Monday, August 25, 2008

Confessions of a Subprime Lender by Richard Bitner

This was published by Wiley -- not in my program, but by a related program run by colleagues and friends -- so don't expect an unbiased opinion.

I read it in part because I think I should be reading some of the books published by my department, and in part because I'm a homeowner who's been paying a mortgage for a good fifteen years now. (The Wife and I have had many discussions, like so many couples and friends have, over the past years about the housing bubble and crash. I do have to wonder: if it seemed obvious to two random homeowners in New Jersey -- where the lending was relatively sedate and old-fashioned -- that houses were getting overpriced and a lot of new homeowners were getting loans that they could barely afford, how come none of the experts could see it? We remembered the late '80s real estate crash, even if we were a bit young to have had it really affect us.)

Bitner isn't a professional writer, which occasionally shows; this is a mildly technical book that could possibly have been a bit smoother in spots. But he was a subprime mortgage lender in Dallas who got out a year before the crash, so he has great credentials to talk about the whole fiasco: he was there as it happened and knows how the system works (both how it was supposed to work and how it actually did work), and was far-sighted enough to know when everything was going too far.

Confessions of a Subprime Lender gets somewhat wonky in spots -- it's written by an insider for a business audience, so he gets into more details than general audiences might expect -- but it's always clear, and Bitner is good at using specific examples from his own loan-making days to illustrate general problems. He runs through all of the players in the industry, both as types and by naming names, and isn't afraid to allocate blame widely. (There's a lot of blame to go around, so Bitner has plenty of it to allocate.) Along the way, he explains how loans get made, and in particular how bad loans get made, and how they lead to more bad loans.

As I said, I'm biased towards this book, but I have to think that if you want a book to explain what went wrong with mortgage lending in the US, Richard Bitner is just the guy to explain it, and Confessions of a Subprime Lender is an eye-opener of a read. It's short (under 200 pages), full of things you won't learn elsewhere, and has a great cover by Michael J. Freeland (a nice guy who lives one town over from me). What more do you want?

No comments:

Post a Comment