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(so many books to catch up on!)
Okay, first: what's with the current craze for personal-experience/memoirs with one-word (or short) catchy titles, followed by witty/overly-long subtitles?
Busted: Life Inside The Great Mortgage Meltdown Not Buying It: My Year Without Shopping Waiter Rant: Thanks For The Tip -- Confessions Of A Cynical Waiter
Trendy much?
Anyway. Speaking of trends, I jumped right on the bandwagon to read this book, from which I read exerpts on Salon.com. I liked what I read and thought the book might be interesting. While witnessing the stunning crash of the housing market here in the Bay Area, I wondered about the people behind the foreclosures -- not just the obvious ones, the immigrants and first-time homebuyers (perhaps with English as a second language) -- but the Regular Joe, white-collar types who over-extended. In some cases, WAY over-extended.
It was pretty good, but it was also -- as seems to be a common theme with new personal-experience type books -- a little overstuffed.
The book follows a fairly pat format of a chapter of personal experience, then a chapter of data and bigger-picture facts, alternating between the two. I found this to be informative, but a little tiresome. I really wanted to know more about why these smart grownups decided it was okay -- even when it quickly became obvious that is was NOT okay -- to buy an overpriced house that was out of their budget. The author, Edmund Andrews (New York Times financial reporter, of all things), goes into much detail about their financial woes. He admits it was their own fault. However, I still don't get it. As Alan Greenspan says to Mr. Andrews when Andrews reveals the depth of his financial crisis, "Why did you do it??"
So, Andrews is a big-shot financial reporter for the New York Times. He's been covering -- and warning against -- the housing collapse for awhile now. However, when the time comes for him to remarry, he is somehow unable to resist buying a house that is outside his budget. The alternative -- a condo or an apartment -- are not appealing. So, he did what many people did. Got a "creative mortgage" and bought the house anyway.
And so we enter a tale of financial horror which quickened my resolve to save, save, save, be frugal, be wise, and not to indulge in financial magical thinking.
Further revelations about his wife's two previous bankruptcies made me even more incredulous. Nothing about his tale convinces me that he had any business buying this house. Even with creative financing, they were barely (and most times, not even) making ends meet. In a household with an income of over $100,000, this seems just plain stupid.
While the litany of shoddy deals was fascinating, what was infuriating were the details of how so many women and minorities were duped into taking subprime loans. In many cases, they were simply told that these were the only mortgages they qualified for.
Ultimately it was a pretty interesting read. Their personal story I found horrifying -- nothing scares me more than out-of-control finances (which made me shake my head in wonder at how long they kept it up! There is NO WAY I could have stood that much stress that long). The amazing speed at which they mired themselves was astounding. Andrews says that he takes full blame for the fiasco, but I have to wonder. There is an edge of "if they hadn't offered it to me, I wouldn't have taken it" happening. It's just plain bad judgment, that's what it is.
If you are at all interested in how the housing industry got into this mess, I found this to be a pretty simple and easy-t0-understand outline of what happened. I skimmed over some of the litany of bank names and types of subprime and creatively-financed mortgage types, but overall I feel more informed. And dumbfounded at what people accepted. I do think the banks and mortgage companies ought to be prosecuted and hang their heads in shame, but I also think that homeowners (or former homeowners) ought to look hard at how they got into that boat. A leeetle bit of creativity I can understand. But some of these mortgages are outrageous and I either have to believe that people simply had the wool pulled over their eyes by the banks/mortgage companies, or that they were simply house-crazed and would take whatever they could get. Either way, it's pretty shocking.
A pretty good review of the book is also here on The Huffington Post.
4 comments:
I was curious about that book. Enjoyed your review. I reminds me a bit of "Maxed Out" (both a movie and a book) which is about predatory credit lending. There is a similar balance between personal stories and surveys/facts. The industry comes off as a bunch of mini Gordon Gekkos, but there is also a lack of common sense the card holders, who are living wildly beyond their means.
Right, that sounds dead interesting to me, especially since I just had a long discussion with sig-o about finances, housing, and etc. Not in a bad way, but we both find it incredible that people can't make ends meet when they make (what seems to us) an exorbitant amount of money (and here I must qualify that I work for a nonprofit and he in the arts industry so not a lot of income but a lot of plain common sense.) The idea of "keeping up with the Joneses" is not a new concept, but it's astounding to me how people seem to feel like the very size of their house is more important than their ability to pay for their house. We tried to buy a house a few years ago - and thank god we didn't - but were amazed at the mortgage officer telling us we could take out whatever loan we wanted since we both have good credit - even though we didn't have the income to support a large mortgage. It only recently occurred to me that we could have been a part of the crisis. Thankfully we stayed in our rental.
Good review. I'm going to have to find this book - we'd both want to read it.
Oh - and the title? I recently read a book called "Spook" with a very, very long subtitle by Mary Roach (unfortunately not as interesting as I'd hoped, but it fits the bill for your hip title/subtitle nonfiction standard :)
ive been wanting to read this book.
i think i saw it mentioned on The Daily Show but im not sure.
the area im from down in south florida (the cape coral/ft myers area) is one of the areas thats constantly mentioned in the same sentence as the housing/mortgage crisis. in my opinion, what seems to have happened down there, is a lot of people were just living a lie and thinking they were/would be richer than they are. of course not everyone was like this, but it seems like everyday someone was taking out a second mortgage to go on vacation or buy a boat. its ridiculously crazy! now the whole town owns homes they owe $600,000 on when its really only worth $200,000. the sad thing is that so many of them havent learned their lesson. they talk about how they have to "walk away from their homes" like its no big deal.
dont get me wrong, i do believe a lot of people were tricked or misled by bankers. and when you're buying your first home its scary and confusing and there is a lot to educate yourself on, but so many people just bought into the fantasy that their house could spit out free money.
obviously im no money expert (ahem, clearly) but i HATE the idea of a house as an "investment." i think when people really start looking at their home this way, instead of as a place to live, they get into trouble.
Alex: That's another one! What is WITH these titles??
Kate: I actually wanted to read Spook (I read Stiff and liked it). And yes, that's another one! I saw another one at the library today: Cheap: The High Cost of Discount Culture. I swear. Get a new title schtick, editors.
Tammie: I'm with you. When I finally do get to buy a house, it's because it's going to be HOME.
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