In 2000, long before the phrase "subprime mess" replaced "shock and awe" as the most overused headline of the decade, mortgage wholesaler Richard Bitner thought that somebody at one lending company had a screw loose.
The company, Associates First Capital Corp of Irving, Texas, was extending mortgages with only 5 percent down to struggling borrowers - and was paying Bitner and other lenders fees of 600 basis points to use the product, compared with the prevailing maximum of about 500 basis points, he says.
"We thought someone in their trading department had spiked the water cooler," Bitner writes in Confessions of a Subprime Lender. The party at the cooler was just beginning.
Today, the US housing market is in shambles and financial markets worldwide are cratering in response to mortgage excesses that implicated all the players in the industry, from fibbing borrowers and fudging appraisers to ratings companies that played a role in turning mortgage lemons into securitized lemonade.
Bitner was the president and co-founder of a Dallas-based subprime mortgage company called Kellner Mortgage Investments. In Confessions, he provides a good education in the varieties of swine who fed at the housing trough.
There was, for example, the big-shot mortgage broker Bitner dined with in Cleveland, only to learn that the guy had done "a few years in the Federal pen." Another broker, Angelo, brought Bitner a client named Rock whom he'd met at a strip club.
Rock was an ex-con trying to buy his girlfriend's house to help her free up some cash. Though the deal closed, it turned out that Angelo worked with Rock only because he was trying to score with Rock's girlfriend. When she rebuffed him, he threatened to kill her. (Rock, by the way, stopped paying the mortgage.)
If you're wondering how deals like these get done, Bitner provides tips in a chapter on "the art of creative financing." Too many bounced checks in the customer's history? Rogues simply omit all but the first page of the checking account.
Had your car repossessed? Bitner describes a case where a collection agency reports the repo to only one of three credit agencies. An unscrupulous broker could make the collection disappear by filing just the reports from the two other bureaus, turning a losing loan application into a winner.
Bitner pulls no punches in recounting how Wall Street firms - and the ratings companies they hired to value mortgage securities - took advantage of the dysfunctional mortgage world.
The days when banks ran the whole mortgage process are gone, he writes. Today, a broker originates the loan, a lender funds it, a financial institution packages it into securities, and investors buy the securities.
The upshot: Investment firms and ratings companies have become "the unofficial regulators of the subprime industry." That makes them most to blame for the housing crisis, he argues.
What about the destruction wrought by mortgage wholesalers like Bitner? While he's generous in criticizing others for lowering standards, his own "confessions" fall short of
confessing, barring a mea culpa in the book's last two pages.
In 2005, for example, Bitner was forced to repurchase a loan from an investor to whom he'd sold a mortgage. The borrowers were a South Carolina couple who had a credit score in the 500s (out of a possible 850) and US$250 left in their checking account after the closing. They never made a single payment. Bitner goes back to review the files, searching for what he may have done wrong.
"Then it hit me," he writes. "We did nothing wrong. Our underwriter approved the deal, we funded it, and the investor purchased it from us because it fit their guidelines."
And there you have it: In this business, the players wrote the rules and no one asked whether the rules made sense. Including Bitner.
As for that South Carolina couple, Bitner got them to sign the deed back to him - after agreeing he wouldn't report it to the credit agencies.
The year was 1991. A Toyota Land Cruiser set out on a 67km journey up the Junda Forest Road (郡大林道) toward an old loggers’ camp, at which point the hikers inside would get out and begin their ascent of Jade Mountain (玉山). Little did they know, they would be the last group of hikers to ever enjoy this shortcut into the mountains. An approaching typhoon soon wiped out the road behind them, trapping the vehicle on the mountain and forever changing the approach to Jade Mountain. THE CONTEMPORARY ROUTE Nowadays, the approach to Jade Mountain from the north side takes an
Last week Joseph Nye, the well-known China scholar, wrote on the Australian Strategic Policy Institute’s website about how war over Taiwan might be averted. He noted that years ago he was on a team that met with then-president Chen Shui-bian (陳水扁), “whose previous ‘unofficial’ visit to the US had caused a crisis in which China fired missiles into the sea and the US deployed carriers off the coast of Taiwan.” Yes, that’s right, mighty Chen caused that crisis all by himself. Neither the US nor the People’s Republic of China (PRC) exercised any agency. Nye then nostalgically invoked the comical specter
Relations between Taiwan and the Czech Republic have flourished in recent years. However, not everyone is pleased about the growing friendship between the two countries. Last month, an incident involving a Chinese diplomat tailing the car of vice president-elect Hsiao Bi-khim (蕭美琴) in Prague, drew public attention to the People’s Republic of China’s (PRC) operations to undermine Taiwan overseas. The trip was not Hsiao’s first visit to the Central European country. It was meant to be low-key, a chance to meet with local academics and politicians, until her police escort noticed a car was tailing her through the Czech capital. The
April 15 to April 21 Yang Kui (楊逵) was horrified as he drove past trucks, oxcarts and trolleys loaded with coffins on his way to Tuntzechiao (屯子腳), which he heard had been completely destroyed. The friend he came to check on was safe, but most residents were suffering in the town hit the hardest by the 7.1-magnitude Hsinchu-Taichung Earthquake on April 21, 1935. It remains the deadliest in Taiwan’s recorded history, claiming around 3,300 lives and injuring nearly 12,000. The disaster completely flattened roughly 18,000 houses and damaged countless more. The social activist and