Busted: Life Inside the Great Mortgage Meltdown

I just read Edmund Andrews's "Busted" and thought it was GREAT. I learned a lot about mortgages, mortgage companies and federal "regulatory" agencies and felt that, after finishing the book, I had a better understanding of the mechanics of the melt-down than before. I also really enjoyed Mr. Andrews's personal story and felt that his sharing it was perhaps one of the most illuminating portions of the book. Realistically, there are more than a few places I can read about Option ARM morgages, FHA requirements and the role of the Fed in pumping the bubble (or at least failing to pop it). There is almost nowhere I can go to understand, really, how all of this happened. Let's face it - the housing bubble can't be explained by people "not reading their mortgages." People's reading habits at closing didn't change dramatically between 2002 and 2004. The housing bubble was about real people, otherwise smart people, getting in over their heads. But I had yet to hear a good story about people who didn't have a medical emergency or job crisis, didn't consider the property an investment and the walking away a business decision, or weren't blatantly defrauded. I knew there must have been a lot of "normal" people who just, well, should never have been able to get a mortgage. I consider the content of most of the negative reviews I just read akin to hating The Great Gatsby because you are against infidelity. Brilliant. Yes. I am against people being unfaithful just to have a good time. But it doesn't change the fact the The Great Gatsby is one of the classics of American literature. I can not agree with Mr. Andrews's spending decisions until I'm blue in the face, but they gave me a great understanding about how the country's great housing bubble occurred and, finally, how it popped - taking with is trillions of dollars in paper wealth. I can't recommend this book enough and think its a must-read for anyone trying to really "get" how economically out-of-control the second Bush term was. And you can not like Mr. Andrews or his wife all you want - it doesn't mean that their story isn't important in the context of the housing and credit crises. And it certainly doesn't mean that Busted isn't a great read...

I read this whole book in an evening and found it very compelling. The big picture is about the fraudulent practices and outrageous prices of the various industries surrounding home ownership. I understand that Mrs. Edmund Andrews has filed for bankruptcy a second time, during the years covered in this story, and that Mr. Andrews didn't mention it. Give the guy a break - how much of your life and how many of your mistakes do you ever write a book about? Mr. Andrews goes into detail about how he overstretched his budget quite knowingly to buy a house. It's a rather modest house that wouldn't have cost such a fortune without the incredible inflation of the era. There is a lot more to tell here. First of all, he really did know better, but many people didn't. They just followed with the BS and did what they were told to do, and found themselves underwater. Do you remember the hype and conventional wisdom of just a few years ago? It really was compelling for many people. I didn't think it was sustainable but I always found myself in the minority in discussions about the topic. He discusses this toward the end of the book but does not really give it the attention it deserves. What I think is the most important point in this whole discussion is that most of the people caught up in this crisis, from the Andrews family to the various homeowners he interviews, to everybody in America who bought a home this decade, is this: We just want a place to live, and the conspiracy of these corporations is making it impossible! It's not about living extravagantly for most people, it's about having a house to call home. Even rental prices have gotten outrageous in the decade as well, following far behind the cost of ownership but still costing too much for an average family to afford. This book is very insightful and a very quick read. I wish people would get over the fact that he left out some important details about his family's financial life. For whatever reason, he uses the first person singular when discussing his family's decisions. I.e., he says "my" or "mine" instead of "our" or "ours", which seems to me like he's leaving his wife's responsibility to the wayside...but that's a broader cultural question. Obviously you can read all about his wife's bankruptcies on the internet, but in his book Mr. Andrews discusses enough of their private lives to illustrate the situation quite well.

Andrews writes a great tale of woe while explaining the financial shenanigans Wall Street created to lure the greedy, needy, and in Andrews's case, love struck. It's hard to imagine a sophisticated NY Times financial reporter becoming burdened with a $500,000 mortgage while struggling through a divorce on a reduced take home income of less than $3,000 per month. Andrews is twice busted. First by engaging in a dangerous bet on ever increasing real estate values, and second, by being blinded by love for a twice bankrupt, beautiful, but dysfunctional woman. Two hits to the chops that even this book deal won't fix.

I believe that by putting a face on the mortgage crisis, Andrews has provided the best insight yet into the problem. It is the most self-deprecating book I believe I have ever read. Imagine being a respected economics reporter for the New York Times. You get a divorce (unlike some reviewers have commented this was not dumping wife number one for a trophy wife but a marriage long dead and finding again a woman he grew up with; you fall in love and do stupid things (he takes full responsibility for these, he does NOT asked to be bailed out, in fact he says he does not deserve to be bailed out; you are embarrased to have your peers, bosses, and even Alan Greenspan become aware of your situation; you write a book summoning all your reporting skills in economics and finance, and hopefully you bail yourself from your self-inflicted hell. Is there something wrong with that? No. Andrews airs so much dirty laundry along the way that if it was my wife I would be in divorce court. This is the main value of this book, to show how financial matters, the leading cause of divorce, can destroy a family. That could be the story but what about the greedy realtors, appraisers, loan originators, banks, brokers, etc. who pushed for more and more product of lesser quality and even found it more attractive the worse the credit was. In 37 years in banking and investments I have never witnessed this phenomenon. Worse yet, the rating agencies used flawed models to rate the securities AAA when they were nothing of the sort, and Congress and the regulatory bodies turned their heads and held their noses. Within the mortgage industry there were a few good guys, not saints, but some who had limits to how low they would stoop...despite being pressured by Merrill Lynch to do so and then forced into bankruptcy for not complying. But the worst thing, and Andrews goes to great length to describe it, is that he received one of the best subprime mortgages possibly because he was a white male while latinos, blacks, and women, across all income levels were given worse...in some cases confiscatory terms in subprime loans when many could have qualifed for prime mortages but were steered away from them. He doesn't blame the Republicans, Democrats, bankers, or anyone else for this. That is for the reader to decide. True, there is blame to be spread all around but when some are taking out the loans but others are giving them loans just to make a profit knowing they will default and then selling them to others without recourse, someone should pay. Just as the credit card companies sent out unsolicited cards, even to people who had just filed bankruptcy, these predators convinced people they could afford a home and if they couldn't they fraudulently made them qualify. It is this destruction of the American way of life...even the American dream that we will suffer from for years...perhaps decades. I read this book in two evenings with my mind spinning because I knew many of the compani