In a word, is this all about greed?
Richard Bitner opened his own mortgage shop in 2000, and had the good fortune – and sense – to bail out of the business in 2005, before the housing crisis hit. He saw the shoddy lending practices that got us into the subprime crisis first hand, and has chronicled them in his book, Confessions of a Subprime Lender. According to Mr. Bittner, "the lack of professionalism, the crazy loans, the finagle factor and the open fraud finally drove him from the business. Although he escaped the worst of the mortgage meltdown, the company he founded did not; it folded in early 2007.
Confessions of a Subprime Lender: An Insider's Tale of Greed, Fraud, and Ignorance (Wiley), draws on his unique experience in the lending industry to explain the truth about the subprime meltdown.
A world class public speaker who has appeared on CNBC and the Daily Show, Richard spoke with Peter Clayton, host of Total Picture Radio, about how we got into the mortgage mess, what to do if you're in a subprime trap.
In 2000, Richard Bitner and his two partners started a mortgage company to make a few bucks, and as corny as it may sound, help those with damaged credit get into a home. He was quite successful as his company pulled in over $250 million in loans annually. Yet, five years later, after witnessing firsthand how ridiculous the industry had become, Bitner got out.
Bitner's departure from the business wasn't the result of bad deals with con artists or foreclosures resulting from customers getting "creative" on their loan applications. It was the realization that greed and lack of financial control turned unqualified applicants into qualified borrowers.
While reviewing a foreclosure in which the borrowers failed to make even one payment, Bitner discovered that everything had been done correctly. No fraud had occurred and neither party had been dishonest. The loan, no matter how you looked at it, was a bad idea, despite the fact that it met industry standards. It was clear to Bitner that the entire system was broken.
In his book, Bitner points out that nearly three out of every four mortgages were misleading or fraudulent. Brokers and lenders used creative financing to lend money to just about anyone. While Bitner feels there's plenty of blame to go around, he specifically points to Wall Street and rating agencies as key figures responsible for the collapse.
Richard Bitner's Biography
Richard Bitner's new book, Confessions of a Subprime Lender: Tales of Greed, Fraud & Ignorance, details the players and events that caused the housing and mortgage crisis. Bitner draws on his 14 years of experience in the lending industry to provide an in-depth perspective on the causes as well as the solutions needed to fix the lending industry.
Bitner is currently the President of LTV Media LLC, a publishing and communications company. He spent five years as President of Kellener Mortgage Investments, a Dallas-based subprime mortgage company. He was also Director for GMAC Residential Funding and the National Training Manager for GE Capital Mortgage Insurance (Genworth Financial).
Bitner holds a master's degree in communications from Cornell University and a bachelor's degree in public relations from Northern Arizona University. He currently serves on the board of directors for Family Gateway, a Dallas-based transitional housing facility.
About Peter Clayton
Peter Clayton, Producer/Host, is an award-winning producer/director of radio, television, documentary, video, interactive and Web-based media who has created breakthrough media for a wide array of Fortune 100 clients.