Title: ‘Confessions of a Subprime Lender: An Insider’s Tale of Greed, Fraud and Ignorance‘
Author: Richard Bitner
Publisher: Wiley, 2008; 208 pages; $19.95 list ($13.57 on Amazon.com)
Reading "Confessions of a Subprime Lender: An Insider’s Tale of Greed, Fraud and Ignorance," by former subprime mortgage lending company co-owner Richard Bitner, was reminiscent of reading Antonia Frasier’s "Marie Antoinette" — the historical facts and anecdotes woven together create an excruciating sense of dread and suspense, despite the fact that every reader knows from the outset exactly how the story ends.
"Confessions," the trade-published edition of a formerly self-published book, is a historical retelling of the rise and fall of the subprime lending industry, which just so happened to take America’s homeowners and economy along with it for the ride — in both directions.
As it retells, "Confessions" also analyzes and assigns responsibility for the subprime mortgage market mess and the credit crunch — first to each of several primary perpetrators:
- Corrupt and dysfunctional mortgage brokers (the latter category of which Bitner classifies by whether they were "pushers," "withholders" or "manipulators"), to be distinguished from honest, ethical brokers;
- Subprime lenders themselves, at whose offices Bitner feels the buck ultimately stops, given that even utterly credit-unworthy loans were rubber-stamped and allowed if they met a lender’s guidelines, no matter how "insane";
- Wall Street investment banks who securitized mortgages and the rating agencies who validated those deals.
Bitner moves on to a brief treatment of secondary "participants" and their contributions to the problem, including the Fed, retail lenders, homebuilders, real estate agents and — yes — borrowers. Bitner tags the role these second-tier culprits played in creating the crisis while simultaneously laying out their inculpable motivations and priorities for the same behavior.
Throughout, Bitner does a remarkably clear and cogent, "un-fancified" job of rendering abstract subjects concrete, as with his discussion of how mortgage securitization impacts borrowers.
He closes the book with a comprehensive, smart and realistic outline of an industrywide regulatory scheme that aims for both ease of integration and avoidance of knee-jerk extremes while facilitating the admirable endgame of subprime loans — ensuring the availability of credit to less-than-perfect borrowers.
Of all the finger-pointing books that have claimed to represent an effort to prevent us from repeating this nasty slice of history, "Confessions" lays out a superior action plan for executing a mortgage-crisis-free future. If the measure of a mea culpa is how much responsibility the offerer takes for solving the problem, then "Confessions" ranks grade "A."
Tara-Nicholle Nelson is author of "The Savvy Woman’s Homebuying Handbook" and "Trillion Dollar Women: Use Your Power to Make Buying and Remodeling Decisions." Ask her a real estate question online or visit her Web site, www.rethinkrealestate.com.
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