June 19 (Bloomberg) -- To get a feel for how much further U.S. home prices may fall, pick up Edmund L. Andrews’s “Busted: Life Inside the Great Mortgage Meltdown.”

A New York Times economics reporter who should have known better, Andrews here describes how he bought a house he couldn’t afford with mortgages that almost bankrupted him during the Great American Credit Binge.

His embarrassing tale -- complete with panic, marital dustups, $50,000 in credit-card debt and imminent foreclosure -- shows just how twisted the market got in the age of the liar loan, and just how long it may take to hit bottom.

Andrews, who is 53 as the book closes, now realizes that he mortgaged his future when he should have been saving for retirement. The sad reality is that he was hardly alone.

“Millions of people had stopped saving over the previous five years, many because they assumed that the rising value of their homes would constitute their main nest egg at retirement,” he writes.

How did it come to this? Andrews uses his travails as a prism for viewing the forces behind the bubble, from the rise of shady lenders and independent mortgage brokers to the ratings companies that slapped triple-A grades on financial sludge. Step by step, he investigates the institutions that gave him the rope with which to hang himself.

“Don’t worry,” a mortgage-loan officer at American Home Mortgage Investment Corp. tells him. “The value of your house will be higher in five years. You’ll be able to refinance.”

‘Money for Nothing’

The bubble zeitgeist is captured in chapter titles: “Money for Nothing” is followed by “Prudence Is for Losers” and “My Lender Drinks the Kool-Aid.” That gives way to “Magical Thinking, Real Debts” and (scarier still) “Alan Greenspan.”

The book opens, appropriately enough, with Andrews describing his reckless mortgage to the former U.S. Federal Reserve chairman: “Greenspan blanched,” he writes. “First he looked appalled. Then he looked perplexed.”

“Why did you do it?” he asked.

Andrews’s descent into mortgage madness began in 2004. He had separated from his wife and was paying more than $4,000 a month -- “well over half of my take-home pay” -- in child support and alimony. Yet he had fallen in love and wanted to start a new life.

With the help of a loan officer at American Home, Andrews was able to buy a $460,000 home in Silver Spring, Maryland, with a “no-ratio” mortgage, which didn’t require him to state his income, let alone his debt-to-income ratio. The rate and monthly payments would adjust every year; a second piggyback loan featured a higher rate and a balloon payment after 10 years.

Unpaid Bills

Before long, Andrews’s professional life and personal crisis collided. After July 2007 -- when Moody’s Investors Service and Standard & Poor’s slashed their ratings on billions of dollars of bonds backed by subprime mortgages -- he found himself both covering the crisis and drowning in it.

As unpaid bills piled up, he and his new wife managed to refinance the house twice, first with Fremont Investment & Loan, then with JPMorgan Chase & Co. Each lender was linked to the drama unfolding nationwide, he says: Fremont had been a leading cause of the Moody’s downgrades that July 10, he writes. American Home collapsed just weeks later. JPMorgan Chase would emerge from the meltdown as a big winner.

By this point, bill collectors were ringing six days a week and the house was getting seedy, its paint peeling and screens broken. Andrews was one conflicted reporter.

“On the beat, I was becoming angrier, more exhausted and a lot less eager to be evenhanded,” he says.

Punching the Furniture

Andrews, to his credit, admits his failings -- how he hectored his new wife about money, flew into rages and at one point punched a crack in her antique wardrobe.

Yet he goes surprisingly easy on Greenspan, the man who pumped helium into the bubble by keeping interest rates too low for too long and refused to clamp down on wayward lenders. For Andrews, the debacle reflected something broader -- “rot and corruption in the whole system, up to and including policy makers like Greenspan.”

“Why did we all jump off the cliff together?” he asks.

The answer -- from those of us who bought affordable homes with fixed-rate mortgages -- is simple: We didn’t. Please explain why we should pay for your mistakes with inflationary government rescues.

“Busted” is from Norton in the U.S. (220 pages, $25.95).

(James Pressley writes for Bloomberg News. The opinions expressed are his own.)

To contact the writer on the story: James Pressley in Brussels at jpressley@bloomberg.net.

Last Updated: June 18, 2009 19:00 EDT