The Foreclosure of America: The Inside Story of the Rise and Fall of Countrywide Home Loans, the Mortgage Crisis, and the Default of the American Dream

by Adam Michaelson

From Countrywide's former Senior VP of Marketing, the first engrossing inside look at Countrywide Home Loans, how the mortgage crisis started-and where it may end.In July 2004, Adam Michaelson entered "The Vault"-an underground bunker at Countrywide headquarters-for a meeting about a new loan product that would allow borrowers to pay less than their minimum monthly payment. After the "finance jocks" proudly made their case, Michaelson asked one "Are you nuts?" Countrywide's decision-makers believed these new exotic loans were "worth the risk." The booming housing market would only get bigger, with ever-increasing home values supporting homeowners in a never-ending cycle of borrowing against the virtual value of their homes and refinancing later. They were dead wrong. With both an insider's knowledge and thorough reporting on the ripple effects on American families and the economy, this fascinating, witty, and wide-ranging book not only examines t

368 pages, Hardcover

First published December 18, 2008

Reviews

[Kim · Rating 1 out of 5]

Total. Waste. Of. Time.

[Matthew Shiney · Rating 1 out of 5]

I read this book only because a client of mine recommended it. The book should be called, “The Inside Story of Adam Michaelson”. There was excruciating detail on all the marketing work he did and his relationships with colleagues and very little on the actual rise of Countrywide, the psychology of bubbles and an inside look at the mortgage industry at large. There is no drama except for petty pissing matches between colleagues. His “inside look” makes it clear he overstated his own importance or did not do enough research. His diagnoses of the problems of lending are primarily to blame consumers, but this is a ridiculous oversimplification of the issues. Mortgage lenders and other financial service professionals have significant information asymmetries, so most consumers do not understand what they are actually agreeing to. The mortgage lenders play into the worst instincts of overconsumption and should bear responsibility for that too. He seems to blame systemic greed and consumerism (which exist) and almost absolves Countrywide from any culpability. This book should have been half as long, but mercifully it’s a quick read. If you want to read a book about a guy who loves the sound of his own voice, hear about how smart he is, and miscellaneous non germane details about inter-office politics and marketing, then this is the book for you. If you want an actual inside look at the financial crisis and it’s lead up, read “The Lost Bank” or “The Big Short”.

[Thomas Bray · Rating 3 out of 5]

I think I lost this book somehow and can't find another copy, near about 2/3rds through. Anyway - I didn't read this book as negatively as seemingly most of the reviewers. I expect that someone who's not reporting expert to discuss their portions of a large corporate machine, and not have insight into the larger machinations of a giant enterprise. Definitely not amongst the worst books I've (almost) read this year.

Edit:

I found the book, and finished it! The tone was casual, a marketer isn’t the most reliable narrator, and the story was incomplete when this book hit the presses, but it’s truly a fine book. It’s clearly a creature of its time, and I’m glad I picked it up from the local Goodwill.

[Lisa]

Adam Michaelson, a marketing executive at Countrywide, was intrigued when he was invited to a meeting at the Vault - a nuclear bunker deep underground. He listened in amazement to a presentation advocating mortgages that actually increased the amounts which people owed on their houses. This was based on the premise that house prices would keep rising.

Michaelson immediately imagined a scenario in which house prices began to decrease and the forthcoming disaster. "Are you nuts?" he asked the presenter.. He loved working for Countrywide and he developed the "Realize Your Dreams" campaign. Michaelson really felt that this huge company was helping people do just that because it loaned people money to help them buy houses and apartments. Even the image of the campaign - a nice house with white picket fence - was the embodiment of the Great American Dream.

Disillusionment set in, however, when he realised what was going to happen and he watched the company go into free fall.

Some of these business tomes are boring, but this is a fast-paced, exciting book which puts the reader right into the heart of the bubble. Michaelson describes the rise of Countrywide and how it all went wrong. He still defends capitalism, however, arguing that too much market control and watching over people is the beginning of totalitarianism. I agree!

He has helpful suggestions to stop this disaster happening again. Unfortunately, I don't think that any of them are being put into practice.



Michaelson's outline of his career is also useful for anyone interested in marketing, especially his handling of job interviews.

[EstelleLiterature · Rating 5 out of 5]

In 2009-10, I accompanied someone to research for a novel and observed first hand the housing crisis in America. In this epoch, the housing bubble was deflating everywhere in Europe and America, and the French government was removing the floating-rate mortgages from the French lenders' books and tightening their grips on French banks' holdings in mortgage-backed securities and disciplining France's traders of derivative securities for accounting scams. We visited 6 American metropolis and their suburbs and watched people sleeping in tents pitched on loose snow. The images still linger in my mind when I see the ravages done also on France's small towns and the French retirement funds that invested heavily in securities backed by these subprime mortgages.

[Mushtaq · Rating 1 out of 5]

This might be the worst book I have read this year. It provided no insights into the broader issues of what happened at Countrywide and why. Michaelson casts himself as a central figure in the mortgage business in the years leading up to this housing crisis, but in reality, he was a middle-level manager in the marketing division of Countrywide. It's indulgent, self-aggrandizing, and sheds no light as to how and why decisions were made regarding mortgage financing.

[Princesse · Rating 3 out of 5]

I would recommend this to anyone interested in corporate culture and the ruthless machine of marketing. The author fills about half the book with his personal take on things, so do not expect a dry documentary or a fact-filled read. But when he does give up the numbers and details, he clearly explains how the mortgage frenzy exploded.

[Laura · Rating 4 out of 5]

Interesting and good perspective on the housing crisis in America. Michaelson honestly wrestles with every dimension and side of the collapse in an effort to understand all viewpoints involved from corporate to homeowner to defaulter. The book is a good counter to ignorant a-holes who say things like "if you guys had just paid your mortgages none of this would have happened".

[Michael Berry · Rating 3 out of 5]

Interesting inside look at the advertising industry. This tends to digress into nuts and bolts of marketing.

I was looking for another perspective on the mortgage crisis. It delivers on that goal.

[Marci · Rating 4 out of 5]

written by former Countrywide SVP

[Meredith]

How exciting! I worked on this book, and I am thanked by name in the acknowledgements.