Synopses & Reviews
"Bitner's book conveys the authority of someone who was in the trenches where this dirty work was going on." -- NewsweekMagazine
With each day bringing new revelations about the economic damage the mortgage crisis is creating worldwide, this book couldn't be timelier. Bitner tells the fascinating story of his disillusionment after owning a sub-prime lending business for five years. It starts with foreclosing on a borrower he knew shouldn't have been given a mortgage in the first place (even though the loan fit the industry's guidelines). He relates the story of his house catching fire, and how this prompted him to re-evaluate his priorities and sell his stake in the company just as profits were plummeting and sales were hitting an all-time high. A year after Bitner bailed, the industry imploded, and he watched his former company close down.
Woven throughout his personal industry experiences is the fascinating story of how an industry started out helping disadvantaged customers buy houses, but soon lost its way due to greed, lack of financial control, and willful ignorance. This book reveals the truth about how various parts of the mortgage business yielded to the temptation to maximize profits, weakening the chain that held the system together. The book covers:
- What it was like running a sub-prime lending business in an industry spiraling out of control
- The fact that nearly three out of every four sub-prime mortgages originated by brokers were misleading or fraudulent, and the tactics these brokers used to trick lenders and borrowers
- How the sub-prime industry pushed home prices to unsustainable levels
- How brokers and lenders used creative financing to turn unqualified applicants into qualified borrowers
- 20 critical changes that must be made to fix the mortgage industry, including transparent fees, rating agency reform, and the implementation of new, mandatory licensing requirements for brokers
From borrowers, to brokers, to appraisers, to Wall Street Investment Banks, Bitner exposes the role that each level of the hierarchy played -- and the tactics they used -- in bringing on one of the greatest business disasters in history.
"...packed with tales of crooked brokers, deceitful customers, avaricious Wall Street banks and all too obliging credit rating agencies."(The Guardian, September 19, 2008
One insider's rollercoaster account of the subprime implosion
Richard Bitner founded his own subprime mortgage company just as the industry took off. In five years, he watched his company grow from a tiny operation to a booming business. But something wasn't right...
As housing prices skyrocketed, Bitner watched greed and fraud overtake the industry. Eventually, he became disenchanted after foreclosing on a subprime borrower who was given a legitimate, industry-standard mortgage—a loan Bitner realized never should have been made. Seeing the ugly writing on the wall, he sold his stake in the business before the industry imploded under a mountain of bad debt.
Confessions of a Subprime Lender pulls back the curtain on the players who created the subprime disaster, including brokers, lenders, Wall Street investment firms, and rating agencies who worked the system to their advantage. From his unique perspective as a subprime lender, Bitner reveals:
Why nearly three out of every four mortgages were misleading or fraudulent
How unscrupulous brokers tricked lenders and gullible borrowers
How brokers and lenders turned unqualified applicants into "qualified borrowers"
Why Wall Street and the rating agencies are largely to blame for the collapse
Interwoven with dramatic personal anecdotes, Confessions of a Subprime Lender explains how the subprime industry blew up and concludes with a comprehensive solution for rebuilding it by forcing changes on all the key players.
"Bitner's thorough review of the subprime lending industry provides a behind-the-scenes look at the mortgage mess. From the broker on Main Street to the investor on Wall Street, it's an unabridged version of what went wrong and how it needs to be fixed."
—Bill Dallas, founder, First Franklin Mortgage, one of America's largest subprime lenders, before it collapsed
"This is an in-depth, eye-opening examination of the problems impacting the housing and mortgage markets."
—Matthew McIntyre, CEO, Puritan Financial Group, Inc.
Former subprime lender Richard Bitner once worked in an industry that started out helping disadvantaged customers but collapsed due to greed, lack of financial control and willful ignorance. In Confessions of a Subprime Lender: An Insider's Tale of Greed, Fraud, and Ignorance, he reveals the truth about how the subprime lending business spiraled out of control, pushed home prices to unsustainable levels, and turned unqualified applicants into qualified borrowers through creative financing. Learn about the ways the mortgage industry can be fixed with his twenty suggestions for critical change.
About the Author
was president and cofounder of Kellner Mortgage Investments, a subprime mortgage company that peaked at sixty-five employees and $225 million in annual loan volume. He is Managing Director for Housing Wire, a leading mortgage industry online publication.
Visit Richard's blog at www.lendingsanity.com.
Table of Contents
Chapter 1. Why I Bailed out of the Subprime Industry.
Chapter 2. The “Gunslinging” Business of Subprime Lending.
Chapter 3. The Underbelly: Mortgage Brokers.
Chapter 4. Making Chicken Salad out of Chicken Shit: The Art of Financing Unqualified Borrowers.
Chapter 5. Wall Street and the Rating Agencies: Greed at Its Worst.
Chapter 6. Secondary Contributors: The Fed, Consumers, Retail Lenders, Homebuilders, and Realtors.
Chapter 7. How to Fix a Broken Industry.