NY Times eco reporter defaults on his mortgage

Wow.

Read the comments on the story from calculatedrisk:

http://www.hoocoodanode.org/node/6850

and

http://citypaper.com/digest.asp?id=18067

http://citypaper.com/digest.asp?id=18067

"After alimony and child support ($4,000 a month), Andrews had a monthly income of $2,777. His 2004-vintage no-doc, five-year exploding-adjustable-rate mortgage? $2,500 per month. Almost everything after the establishment of these two facts is completely predictable. "

oh my goodness, this is soemthing I would espect to read in the Onion! And even worse is the fact that all NY Times employees just got a 5% pay cut!

I can't help thinking that more people would read this post and contribute to a healthy discussion about it if it did not sound like it was granola chomping tree hugger that defaulted on their mortgage.

Divvie, I thought it was the granola chomping tree hugger reporter that defaulted on the mortgage... :-)

It is the *econ* reporter if you want to use an abbreviation :-)

divvie, read the article. Dude is a econ reporter for NYTs. It figures!

No shortage of idiots, including writers for the Times.

No wonder those f*ckers missed the housing bubble...

heehee, nice one Pirot.

I did read the article and of course saw that it was the economics reporter for the Times (although as soon as I read the first sentence by him I thought why would you of all people be the last ones that should have been taken in? - until I read the next couple for words) but there are many SE threads that I do not read if the title sounds like a topic that would not interest me. I skipped this thread when it was first posted becase of that "Eco" misnomer.

Pisses me off that this guy has been living rent and property-tax free for 8mo while the rest of us are having our taxes raised.

I got a match.... let's go burn his house down.... on second thought... the f'er would just appreciate it....

tree chomper....

I found this article extremely depressing. One thing that really stuck with me as a kid was reading David Copperfield - the character of Micawber was perpetually broke and in danger of being seized and throwing into jail for his debts. There was a line that went something like - you'll be happy if you keep what's going out less than what's coming in. You don't need sophisticated math to understand that.

LP1, that's an issue. Comments on Calculatedrisk say 'bring back debtor's prison'. We're paying for these schmucks and the banksters. And our Prez isn't cutting the budget, he's adding to it big, big time. I smell potential revolution in the air.

I was a strange child, this has stuck with me for life - "My other piece of advice, Copperfield, said Mr. Micawber, you know. Annual income twenty pounds, annual expenditure nineteen nineteen six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery. The blossom is blighted, the leaf is withered, the god of day goes down upon the dreary scene, and, in short, you are for ever floored. As I am!"

Actually, what got this reporter into financial trouble in the first place was his divorce, and his inability not only to live within his means, but to even recognize what his "means" really were.

The problem is, too many men who divorce forget that a huge chunk of their income goes directly to supporting another household. Here's a guy who still lived like a professional making $120K, when he should have dialed back his own expectations and realized he was really only living on $60K.

kinda like the 14 gallons per minute, right matt? now you're a master financial advisor...giving up on the laundry so quickly?

Even the costs of jailing debtors was too high for 18th/19th C England - why do you think Australia was set up as a convict colony?

It's been all downhill since the first Reform Bill.

exactly nycmatt. cheaper to keep her.
He went in with eyes wide shut.

He should be fired.

Its like a fire chief who commits arson.

Or a treasury worker who doesn't pay his...

Whoops.

Divorce is very expensive. Personally, barring abuse, I think people should make an effort to stick it out for economic stability if they have children.

why oh why did this guy write this article and why did the times print it? that's the thing i don't get. kind of like why i don't understand people being interviewed on tv after something awful has happened to them or their family.

More publicity for his book. More book sales = more $ to dig him out of his hole. Can't blame him for it.

you're kidding, I hope. not a whole book about this!

agree, cc, but it's a cautionary tale worth telling.

IMO, a lot of middle-class people don't want to lose their homes to foreclosure. If they still have steady jobs, I don't see anything wrong (other than moral hazard next time around) with an adjustment of their equity to zero and having their mortgage payment adjusted to a manageable part of their income. Saves neighborhoods from blight and huge dislocation. Of course, devil's in the details.

yes and no....all kidding aside what are we (the poor reader) to make of the fact that the econ reporter doesn't have the sense to not buy a $500 K house that he can't afford? that it can happen to anyone? and therefore, no one should take any responsbility?

2 main lessons: it's ez to get sucked in by ez money and responsibility/morality is dead/dying in our society.

I don't like the irresponsibility of all the parties in this equation. But the fact is that what's done is done. As a nation, what course of action is best? Should we allow properties to make their way slowly to foreclosure like this reporter's (I bet he is not maintaining "his" house now)? Entire neighborhoods and towns could be blighted forever (and yes, this disproportionately affects various ethnic groups). Or should we allow him to "keep" ownership, or essentially keep renting his property from the bank at a price he can afford? Is this better or worse than having it go to foreclosure, get picked up by bottom fishers, etc.? I don't know the answer but I'm suspicious that if anyone can say that the latter is the best way forward.

Actually, I hope he's had the good sense these past eight months to take that $3500 or so per month he DIDN'T use to pay his mortgage to pay down his other debt!!!

This dude seems completely out of control. Hope this is not a representative of what is happening in middle america. But remember, he is reporting on himself, so some of this stuff could be made up for effect - especially since he is writing a book.

His story sounds real - but I bet his financial situation has improved somewhat in the last while. He has a book deal.

http://www.amazon.com/Busted-Inside-Great-Mortgage-Meltdown/dp/0393067947 - c'mon, support this poor chap. Also, if he makes it on Oprah or whatever talk show is hot now, he is going to be just fine.

This ass probably did it intentionally for the book deal.

What I don't get is the over-spending by the idiot wife. Clothes, fancy foods and $6 vente lattes at Starbucks don't exactly make for prudent budgeting. The author's own spending sounds like it was foolhardy as well. Doesn't anyone know how to balance a checkbook anymore?

At 2777/month and kids on weekend, the bottom line is he not afford to support a wife. Middle-age crisis is what I say. At 120k/year in a DC burb (is that right?), I'd also say that he could not afford to pay child support and therefore should have tried to stay together until the kids were finished college. Sounds like his previous wife did not work (given the level of child support).

"This ass probably did it intentionally for the book deal."

What a stupid and ignorant thing to say.

Squid, it sounds as though she had never dealt with financial reality before. Some stay-at-home moms don't handle the family finances (the ones I know do, but I don't know many). The big disconnect in expectations between the bozo economist and his wife sounds like she expected X lifestyle and couldn't get her head around the fact that there was no money to support it. If you read personal spending blogs, you figure out pretty quickly that for people who haven't tracked expenses before it can be an extremely difficult adjustment. Not that I have much sympathy.

Oh. My. God.

1) New York Times reporters make $120,000 a year?
2) Once the couple had credit-card-debted themselves into a hole in 2006, they couldn't figure out that they needed to sell the house THEN?
3) If husband's income equals the house payment, and wife is out of work, husband doesn't get a second job why?
4) No financial adviser suggested personal bankruptcy?
5) NYC10022, LOL.

The lesson here is not that there's ONE bad decision, it's that going broke takes FIVE years of daily bad decisions.

ali r.
{downtown broker}

I made a little under 4000/month (net) in my mid 20s (paying NJ taxes), and I didn't have visiting kids on weekends. I capped my max. rent at 1100 initially, and was thrilled when I was able to reduce it to 400. Things like utilities, commuting expenses, car brought my monthly nut to 1200.

If you make a little under 3k/month, have kids visiting on weekends and are middle-aged, you need roommates in the DC area.

"I'd also say that he could not afford to pay child support and therefore should have tried to stay together until the kids were finished college. Sounds like his previous wife did not work (given the level of child support)."

don't get it. divorcing from a non-working wife means having to pay her bills so that she can keep staying at home? why doesn't the ex-wife work to lower the child support needed? don't get how child support can take more than 50% of a paycheck, a divorced guy is supposed not to start a family ever again?

1. As someone who works in the media, I can tell you that $120K/year for an experienced reporter at the nation's largest newspaper, covering Washington, is not generous at all.

2. Yes. They both definitely missed the ball on this one. But based on his little story about their exchange on her birthday, it sounds to me like there was absolutely no talking to her anyway.

3. He admitted he was working overtime. NYT reporters are union, so working overtime pays much more than any second part-time job could possibly bring in.

4. Apparently, their only "advisor" was their friendly neighborhood broker, who profited from their multiple financing arrangements.

5. I don't find anything funny about it.

The lesson here is that divorce is expensive, not being realistic about the expenses incurred with supporting TWO households on only $120K in Washington, D.C., and marrying a woman who thinks she's marrying a millionaire is what got this poor guy into trouble.

Oh admin, don't you get it? Divorce settlements are all about screwing over the MAN to benefit the WOMAN.

Unless it's the woman with the money.

There was no alimony mentioned - the child support is for the kids. The ex-wife probably works now, but I think CS is based on income of non-custodial parent. I am not familiar with how child support payments are calculated, is this true? I don't know that if she did work, that it would lower his CS payments.

Correct, in most cases, a divorced guy CANNOT afford to start a new family! Because his "new" children does not get allocated CS by the court (and I'm not sure that those children reduce court-ordered obligations to children from prev. marriage). In some cases, it leads to real hardship for the younger children, because some states mandate college tuition contributions. I'm sure most first wives will not have any trouble with this scenario. I am a first (hopefully last) wife, so I'm not exactly going to agitate to rock this boat.

Everybody that works in the media knows that the NYT pays very low salaries. People loves to work there in spite of this.

He got sucked in by ez $, cognitive dissonance, denial, wishful thinking & entitlement.

The story meshes nicely with Nick Paumgarten's "Annals of Finance: The Death of Kings" in The New Yorker last week.

"The lesson here is that divorce is expensive"

hey, but why on earth is the guy on the hook for supporting a non-working ex-wife? one thing is to support the kids 50%-50% together with the ex-spouse, why does the guy have to pay more than that? why not selling his ex house when divorcing and asking the ex-wife to rent a cheap place if she doesn't work? am i being inconsiderate/irrational?

A court system that makes him give $4000 a month and 2/3 of his salary to someone who isn't working (so has many choices in living places) is a huge chunk of this problem.

I'm with you, admin and 10022.

Let's change the system!!!!!!!!!!

So, even if divorce law screwed him over unfairly, he still knew his budget, but he disregarded it & he's an econ reporter!!!!!!!!!!

He is not supporting the ex-wife. I don't know MD CS laws but here's the gist of most CS systems:

1. The non-custodial spouse pays child support. End of story. Regardless of what the other (custodial) spouse makes, he is responsible for paying X% (more or less) of his salary as child support.

2. If you are joint custodial parents, then yes, I think it may be a 50-50 situation. I don't know if courts take into account the fact that one parent makes more than the other to make it an equal standard of living for the kids in both households.

He is in situation #1. Maybe he didn't want joint custody.

Bottom line - divorce is expensive for both parties. You are maintaining 2 households when before you had one.

You can google this to death, but the fact remains that most divorced men's living standards are much higher than that of their ex-wives and children.

He is not supporting his ex-wife. The custody agreement they have means that she has to house & feed, clothe, educate, transport the kids 90% of the time. I don't know what the COL is in Maryland but I don't think 4000/month is necessarily over the top. We also don't know if the kids were/are college age, and if Md requires college tuition contribution, if they were going to private school, if they are special needs, etc.

And, he married a non-working woman & paid for her kid's braces.

Yup, fair or not - he can't afford to support a new family. Even if his CS support payments had been "only" 2k/month.

nyc10023, right. We may not be getting the whole story with this guy.

Get ready for a wave of expose books written by people in foreclosure. The sadder or more unexpected the story the bigger the potential draw. I expect it to be like the "I was a junkie" drug books of the late 70's and 80's (re: "I'm dancing as fast as I can")

Only good move this guy made was selling his NYT stock in '05 at about $40/share. Currently trading at $6

"1. The non-custodial spouse pays child support. End of story. Regardless of what the other (custodial) spouse makes, he is responsible for paying X% (more or less) of his salary as child support."

my point is that by definition a divorced guy will have to live somewhere else. the sanity limit on housing costs is 1/3 of income. now, what could he afford during the bubble with 1/3 of the income after child support? a rental of $900/month with the Argentinean princess wannabe and her daughter.

that crude reality would have save him. telling her "listen darling, i found this absolutely charming $900 peace of s**t in the ghetto"... she would have walk away and end of story.

The NYT loves these mortgage-victim stories. E.g., where the dufus borrowed against his equity, plowed it into his business, and is now whining about being underwater. Half the Neediest Cases stories last year were about idiots like this.

"I was a teenage junkie prostitute, but, it was the Liar loan that did me in."

Yeah, if it had been the more (I think, again not an expert on CS) standard 30% of income, he still couldn't have afforded to 2500 mtge payments. Not smart. But smart enough to write a book and make some bucks.

I think this story is very common and I'm glad someone is talking about it. How many people do you know that have refinanced their loans more then once in the last few years. People think they are catching up, instead they are just falling behind.

"hat crude reality would have save him. telling her "listen darling, i found this absolutely charming $900 peace of s**t in the ghetto"... she would have walk away and end of story."

Yup. She's a princess.

In an unrelated matter, the guy had two kids, an ex-wife on alimony, a kid on child-support, a wife with two kids and only one of them was working when they were looking to buy the house? That's 8 dependents on $120,000/year. This guy was definitely smoking the free-money-in-real-estate crack that's being passed around lately.

well, bernanke bought at the peak of the bubble. the big picture is that these financial illiterate people that the ones making the financial decisions for us or writing to illuminating us on the topic. a mentor told me several times: "an economist that has no money is not a good one". i use it more with doctors, running away from those that are fat, drink soda or smoke.

admin, an economics reporter is about as much of an economist as a science reporter is a scientist. To wit: check out the bios of the CNBC crew. Mostly journalism majors.

NYCMatt, $120K is a FORTUNE for newspaper publishing. I was a mid-level editor at the Post from 2003-2005 (where I was a profit center, bringing a couple million dollars a year into a famously money-losing paper) and I didn't make that -- and certainly senior-level reporters don't as a matter of course.

But that was a digression, really. The main point is that this guy is like an alcoholic or a gambler, someone who is in daily denial about the difference between the world he wants and the world he has. I'm with dwell -- he knew his budget.

Once they bought the house, he needed wife #2 to both work consistently (his post-alimony/CS $70K and her presumably $50K from Saks would have allowed them to carry a $400K mortgage, if they'd scrimped on other spending) AND they needed to hit the thrift stores. Once it became ABUNDANTLY clear that those two things weren't happening, they needed to sell the house.

ali r.
{downtown broker}

Is anyone going to buy his book? what is the point - other than a contribution to his cause? just to see how stupid this guy was?
" Hey guys read about how stupid i was (which we all already know)- and while you are at it help me out by buying my book"

I am surprised NY Times let this guy write this - is this the quality of NY Times economic reporters?
Seriously, this guy - if what he writes is true - needs medical attention for depression.

"NYCMatt, $120K is a FORTUNE for newspaper publishing."

Depends on the newspaper. For the Times, it's not exactly over the top.

thanks 80sMan, that explains Gretchen Morgenson's case.

"this guy - if what he writes is true - needs medical attention for depression." did you notice the expression of the wife in the pictures? looks like she's not happy about the exposure nor proud to be the wife of the writer. i'd be shock if they are still together.

front_porch, maybe the post didn't pay you more cause you didn't ask for a raise loud enough? it might be the case that this guy went and asked for a raise himself and the NYT said "sure, but why don't you first embarrass yourself and your wife with an article about it?".

What I wanted to know when reading this article is why the wife wasn't receiving child support payments from her ex.

Her ex was probably so incensed by having to support his ex-wife and his kids (horrors!) that he quit his job or something.

He is interviewed today on NPR's "All Things Considered." It already aired in the 5:30 - 6 pm half hour, so you can access it tonite or tomorrow at the NPR.org website. Interestingly, he doesn't seem apologetic or cognizant of his stupidity....

The point of this story is that if this could happen to educated, respectably employed people, it could happen to anyone. This is not an isolated story. This is happening all over the country. It is very sad.

Why there's no "shame on me" in all these sob stories about innocent lambs who thought (sob, sob) and believed (sob!) that they deserve a free pass because they work for! New! York! Times!!
Why they are not repenting and asking forgiveness for their stupid, stupid arrogant ways?

that's right NYRE, "Mal de muchos, consuelo de todos". heard of some lockheed martin employees (with engineering degrees from ivy leagues) got in trouble with mortgages and then with their jobs as their FICOs have to stay high. not nice but sure it might make regular folks feel less bad about themselves.

windyrec, I was typing the in synch with you.
So now we have this new stars who fail upward. And after all, the bank is left holding the bag. Big bad bad bank.

nyc matt: yet another expertise...salary analysis in the media business. lets see: crack financial advisor, vp and building expert, brilliant plumber. what's next?

Yes this could and does happen to some responsible people but it usually involves death of spouse, major medical problem etc. In this case he consistently made irresponsible choices that I would be ashamed if my 21 year old kid made the same decisions.

What's next is I ask you out on a date.

Everyone should read David Copperfield and think of Micawber.

"Big bad bad bank."

While I do fault people for getting in over their heads, the buck does stop where it actually STARTED: at The Bank.

Lenders and underwriters en masse absolved themselves of any fiduciary duty to their institutions by not even bothering to verify income or debt obligations of applicants.

nyc10023, he was paying alimony: "I was handing over $4,000 a month in alimony and child-support payments."

I found Edmund, Patty and the ex-wife so loathsome it almost made me like Bob the mortgage broker.

no unfortunately the buck stops with us--those of us who didn't join the insanity. its going to get increasingly tricky as more and more bad news surfaces. call me old fashioned but i did not get the impression from the writer of this piece that he was feeling particularly responsible or remorseful.

I stand corrected with respect to the alimony. Still, he had no business finding another fam. to support.

No argument here. This is one of those ugly stories where everyone is guilty. I wonder if DC is recourse or non-recourse? I'd like it if he was forced to give his book profits to his creditors first.

ok...we all read the article but, who is going to lay out $25 to read the same story in excrutiating detail? unless oprah decides to have him on and do a panel on how to be stupid with money? or celebrity apprentice with suze orman and have them competing for the donald's attention.

does anyone know what happened after '07...did he divorce his second wife (he should go back to his first wife and save $4k a month)...is he paying alimony to the second wife? I think i will go out and buy the book.

or read Little Dorrit and think of debtors' prison.

AR...you're terrific...

Julia, still married, per the pictures of them in their sad little shitbox of a house. "Stately", forsooth....

NWT, don't forget the touching (in a gag-inducing sort of way) paragraph towards the end: "Even if we lost the house, we had gained in other ways."

I'd guess he thinks he's going to skate somehow and she thinks the book deal will have her enjoying lattes and shopping sprees again.

Gawd.

I'm guessing $25 advance on the book. Extremely difficult to make a nickel that way.

$25k

i wouldn't usually say this about someone but this guy was an idiot...gets out of one marriage paying $4k a month and then goes right into another marriage without talking finances...doesn't know the second wife doesn't want to work. She wants to stay home and take care of her daughter and shop.

He took a bath in his divorce. His ego has taken quite a blow, and let's face it ... at 48 years old and not particularly much to look at, having an attractive woman fawn over him is enough to blind any man in his situation. And by his own description of her -- "brainy, regal, sexy, fiery and eclectic" -- this is code for "high maintenance".

I'm not excusing it, I'm just explaining it.

I think he made out like a bandit. The ex-wife's getting a lousy $4K per month to support their three kids and pay the mortgage on the house he "gave" her. She's probably working her butt off, not sitting around like some divorcee from a 1960's movie.

NWT ... please. "Lousy $4K/month"?? Get a grip. That would be like grossing close to $70K/year ... well above the U.S. median household income ... without her even lifting a finger. Any other money she makes on the side is gravy.

Yes, she IS living in a 1960s movie as the rich divorcee.

We have vastly different ideas on what it takes to maintain a three-kid middle-class household in the DC area. She couldn't begin to do it without working herself.