Life Inside the
Great Mortgage Meltdown
Edmund L. Andrews
(Norton)
Well, he wasn't --- and the last time we heard (in an extended article in the Times that appeared this summer) --- we find that Andrews was many months late on the half-million dollar mortgage on his house in suburban Washington, just waiting for JPMorgan Chase to do their will with him.
The book Busted preceeded the author's confessional article. It is ostensibly about the "subprime mortgage" market: how it came into being, how it fed on its own greed, how most of the huge banks got came in through the back door (and how some of them got eaten up), who was at fault, where the chips were and are falling. It is also about the decline of the three most trusted financial rating services --- Moody's, Standard & Poor's, and Fitch.
"If you wanted to mark the exact date when subprime mortgages began to wreck the whole financial system," writes Andrews, "it would be July 10, 2007, the day that Moody's Investors Service and Standard & Poor's tacitly admitted they had blown it."
- In separate announcements, the world's two most powerful arbiters of credit quality slashed their ratings on hundreds of securities backed by subprime mortgages.
"S&P took the ax to 612 different bond issues with a face value of $8.3 billion. Moody's did the same to 399 securities worth $5.2 billion. Never before had the agencies downgraded so many at one time."
Mixed in with this tale of national economic disaster, government malfeasance, the appalling misuse of consumer gullibility and innocence, comes an extended account of the author's personal experience: falling in love with a lady from California and buying a house with her in suburban Washington, D. C. The national trauma of people losing their assets in real estate is, too, the story of reporter Edmund Andrews and his soon-to-be wife Patty.
The adventures of Citibank and the Federal Reserve and Fanny Mae and credit scores and "option ARMs" and mortgage lenders and financial tsunamis and "low-doc" loans come, at times, to be sidelined by his personal tale of woe, the couple caught up by their declining finances, their onerous bills from J. Press; "the $400 electric bill with the cutoff date printed in red;" the nagging of the creditors (the telephone starts right up at 8 am); and the $3,271 monthly mortgage.
Wife Patty is "exhausted, frightened, and in despair." He tells us, "I had morphed from a gentle and adoring rescuer to a short-tempered, self-absorbed, hypercritical prick." And his take on her: "I've married a lunatic ... She's gone nutters."
In the fall of 2008, the American economy seemed poised on the edge of economic collapse. Stock prices of those huge financial engines had plummeted: GE, Citibank, Merrill Lynch, Lehmann Brothers, Washington Mutual, Chrysler, Ford, and, no doubt, Playboy Magazine. I seem to recall that Bank of America stock fell to less than 3, Fanny Mae and Freddy Mac below 1, and we all know what happened to Lehmann Brothers, not to say General Motors and WaMu. As of this writing, Citibank is 3, GE 14, AIG --- after a reverse-split (20:1!) --- hovers around 12. My 401(c) is a shambles. I've gone nutters too.
The American economy, hell, the world economy, teetered; some of us thought it would fall to zilch. We remembered what happened to our grandparents in 1930, and 1931, and 1932 --- when everyone thought that we had finally come through the worst of it. Now, at least earlier this year, we were suddenly thinking about the hidden poetry in key words and phrases: "depression;" "falling out of bed;" "tsunami." Even the names of the ratings agencies seemed prophetic: "Standard & Poor's." "Moody's." As in the bad moodies.
In Busted, we get a double whammy. The world of finance has gone crazy and wrong. And poor Patty: she left her secure world in California to live with grouchy Ed in a perfect storm of debt in suburban Maryland for pity's sakes, in a house now filled with deteriorating furniture, a cut-off DSL line, bills from the telephone company and a monster for a husband: "You're destroying me with your constant nagging and criticism," she tells him. "You never stop. You can never leave it alone." The house is a shambles, as is the car ... and the marriage.
Just like Patty and Ed, a year ago I woke up to find my own finances going down the rathole: the value of my house had plummeted to half its former value, I have a leaking toilet I still can't afford to fix, there are rats in the ceiling ... and a mortgage that will soon balloon to $3000. How could I have been so stupid?
So we --- Ed and Patty and I --- are left busted. All we have to show for it is the patience of our debt-collectors and a chastened Times reporter whose one talent is words. For he is still left with that: he can magically take a complicated piece of financial history and make it understandable. (His expert tracking of a pool of mortgages and debt instruments labeled "JPMAC 2006-FRE1" is masterful.)
In fact, in simply publishing this book, with his (sometimes) self-pitying confessions, he may have saved his ass. Despite his self-denunciations, he has a jewel in his J. Press jacket breast pocket: If he thinks that JPMorgan Chase is going to foreclose on him, he has another think coming.
Look at it: last year he was just another homeowner, like me, deeply underwater. But now he is a nationally famous New York Times reporter who has written a heart-tugging mea culpa in the guise of a study of The Great Mortgage Meltdown.
He must suspect, as we all do, that those centurions in the mortgage department of JPMorgan Chase --- much less the Prez, Jamie Dimon --- know which way the wind is blowing. They read the Times too ... know it would be impolitic, very impolitic to send this brave reporter and his bedeviled wife and all those harried step-children out, dispossessed, onto the steamy streets of Silver Spring, Md.