Reader's Reviews
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It would be tempting to believe that so many people who have gotten caught in the mortgage crisis were duped into their bad decisions - lead down the primrose path by greedy bankers and people with no scruples who were just looking to enrich themselves. That's the principle of this book, anyway. Unfortunately - as it usually is - the truth is inconvenient, and the truth is that no one was holding a gun to Andrews' head when he took out a massive "liar's loan" to buy a house he couldn't afford for himself and wife number 2 in 2004.
First, let me just say that Andrews might be a really fine person and tons of fun at parties, but throughout the entire book it's pretty apparent that he wasn't thinking with his "big head" when he was making tons of bad financial decisions. He ditches his wife of 21 years - apparently not realizing that there's a reason why people say after 20 years of marriage, "it's cheaper to keep her." He initiated the divorce, he has three kids, and his first wife apparently didn't work - that's basically a recipe for getting socked with huge alimony and child support payments, yet he seems incredulous and petulant that he would have to support his former family even after he's moved on to his magical new beginning. He ends up with a "captivating" woman he knew in high school - a homemaker with 4 kids and apparently not much in the way of common sense, financial savvy, or ambition. Now, I don't know if this is true everywhere, but "homemaker" where I come from means "woman with no job." Patty, his new wife, hasn't worked in over 20 years, yet throughout the book, Andrews talks about expecting her to get a job making at least $40,000 a year to supplement the family's income. Generally, 50+ year-old women with no recent work experience are lucky to get jobs in convenience stores, much less a job earning that much. Andrews takes himself to task for having "unreasonable expectations" about his wife's ability to get a job (or, apparently, keep one) but she must have been agreeing to his requests or feeding into it in some way. It was very obvious, to me, that Andrews was no different than any other older man in the throes of a midlife crisis looking to recapture his youth by bonking someone who isn't his wife. The only thing that didn't surprise me is that the woman wasn't 20-30 years younger than him, as that's how it usually goes. Patty comes across as both weak and a bit of a hysteric through the whole thing, not to mention more than a little wifty.
That leads me to my next point. Two people bringing home $6,000 a month (take-home, not gross, as he states) should be able to live relatively comfortably - I don't care who you are, or where you live. That is a very respectable amount of money. However, when you do something incredibly boneheaded - like buy an overpriced house you can't afford, with a mortgage you don't understand and also can't pay for, no matter how much money you make, you're going to end up in difficulties. Added to those difficulties was the minor issue that the family just couldn't stop spending. My husband was laid off this year, and when he lost his job, we locked down our spending - no more cable, we downgraded our cell phone plans, we stopped shopping unless it was for food. In the face of unbelievable financial shortfalls, the Andrews' didn't change their standard of living one iota. Buying new clothes at J. Crew. A thousand dollars (A THOUSAND DOLLARS - I guess they've never heard of coupons or sales) on groceries every month. Keeping the phone/cable/internet (tip: if you have a cell phone, you don't need a home landline phone). Hysteria McDrama (his second wife) can't keep a job, yet keeps spending like there's no tomorrow. He bemoans not being able to fix his house or furniture and yet they're still going out to eat. This is when you wish you could tie someone to the railroad tracks to ensure they will be hit by the clue train. When you don't have any money, you have to live like you don't have any money. Not like things are still great. They didn't, and that's how they ran up their credit cards.
And then there's that whole issue. Andrews says at one point he threatens Patty with taking away the cards, and I am amazed he didn't. The controversy over Patty's bankruptcies is well-documented elsewhere, and I have to believe Andrews knew she had racked up FIFTY THOUSAND DOLLARS of credit card debt in her previous marriage, that had to be discharged via bankruptcy. Again, this is "little head" thinking. I'm frankly amazed they didn't end up worse off than they did.
Back in 2006, when the real estate market in our area was hot, we toyed with the idea of selling our house (in which we had about $130,000 in equity due to the inflated housing market) and buying a new one. We found a great house that was just slightly out of our price range, but we really loved it and could totally see making a home there. We had quite a bit of cash we could put towards the sale, in additon to the equity we could put in once our house sold. Our realtor had us contact a mortgage broker he knew, who came up with all kinds of crazy ways we could pay for the house, including a scheme where we could pay NOTHING down and finance 100 percent of the price of the house and still only have a $1200 a month mortgage payment. When we told him we were only interested in one type of mortgage - a traditional, documented 15 or 30-year fixed - the options got more limited and we quickly realized we would end up with a payment we could afford, but not comfortably. I didn't want to spend nights lying awake worrying about how we would pay the mortgage if my husband lost his job, so we walked away from the deal. It was a great house in a great area. It's worth close to $125,000 less than what the sellers were asking in 2006. We dodged a major bullet on that one.
And that's really the takeaway from this book. Yes, there were predatory lending practices. Yes, there was a huge amount of deception and irresponsibility in the mortgage industry, and the financial industry in general. It shouldn't have been allowed to happen, and it shouldn't be allowed to happen again. But no one was forcing people to buy more house than they could afford. No one was forcing people to take out "liar's loans," or mortgages without a down payment, or ARM mortgages where the interest rate would leap to 11 percent in 3 years. Andrews could have had his wonderful "new beginning" with his new wife in an affordable apartment, but I imagine that wasn't as romantic or even acceptable to Mrs. Princess (who I would bet money was goading Andrews into a lot of this, including buying the house and running up the credit cards). The Andrews emphasized superficial trappings of success over happiness, which is certainly a mistake a lot of people make. They could have rented an apartment, kept Mrs. Princess at home where she obviously wanted to be, and been a lot happier and more stable (well, until she maxed out the credit cards at Saks, but that's a different issue). If Andrews is a "typical American" who got taken by scheming bankers, we're all in trouble, because that means the typical American doesn't have the intelligence or common sense to get out of the path of an oncoming speeding semi that's about to make them into road pizza. If Andrews hadn't been letting his johnson make the decisions, he would have been able to see all this coming ten miles away. Anyone with half a brain would look at woman who had already filed for bankruptcy once, hadn't worked in 20 years, and hadn't protested making an incredibly dumb decision like buying an unaffordable house, and think to themselves, "here comes trouble."
I'm curious to know if Andrews and his second wife are still married or if she's ditched him and moved on to a prospect more likely to keep her in Saks clothes and expensive houses. If that hasn't happened yet - brace yourself, Andrews, because it's probably coming. Andrews got taken, but not by the mortgage industry. He got taken by his wife, and there's really no excuse for a man of his intelligence and background not knowing better.
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A well-written personal soap opera woven into the housing mortgage meltdown written by someone who was actually living it. Edmund L. Andrews admits his faults (although he was not obligated to fully disclose Patty's serial personal bankruptcies)with finances and the very poor decisions which led up to the housing mess that he created.
There were times that I had trouble feeling compassionate for someone who was making $130,000 a year but couldn't effectively manage his own finances. He should have demanded more from Patty to contribute to household by taking any job which will provide some type of household income rather than coddling her (as well as undergoing intensive financial and marital counseling for both himself and Patty).
***
What happened to Patty? I was totally left hanging, and the fact that I care is a testament to the engrossing storytelling in Busted: Life Inside the Great Mortgage Meltdown. Andrews is a NY Times economics reporter who covered the mortgage market and yet found himself a near bankrupt participant in the housing market collapse and subprime mortgage mess. His firsthand perspective gives a human angle to the often faceless coverage of the housing market.
This is an engaging read (I feel bad saying enjoyable given the very real and miserable circumstances of the author that led to this book). It's an important read: a warning for people living on the edge financially; an inside look at the real consequences of lapses in judgment; some food for thought about how we (since we all are feeling the aftershocks) got into all of this housing trouble. Busted provides a valuable inside perspective on one of the most defining issues of our time.
Finally, Busted is a love story. So, special note to Mr. Andrews: what happened to Patty? Even a little footnote would have closed the loop!
***
While this is a ostensibly about how a smart economics reporter for the NY Times managed to take out a mortgage he REALLY could not afford and dig himself into a financial mess, I found it also to be a cautionary tale about rushing into marriage. Andrews proposes to his wife before they have even kissed; both reeling from bad first marriages, they decide to move in together with some of their kids -- hence the need for the expensive, not overly large house, bought at the height of the housing boom. More than half his salary goes to alimony and child support; the rest will pay the mortgage initially. He is counting on his new wife to make up the slack but she is not a "go-getter". He does note the irony that he really was not looking for a high-powered career woman but is upset that she cannot find a high-paying job. (I also was amused that he called his $130,000 salary "modest.") The minister due to marry them observes they score poorly on compatibility tests. I found the chapters about the mortgage crisis and how the nation got there harder to read, but that's probably because I don;t enjoy reading about economics. The parts on the couple's relationship was compelling, as well as the nonsensical ways he was able to score his mortgage, and when he had trouble keeping up with it, borrow even more money to help pay off bills. Does his marriage survive? The book ends on shaky ground. It's a great look at how financial problems tear a couple apart.
***
I really enjoyed this book, it's a good read. The details that Andrews provides about mortgage-brokering and the business of securitizing debt for resale are eye-opening, and presented in a way that's easy for a lay person to understand. If you are interesting in the mortgage crisis, Busted and Our Lot are a good place to start.
There's a lot of outrage about the author and his family. Whatever. Very few people have lived perfect, mistake-free lives, and they usually don't spend their time condemning other people on the internets.
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