers basically being ordered to get a deal done by clients in 2006-2007? Valuations with double digit multiples, bankers pointing out the ridiculousness, "sophisticated" clients wanting the deal done and being unable to negotiate the price down further? Besides which, many mortgage brokers had taken the very drug that was making everyone think prices wouldn't fall.

    I'm also interested in the aggregate vs individual conundrum. In the aggregate, foreclosures are bad. Individually, it's better for the mortgage owner to take possession. The gov't is concerned with the aggregate. But now the banks, by collecting and disseminating the mortgages, are also concerned about the aggregate.

  • posted by FuManchu at 2:24 AM on May 15, 2009


    Well, now I'm really curious. If there's a trend where banks don't want to deal with the messiness and expense of foreclosing, and therefore paying to reasonably maintain a property, I'm wondering if we're going to see our very own American version of squatting, since having a permanent group of people take over a house might actually be cost-effective for the banks in the long run if they're willing and capable of keeping the place in decent shape (not totally trashing it by starting fires, etc.).

    And now I'd also like to know if utility companies have a legal issue when it comes to providing water, gas, and electric to properties that have been abandoned by the initial owner. I'd imagine they aren't allowed to, but maybe it would be in everyone's interest to keep the lights on if someone was willing to pay that bill, even if they weren't paying the actual mortgage.

    And if it's been eight months since Mr. Andrews stopped paying his mortgage, will his bank hit him with some sort of occupancy fee? (Rent, so to speak?)

    Morbidly fascinating.
    posted by bardic at 3:37 AM on May 15, 2009 [1 favorite]


    "Using a large portion of your assets to purchase a house is no different than taking all of your money and investing it in any other financial instrument. While the probabilities of that instrument failing vary greatly whether it's a house, stock, bond, etc., it's always above zero."

    This is not completely true. Buying a house is unlike buying a stock or a bond because you need somewhere to live. When the cost of buying is equal to -- or not significantly above renting -- then even if the house's value drops to nothing, you'd still come out ahead.

    Buying my own house probably cost more than renting for about the first five years or so -- but it wasn't hugely more than renting at all. And after I'd passed that point, my mortgage payments were always significantly less than renting would cost.

    Twenty five years in, my mortgage is done and I'm living rent free for the next thirty years or so.
    posted by PeterMcDermott at 4:33 AM on May 15, 2009


    How the hell does a judge decide that someone making $120K a year owes $4000 a month in alimony and child support? Even by generous standards, it should be closer to $3000.

    The cost of divorce is a hidden part of the entire mortgage meltdown story.
    posted by fourcheesemac at 4:46 AM on May 15, 2009


    Or in other words, there's something to this women and money shit. His kids were teenagers. What, she couldn't get even a part time job?
    posted by fourcheesemac at 4:47 AM on May 15, 2009


    90% of the problems with our new house stem from the fact it wasn't lived in for awhile, which took out a chunk of its value. So I can see why banks would be interested in keeping homes lived in when mortgage payments fall behind. Every dollar we spend and every hour we take working on the house increase its value down the road. I don't know if the housing market will bounce back by the time we'll be looking to sell, but even if it doesn't (but doesn't continue to tank), we should get some return on our investment.

    At least this is what I tell myself as I write a check to pay for a new main drainage pipe. Note to first time homebuyers - that 8 grand the government's giving you? Hold on to it as an Oh Shit Fund, not as a license to raid Crate and Barrel.
    posted by robocop is bleeding at 5:41 AM on May 15, 2009 [1 favorite]


    Thanks to Nelson and Mutant for helping me avoid the conviction that MeFi is made up entirely of self-absorbed assholes. Here's a fascinating personal account of what it's like for the millions and millions of people who have done what this guy did and helped create the mortgage bubble and bust, and all the MeFi Collective is interested in is proving how they're so much smarter and get to put the boot in because they've never done anything the least bit stupid in their lives and also fuck him because he makes more money than I do!! Pathetic.

    Actually, Mr. Reporter is correct on this point (though he doesn't seem to know much about how money works). The I is a predicate nominative and takes the subjective case.

    Actually, that's complete bullshit. English doesn't have a "predicate nominative," Latin does, and a couple of centuries ago people were eager to make English just like Latin, and some of their stupid made-up rules like this one still linger in the popular imagination. At any rate, I'm quite sure the "I" is the result of applying the Times style guide, whatever the reporter's personal usage might be.
    posted by languagehat at 5:55 AM on May 15, 2009 [14 favorites]


    I kept my judgments in check until he revealed he was writing a book about the experience and the article we were reading was his promotional teaser. How fortunate for him as compared to the million other Americans facing foreclosure today who don’t have New York Times connections to help them profit from writing about their poor decisions.

    (I recently went into a Borders bookstore and concluded that we are just up to our tits in navel-gazing nonfiction/biographies--imagine the New Release section as a wall of Facebook status updates in expanded, $24.99 hardcover form. Who needs to climb Mount Everest when we can publish diaries about our failed diets, bad dates, and shitty jobs? Anyway, don't miss my new exposé, Changing My Favorite Color From Blue to Sort of a Lavender – One Woman’s Story.)
    posted by applemeat at 5:55 AM on May 15, 2009 [13 favorites]


    The guy is a writer, one who clearly never completely and deeply assimilated what he was writing about

    Which is sort of the alarming point here. Isn't assimilating the material exactly what such a specialized reporter is supposed to do? So the General Reader can get a handle on what's up in that specialized world? (I will go check his backlog when I have a minute to spare, see how his other stuff holds up- is it reporting or is it passing on press releases.)

    What, she couldn't get even a part time job?

    Perhaps she did....
    posted by IndigoJones at 6:19 AM on May 15, 2009


    I kept my judgments in check until he revealed he was writing a book about the experience and the article we were reading was his promotional teaser.

    He's a writer. Books are one way a writer makes money. He needs money. Here's a highly topical subject he's unfortunate enough to know extremely well. He'd be a fool not to write a book about it.

    There are precedents....
    posted by IndigoJones at 6:24 AM on May 15, 2009 [2 favorites]


    Writer didn't buy a mortgage. A mortgage was sold to him.

    Good grief. The mortgage broker sold it to this writer and he bought it. There are two active roles there. And while I'm by no means giving the real estate and banking industry profressionals a free pass for their role in this, people who took out loans they couldn't afford and/or mortgaged their homes to the hilt and above are just as much to blame.

    Anyone who has a mortgage knows that bankers are more than willing to get someone with good credit up to his or her neck in debt. But it doesn't follow that you have to let them.

    just because the guy writes about Economics for a living doesn't imply either 1) he's a an expert in Economics nor, 2) Personal Finance.

    I don't expect him to be an expert. To be honest, I think the whole economic system is too complex and variable for anyone to really understand. But I do expect him to be able to work out a household budget and to stick to it, and to not get in over his head in debt or base his financial commitments on non-existent income. That's just basic personal responsibility.
    posted by orange swan at 6:36 AM on May 15, 2009 [1 favorite]


    > This stopped bugging me after I imagined him saying "It was I!" with great emphasis, and then tossing the edge of a shiny cape over his shoulder.

    That's a ZARDOZ reference, right?
    posted by The Card Cheat at 6:36 AM on May 15, 2009


    Boy, linking to YouTube videos is a dead-end for information. You all could at least identify what you're linking to a little bit. I can't scan or scrub a YouTube video to find the nugget, so your links are useless.
    posted by Mo Nickels at 6:39 AM on May 15, 2009 [7 favorites]


    Top economics tip: stop spending money that you do not have, and have no hope of ever repaying!

    Here's the problem: people have stopped looking at a house as something you have to pay for. They're only thinking about monthly payments.

    Shopping for a house (condo, most likely) has made me realize that, at the end of the day, you're buying something, and there's no way to get around that simple fact. Yes, you can borrow money to buy something, but no matter how you juggle the financing around, you have a debt, and the best way to lower your payments is to simply borrow less money by providing more cash up front.
    posted by deanc at 7:06 AM on May 15, 2009


    Indigojones: ...There are precedents....

    Exactly--Which is why the most unique part of Andrews's saga is the ease with which he will add to that genre.
    posted by applemeat at 7:06 AM on May 15, 2009


    A few years ago, I think the perception out there among homebuyers was that general inflation was the logical result of home prices going up. So, in the average mind analyzing the data, buying a house was going to be like those people who bought houses in the 1950's and watched their value go from 32K to 320k in their working lifetime. The pressure to buy before it went higher was real and historical to them. The bubble scenario was not. Many of us basically grew up scolding our parents for not buying more open real estate because the bubble was not real to us.
    posted by Brian B. at 7:07 AM on May 15, 2009 [1 favorite]


    The secret is....

    IF YOU CAN"T PAY IT OFF AT THE END OF THE MONTH.... DON"T SPEND IT!!

    (yeah yeah I know unless there is an emergency)

    That is all
    posted by Mastercheddaar at 7:12 AM on May 15, 2009


    d"IF YOU CAN"T PAY IT OFF AT THE END OF THE MONTH.... DON"T SPEND IT!!"


    Word up.

    It's worked for Mr. Tena and me for 25 years. We just live slightly below our means and always have.

    And lived very well that way. And we don't have any debt, which is a damn good thing because my husband is the youngest of 3 and we're the only ones with any income or financial stability right now. My husband's sister's husband owns a Chrysler dealership - been in his family for 3 generations- and we are keeping them afloat. His older brother lost his job in commercial real estate at Christmas and we're keeping them upright, too.'

    My husband's retirement that he saved 35 years for is gone - it's gone to the family.

    But at least we had it to give and we don't have debt anywhere- we paid off two houses. We pay off credit cards monthly -full balance. VISA hates us - and I love it that we use their money rather than the other way around. You can do it - you just have to be old-fashioned, like my husband is. I would never have done this well on my own - I didn't have the right attitude. Thank the gods and goddesses my husband does.
    posted by Tena at 7:24 AM on May 15, 2009 [4 favorites]


    Thanks to Nelson and Mutant for helping me avoid the conviction that MeFi is made up entirely of self-absorbed assholes.

    Thanks for the (meagre) compliment, but I'd argue with you about Mefi being entirely self-absorbed assholes. Well, no more than the usual. But boy, this thread is full of a lot of hate. Yeah, everyone, the reporter made some serious mistakes getting himself in the position he's in. He'd be the first to tell you that. In fact, he was, right in the nation's largest newspaper. But good for you for spotting it.

    I'm still a bit confused about the source of all the hate, though. I think it's envy. Here's this schmuck living in a house he can't afford, and he (sort of) got away with it. I'm guessing a lot of MeFiers don't own houses, or make that kind of money, and feel a bit self-righteous that hey, we're renting, but at least we don't wake up at 4am in a panic about money every night. And good for you! I have a feeling our reporter has more than a bit of envy for you, too. But seriously, you'll learn more in life if you try to empathize with other people's experiences rather than just demonstrate your contempt and superiority for them.

    Also I'm baffled by people who have contempt for him writing a book (or article) about the experience. What would you prefer? That he say nothing, keep his experience to himself? Maybe being a writer is the problem, he should do some honest labor. Then again MeFi gets the amazing opportunity to point out the irony and horror that an economics reporter got in trouble with personal credit. Very clever of you to spot that, I wonder where you read it?
    posted by Nelson at 7:30 AM on May 15, 2009 [7 favorites]


    Although I think that there were a lot of stupid mistakes made financially by a lot of people in this crisis, I think those that speak about brokers and bankers and other financial middlemen and their fiduciary duty and how they should have said "HOLD UP" are forgetting one thing. Those people are human, too, and they probably didn't become brokers and financial middlemen because they were exceptionally rational financial beings. Typically, these aren't the kind of people that are going to find themselves in front of the onrushing horde and go, "hey, wait a second, maybe we're being a little bit crazy here." There is really only a small subset of people who have the mental constitution or stubbornness not to follow the pack; in retrospect it seems easy, now that we all know the results, but at the time, even some very smart people made stupid mistakes.

    I always find this post-facto kind of sneering kind of ridiculous. You just don't know what you'd do in any particular situation and if you happened to make the right decision one time, it doesn't mean you'll necessarily be correct every single time.
    posted by Big Fat Tycoon at 7:36 AM on May 15, 2009


    I don't see that this guy did anything wrong. Except to buy into what was the conventional wisdom of the time.

    I'll put the conventional wisdom in a a nutshell for you: You deserve it. This is the basic premise behind every piece of advertisement. Add to advertising, the movie and television portrayals of a certain class of Americans (white, urban professionals) which reinforces this idea. We have a certain expectation as to our standard of living-- regardless of how much money is actually incoming. I know, because I keep bumping my head on this expectation all the time. At my age and my education and background I "feel" like we should be eating out more than 2 or 3 times a year-- after all most of the people we know do and expect us to as well. I also feel slightly cheated that we don't have season tickets to the theater, we don't shop for clothes at the better department stores, and I can't go to my local boutique nursery and buy up every plant I take a fancy to. I'm 51 years old and my sofa came from the Goodwill, for heaven's sake! Life isn't supposed to be like this. We don't have wooden floors, we don't have an SUV, and we don't take vacations every year. We live within our means and that is a very different reality from the lifestyle I expected to lead.

    You would think that would give me peace of mind, yet lurking in the back of my mind is the specter of big medical bills which could wipeout all of our thriftiness in one fell swoop.
    posted by Secret Life of Gravy at 7:45 AM on May 15, 2009 [5 favorites]


    Given all the anonymous AskMe questions about bankruptcy and debt, I'd think we could be a little more forgiving around here. Yes, he should have known better. Yes, he should have made better decisions. He knows that now. Who among us can't say the same for some aspect of our lives, whether it be health, relationships, or money? Who here hasn't fucked up?
    posted by desjardins at 8:16 AM on May 15, 2009 [2 favorites]


    ...yet lurking in the back of my mind is the specter of big medical bills which could wipeout all of our thriftiness in one fell swoop.

    I feel you. I was hospitalized last year and had several ER visits. Even though I'm insured, it killed my savings.
    posted by desjardins at 8:17 AM on May 15, 2009


    I'm still a bit confused about the source of all the hate, though. I think it's envy. Here's this schmuck living in a house he can't afford, and he (sort of) got away with it.

    On my end, I don't feel anything as strong as "hate." But there's a profound annoyance.

    Despite the photos of the author in the story, all I can picture is Fred Willard with his pockets turned out, pennies and broken piggybank strewn across the floor, looking both confused and smug in that magical Fred Willard way, saying Wha'hoppen? while everyone else sighs and cleans up the mess.

    I do have sympathy for the fuckups and dunderheads of the world, but -- and this ties into the book-writing thing -- it seems to be popular to think that acknowledging you're a fuckup makes it okay.

    It doesn't.

    Making amends for being a fuckup and ceasing to be a fuckup makes it okay.

    Seeing this man chronicle his Tales of Fuckuppery, something he was professionally obliged to see coming and didn't, and then write about it in a way that shifts blame to "it was the culture I was in at the time," and then try to leverage that into a book deal so he can make money from his Tales of Fuckuppery, doesn't seem like much of a step up the Fuckup Ladder.

    Do I think the guy should wear a hair shirt and self-flagellate with a cat-o'-nine-credit-cards unto death? No. But the overall vibe here -- what I get from his article -- is Fred Willard with his broken piggy bank, shaking his head and grinning and saying boy, I really did it this time, huh? and no real feeling that this is somebody that has learned a profound lesson about how much trouble keeping-up-with-the-Joneses bullshit has gotten us all into.

    So: hate? No.

    Wish that all of this mess would turn into some sort of sincere shift towards recognizing that we need to focus more on living with what we need instead of having everything we want? Yes.

    Get frustrated with all these self-serving expiations-by-confessional, admitting everything while learning nothing? Hella yes.
    posted by Shepherd at 8:30 AM on May 15, 2009 [17 favorites]


    The only problem was money. Having separated from my wife of 21 years, who had physical custody of our sons, I was handing over $4,000 a month in alimony and child-support payments. That left me with take-home pay of $2,777, barely enough to make ends meet in a one-bedroom rental apartment.


    For awhile, my wife and I lived in New York on 1200$ a month. This guy sucks.
    posted by GilloD at 8:31 AM on May 15, 2009


    Let me elaborate: What really flips my switch about this article is that this guy is. He just throw up his hands and goes "I ONLY HAVE 2000 DOLLARS!?!?!". Well, welcome to the rest of us. You can make that work! That's a lot of money! That's more than I make in a month! It's almost more than twice what I make!

    And so his resistance to sacrifice and his refusal to be thankful for what he does have is what makes me want to pull my eyeballs out.
    posted by GilloD at 8:34 AM on May 15, 2009


    Reads like the economist verstion of a preachers love affair with meth, hookers, and same sexed individuals. And he will be rewarded with more readership. What a load of fluff.

    When does his book come out?
    posted by buzzman at 8:42 AM on May 15, 2009


    Oh boy. I finished reading this article tonight, and was thinking how fucked this poor guy is and how I wouldn't want to be in his shoes for anything. And then I get a call from mum to tell me that the sheriff had dropped by to tell them that RAMS Home Loans was foreclosing on a mortgage made to my sister and, since my parents had put their own house up as security for my sister's loan, RAMS was going to take their house too - change the locks and put their possessions on the street - unless they caught up in the next 3 weeks. Apparently my sister and her boyfriend (from whom she has been separated for a couple of months), have been falling behind on their payments for the past 6 months and didn't tell my parents.

    My sister has disappeared - we're pretty sure she's still working, but no-one knows where she's living or how to contact her. Sis's boyfriend keeps assuring them everything is fine, and throws a tantrum whenever they ask for details. Nothing he says can be trusted. My parents are seeing a solicitor. My nephew has moved in with my parents. My niece is going to have to find another place for herself and her two kids. I'm looking at helping bail the folks out with some cash savings - mainly because their alternative is to sell off some shares, the dividends of which were supplementing their pension. Once those shares are sold, they're gone for good. Cash is easily replaced.

    There is no good place to put the anger, and no point to being angry other than to prop up a false idea of myself. I feel bad for my folks - 80 years old and on the hook for this orphan mortgage. They weren't trying to make an easy buck flipping houses, they just thought they were doing a good thing for their daughter. I love my sister, for all that she has terrible judgment and no coping skills to speak of, but I wouldn't bail her out of a financial mess that she helped create if our parent's house wasn't on the line. I was another one who did everything 'right' (though only in retrospect), but it doesn't matter. I'm still not going to be able to sleep soundly tonight.
    posted by Ritchie at 8:44 AM on May 15, 2009 [8 favorites]


    But seriously, you'll learn more in life if you try to empathize with other people's experiences rather than just demonstrate your contempt and superiority for them.

    You know, this is a great piece of advice, and I think the NYT should take it to heart. The first move they should make is tell their journos to stop writing about themselves. Or their upper middle class pals for that matter. There's only so many stories about Bobos, or how $500,000 a year is really middle class these days in New York, or how the latest thing is taking your dog to the gym and using him as a dumbell.

    On the self-absorbed asshole scale, people on this thread rate pretty low compared to the NYT.
    posted by dydecker at 8:45 AM on May 15, 2009 [8 favorites]


    What Shepherd said.

    There are so many people in this crisis going around saying 'mea culpa... but the market encouraged me...' from people like Andrews, people like his broker, the banks, etc. And because of that 'but...', no-one seems to be learning any real lessons, because the bailout means that there will be no absolute failures...

    The irritation comes when one realises that the fiscally responsible people will be bailing out the fiscally irresponsible, who may not and may never learn their lesson, meaning that this cycle will repeat itself...

    Nelson - in my case it is not envy. I was lucky (yes, lucky) to be able to buy my house when it was affordable. I also consider it as somewhere to live in, not an investment vehicle.
    posted by nielm at 8:45 AM on May 15, 2009


    I am so freaking unbelievably happy that I didn't buy a house four years ago when I had the chance. In our shrinking Michigan city I would have sunk myself for $120k on something "kinda nice."

    Ha! First-time homebuyer, in the city, refurbed property approved by the housing services agency? In the "bad" part of town? (Define bad part of town in Kalamazoo, Michigan.)

    Three bedroom, two and a half bath with a garage and a half-acre back yard:
    $12,000.

    Former renters with steady jobs are buying them two, three at a time in our neighborhood. "One for me and one for grandma's funny neighbor-lady friend, and one for maybe to fix up and rent to college kids..."

    I feel bad for everyone who messed around with hundreds of thousands of dollars... but for me I'm really pretty happy right now. I get to have a house! Yay me!
    posted by Baby_Balrog at 9:02 AM on May 15, 2009


    Also I'm baffled by people who have contempt for him writing a book (or article) about the experience.

    It's kinda like OJ writing "If I Did It" and dedicating it to all the First Degree Murderers in the nation.

    I moved from Tokyo (where I couldn't buy a house) to the Bay Area in 2000, and started saving to buy a house then. I still save to buy a house but felt prices were unsustainable by the time I had a down payment so I rent.

    I pay $1750 per month for a place that I'm comfortable won't be broken into in Sunnyvale, and if my rent isn't paid by the fifth of the month the sheriff will have my ass on the street by the tenth.
    posted by toroi at 9:20 AM on May 15, 2009


    Rumor says [Balzac] died of caffeine poisoning from drinking tens of cups of coffee so he could write all night and fiance the building of the house.

    Balzac was a nutcase.
    posted by rusty at 9:23 AM on May 15, 2009


    Fuck the MeFi sympathy brigade. I'm going to be bailing out this asshole for the rest of my life. I'll be goddamned if I'm going to pretend to like it.
    posted by Afroblanco at 9:24 AM on May 15, 2009 [2 favorites]


    Fuck the MeFi sympathy brigade. I'm going to be bailing out this asshole for the rest of my life. I'll be goddamned if I'm going to pretend to like it.

    There's plenty to be mad about, but I'm not sure it's fair to direct all the hate at people who made bad choices. I'm not sure it's reasonable to put the onus on individuals to be experts in very complicated financial arrangements. Red flags are often raised in individuals (and were in his case) but in the end an individual will largely defer to 'experts'.

    I feel fortunate to have bought my house when I did (4 years ago). At the time the bank wanted to pre-approve me for a crapload of cash which would have allowed my wife and I to purchase a house valued at twice the price for which we were looking.

    We refused and limited ourselves to something in the range of 2.5 x annual income to keep it manageable. I'd like to pat myself on the back and say how smart I was but really we were lucky that the local market hadn't heated up yet and there were viable choices in that range. Fast forward 2 years later and we may have been signing papers for the stupid amounts and telling ourselves, "That's just the market" and further rationalize by saying, "If things go south, we're not the only ones in trouble and it becomes the bank's problem".

    Personally I find these stories fascinating.

    And I love watching Til Debt Do Us Part.
    posted by mazola at 9:42 AM on May 15, 2009


    > It's kinda like OJ writing "If I Did It" and dedicating it to all the First Degree Murderers in the nation.

    Actually, it's not like that at all, but enjoy your moral outrage, you perfect specimen of humanity.
    posted by languagehat at 9:59 AM on May 15, 2009


    There's plenty to be mad about, but I'm not sure it's fair to direct all the hate at people who made bad choices.

    At what point does "I made bad choices" stop being an acceptable excuse? Last I checked, this country's penitentiaries are filled with people who made bad choices. In fact, I'd argue that what this guy did -- in terms of actual damage to others -- is actually worse than what landed a lot of people in the clink.

    But is anyone sending him to jail? No, we're showering him with hearts and flowers and moving violin music. "ooh poor baby, there there, did that big mean mortgage broker hurt you? Did he encourage you and your fancypants wife to buy a house you couldn't afford, expensive clothes (from Gap Kids!) you couldn't afford, and rent a beach house you couldn't afford? Awww, there there, here's a shoulder to cry on."

    Meanwhile, housing prices are ridiculous and will stay ridiculous because everybody's getting a bailout. And the economy is shitty and will stay shitty because people like this dufus "made bad choices." Even if I actually wanted to buy property, it wouldn't be a possibility.

    I do feel bad for him about the alimony/child support payments though. Sounds like he really got taken to the cleaners.
    posted by Afroblanco at 10:01 AM on May 15, 2009 [6 favorites]


    There's bad choices and there's being an irresponsible idiot.

    It was '$240 in traffic tickets — $140 for speeding, $50 each for expired tags and inspection' where I found myself wanting to slap him.
    posted by fearfulsymmetry at 10:07 AM on May 15, 2009


    I'm still a bit confused about the source of all the hate, though. I think it's envy.

    When someone steals your wallet, you're not envious that they've got money and you don't.
    posted by Civil_Disobedient at 10:09 AM on May 15, 2009 [3 favorites]


    At what point does "I made bad choices" stop being an acceptable excuse? Last I checked, this country's penitentiaries are filled with people who made bad choices.

    Well, at what point should there be an expectation that lenders say "You're not qualified, sorry". Putting that system in place keeps housing prices in check, keeps things on an even keel, and generally assures everyone's financial safety.

    This fellow went to 'experts' and they expertly helped him (and many others) to dig themselves in way too deep. Who's accountable for that?

    It's like me going to a doctor and telling them to make me 1 foot taller. They should tell me that's not reasonable/possible and not just go ahead and book surgeries because I want them to.

    Why is the consumer expected to be the most professional/informed one of the bunch?
    posted by mazola at 10:11 AM on May 15, 2009 [1 favorite]


    I'm still a bit confused about the source of all the hate, though. I think it's envy. [...] I'm guessing a lot of MeFiers don't own houses, or make that kind of money, and feel a bit self-righteous..

    It's not envy, it's empathy exhaustion. Look, thousands (millions?) of people (and several people I love) have lost their homes due to this financial crisis and due to human frailties no more or less short-sighted than those of Edmund Andrews, but virtually all of these people lack Andrews's education and auspices and are not the subject of NYT features and soon-to-be-released first-person narratives. I'm not ashamed to reserve the bulk of my empathy for the former. Finally, I hate to spoil the conclusions you've drawn about this thread’s participants, but I'm an employed and statistically "affluent" homeowner who put 20% down rather than navigate one of the exotic ARMs of the era, and I suspect that I'm not alone here.
    posted by applemeat at 10:15 AM on May 15, 2009 [1 favorite]


    > Watch this and feel your blood run cold.

    Holy fuck this is the worst thing I've seen all day. I don't know which gender it's more sexist toward.

    "Women! Don't let your ball-less simp of a husband stand in the way of your dreams with his pathetic whimpering of 'money' and 'bills', you LOVE this house! Another woman says it's special, two women is WAY smarter than one man! God men are insensitive. He's worried about money, can't he see that you LOVE this house? Peck at him like a harpy until he does what he's told!"

    "Men! You worthless doughy shit, look at how mad your wife is, you're so scared of the world you can't even provide her a nice home! That's not the only way you don't satisfy her needs, is it, Tubby? Oh boo hoo the kids are so young, we can't afford it, what about down the road, bitch bitch, You're such a failure she's getting advice from another WOMAN, is that what you've been reduced to? Kids? How did you even impregnate her with no balls?! Christ. MAN UP for God's sake!"
    posted by Uther Bentrazor at 10:29 AM on May 15, 2009 [14 favorites]


    > Holy fuck this is the worst thing I've seen all day. I don't know which gender it's more sexist toward.

    Gotta love the part at 0:13 where the wife literally makes a pecking motion with her head.
    posted by you just lost the game at 11:22 AM on May 15, 2009


    > Times writer desperately needed to strengthen his personal balance sheet, to immediately correct his negative cash flow, and all friendly Bob offered was more debt.

    When you sell hammers, every customer looks like a nail.
    posted by RikiTikiTavi at 11:53 AM on May 15, 2009


    I wasn't going to comment on this, but my mind keeps going back to this story...

    I am not angry because he did this, I am just very frustrated. I, like many others, bought a house in 2006 and the bank offered me (and my husband) a mortgage twice the size of what we took. We knew better than to take out more than we could afford, despite their encouragement. We had no working budget, and neither of us are business people. The frustration is that this guy knows better. And now, he gets to write a book about his mistake and make money. Whereas most people in his shoes are just getting kicked to the curb. Bleh. And he hasn't paid his mortage in eight months!!! Holy crap, I'd be panicked.
    posted by fyrebelley at 12:39 PM on May 15, 2009 [3 favorites]


    Slap*Happy: These people aren't hired based on their knowledge of financial instruments and investing practice. They're hired because they're glad handers, they make the customers feel good, and can sell a ketchup popsicle to a woman with white gloves. They don't care what they sell or how they sell it, so long as it earns them a ton of money.

    Retail bankers do not make a "ton of money"; even the FAs who can sell investment products. The good ones can do well, but we're not talking about Wall Street types here. The banker in question had to be at least licensed to talk about that product, so if he doesn't know enough, there needs to be more stringent requirements.
    posted by spaltavian at 1:18 PM on May 15, 2009


    4K in child support and alimony a month is not unreasonable on a 120K a year salary and considering that he has three (it is three, right, not two?) teenage boys. Child support is not a present to his ex-wife; it's child support. His ex-wife has assumed the mortgage payments on their old house, which might be taking up more than half of the income she's likely to be making if she was out of the job market for 15 years caring for children at home. Yeah, divorce can be expensive, but the amount of misogynist crap in this thread is dismaying-- he has children, and raising them costs money. Once they're through with college, he's done, so it's not for the rest of his life.

    This article certainly puts the lie to the idea that buying is superior to renting. They could have rented a house and lived within their means; but you can't live an upper middle class lifestyle on average wages.
    posted by jokeefe at 1:33 PM on May 15, 2009 [12 favorites]


    In fact, I'd argue that what this guy did -- in terms of actual damage to others -- is actually worse than what landed a lot of people in the clink.

    I really don't understand this thinking. Yes, he should have been much smarter about his decisions, especially given the nature of his job. But surely the companies that lent the money out carry the brunt of the blame, no?

    The Santellis of the world would like you to think that banks were lending money out of the goodness of their hearts until some sneaky middle-class people took more than their fair share. And now we have to bail out those sneaky middle-class people out with our hard-earned money! Come on everybody, let's have a tea party and show them what for!

    Bullshit. Banks were offering these ridiculous mortgages because they had figured out a way to make money off of them even if their clients defaulted. And instead of thinking, well, we don't want to risk putting someone into a mortgage they can't afford just to make money in the short term, these banks encouraged people to take on these mortgages knowing that it would likely ruin them. Because really, who gives a fuck about other people?

    And if they had stopped to think well, as more and more people start defaulting on their mortgages, we're all going to be screwed, they might have not have fought so hard for deregulation. But instead they said fuck it, let me get my little piece of the pie before everything falls apart.

    I guess it comes down to a junkie vs. dealer dilemma. Yes, the dealer is just meeting demand and the junkie shouldn't have gotten hooked in the first place. But if you're looking for someone to stick in jail in that situation, I wouldn't pick the junkie.
    posted by turaho at 2:20 PM on May 15, 2009 [9 favorites]


    I'm still a bit confused about the source of all the hate, though. I think it's envy. [...] But seriously, you'll learn more in life if you try to empathize with other people's experiences rather than just demonstrate your contempt and superiority for them.

    By stuffing that paragraph, you obscured its irony. I helped.
    posted by cribcage at 2:44 PM on May 15, 2009 [1 favorite]


    How could a person who wrote about economics for a living fall into the kind of credit-card trap that consumer groups had warned about for years?
    May I be the first to offer the theory that most of the people who write about economics for a living have been deluding themselves and their audiences for many years and this just provides an obvious example?
    You may, but it doesn't follow from the article so it's not an obvious example at all. What follows from the article is that experts, whatever their field may be, are also human being and are, therefore, likely to commit human errors.

    What seems evident from the narrative is that he is being quite distressed by the cognitive dissonance of having behaved in a foolish way, his education and understanding notwithstanding. A parallel could be that of a smoker surgeon that, after having seen a number of devastated lungs, discover to have a lung cancer. He starts thinking "how could I be so foolish?" and the more he identifies with a knowledgable person in his/her field, the stronger the dissonance and pain will be, as he no longer feels knowledgable and feels unable to keep control of himself abd his life. That's an incredibly scary experience.

    A more general experience could be that of getting laid one night, forgetting to wear a condom because of intese passion going on, and getting HIV. The odds are low, but they still are not zero. One doesn't need a basic training in statistics to understand that, but even a trained statistician could commit this error (even if odds are he will fall less often then others, because of the training that includes paying extra attention exactly to these kind of errors).

    Going from that to asserting that most people who write about economy are delusional fools is a pretty convenient way to "blame somebody else" for committing the error of underwriting a loan without having paid a lot of attention to the contract, without having a basic understanding of financial mathematics and possibily commiting the very same wishful thinking error of the author of the article. Similarly, the "quants" or "financial mathematicians" will be blamed for developing models that "don't work", knowing exactly that most people will never be able to verify this claim, but also knowing that most people like to feel victims of everybody, but their own selves.

    Before somebody jumps on me saying I am blaming the victims (little stockholder, house owners) let's consider that it seems that probably none of this would have happened without extremely relaxed high risk lending and unregulated betting (derivatives) , and possibily also without the systematic exploitation of human psycological weaknesses.

    In the article, the mortgage conseulor isn't a counselor at all, is a salesman. Indeed he responds to the buyer anxieties about his ability to pay with :
    “Who am I to tell you that you shouldn’t do what you want to do? I am here to sell money and to help you do what you want to do. At the end of the day, it’s your signature on the mortgage — not mine.”
    Fuck that shit! He is not answering, he's reassuring the person by suggesting he is in control with macho tough life shit. All that matters is your FICO score, not your future cash flow income. Bullshit, bullshit, bullshit! But who allowed the salesman to act like that, bullshitting people with non reassuring non sequiturs?
    posted by elpapacito at 3:10 PM on May 15, 2009 [2 favorites]


    Why was Edmund Andrews was paying for school supplies and dental work for his stepchildren? If his new wife was getting child support from her ex-husband (and she probably was since she'd been a full-time stay at home mother all those years in LA), shouldn't that have gone towards the fresh cheeses and clothes for her children and dental work?

    I find myself thinking he's a fool who attached his cart to an idiot. He does appear to really blame her for everything that happened. She found the house, she bought the organic produce and cheeses and clothes, her kids needed dental work and school supplies, and though he doesn't say it straight out in the article, searching around reveals that his new wife was responsible for the traffic tickets... I don't know how far $120K can go on supporting two families with two houses and five children in total. Maybe he didn't conceptualize it that way. since remarrying to a divorcee is very common.
    posted by anniecat at 4:58 PM on May 15, 2009


    At the end of the day, it’s your signature on the mortgage — not mine

    I don't know. Sounds like a pretty solid disclaimer to me.
    posted by anniecat at 4:59 PM on May 15, 2009


    It's like me going to a doctor and telling them to make me 1 foot taller. They should tell me that's not reasonable/possible and not just go ahead and book surgeries because I want them to.

    If you asked this to a doctor, he would be trained to recognize you as functionally retarded and speak to the person who really makes your healthcare decisions. Loan officers are not financial advisors. Why not just ask the car salesman what kind of car he thinks you need? If you're taking out $100K for an MFA in Basketweaving, do you expect a private lender not to loan you money for it because they should know better than to lend a future basketweaver that kind of money? You signed the form. You promised to pay it back.

    People in this very thread had loan money being thrown at them and they decided not to take it. What's the difference between other people and them, other than some people make bad decisions and are easy to sell bridges to?
    posted by anniecat at 5:11 PM on May 15, 2009


    I guess it comes down to a junkie vs. dealer dilemma.

    I am impressed with how easily everyone watching the popping RE bubble takes on drug-abuse metaphors. Everyone, from the most abstract economic thinkers to the most hapless fucked borrowers can assume that if the problem is stated in drug abuse terms, it will be instantly understood. Which makes sense, because where did all that funny money come from in the first place? Could giant profits derived from the illegal drug trade, which were then put up "for sale" by all the banks, because it is easy to risk cash that is difficult to count and store, much less use, account for some of the bad craziness?

    And of course, Wall St. cocaine use is legendary. The whole drug abuse metaphor for the financial excess of the Noughts may be much less of a metaphor than we realize.

    Now, how about that "stimulus package". How's that working out?
    posted by telstar at 5:13 PM on May 15, 2009


    A google search for more info on this writer called up this horrifying tidbit, about another family man unable to make ends meet.
    posted by availablelight at 5:29 PM on May 15, 2009 [1 favorite]


    If you're taking out $100K for an MFA in Basketweaving, do you expect a private lender not to loan you money for it because they should know better than to lend a future basketweaver that kind of money? You signed the form. You promised to pay it back.

    I think student loans and mortgages are different enough to make this comparison almost pointless. I mean, for one, you can't foreclose on an diploma. And student loan officers don't encourage students to take out loans beyond what they can reasonably afford to pay back.

    Here's the thing--these banks knew they weren't going to get paid back. You don't lend half a million dollars to someone who makes $30k/yr (after alimony and taxes) unless you're an idiot. They knew people would default on these loans. They didn't care, because the money they made on the side with credit default swaps was so lucrative it didn't matter. And if they had to foreclose on a house, they would end up with an house asset that would--in theory--only steadily increase in value.

    Completely different than a Stafford loan.
    posted by turaho at 5:53 PM on May 15, 2009 [1 favorite]


    In fact, I'd argue that what this guy did -- in terms of actual damage to others -- is actually worse than what landed a lot of people in the clink.
    I really don't understand this thinking. Yes, he should have been much smarter about his decisions, especially given the nature of his job. But surely the companies that lent the money out carry the brunt of the blame, no?


    I agree, financially-naive people can't be expected to always recognize when "it's too good to be true" is, in fact, too good to be true. All the more so when the people they rely on to provide them with professional guidance in matters financial blow smoke up their ass. Yes, by godz, the greedheads who screwed their clients should pay dearly.

    At the same time, it is not more than very basic arithmetic to recognize that dollars in can not be greater than dollars out. A lot of people purposefully engaged in high risk behaviour because they thought they could make a quick buck flipping a home; or counted their wages before they hatched because prices were going up and they wanted to jump in before it was too late.

    The dummy who bought a half-million dollar home on a piss-poor income should lose it. He should declare renegotiate or declare bankruptcy. Just like we all have had to do for the past umpteen decades if we we so foolish as to do the same.

    The dummy who loaned a half-million dollars to a schlub with a piss-poor income should eat their losses, too. Just like they had to do for the past umpteen decades if they were so foolish as to do the same.

    There's no reason why the rules should be changed just because a bunch of greedy pricks went apeshit this past few years.

    There need to be real consequences or this same stupid thing will happen again and again.
    posted by five fresh fish at 5:54 PM on May 15, 2009


    There's no reason why the rules should be changed just because a bunch of greedy pricks went apeshit this past few years.

    Little late there, pal. We've already learned that if one works for a large enough bank, there is no limit to how much risk one can take on for that bank. If everything goes kablooey...well, your bonus check is still safe and the bank's lost money will be repaid by...you and me.

    I used to be responsible with money (no debt, savings, live frugally). Now I'm wondering how much I should give a fuck.
    posted by telstar at 6:20 PM on May 15, 2009


    Indeed, telstar, indeed. I feel as if I'm a fool, because I am not running up a debt far greater than that my estate can pay upon my death. I've got no kids. The lenders can take whatever they can glean from my dead bones. I come out ahead: I got all the toys, and none of the cost.

    Instead here I am, living a responsible, debt-free life, with few toys and a lot of savings. Stupid, stupid, stupid.
    posted by five fresh fish at 7:03 PM on May 15, 2009


    Oh telstar and five fresh fish. I've been careful too, and I'm not kicking myself for it just because someone else temporarily seems to be benefiting from being irresponsible. Not that I see the benefit anyway. Andrews has massive amounts of stress, it's affecting his marriage and probably his kids and stepkids, and he is quite likely to lose his house in the end and may have to declare bankruptcy. Okay, he gets eight months of mortgage-free life, but it'll catch up with him. Those of us who've bought houses we could afford with the intent of paying them off will get our mortgage-free existence later on.
    posted by orange swan at 7:10 PM on May 15, 2009 [2 favorites]


    In fact, I'd argue that what this guy did -- in terms of actual damage to others -- is actually worse than what landed a lot of people in the clink.

    I really don't understand this thinking. Yes, he should have been much smarter about his decisions, especially given the nature of his job. But surely the companies that lent the money out carry the brunt of the blame, no?


    It's pretty simple, really. People go to jail for all kinds of low-level shit. First off, we have drug crimes that (in my opinion) don't do any real damage to society at all. And these people regularly get sent up for 5-10 years at a stretch -- more than some violent sex offenders!

    But okay, let's put that aside for the moment; perhaps you're like me and don't think that people should go to jail for drug crimes. So let's take a pretty standard property crime like stealing a car. Okay, so the car thief has done maybe a few grand worth of damage, for which he'll probably have to make restitution in one way or another.

    The guy who wrote this article borrowed half a million dollars that he had no reason to think he'd ever be able to pay back. Sure, eventually some bank will probably foreclose on the house and get something back from him. But there's no doubt that a ton of money has been lost in the transaction -- from the pension funds that unwittingly "bought" some of his mortgage, to the decrease in area property values brought on by the foreclosure. That adds up to a lot more than the few grand lost due to a car theft.

    I'm not saying this guy should go to jail. But I'm saying that we don't excuse car thieves for their bad decisions, so why do we excuse this guy? He thought he could get away with it, just like the car thief did.
    posted by Afroblanco at 10:08 PM on May 15, 2009 [2 favorites]


    I love all the people in this thread scrambling over each other to proclaim how much smarter and thriftier they are than the author of the article. Do you choose all your reading material based on how much it will let you stroke your ego, or only the financial stuff? Do you watch Cops and then call up everyone you know to tell them you've never been arrested? Hey, here's one I bet you'd like - try hanging around the parking lot after an AA meeting and shouting about how you only have a glass of wine with dinner. I bet you'd jizz your pants.

    But somehow, I bet there's something you're ashamed of, too. And when the article about your secret flaw shows up on MeFi and everyone rushes to explain in detail about how they don't suffer from it and how stupid people like you are, I hope you feel a little bit embarrassed.
    posted by miskatonic at 5:35 AM on May 16, 2009 [4 favorites]


    But somehow, I bet there's something you're ashamed of, too. And when the article about your secret flaw shows up on MeF..

    Secret? (...or, for that matter, alcoholics Anonymous?) Where? This man's (depressingly ordinary, as many above have said,) "flaw" is the subject of a NYT feature and his soon-to-be-released book.
    posted by applemeat at 7:24 AM on May 16, 2009


    Yes, let's not pick on the greedy people. It's not their fault they're greedy!
    posted by five fresh fish at 10:34 AM on May 16, 2009 [1 favorite]


    I'm not saying this guy should go to jail. But I'm saying that we don't excuse car thieves for their bad decisions, so why do we excuse this guy? He thought he could get away with it, just like the car thief did.

    The key difference is in auto theft (or theft of any nature) one person takes something without permission. This is a business deal where all participants agree.

    The shadiest part IMO is the 'mortgage councillor' who seems to try to obfuscate as much information to the bank to prevent them from making a deal 'on the level'. Don't mistake this for sympathy for the bank, they seem more than willing to set the bar low enough 'to get the deal done'.
    posted by mazola at 11:15 AM on May 16, 2009


    Letter To My Grandchild
    posted by telstar at 11:59 AM on May 16, 2009


    The key difference is in auto theft (or theft of any nature) one person takes something without permission. This is a business deal where all participants agree.

    You're splitting hairs. At several points, Andrews' mortgage broker tells him something to the effect of, "We need to do X to conceal the fact that you can't afford this house. If we don't do X, you won't get the house." To which he responds, "Yes, let's do X to conceal the fact that I can't afford this house."

    In other words, if he weren't willfully concealing the information that was most pertinent to the business deal, there's no way the participants would have agreed. Sure, this was all technically legal, which is why he works at an office building in midtown and not a license plate factory upstate. But ethically speaking? No better than the car thief.

    And in terms of actual damage done? Far worse.
    posted by Afroblanco at 5:04 PM on May 16, 2009 [1 favorite]


    The key difference is in auto theft (or theft of any nature) one person takes something without permission.

    I did not give permission for Wall Street to crash my investment portfolio, an important part of which was not associated with high risk stocks. The banks, and Andrews if he finangles his way out of his debt, have taken my retirement without permission.

    It sure feels like a form of theft and it sure feels like greedy people are the thieves.
    posted by five fresh fish at 5:15 PM on May 16, 2009


    I guess I don't understand why you're so mad at Andrews and not the broker or the bank.

    What would the end result have been if Andrews hadn't acted as he did? He would be renting and not in the process of foreclosure?

    Now what where would we be now if the brokers and banks had acted differently? Maybe you would not feel as though your investment portfolio had been pilfered?
    posted by mazola at 12:38 AM on May 17, 2009


    It takes two to tango: Andrews was aware of his role. None of them should be getting away scot-free: they all played a role in what went down.
    posted by five fresh fish at 1:07 AM on May 17, 2009


    Well, yup.

    As for 'scot-free':

    Andrews gets panic attacks and foreclosure proceedings out of the deal. He's lived mortgage free for a few months, but this hasn't played out entirely yet, has it?

    The bank is stuck with bad debt (or it was packaged and sold as an investment, yes?).

    The mortgage councillor, as far as I can tell, got a commission out of the deal and repeat business.
    posted by mazola at 8:35 AM on May 17, 2009


    It took a while, but Patty and I found we could get past blaming each other.

    Debt makes people different. It sounds like these bad financial decisions nearly torpedoed his marriage -- and there's more stress to come. It's clear that through the 21 years of his first marriage, he never learned to manage money responsibly. so I have to wonder how much this contributed to his first divorce.

    He made (was encouraged to make) some spectacularly bad decisions, but over all, I have to feel sorry for him and his family.
    posted by rossmik at 3:07 PM on May 17, 2009 [1 favorite]


    Megan McArdle, using Andrews book as a starting point, investigates further into the couple's background. She claims that Anrdews' wife previously filed for bankruptcy in 1998, with her previous husband, when the couple had a combined income above $100,000.
    posted by FuManchu at 11:38 AM on May 21, 2009 [2 favorites]


    Oops, she filed not once, but twice. ...and whatever your feelings of McArdle's politics, this looks like decent reporting.
    The terrifying implication is that it could happen to you--to anyone who leads with their heart and not their head.

    But en route to that moral, it turns out the story has been tidied up a little. Patty Barreiro, Andrews' wife, has declared bankruptcy twice. The second time was while they were married, a detail that didn't make it into either the book or the excerpt that ran in last Sunday's New York Times Magazine.

    Andrews' desire to shield his wife is understandable--hell, laudable. No decent person wants to parade their spouse's financial trouble in front of the world. But this is material information that changes the tenor of his story.
    posted by FuManchu at 11:43 AM on May 21, 2009 [1 favorite]


    That McArdle article is great. It certainly makes this couple seem like serious ass dumbaclots who would have fucked up crisis or not. (Though maybe they wouldn't' have been able to get a mortgage in the first place had things not been so crazy.)
    posted by chunking express at 9:29 AM on May 22, 2009


    BTW, doesn't anybody remember Casey Serin?

    Who is, FWIW, now working for a short-sale realtor and blogging on the side.
    posted by We had a deal, Kyle at 10:33 AM on May 22, 2009


    Who is, FWIW, now working for a short-sale realtor and blogging on the side.
    posted by We had a deal, Kyle at 1:33 PM on May 22


    How disgusting. He admitted to committing fraud on his mortgage applications. He should be in prison.

    That McArdle article is even more disgusting however. It's one thing to go bankrupt 3 times, but look carefully at the reason:
    By the time of the filing, the couple owed about $30,000 on 8 credit cards, over $200,000 in back taxes, and almost $15,000 in private school tuition, as well as substantial car and mortgage payments.

    They filed bankruptcy because the spent the money they were supposed to pay to the government in taxes. They just decided not to pay their taxes, and now he writes a book. Who the hell do you think you are not to pay your taxes? What privileged class do you belong to that I have to pay and you don't? You must have thought we were rubes. Look at those fools paying their taxes! Ha ha, suckers! I hope subprime lenders preyed on you and bled you dry. I hope they lied and defrauded you. Good. You deserve it. They should be given medals.

    No sympathy. How dare you think you don't have to pay the government $200,000 in taxes, and then have the chutzpah to go and buy another house? You and your wife are cheats and liars. And then you go and write a book about how you got screwed in real estate, like we are so stupid we aren't going to find out that you and your wife are financial poison? You think we are going to sympathize with you because your got cheated like an innocent Doe. Poor Edmund. Do us a favor. Walk into your foreclosed house, then put a gun in your mouth and paint the ceiling.

    On top of that, how stupid are you that you kept $200,000 and ended up in bankruptcy again? The point of evading taxes is to become rich, shitheads. All you had to do was put that money in a CD for a few years, then pay the government, and pocket enough to pay for your kid's tuition.

    Edmund Andrews and his wife are dumber crooks than liquor store stick-up artists. It's one thing to rob Mom and Pop for forty bucks and a box of slim jims, you want to rob the goddamn US government and you still end up poor? And someone gives you a book deal?!

    This country is so fucking stupid it deserves much much worse than it gets.
    posted by Pastabagel at 12:06 PM on May 22, 2009 [1 favorite]



    They filed bankruptcy because the spent the money they were supposed to pay to the government in taxes. They just decided not to pay their taxes, and now he writes a book. Who the hell do you think you are not to pay your taxes? What privileged class do you belong to that I have to pay and you don't? You must have thought we were rubes. Look at those fools paying their taxes! Ha ha, suckers! I hope subprime lenders preyed on you and bled you dry. I hope they lied and defrauded you. Good. You deserve it. They should be given medals.

    This first bankruptcy that you are referring to was filed by Andrews' wife and her first husband, not her and Andrews. It's still egregious, but in this particular case of unpaid taxes, we're talking about a different schmuck than the guy who wrote the article and the book.
    posted by foxy_hedgehog at 12:46 PM on May 22, 2009


    Can they pull his book from the shelves and force him to pay the advance back? (I guess he wouldn't be paying anything back in reality.) Something James Frey-ish about this.
    posted by anniecat at 12:54 PM on May 22, 2009


    Megan McArdle, using Andrews book as a starting point, investigates further into the couple's background.

    This new twist is gaining traction:
    New York Magazine: NYT Mag Writer Edmund Andrews Neglected to Mention One Little Thing in His Mortgage Opus.

    Huffington Post: New York Times Reporter Bankruptcy Saga Actually About Love, Not Money.
    posted by ericb at 1:45 PM on May 22, 2009


    Andrews responds to the McArdle article.
    posted by creepygirl at 7:24 PM on May 22, 2009


    Oh fuck these people. What is so hard about not spending more than you earn? If you are earning less, you spend less. If you are making more, you put some away. If you can't afford to live where you are, you move. If you borrow money, you pay it back. If you can't learn this shit, why do I have to hear about it? Fuck.
    posted by zinfandel at 7:38 PM on May 22, 2009 [2 favorites]


    but the amount of misogynist crap in this thread is dismaying

    It may be somewhat provoked by the fact that he's lying in bed at night, worrying about how he's going to make the next mortgage payment, while she's telling him that he promised her that what she saw was what she got, and now here he was, turning into the kind of guy who wakes her up at night because he's worried about money.

    You gotta admit, that kind of attitude does feed the misogynistic tendencies. It does mine, anyway.
    posted by PeterMcDermott at 7:53 PM on May 22, 2009


    Nelson, the hate isn't envy. The hate is because, today? We're getting new floors for our house finally, so I spent it on my hands and knees, cutting carpet away and scrubbing cat pee from the hardwoods underneath and trying not to throw up from the smell. It was really gross but it's something I've waited 15 years to fix and I can do it now because we've paid the house off and can pay cash for the home improvements. In the meantime, people like this have been looking down on us while charging shit that they think they need but don't, and now they think they're going to walk away.
    posted by zinfandel at 7:59 PM on May 22, 2009


    You gotta admit, that kind of attitude does feed the misogynistic tendencies. It does mine, anyway.

    Well, I don't gotta. Womankind is not responsible for the second wife's nastiness. And neither is Andrews's first wife, who is essentially the one being attacked when commenters say he was "taken to the cleaners." When one spouse spends 15 years out of the workforce raising the couple's children, that is a financial risk both members of the couple agreed to and benefitted from, and both need to take responsibility for. That's all jokeefe was saying (I think), and the fact that a withholding bitch exists, somewhere in the world, doesn't take away from that point.
    posted by palliser at 8:53 PM on May 22, 2009 [1 favorite]


    creepygirl, thanks for that link. McArdle has her own response. And a comment on ClusterStock says that she easily could have filed as an "innocent spouse" in the first bankruptcy.

    I hereby withdrawal any praise I gave for his honesty and self-reflection. He is clearly still defensive and delusional about some of his shortcomings.
    posted by FuManchu at 1:14 AM on May 23, 2009


    I heard a radio program which featured Andrews. And while I realise that more has been revealed about his family's exact financial situation, the following were the thoughts I had just listening to his version of the story:

    The American dream is over (if it ever really existed). When a three bedroom house anywhere costs $450,000, that's not affordable. Of course, the whole American dream - that you can strike out, and get a living and make it good - was based on temporary opportunities like settling new farms, financed out of dispossessing Native Americans and not including women or non-white people as beneficiaries, or, indeed, the vast majority of white immigrants coming in the late 19th and 20th centuries who filled the cities and lived in tenements. It got another boost in the 1950s due to the G.I. Bill (again, just for white veterans; black veterans were included, but no one would sell them good houses).

    It's never been easy for a broken family to live the American dream (separation and divorce usually leads to much reduced living standards for the whole family, because two households cannot live as cheaply as one). But now it seems that it is just out of reach for the majority of people.

    And that's just life - unless there is a complete turnaround in the social trends of the last three decades, we will all just have to suck it up. House ownership will become a priviledge, not an expectation of the majority. People like Andrews will have to live in cramped apartments and send their children to bad schools, just like the poor have been doing. Give up their cars, and take public transit. Buy fewer gifts at Christmas.

    Of course, this will lead to a failure of demand which will further hurt the economy and thus lead to more of an economic slowdown and a further reduction in consumer spending in a vicious deflationary cycle. But hey, that's the fallout of believing in trickle down, and that growing inequality, and thus growing poverty among the consumers whose demand drives the economy, doesn't matter.
    posted by jb at 8:45 AM on May 23, 2009 [6 favorites]


    The Weekly Standard: Save Your Money: Don't Buy This Book.
    posted by ericb at 9:09 AM on May 23, 2009


    The American dream is over (if it ever really existed). When a three bedroom house anywhere costs $450,000, that's not affordable.

    Median price for a single family house in the united states is currently $169,000. this isn't 2005 anymore. The MOST EXPENSIVE median is Honolulu at something like $550,000. So you're way off with the numbers.

    That said, the idea that everyone needs a three bedroom single family home deserves to die. It's unsustainable, unworkable, and terrible for the environment. High density housing is the future.

    But $450,000 is still a gross overestimation of current housing prices unless your "anywhere" is limited to the nicer areas in New York, LA, San Francisco, and San Diego.
    posted by Justinian at 9:18 AM on May 23, 2009


    This is getting much better. It's like he half-confessed to breaking the Sabbath in a Puritan village, and now the search is on for the one who is possessed.
    posted by Brian B. at 11:38 AM on May 23, 2009 [1 favorite]


    I do love the fact that he and his new wife are receiving a severe beating in forum of public opinion. His confession of economic profligacy is turning out to be something like John Edwards' confession of infidelity --- a confession tainted by self-interest and half-truths.
    posted by jayder at 1:26 PM on May 23, 2009


    Hoo boy. I've read McArdle's post on Andrews' wife's two bankruptcies, Andrews' attempt to explain why he didn't disclose the bankruptcies, and then the debunking of his explanation. The guy's just digging himself in deeper and deeper. And I do wince for him, but it's not a situation he'd be in if he'd been at all responsible.

    I mean, he makes his wife's sister out to be an asshole and claims the second bankruptcy was because she sued Patty to get her loaned money back, and doesn't mention all the credit card and other debts that the second bankruptcy discharged? How stupid is he? Does he think no one will check the facts? Does he not know the truth himself? Not to mention that he and his wife had no business buying a house when his wife owed what must have been a substantial amount of money to her sister.
    posted by orange swan at 1:57 PM on May 23, 2009 [1 favorite]


    Gawker's take on Andrew's "Respon[se] To Sketchiness Allegations."

    Amazon.com customer reviews: "Busted: Life Inside the Great Mortgage Meltdown."
    posted by ericb at 2:02 PM on May 23, 2009


    A perceptive customer review (by Snowth) at Amazon.com:
    “This book purports to tell the tale of an Everyman who knew a lot about finance, yet fell victim to the irrational exuberance brought on by mortgage and credit lenders and a go-go housing market. He wrote this book in an effort to save his house. Like many, I read his story in the Times, and bought it wholesale. Could happen to anyone, right?

    Except that he left out a whole chunk of the story.

    This story is primarily about a nebbishy guy who gets taken for a ride by a high school crush. It's also a story about people insisting on having it both ways.

    After one failed marriage, and given a second chance at love in middle age, Andrews falls head over heels with his high school gal pal, who is ‘brainy, regal, sexy, fiery and eclectic.’ This tacky description alone should tell you that this otherwise literate man is in deep. But this hoochie mama, as it happens, also went hundreds of thousands of dollars into debt during her first marriage, was sued by her sister for defaulting on a loan, and filed for bankruptcy -- twice.

    Yet Andrews did not feel it necessary to disclose any of this as part of his boom-bust narrative. Indeed, in the ensuing foofaraw of this revelation, he argued that his wife's massive, debt-ridden history was not relevant at all, that it had never even occurred to him to mention it -- which seems pretty disingenuous coming from a seasoned journalist. Even in the face of hard evidence, he staunchly defends her. To hear him tell it, she wasn't responsible for any of it. I suspect this is the exact attitude that got her into trouble in the first place.

    It's understandable that he wanted to protect her from embarrassment, in which case, he should never have written the book at all. But he wanted it both ways. He wanted readers to think he was being completely candid, while excising a rather significant portion of the story that would perhaps have made him a less sympathetic figure, thereby selling more books. The irony is that, as a capable writer, he probably could have told the whole truth, and made it just as compelling, if not more so.

    But now we are left with story fragments. We know that even while profoundly in debt, his wife had not held a real job in 20 years; that she expected to continue not working after her marriage to Andrews; that she did not respond well to being held accountable for her spendthrift ways. Because he refuses to flesh out the rest of the story, and dimensionalize her character, she is now being vilified as a spoiled, lazy, freeloader, which, one hopes, is an incomplete, if not wholly inaccurate, description.

    Surely, this ‘brainy’ lady, who thought her only job was to love her husband and the four children she brought to the union, plus his three, would not be so foolish as to try to keep up with the Joneses once she took a hard look at their negative bank balance. Surely, she would not be so shallow as to equate clothing one's family in J. Crew and keeping the refrigerator stocked with fine cheeses, with love. Surely, in the face of foreclosure, she would find sensible ways of keeping her family neat and fed without the help of luxury retailers, instead of going to war with her husband over it.

    But left to fill in the blanks ourselves, the impression we now have is of privileged, entitled people living irresponsibly, and a husband in complete denial about his wife's near-pathological excesses. He writes a book in a desperate attempt to keep them in the lifestyle to which she has become accustomed. The irrational exuberance he fell victim to cannot be blamed on any lender. Love made him willfully ignorant. And on that count, it's hard not to feel a bit of sympathy for the guy. He must have been terribly lonely to know what he presumably knew, and still marry her. It's hard to say at this point what his wife brought to the table other than her sexy eclecticism, a profoundly irresponsible approach to money and a tendency to shut him down whenever he broached the topic of reining in her spending.

    I don't know what's worse -- potentially losing their home, or the fact that they are now stuck with each other. Andrews probably couldn't even afford divorce at this point if he wanted it. He can, however, come clean about the seriousness of his wife's problem and nudge her in the direction of taking responsibility for it. Or, hope she works her 50+ year old hoochie mama magic on some other guy and leaves this marriage without taking the remaining half of his paycheck with her. Provided the other guy has credit to burn.

    Now, THAT might be a book worth reading.”
    posted by ericb at 2:15 PM on May 23, 2009 [2 favorites]


    AND HE STILL TRIES TO SELL ME on it.

    Beware the hidden agendas of 'experts'.
    posted by ericb at 3:02 PM on May 23, 2009


    The book tour is going to be painful.
    posted by jayder at 3:27 PM on May 23, 2009


    He's practically guaranteed to star on Oprah, though.
    posted by five fresh fish at 5:34 PM on May 23, 2009


    I don't know what's worse -- potentially losing their home, or the fact that they are now stuck with each other. Andrews probably couldn't even afford divorce at this point if he wanted it. He can, however, come clean about the seriousness of his wife's problem and nudge her in the direction of taking responsibility for it. Or, hope she works her 50+ year old hoochie mama magic on some other guy and leaves this marriage without taking the remaining half of his paycheck with her. Provided the other guy has credit to burn.

    Uh huh. Like I said, misogynist crap.

    Let's review (and I'm not defending Edwards, who was a fool about his mortgage, but who fell afoul of what he dreamed his life, and home could be, like many of us). The ex-wife was owed "untold thousands" of dollars in child support from her ex-husband, so he deserves some blame here too, if blame needs to be cast. She did, in fact, get a job once she was settled in Washington-- two of them, in fact, one for a perfectly decent salary. She lost that job due to the economy, the same way many people have in the last year or so. Nothing suggests that she married Edwards to get at his cash. Edward's ex-wife-- the one who "took him to the cleaners"-- is living in the family home with their sons. She's assumed the mortgage, which would imply that she's employed in some fashion. Edwards is contributing to the support of the household by paying 4K worth of child support and some alimony. We know nothing else about her, really. What do you think a better settlement here would be? For the ex-wife to leave the family home and disrupt the lives of their kids? Would it be fair for her to be living in a two bedroom apartment with their children, while he pulls down 120K at the Times? Isn't it better, after a divorce, for children's lives to stay as much the same as possible? The child support he is paying is not unfair, and, again, it's not a present to his wife. It's child support. If his wife was out of the work force for 15 years, it's going to be a long time before she can maintain her household on her own; but if her settlement is anything like others I'm familiar with, alimony is paid for only a short time-- a few years at most.

    If you want to blame anybody-- and really, who fucking cares-- blame Edwards, who tried to build a castle made of sand.
    posted by jokeefe at 6:42 PM on May 23, 2009 [2 favorites]


    Here's the thing I keep coming back to. Edward Andrews is a New York Times reporter. No matter how you feel about the paper, they do have standards, and most of the people who end up employed there do know how to write and research, and have usually put in many years of work to get to that job. Check out some of the articles Andrews has written in the past. Did he pick up the phone, recheck his facts, and research throughly? Now I wonder. Ok, so this mortgage thing was his real life not his job - except I've never met a reporter who didn't use his/her real life as resource material (not that this is always healthy). I really don't see why getting second opinions, questioning experts, sitting down and doing the math on his situation would be any different from the approach to his job, following the money on a larger scale. (If he's not into playing with the numbers he's the first economy wonk I've known to be that way. Granted I've not known that many.) There are many things about Bob the loan officer's advice that would have made me uncomfortable - but Andrews said that "I thought I knew a lot about go-go mortgages". Then says "I couldn’t shake the sense of having just done something bad."

    I'm not hating the guy. What I am is feeling deeply unconvinced that 1) purchasing his book would be worthwhile (even out of curiosity) and 2) really wondering how I can trust this guy's reporting in other articles when his common sense and logic seem to be a bit... off. I'm not expecting him to be an expert in all things - I'm just expecting that, with his job, he'd know how to ask the right questions - and just as importantly WHEN it's time to ask questions. If he's "been the paper’s chief eyes and ears on the Federal Reserve for the past six years" - well, let's just say that I'm now looking at all his work wondering if he wasn't asking enough questions at other important moments. Or whether his trusted sources/experts are all giving him equally bad information and he can't tell. And I can tell you that I'll notice if he's the author of any future articles that I have questions about.

    I'm also kind of wondering about him being so open about this mistake - I guess he feels that there are so many other people in similar situations that it isn't a terrible shock that he didn't see the mortgage debacle coming either. But let's just say that if it were me and I was going to blog about "the big life mistake I made which I should have known a bit more than a layman due to some of my work knowledge" - well, I'd also know not to be shocked if future employers (in his situation, readers) were not ready to hire/trust me because they'd Googled and read that. Maybe his agent sold him on the "Misery lit is hot, we need to get you into print FAST!" Especially before too many other similar stories are published.
    posted by batgrlHG at 7:42 PM on May 23, 2009 [1 favorite]


    (Actually it's not really Misery Lit - we need a catchy genre name for all the Bad Financial Saga books that will be coming out. Any ideas? Also I ended up feeling kinda uncomfortable about what he said about his wives in that article - I'm weird I suppose, but it's ok to leave some things private. I hope he at least allowed them to read the story before it went to print.)
    posted by batgrlHG at 7:52 PM on May 23, 2009


    What I am is feeling deeply unconvinced that 1) purchasing his book would be worthwhile (even out of curiosity) and 2) really wondering how I can trust this guy's reporting in other articles when his common sense and logic seem to be a bit... off. I'm not expecting him to be an expert in all things - I'm just expecting that, with his job, he'd know how to ask the right questions - and just as importantly WHEN it's time to ask questions.

    Have you heard the old adage, "Doctor's wives die young and shoemakers' children go barefoot"? And it happens. Sir Arthur Conan Doyle's first wife nearly died of TB before her illness even really registered with him. But then once he did wake up to the seriousness of her condition, he took such excellent care of her that she lived far longer than her doctors predicted. Have you ever noticed that mechanics always drive the worst cars? That medical professionals smoke and are overweight? I'm an editor. Are all my posts letter perfect? Research and analysis, like doctoring or fixing cars or editing, are a process. Someone may be very good at doing it professionally and just not bother to do it at home.

    Not to excuse Andrews, of course. Buying a house is a major financial decision and he'd done it before with his first wife. He is certainly capable of understanding how to safeguard himself from getting in over his head. It doesn't take all that much effort to write out a budget and figure out how big a monthly mortgage payment one can carry.

    My point is just that Andrews is not necessarily a terrible reporter or without understanding of business principles because he has so blatantly failed to apply them to his own life.
    posted by orange swan at 9:53 PM on May 23, 2009


    Oh I totally agree with you Orange Swan. But in that we have a lot of reporters out there churning out material, this is the kind of background on someone that helps me decide how critically to read their work. The fact that Andrews doesn't think his second wife's two bankruptcies have anything to do with the story ("nor did they have anything to do with our subsequent financial problems") - is really telling. Not a terrible reporter - but not seeing the story when it's in his face - the way he mentions how his wife spends in just a few sentences in his own article seemed very important to their problem and his story. I'm really not trusting his ability to make judgments of other people's truthfulness. Which in a reporter is a big problem.

    But I guess I also do expect much more of someone covering finances and politics, then for example film reviews or human interest stories. I don't want someone in there asking questions who folks will later excuse by saying "well, he's a nice guy and he tried hard." I want someone who is going to be ruthless in pursuit of the story and will ask the hard questions - even hard questions of themselves. ("What's my own motivation in writing this story and asking this question? Do I have a personal bias here?" - Reporters need to be self-critical all the time like that.) In the same way it would make me uncomfortable to have my banker talk about their own bankruptcies, or losing vast sums in the stock market, or how they'd never discovered how their nice coworker embezzled all those funds.

    I'd never go to a doctor like Doyle after hearing about him missing his wife's TB like that. Wouldn't cut him socially, just wouldn't trust him with my own life. Meanwhile I'm fascinated - I never heard that story.
    posted by batgrlHG at 9:48 AM on May 24, 2009


    It's so much easier to be objective about other people's situations than your own, batgrlHG.
    posted by orange swan at 10:21 AM on May 24, 2009


    In today's NYT's: The Writers Make News. Unfortunately.
    posted by ericb at 1:36 PM on May 24, 2009


    Child support is an obligation, like paying taxes. Did Andrews moan about how the government took 25% off his paycheck before he even saw it? No, and no one here would have sympathized with it. The obligation to pay child support is a piss-poor excuse for spending so far above his means.
    posted by palliser at 1:59 PM on May 24, 2009


    BTW, according to the wife's bankruptcy papers, her ex-husband owed her $14,000 at the time of her second filing in 2007. That's less than half of what she owed her sister, and about a quarter of the $55,000 she discharged in that bankruptcy, her second.

    In total, she has discharged more than $300,000 in debts, including at least $50k in credit card debt, $15k in private school tuition, $30k owed to a family member, and $83 in fines owed to her public library.

    It is neither misogynist nor unfair to point out that this person was living thousands of dollars above her means, especially when both she and her spouse have attempted to blame numerous others (her sister, the bank, their mortgage broker, the government, her ex-husband, etc.) for their financial woes.
    posted by decathecting at 2:33 PM on May 24, 2009 [1 favorite]


    Mystery Blogger for the Atlantic Attacks 'Excellent' New York Times Reporter.

    New York Times Crashed-and-Burned-and-Smoking Watch (Ombudsman Clark Hoyt Edition).

    The NYT ombudsman’s blogophobia.
    posted by ericb at 10:33 PM on May 24, 2009


    mazola: "This fellow went to 'experts' and they expertly helped him (and many others) to dig themselves in way too deep. Who's accountable for that? … It's like me going to a doctor and telling them to make me 1 foot taller. They should tell me that's not reasonable/possible and not just go ahead and book surgeries because I want them to."

    I don't think that analogy is applicable at all. Not even a little bit.

    If you go to a doctor, they're your doctor. They are working for you. They have a responsibility to give you good advice in the context of that professional relationship. If you go to them and tell them you want to grow a foot, and they tell you to take Mr Smiley's Growth Pills three times daily because they own a fat wad of Mr Smiley Brands stock, I'd say that's pretty plainly unethical and a clear conflict of interest. I'd expect them to be punished for that, and I wouldn't fault you very much for trusting their advice. (A similar situation exists with other professionals who work on a relationship basis with clients, e.g. lawyers, accountants.)

    But that's nothing like going to a mortgage broker. A mortgage broker doesn't work for you, they're a salesperson. They're not on your side any more than the guy behind the counter at Tweeter, or someone working at a car dealership, is. Their job, their sole purpose for being at work, is to rack up sales — in other words, to get you to walk out of there with as much "product" as they can.

    If you want someone who's on your side, you need to pay them; make sure you're their customer or their client, rather than the consumer of a product they're being paid to flog.

    It was and is totally unreasonable for people to walk into a bank and expect the salesperson to not try and get them the biggest, most expensive mortgage they would possibly buy. There's a point where credulous naïveté ceases being cute and just becomes unhealthy, and this is way past that point.

    And no, I'm not saying that I've never done anything stupid or never made a regrettable purchase. We all have. But you don't need to be an Übermensch to look at something really stupid — and getting eyeballs-deep in debt because some loan officer said it'd be okay is right up there — and call it out for what it is.
    posted by Kadin2048 at 9:19 PM on May 25, 2009


    Ugh, there are so many, many things wrong with this.

    It's problematic at best for a paper to give one of their straight news reporters a platform to promote sales of a personal project, particularly when it involves the very topic he reports on. To then allow him to lie by omission - in such a way that it changes the entire tone and impact of the story - well; that's damn close to irresponsible.

    Seriously, I've had friends who, after submitting their freaking wedding announcement to the Times, went through background checks and interviews apparently more extensive than anything the paper subjected their in-house reporter to. WTF?
    posted by lalex at 9:41 PM on May 25, 2009 [1 favorite]


    It was and is totally unreasonable for people to walk into a bank and expect the salesperson to not try and get them the biggest, most expensive mortgage they would possibly buy.

    It is not totally unreasonable to expect the bank to not lend to applicants that are almost certainly going to declare bankruptcy as a result. And it's not totally unreasonable to expect the bank to not make that mistake to such a huge degree that it bankrupts the bank.
    posted by five fresh fish at 10:41 PM on May 25, 2009


    It is not totally unreasonable to expect the bank to not lend to applicants that are almost certainly going to declare bankruptcy as a result. And it's not totally unreasonable to expect the bank to not make that mistake to such a huge degree that it bankrupts the bank.

    True. Although I don't think that particular problem really happened that way; many if not most originators (at least of the subprime/liar-loan market) were not selling loans with the idea they'd actually be sitting on them for the next 30 years. So the "loan officers" / salespeople could sell whatever they could get signatures on without violating the don't-shit-where-you-eat principle: they'd just bundle up and resell the mortgages, and then it's the buyer of the resulting MBS's problem.

    There's a whole separate issue on the MBS-buying side, and a whole discussion of the ratings agencies and everyone who failed to do their jobs or passed the buck that's probably not germane, but the point is there was a market for crap mortgages.

    The mortgage originators acted in a perfectly rational way given the plethora of lenders looking to buy MBSs on one hand, and the plethora of borrowers willing to sign ridiculous loan terms on the other. Given that the two groups existed, it's a near-certainty that somebody was going to bring them together and make an easy profit. The shadiness and general sleaze of the mortgage-origination industry is a product of a willingness to borrow irresponsibly coupled with a willingness to lend irresponsibly (the irresponsibility on the lending side being spread out more, but no less significant).

    If we want to prevent the situation from reoccurring, the solution should concentrate on discouraging the short-sighted and irrational behavior at both ends of the mortgage market (borrowers taking out massive loans; mispricing or misrating of MBSes and their purchase by buyers who should have looked at them harder), rather than wasting effort on sleazy but rational middlemen. They're never going to go away.

    The easiest solution, it seems to me, would just be to legislatively nuke the whole "creative home financing" sector from orbit and force a return to more traditional 15 or 30-year 80% LTV fixed-rate mortgages, while simultaneously barring any deposit-taking financial institution from holding MBSes it did not originate.
    posted by Kadin2048 at 12:43 AM on May 26, 2009 [1 favorite]


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