In the latest report of his Making Sen$e series, Paul Solman talks to New York Times economics reporter Ed Andrews, who chronicles his personal tale of the mortgage crisis in "Busted: Life Inside the Great Mortgage Meltdown."
Read the Full Transcript
Now, NewsHour economics correspondent Paul Solman tells the story of a personal mortgage meltdown. It's part of his series, "Making Sense."
PAUL SOLMAN, NewsHour Economics Correspondent:
New York Times economics reporter Ed Andrews knows a lot about toxic mortgages.
EDMUND ANDREWS, The New York Times:
This was something I wrote in June of '04, "The Ever More Graspable, And Risky, American Dream."
It turns out Andrews wasn't just covering that dream; he was living it.
A divorced father of three, Ed was eager for a new lease on life with new bride Patty and her four kids. A huge stretch, he knew: two-thirds of his take-home pay went for alimony and child support. But Andrews could buy this house in Silver Spring, Maryland, for nearly $500,000 with a so-called no-ratio loan.
Today, he faces foreclosure, a tale he tells in "Busted: Life Inside the Great Mortgage Meltdown." He described what happened in the backyard he's still hanging onto, for now.
In 2004, which happened to be at a time when I was taking note of, as a journalist, these crazy loans that were becoming very, very widespread, I fell in love.
I fell totally, madly, head-over-heels in love with Patty, the woman who I did marry not long after that, and I, as a result of that, was kind of desperate to find a way to make our lives — you know, start this new chapter in our life.
I quickly found out that it was really much, much easier to buy a house than it was to rent one and, in fact, that I had lenders falling over themselves to lend me the money.
Not because you're the guy at the Times who's writing about this?
No, no, no. I had two things. I had a very good credit record, at that point, and I was breathing. I mean, that's basically it.
There was sort of a whole continuum of these scamming loans, so the most familiar one would be the stated income loan, where you state the income, but you don't document it, but you might document the assets that you have, OK?
And then, if you want to take it down a notch, you state the income and then you state the assets. You don't document them either, right? And if you go further down the line, which I had to do, you don't state the income at all.