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Confessions of a Subprime Lender. An Insider's Tale of Greed, Fraud, and Ignorance

  • ID: 2325665
  • Book
  • August 2008
  • Region: Global
  • 224 Pages
  • John Wiley and Sons Ltd
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Real Estate

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.

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Acknowledgments ix

Introduction xi

CHAPTER 1 Why I Bailed Out of the Industry 1

CHAPTER 2 The Gunslinging Business of Subprime Lending 15

CHAPTER 3 The Underbelly: Mortgage Brokers 39

CHAPTER 4 Making Chicken Salad Out of Chicken Shit: The Art of Creative Financing 73

CHAPTER 5 Wall Street and the Rating Agencies: Greed at Its Worst 103

CHAPTER 6 Secondary Contributors: The Fed, Consumers, Retail Lenders, Homebuilders, and Realtors 127

CHAPTER 7 How to Fix a Broken Industry 151

Glossary 183

Resources 185

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Richard Bitner
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