NY Times eco reporter defaults on his mortgage

There are plenty of middle-class households in the D.C. area who are doing it on far less.

Everyone has their idea of what middle-class is, especially in the U.S. where everyone likes to think they're at least middle-class. Very different idea of what constitutes middle class in the UK. Anyway, the crucial lesson is - know your burn rate, net more than burn rate. End result - satisfaction. We have a crazy burn rate in NYC, especially since we're indulging in owning RE. If income changed tomorrow, you'd better believe we're out of here or making drastic lifestyle changes.

NWT you are correct. Matt is wrong. She must be working, and I hope she's minding her budget better than Bozo the Economist. $4,000 times 12 is $48,000. In DC, as in New York, that will barely rent you a one-bedroom apartment with money left over for groceries.

matt wrong?

Shocking, but these things happen.

Here's a link to the NPR interview. I agree with Ali. Bozo the Economist has never heard of budgeting.
http://www.npr.org/templates/player/mediaPlayer.html?action=1&t=4&islist=true&id=2&d=05-15-2009

"I literally left that income box blank, and they went ahead with it [the loan] anyway]." There is the housing problem in a nutshell.

this makes me sick...why is he bragging about how stupid he was?

CC, it was all the banks' fault! Sometimes when I listen to this stuff I feel like I'm listening to an extremely irritating extended remix of Shaggy's "Wasn't me." It wasn't Bozo the Economist's fault that he signed that document, nosireebob.

its all ok...he has the love of his life...barf....this is revolting....nice articulate, asshole happy to blame everyone else except himself. no wonder 30% of the country is still in love with dick cheney.

not excusing his behavior in the slightest, but did anyone here ever fill out those readily downloaded calculators (on reputable sites such as the NY Times) that purported to tell you how much house you could afford? Not exactly analogous, but I think we need to be quite concerned about the huge numbers of foreclosures that are still in the pipeline, on properties bought by stupid and smart. This will affect real estate for years. It's no longer a people can't afford to buy so they'll rent thereby driving up rents question, it's a many people can't really afford to live on there own at all any more, so they'll live like rabbits (or not compared to the rest of the world) until wage deflation ceases. And then the way of life may become much more acceptable because it is so pervasive, and takes so long to get out of, and we may have fundamental structural change.

My great theme throughout all of this has been that people STRETCHED. Maybe not to this extent, but people were greedy and/or fearful, greedy to make a buck and/or to buy before being priced out forever. the number of "stupid" people will surprise us all, i'd guess.

ok...but this guy's mortgage payment was equal to his take home pay...he is a QW$^#$%^ economics reporter for the new york AWGRGSR times. he couldn't understand that was beyond a stretch? and now he's going public to hawk his qWT^QWTRQW book? great.

a lot of people got screwed very unfairly. my problem and what is making me so furious is that this guy is making the very argument that the dumb shit banks are trying to put across---it wasn't my fault! for a lot of people i sincerely believe that it wasn't their fault...not this shithead though.

and now while he's busy cashing in he's also reinforcing all the negativity surrounding people's behavior.

great.

AR, believe me, I am concerned about the number of foreclosures coming at us. Some people bought prudently and are getting unfairly creamed in this debacle. People have been stretched, and we are all going to be more stretched as boomers begin to retire. But: as Columbia put it, this guy was an ECONOMIST!

Frankly, I suck at math. I can barely follow some of the more arcane discussions that crop up on this board, not that I don't try. Yet even dummy me knows better than to take out a mortgage that costs more than my take-home pay. Maybe I should take over his $120k job; I could use a raise.

And now I'm going to go watch a zombie movie. Zombies are the theme of our era.

cc, tsk, tsk. you know that I was going beyond this guy. the basic truth here is that the banks were supposed to be the "experts" in this lending relationship. They had numerous obligations to numerous people to not allow this to happen. It shouldn't have been an option, for the admittedly fucked up author, or anyone else, to do this. in the law this is considered an uneven playing field, two parties who should know better, but one who has far more reason to know better.

the litigation is starting. just wait until we see the shit truly hit the fan. you don't lose 50 years of underewriting knowledge overnight without some assistance.

We also live in a country where the savings rate was negative! How crazy is that? Repeat after me - output less than input, output less than input.

evnyc, this story is exactly why i am so negative. it was pervasive. i can't tell you how many "super intelligent" people told me I was wrong in 2007 when I suggested it might not be a good time to buy. Many of them are barely holding onto jobs now, a couple are in the divorce process, real estate ownership in this country (and a few others) is so psychological as to have been, well, manipulated.

zombies are cool, as long as they're not condo buildings.

agreed, of course.

but a ny times reporter going public in this way muddies the issue in a way that i don't think helps anyone except perhaps him. a lot of people want to find scapegoats and they don't want it to be the banks. this guy is a poster child for scape goating the individual buyer.

he is perfect fodder for rush and his buddies. plus, on a personal note, i find his complete lack of responsibility, galling beyond belief. this is not someone who was duped -- he seems almost proud of having been an idiot.

and meanwhile we seem to have an adjacent string discussing the need for two washers and dryers in one apartment. god help us.

The NPR piece makes me want to smack the guy. He makes it sound like he was facing two alternatives: either buy a house or don't get married to the love of your life. How about option 3: wait until the love of your life has a steady income then buy something you can actually afford, even if it means less space, a longer commute, etc.?

Also, he hasn't paid his mortage in 9 months, yet:

"I really don't think I need to apologize for my mistakes because the country was in a situation at that moment where the whole financial system was enticing, enabling and encouraging everybody to borrow as much as they could, and the decisions that were made at the lender level and at the Wall Street level system were far more cynical and reckless than anything an individual consumer could have done."

Is ANYONE fessing up and apologizing to the taxpayer who didn't screw up and is left holding the bag?

I am becoming such a bitter, angry person over this wretched mess we're in. I need to get back to boxing class to relieve some of the pent up frustrations.

I saw that, CC. I have only ever had one home, though :) Far cheaper to have 2 W/Ds than a 2nd home, no?

you got me there.

Heh, at least he was blinded by love.

i'm with you there cc. i think part of it is that he's had so much time to consider it. psychologically the banks are doing the defaulters no favor by delaying. they just don't want to mark to market the loss, so they pretend that the loan is overdue but hasn't been moved into the deep dark side yet.

but if you've been sitting in a property for months not paying yet knowing that the shit will hit eventually, i could imagine that could turn anyone into a bit of an asshole. especially an economist. and i'm sort of in the other camp regarding his opportunism. this is America, is it not? land of TALF, TARP, and ream the consumer? You are not required to buy his book, so there is that. don't buy it if you think it will help an asshole, but good on the asshole for finding opportunity in adversity.

evenyc: "$4,000 times 12 is $48,000. In DC, as in New York, that will barely rent you a one-bedroom apartment with money left over for groceries."

That's $48,000 NET -- which would be close to $70,000 GROSS, before taxes. My numbers are spot-on.

This is what she could afford on her $4000 CASH budget: http://washingtondc.craigslist.org/nva/apa/1173146827.html

Since she's not working for this $$$, there are no work-related costs such as commuting or work clothes.

once again, you are right. npr promoting his book is no different than them trashing elizabeth warren. still a bit of an idealist left in me but its getting beaten out of me slowly but surely.

this eco stuff is very interesting. I was at a brunch recently with some financial types. one was very smug about his travel arrangements, spouting off numerous figures about the high environmental cost of business/first class. I pointed out that I had more than a spot of guilt about the size of the second home. The md who has three or four homes looked at me sternly and said I don't see what the size has to do with it. I said, yes, maybe it is the mere fact that it is an additional home, the size might be irrelevant. He was testy for a bit.

No cc, it's the idealistic remains that matter so much. Never give them up.

MattNYC, that's assuming the kids remain on daddy's health care. If not, she sure as hell better have a job.

oh thank goodness, for matt....hey buddy..check it out...on the other thread they're talking about two washer dryers and you, my friend, don't even have one. but you do have that low maintenance, the vp spot and the media biz expertise.

CC, let's just make out already.

yuck

Shared psychotic disorder: Also known as folie à deux; shared psychotic disorder is an uncommon disorder in which the same delusion is shared by two or more individuals.
Now, not all individuals in the US had it. Not everybody flocked to California for the gold rush, neither, and some germans actually helped some jews.
I know the US has an amazing recovery capability. I just hope that the debate about how we got where we are reaches deep and wide, so the next generation can be more aware of this kind of pitfalls. Jeff posted an article in UD that goes in this direction: Trading Mentality: The 8th Deadly Sin http://www.urbandigs.com/2009/05/the_8th_deadly_sin.html

I wanted to scream when I read this!

1. Why didn't the guy sell the place when he realized he was in trouble and down size?

2. New wife needs a clue.

3. There are so many cheaper places to live in DC. Entitled, SOB.

4. Why didn't the wife have child support?

Let this be a lesson.....never divorce your stay at home wife.

If you are going to have kids, and have one parent stay home, either have the breadwinner make bank (like AR's husband) or stay married until the kids leave home (barring abuse). It's cheaper to maintain one household. If you don't get along, sleep in separate beds, whatever. You bring kids into the world, you deal.

If you can barely support two households as a divorcee, you have no business acquiring a new family to support.

but...he was in love....and he works for the new york $^@#^$ times!

Maybe the ex-wife will get a letter into the NYT with her side of this. (His hideous shoes might've been what pushed her over the edge.) Then there're the poor kids, with the yutz father plastering the family story all over the paper.

nyc10023, right. DC has SROs he could've lived in until the kids were emancipated and her alimony stopped. It's most likely seque alimony, ending after x years, by which time she has to get back to speed in the job market.

while i agree with you entirely on a financial level, i have to wonder about a society that is so stretched that having a second go at it is just viewed as an economic concern.

i was telling my hubby this morning that i was glad that we still got along so well because i didn't feel that i have the emotional wherewithal to start over (he took it the right way, he's a love who understnds me oh so well). but i put him through law school in a community property state. and i don't know if i'd ever have been a stay-at-home mother, or had the confidence that i have in that decision, but for that. i'd like to think so of course, but who knows.

I'm a brutal realist. Kids are the only innocents here. If he had to divorce, he could have converted his old basement (if they have them in DC) to a separate apt. Swap places with his ex-wife on weekends. Voila.

Only if he truly cares about his kids. Kids are the victims, if not the innocents.

one second...he was trying to support two stay at home moms with myriad kids....where do we draw the line? there really were a bunch of choices that they could have made short of not paying the mortgage. starting with...renting an apartment.

AR: does it matter where he went to law school? Doesn't the state where you maintain residency now matter when it comes to divorce? NYS is most certainly not a community property state.

I disagree that it's only in our society that having a 2nd go should be evaluated as an economic concern. I would argue that in every society (or at least not the hunter-gatherer ones) that marriage (after children) is primarily an economic construct (or has been made one by the state). If it were just a private matter, people would just declare themselves married as a private and/or religious matter and be done with it. The state would have no say in what sorts of economic contribution people are responsible for.

cc, how? his credit rating is trashed. how could he have walked from the mortgage without having a chunk of savings to pay for a rental up front?

i was thinking that he would have rented instead of buying...

ok...lets see, i've got $2,800 a month to play with ... that sucks but i'm in love and that's good. how about renting until his/their circumstances improved?

He went to the University of Washington law school. I legally own half of that puppy, from now to eternity. New York is not a community property state, but they also recognize the spousal half ownership of an advanced degree when said spouse paid for it. I'm covered, and the ever-so-agreeable hubby knows i'd take him to the fucking cleaners if he walked. However, he doesn't seem to be the type to do so, so we're just still feeling the love after 22 years.

btw, 10023, i never actually said "our" society. I said society in general. We tend to be a fairly punitive bunch, but not necessarily in ways that make sense.

good news...his book is still way down on amazon list...check out these comments.

http://www.amazon.com/What-a-jerk/forum/Fx3QIUX7KMCIXWZ/TxKV30N6JHT2FG/1/ref=cm_cd_dp_tft_tp?%5Fencoding=UTF8&s=books&asin=0393067947&store=books

AR: that's good to know. I'm of the "carry a big stick" school. After 22 years of marriage, I think NYS is effectively a community property state - ultimately up to the judge and equitable distribution...

Yes, I believe people deserve many chances at happiness but (recurring theme here) have to be responsible. You have kids, you give up some roads in life. You don't ever want to give up anything, don't reproduce! Very simple.

aboutready, you've got it. I see only the cases that end up in the NYLJ, though. Always interesting reading.

nyc10023, I agree with you 200%. and we thought long and hard about having a child, almost didn't do so because we thought we might be too selfish.

We thoughtfully changed our minds, and still in was oh so hard. should people really have to be so financially savvy to afford one or two kids? if so, we might expect negative population growth that would put China's recent issues to shame.

Yeah, I can excuse a lot of poor parenting - read that NYMag about pg 14yr old, now 17 with 2yo? But 2 college-educated (I presume ex-wife is a college grad) people? You don't have to be THAT financially savvy. But once you tot up the costs of divorce, shouldn't you balk a little?

depends on your definition of financially savvy. have a kid or kids and they come first. pure and simple. if there's something left over, great. if not, so be it. the last few generations got this completely.

10023, the cynic in me almost thinks that this guy was put up as a decoy. many, many people overextended. the point here is that the banks (who we are being bailed out) aren't marking to market, they're not even putting the problem in the loss column if the bells are tolling. and they couldn't give a rats about the people they drew into this.

nobody should be so stupid, but no lending system should allow anyone to be so stupid. and who took the fees? who securitized the loans? who got the bonuses? and we're all shitting on this poor semi-arrogant, semi-despondent asshole who has had his life ruined due to the imprudence that mom and dad financial industry should never have allowed? he fucked up big time, but is he being produced as a lightening rod for our anger? and where should that anger really be directed? underwriting standards existed for years, this loans should never have been offerred.

you are correct but i cannot believe that this guy was duped into doing this article/book. as i said earlier, his stupid story deflects from the real problems that you cite. becomes too easy for many to generalize his stupidity into blaming everyone else who took a loan--many of whom legitimately didn't know what they were doing.

you are correct but i cannot believe that this guy was duped into doing this article/book. as i said earlier, his stupid story deflects from the real problems that you cite. becomes too easy for many to generalize his stupidity into blaming everyone else who took a loan--many of whom legitimately didn't know what they were doing.

might be time to knock off for the evening.

yes, i think it is time for sleep. but you'll not hear stories from the "real" people, cc. not until the homeless issue becomes overwhelming.

a few people have asked why i don't get off my sorry ass and volunteer. well, i currently do so, but not for the truly indigent at this time. i will do so in the future, but i am conserving my strength.

I did so three times a week (I worked, also, at the time) at a soup kitchen, in 1989. I don't regret the work I did there, but I cried for almost an hour every night when I got home. It takes a tremendous amount of energy to provide cheerful assistance to the poor, and to those who have suddenly found themselves poor despite all that they have done to achieve. I have a child, and it will be hard to go slog off to the volunteer ranks, but i will do so. just not yet, i think my energy may be better utilized in the future. And by then I suspect my daughter will not only support my efforts, but possibly join them.

Matt, I'd love to see the universe in which 12 times $4000 equals $70000. Because everyone's tax liability is exactly the same, regardless of location or family makeup. Bulls**t. With financial wizards like you, who needs zombie banks?

CC, I have to say that the guy probably is capitalizing on an opportunity to exploit his own stupidity for media and financial gain. Aboutready's right: he's just exploiting a system.

Zombie movie was fun. Lots of gore.

evnyc, 12 x $4000 equals the NET of a ~$70,000/year gross income. Why is this so hard for you to grasp?

note comment above---in your laundry room, everyone pays the exact same taxes? how you doing with the fork and the outlet?

Exactly! Nobody dare question Matt, ruler of the elitists.

Does everyone here know why certain buildings are better kept than others? It has NOTHING to do with the LL (or VP's that make up the management company) it's because less affluent people don't give a shit about cleaning up after themselves.
Thanks for that pearl of wisdom Matt...I sleep easier knowing you're out there, correcting my grammar and shitting on the less fortunate.

You are a model VP...good job chief!

Here's the casbah the ex-wife is living in and paying for: http://dc.blockshopper.com/property/27710064/1346_leegate_road_nw/.

Well he's got the plum book deal which will pay for everything and make it all worth it.

A wizened plum, maybe. His advance from W.W. Norton was $100K. Not bad, not spectacular.

what's your source on the advance?

A friend at Norton. The amount was more-than-middling enough for her to remember it. The signing was quite a while ago.

Let's hope he doesn't squander his 2nd chance. Can't blame him for being a publicity whore to get out of dire straits. The thing to remember is - he is a fairly resourceful guy, unlike 99.999% of the other owners in foreclosure proceedings.

still roughly 2,000 at amazon..doubt that they will sell 10,000 copies and most likely no life in paperback. i don't blame him for trying to make money--good luck to norton on this one.

He needs Oprah. People spend $ on made-in-China plastic crap, no harm in diverting some $ to this guy.

oprah definitely changes everything.

There might be a second book in it. How they did or didn't extricate themselves. Something about all those details, though, says he's going to stay profoundly pound-foolish.

He should not divorce again, put limits on how much he helps his stepchildren, and pay off his frigging debts.

come on...don't you think he's got another babe lined up --- how i couldn't support three families on $120K a year and other problems.

Hmm, reminds me that I should change my will a little - put some in trust for my children, so that any future steps or half-sibs don't get any! Men are v. weak when it comes to 2nd families. Women have to be much firmer on drawing the line.

Ah. I'm flashing back to the '90s movie, "The First Wives Club".

Yes. Income-only to the widower, with no power of appointment and no invasion of principal. Not to generalize, but "very weak" is it exactly. Ask any T&E lawyer.

LOL, NWT. I'm mean, no income to the widower either. Oh, and joint trustee with the maternal gparents :) Just have to get around to setting up those insurance trusts.

Even better.

Mr. front_porch's reaction to this story was "this guy was white, right? Because if he was black we wouldn't be reading his story in the New York Times . ."

ali r.
{downtown broker}

The NYT has had those stories, but little and in the main news section. Wouldn't have worked for the "there but for the grace of god go I" tack they were taking with this piece.

excellent commenting all. yes, this story is akin to the tub birthing and young women whose bfs/hbands lost their job stories. he's looking for more benjamins otherwise why put yourself up for total humiliation and the crap shoot of the book not selling well....and he really needs a dose of the cover subject's "can I afford it..." Self entitled beyond the pale.

The financial illiteracy of the US population is frightening!

Ali...I don't understand Mr. front_porch's reaction...

Ali, had Mr. Front Porch seen this article?

http://www.nytimes.com/2009/05/16/nyregion/16foreclose.html?ref=realestate

It's no book deal, but it was on the front page this morning, and I have a lot more sympathy for the people in this story than I do for Bozo the Economist.

I used to tutor other students when I was in high school. The number of 15 year olds in the general popl who don't even get fractions is frightening. Imagine explaining mortgages to them.

I was at a conference not long ago where one blowhard insisted that "literacy as we know it is toast" because any day now, people would just hook into a hive mind and thoughts would flow freely. I'd say basic literacy to read the mortgage documents would be something to be ENcouraged, rather than DIScouraged. The number of people who are barely literate in this country is astounding.

I see no reason you can't live in the DC area on $120k a year. Now true, your not going to live in a tony area like Georgetown on that salary, but you should have no problem affording a modest house or apartment in Virginia or Maryland.

So many comments, I don't have time to read them all, but I want to post my reaction to Mr. Andrews' behavior...

I read the article, and prior to reading it, I heard Mr. Andrews interviewed on NPR. What struck me in the interview is that Mr. Andrews said something to the effect that he would not apologize for his behavior, that everyone in the system -- mortgage broker, real estate broker, credit card companies, etc. -- pushed him to his irresponsible behavior. When I heard this, I was disgusted. Then, I read the article where he explains that he knew that getting the first mortgage and buying the house he could not afford was a mistake. In my humble opinion, it is people like Mr. Andrews who have contributed to the mess we are in, yet these are the same people who have continually blamed "the banks," "the mortgage brokers," etc. Not only is America in an economic recession/crisis, we are also in a moral recession/crisis when people no longer take personal responsibility for their decisions and their actions, especially people like Mr. Andrews and his new wife, who are educated and influential in society. Furthermore, what message are they sending to their children, who have also all been living beyond their families' means, and who are likely learning to blame their mistakes and problems on others? For this family, I would recommend no more GAP and J. Crew, etc. Time for the kids to wear hand-me-downs and for the teen-agers to work part-time, mowing lawns and working at fast-food restaurants, as in earlier generations. As Mr. Andrews is putting himself squarely in the public eye, I would like him to apologize publicly for his personal financial mistakes.

Children should be taught, starting in kindergarten, how to manage money. Too many adults just seem to have so many problems with their finances!!!

Good summary, HB.

Agree. And employees at financial institutions should also be taught, upon beginning employment, how to manage money. Too many bankers just seem to have so many problems with their finances.

(prada, not dissing on you, just a bit of a play on words).

Agree, Hopeful. We are all paying for this guy's stupidity & he has no remorse.

the negative reviews continue at amazon....looks like norton is going to take it in the shorts.

http://www.amazon.com/What-a-jerk/forum/Fx3QIUX7KMCIXWZ/TxKV30N6JHT2FG/1/ref=cm_cd_dp_tft_tp?%5Fencoding=UTF8&s=books&asin=0393067947&store=books

Forget managing money, the really forgotten notion is NOT TO LIVE ON CREDIT. Which means not to be in heavy debt 27/7/365. Another thing is that not repaying what you borrowed lost the stigma. The next step is incouraging not repaying what one borrowed — one step from stealing.

will someone pls scan his book and put it up on the web? There is no way this douche should make a $1 from his stupid over-leveraging... I don't care how white and suburban he looks... he goes and divorces his first wife... entices a married women with "well" to do image then covers it up by borrowing from his home and then looks for his book deal to save his financial ass.... isn't there a can't make money from selling book rights from mass murderer law equivalent for this dipshit?

"Children should be taught, starting in kindergarten, how to manage money. Too many adults just seem to have so many problems with their finances!!!"

sure. children also should be taught right away how to take care of themselves and avoid being fat. problem is, even the teachers and principals are fat. who is going to be their role model then?

LOL w67thstreet. Don't worry, though. Odds are he's pissed it away already. The agent still has that 10%, I hope. Must've earned it.

Or maybe we should all just stop buying the papers who hire morons.

http://www.youtube.com/watch?v=6khYSTqHrqM&eurl=http%3A%2F%2Fwww%2Ecalculatedriskblog%2Ecom%2F&feature=player_embedded

mortgage fraud video

"Or maybe we should all just stop buying the papers who hire morons." i make that a rule: no NYT nor WSJ at home. only the FT.

why can't the US have the equivalent of the FT? i guess it doesn't matter, as FT's US coverage is thorough, but still.

I like them all. The more the merrier.

W67th, I'm sure Google Books is working on it.

"why can't the US have the equivalent of the FT?" cause it's a tougher read than the wsj that reads fast just like gossiping. not that the FT is all fully worthwhile either, but you can always find at least 4 or 5 articles that are worth it. but it's the best in finance by far. the TE is pretty crappy too (imho).