Buyer Beware: Mortgage horrors
By John Amato Monday May 18, 2009 4:00pmI saw this NY Times article on Digby's site and it's just awful. As Edmund, a NY Times economic reporter, writes: If there was anybody who should have avoided the mortgage catastrophe, it was I.
Read his personal saga of getting sucked into the mortgage crisis. It's riveting. I watched this thing from the start because I sold my house right before the mortgage lenders lost their minds and almost destroyed the world. They should have been the firewall that prevents the virus that infects the system, but they turned out to be the virus themselves.
If there was anybody who should have avoided the mortgage catastrophe, it was I. As an economics reporter for The New York Times, I have been the paper’s chief eyes and ears on the Federal Reserve for the past six years. I watched Alan Greenspan and his successor, Ben S. Bernanke, at close range. I wrote several early-warning articles in 2004 about the spike in go-go mortgages. Before that, I had a hand in covering the Asian financial crisis of 1997, the Russia meltdown in 1998 and the dot-com collapse in 2000. I know a lot about the curveballs that the economy can throw at us.
But in 2004, I joined millions of otherwise-sane Americans in what we now know was a catastrophic binge on overpriced real estate and reckless mortgages. Nobody duped or hypnotized me. Like so many others — borrowers, lenders and the Wall Street dealmakers behind them — I just thought I could beat the odds. We all had our reasons. The brokers and dealmakers were scoring huge commissions. Ordinary homebuyers were stretching to get into first houses, or bigger houses, or better neighborhoods. Some were greedy, some were desperate and some were deceived...read on
He was so honest about his financial situation and his relationship with his wife that it lends the article the kind of credibility talking heads on TV will never have.
And I agree with Digby:
This is one of the bravest articles I've ever read. But it's important to read how an intelligent, successful person could get themselves caught in the maw of the sub-prime mortgage meltdown. It wasn't just a bunch of illegals lying on their mortgage applications. There was a whole industry devoted to seducing people into believing they could easily have things they couldn't afford. After all, our whole society was screaming at the time that you were a sucker for not getting in on the game. And everyone has some capacity for believing what they want to believe. It was a perfect American scam.
I rent these days and was lucky enough not to have destroyed myself before the fools gold rush began. If the financial experts got blinded by it, what chance did the average American family have against this massive financial con game?
Login or Register to post comments.
Ask little Timmy for a bailout. Tell him you just completely blew it, and just like the Wall Street fatcats, it wouldn't be fair to let you go under.
bastids!
(how did the cat get so fat?)
Is this guy one of Rick Santelli's "losers"?
of criminal acts by the banks etc.
The House of Reps and Senate get better pay when they represent fat white capitalist greedheads rather than
scrawny white retired potbellied yay-hoos kinda like me.
But Mick, who would they rather have a beer with?
Stupid, yes, but brave? C'mon, the guy is probably aiming for a book deal with this.
Monthly take home: $2700
Alimony/child support: $4800
..decides he can afford a $460,000 house.
He should have invested the money in a good psychiatrist.
brave my arse! Just another wanker that made a bad decision. boohoo QQ me a river!
I believe the $2700 take-home was after alimony and child support, and did not include his wife's salary.
Take home pay was after alimony and child support. Plus, he and his new wife thought her income could make it work - not an unreasonable assumption before the recession.
It's too easy to judge this guy after the fact.
when the media specifically cNBC spoke about this about 6 weeks ago they often grouped the "ordinary homebuyer" as greedy and a big part of the blame. actually homebuyers were a relatively smaller part of this scheme. several bets could be placed on one mortgage. mortgage brokers/bankers wanted as many
mortgages written as possible. they just sold them off. the banks were heavily involved in lending money and financial institutions were involved in the fnancial instruments. AIG couldn't pay it's "insurance" on bets made by investors that hedged their bets with insurance. so what we have and have had is a credit crisis. businesses of all sizes need credit. NO credit NO business consequently people get laid off. people lost their jobs their homes and effects the values of surrounding homes. there's a lot of systemic/collateral damage because of this credit default swap orgy. personally i'm NOT very pleased that
the cram down bill was NOT passed. the financial elites run this country.
“You lied to me,” she told me as I got coffee. “You said that what I saw on the outside was pretty much what you were. But you’re completely different. If I had known what you were really like, I would never have come out here.”
they are having extreme financial difficulties and she feels attacked?
i really am as oblivious to this response as she is to her predicament.
maybe i have asperger syndrome, or i am a hypochondriac that thinks he has asperger syndrome.
did my heart stop? no, there it goes again. phew.
"He was so honest about his financial situation and his relationship with his wife that it lends the article the kind of credibility talking heads on TV will never have."
I'm sympathetic, I think there was fraud, but honesty would have meant he took time to do all the work to know what was going on.
Is someone who makes self disclosures about their personal life more honest than the rest who don't spill?
he wasn't honest enough to admit that it would be unlikely for him to pay back.
I see how sadly dishonest he actually was. Not to say he wasn't led down the garden path by people with bad intentions, but somewhere self-responsibility incentives must remain in place for people to grow into responsible adults, after all.
self honesty is easily overlooked when you are sold a dream; risk analysis goes out the window.
into Vladamir Putin's dreamy eyes.
steve wynn's with charro blowing on the dice for luck
$120k/year??? I am lucky if I can perceive 1/10th of that.
He acknowledged feeling wierd, like he had gotten away with something.. because he had!!
Anyone who would support a complete poseur here has got to be out of their minds!!! What is he paid $120k for IF NOT TO analyse the economy and personal finance.. Yes, the fact that he makes an utter hash of it makes him human, but HARDLY WORTHY OF A LABEL OF "BRAVERY" as though MORTGAGE FRAUD were some kind of PURPLE HEART or SILVER STAR award.
DO NOT debase the meaning of bravery.
may I mambo dogface to the banana patch?"
Steve Martin, on teaching kids to talk wrong.
Why do we need a Fed to hand out our tax dollars to private middlemen?
They have proven they can't be trusted.
Eliminate the Fed, and Nationalize the Banks, until they can prove they are responsible.
Would you keep giving your car keys to your kid if he wrecked it everytime he drove the damn thing? It's not like there isn't a history here.
The article is, in fact, excerpted from his upcoming book.
This guy is a finance reporter? I guess you don't need to know much about the subject then. Apparently these two had owned homes before so how did they not know that there wouldn't be enough money left to pay expenses? It's not rocket science. They were not lied to about the terms of the mortgage. BTW, why does she get child support for her kids? You don't buy full retail and go on vacation when you are going under either.
I feel for first time buyers who are duped into too expensive homes with huge mortgages by unscrupulous agents and lenders. I feel for people who are lied to about the terms of the loan or steered into subprime loans. I feel for people who don't have a great command of the English language. These people really got ripped off.
Good catch on that, recoup losses quickly with a book deal.
I read this before. Another clueless economist that can't see the forest for the trees. Next he'll be telling us that the recession is "bottoming" out. I wouldn't trust him to give me directions to the ice cream parlor much less financial advice.
Dude! Speeding tickets? Turn off your AC, hang your clothes out to dry, use coupons, drop the cable/internet/phone, no more $700 clothing escapades. It's not that difficult! How do I know? Because that's how I'm making MY friggin mortgage payments and I didn't get a frigging fake loan, I got brain surgery. GRRRRRRRRRRRRRRRRRRR.
GRRRRRRRRR.
I have absolutely NO sympathy!. Is he still paying child support and alimony? Did he think about his first family, his first responsibilities before he jumped into the second?
Don't defend this bastard and don't think it's anywhere near alright to behave like he did and does. Not a single attempt to pay the mortgage in eight months.
In essence, my children will pay for his idiocy. I qualified for SS Disability and I paid for it but will it be around if one of his children needs it someday? Not if we use it to pay his mortgage.
This is how economists think? Yes. Some. That's how we got into this mess.
But alas the crisis is over now isn't it ? With a complicit government wallstreet and the banks pulled off the biggest heist in world history and were therefore rewarded , the wealthy investor class are once again making money in the market so hallelujah ! All is well once again ! It's funny but having been laid off , being jobless with savings all gone I feel left out somehow ya know it ?
They told me they could lower my house payment by thirty dollars a month and not increase the number of years left on my mortgage. They said all the costs would be added to the new loan except a four hundred dollar application fee.
I don't know about you but the only time I ever paid an application fee, I got ripped off. No loan and they kept my money.
I told them I didn't like the idea of paying an application fee and they hung up.
Just a bunch of rippoff artists!
Wife, mortgage, car, kids, alimony. Does it to you everytime. I'm doing it tough but I do not possess the afore mentioned dilemmas. I wouldn't give that guy's troubles to a monkey on a rock.
I am having a really hard time understanding why no one has jumped on this ridiculous sentence. Imagine if he had written "It was he", would that not prompt someone to notice his clumsy construction?
That he could write it and that his editor could print it just blows my mind.
Subject "It", verb "was", object "I"? No, the object is "ME".
pbh
I'm having a really hard time identifying with this guy.
I shopped for my first home the same time he did, when rates had bottomed out and everybody was willing to make a crazy deal. The difference was that I was aware of my limitations and didn't overspend, because I didn't have faith that the price of my new home would skyrocket or that the adjustable rates would remain low.
And when the rates did start climbing, I reduced my top price accordingly. I'm not wealthy and my husband makes intern money, so it was our responsibility to get a good deal that we could live with.
Lenders offered us well over $400,000, and we used much less than half of that and got a lovely, well-kept home in a good neighborhood with a manageable mortgage. And when rates dropped a few months ago, we refinanced and got an even better deal.
All the while, we used the money we could have been dumping into an overpriced home we didn't need into paying off our credit cards. I even used those checks he referred to, to transfer a balance from a higher-rate card to a lower-rate one, and paid it down from there. I stopped using the higher rate cards completely and restricted myself to our debit card and Amex, which has to be paid off monthly.
I feel sorry for anyone who was duped, but it's foolish to blame the lenders entirely. They're greedy sons of bitches to be sure, but so were the people who bought the fantasy and signed on to loans they couldn't be sure they could repay, or to try to coast on credit cards which they can't pay off.
DH and I bought in September 2005. Anyone who signed up for anything other than a 30-year fixed rate mortgage was gambling and they should admit that. Yeah, housing was unaffordable in a lot of areas - guess what? That's an indication that you should rent there or buy elsewhere.
During loan approval, I did ask what the maximum was that we qualified for. It was almost double what we actually borrowed.
Doesn't the guy know the most important economic maxim: There is no free lunch?
I would feel bad for him; however, anyone who has had a smidgen of economic background should have known that buying a home during the last 7 to 8 years was a risky deal at best and completely idiotic at worst (obviously there are some exceptions to this). The fact that banks were essentially wanting to "give away" large sums of money should have been the red flag there.
At least the guy could understand the language in his mortgage contract. In the area where I live, the largest population being hit by the mortgage crisis is the Latino population, and from what I understand, a lot of people who signed on for NINJA loans could not even read their own loans since they are not truly proficient in the English language, and their brokers essentially read the loans to them and painted this rosy picture for these poor souls. Now, I feel bad for them, and I want to help them. This guy, though, not so much. He knew better and should have just rented a house.
If you read the whole article, the mortgage is only part of the problem. He and his wife blew through tons of money on shopping, putting the money (that they didn't have) on high interest rate credit cards. The whole thing reads like he was TRYING to screw himself financially, like some sick experiment in the ideal case of American financial self-sabotage.
Although, sure, the mortgage industry was totally corrupt, this is like feeling sorry for a guy who borrows money from a loan shark to win big in one night in Vegas. He completely abdicated control, thinking, planning, and care, and he has kids and a wife with kids. I feel real sympathy for young uneducated families or old people who might not have known better. This man simply decided he would let it roll, and he reaped the results of that stupidity.
He is not "brave" now, he's smart, finally. He will try now to recoup his losses from the royalties from this book.
Login or Register to post comments.