Wednesday, August 05, 2009
(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
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.
Posted by Daphne at 8/05/2009