The notion that experienced business reporter Edmund Andrews didn’t think his wife’s two prior bankruptcies were an important part of the story grows more and more implausible.
Tom Maguire points out what looks like another gaping problem in the original story.
Maguire goes back to the original story, when he explains his interaction with Bob, his mortgage broker:
But this was unlike any other time in history. My real estate agent gave me the number of Bob Andrews, a loan officer at American Home Mortgage Corporation. Bob wasn’t related to me, and I had never heard of his company. “Bob can be very helpful,” my agent explained. “He specialises in unusual situations.”
Bob returned my call right away. “How big a mortgage do you think you’ll need?” he asked.
“My situation is a little complicated,” I warned. I told him about my child support and alimony payments and said I was banking on Patty to earn enough money to keep us afloat. Bob cut me off. “I specialize in challenges,” he said confidently.
Bob called back the next morning. “Your credit scores are almost perfect,” he said happily. “Based on your income, you can qualify for a mortgage of about $500,000.“
You had to admire this muscular logic. My lenders weren’t assuming that I was an angel. They were betting that a default would be more painful to me than to them. If I wanted to take a risk, for whatever reason, they were not going to second-guess me. What mattered more than anything, Bob explained, was a person’s credit record. History seemed to show that the most important predictor of whether people defaulted on their mortgages was their “FICO” score (named after the Fair Isaac Corporation, which developed the main rating system). If you always paid your debts on time before, the theory went, you would probably keep paying on time in the future.
Get that? Andrews was perfectly willing to cite Patty’s potential future earnings to stisfy the income part of the loan, but for purposes of the credit filing his credit scores were “almost perfect.” Obviously, Patty’s credit history wasn’t included, and indeed she wasn’t on the mortgage app.
Even assuming Bob was a total mortgage shark, do you think he would’ve got this deal done if one of the people paying the mortgage had two prior bankruptcies? And beyond that, Andrews himself is being disingenuous when he writes about how good his FICO score is, and how that’s what was important (Gee, how could I have known I wouldn’t be able to afford the house, my credit score was perfect!). He knew that one of the main payers of the mortgage had a terrible FICO score.
So, is this a story of greedy mortgage brokers or nearly fraudulent mortgage applications? I am pretty sure the latter tale would not be publishable, which would hardly suit Mr. Andrews current financial plan, which is to hit it rich with a best-seller, however phony.
Is this Mr. Hoyt’s (Ed note: the ombudsman) idea of full and fair reporting? Knowing about the wife’s prior bankruptcy makes reading this article even more challenging than doing a crossword puzzle, as the reader tries to figure out what Andrews is dancing around and what really went on.