Confessions of a Subprime Lender: An Insider's Tale of Greed, Fraud, and Ignorance
Author: Richard Bitner
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 thebroker 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.
Book review: The Home Owners Journal Fifth Edition or Project Management
Your Credit Score: How to Fix, Improve, and Protect the 3-Digit Number that Shapes Your Financial Future
Author: Liz Pulliam Weston
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Your credit score. It’s just three numbers. But it dictates whether you’ll get credit, and what you’ll pay. Insurers use it to set premiums. Landlords use it to make renting decisions. You need to understand it. In Your Credit Score, Second Edition, MSN Money personal finance journalist Liz Pulliam Weston gives you up-to-the-minute answers you can trust—and a proven action plan for building your credit, fixing it, and maintaining it, starting today!
Weston has updated this national bestseller with extensive new information, including an inside look at the new VantageScore credit scoring system, “Fast Fixes” that actually work, and powerful tips for first-time borrowers.
You’ll discover how your scores are affected by everything from applying for loans to closing accounts...how to cope with a credit crisis, and bounce back from bad credit or bankruptcy...how credit counseling really affects your score...why paying old debts can actually damage your score...how to reduce your exposure to identity theft, and much more!
Acknowledgments xvii
About the Author xix
Chapter 1: Why Your Credit Score Matters 1
Chapter 2: How Credit Scoring Works 13
Chapter 3: VantageScore–A Revolution or Just More of the Same? 29
Chapter 4: Improving Your Score–The Right Way 37
Chapter 5: Credit Scoring Myths 57
Chapter 6: Coping with a Credit Crisis 69
Chapter 7: Rebuilding Your Score After a Credit Disaster 89
Chapter 8: Identity Theft and Your Credit 111
Chapter 9: Emergency! Fixing Your Credit Score Fast 139
Chapter 10: Insurance and Your Credit Score 147
Chapter 11: Keeping Your Score Healthy 163
Index 179
Table of Contents:
Acknowledgments xvii
About the Author xix
Why Your Credit Score Matters 1
How Your Credit Score Affects You 1
What It Costs Long Term to Have a Poor or Mediocre Credit Score 3
How Credit Scoring Came into Being 6
How Credit Use Has Changed Over the Years 7
Consumer's Fight for Truth About Credit Scores 8
Credit Controversies 9
Credit Scoring's Vulnerability to Errors 9
Credit Scoring's Complexity 10
Credit Scoring's Use for Noncredit Decisions 11
Credit Scoring's Potential Unfairness 11
Conclusion 12
How Credit Scoring Works 13
What Is a Good Score? 16
Your Credit Report: The Building Blocks for Your Score 17
How Your Score Is Calculated 18
The Five Most Important Factors 19
Your Payment History 19
How Much You Owe 20
How Long You've Had Credit 21
Your Last Application for Credit 21
The Types of Credit You Use 22
Your Credit Scorecard 22
Your Results Might Differ 24
HowDo I Get My Score? 25
VantageScore-A Revolution or Just More of the Same? 29
The VantageScore Scale 30
How VantageScores Are Calculated 31
Comparing the Scoring Systems 32
Some Rules Remain the Same 33
VantageScore's Future 34
So Which is Better? 36
Improving Your Score-The Right Way 37
Start with Your Credit Report 37
Check the Identifying Information 38
Carefully Review the Credit Accounts 39
Parse Through Your Inquiries 40
Examine Your Collections and Public Records 41
Dispute the Errors 41
Pay Your Bills on Time 42
How to Make Sure Your Bills Get Paid on Time, All the Time 43
Pay Down Your Debt 47
You Need to Reduce What You Owe, Rather Than Just Moving Your Balances Around 47
You Might Need to Change Your Approach to Paying Off Debt 48
You Need to Pay Attention to How Much You Charge-Even If You Pay Your Balances Off in Full Every Month 48
How to Find Money to Pay Down Your Debt 50
Don't Close Credit Cards or Other Revolving Accounts 50
Apply for Credit Sparingly 51
How to Get a Credit Score If You Don't Have Credit 51
Credit Scores Without Credit 55
Credit Scoring Myths 57
Closing Credit Accounts Will Help Your Score 58
You Can Boost Your Score By Asking Your Credit Card Company to Lower Your Limits 59
You Can Hurt Your Score By Checking Your Own Credit Report 60
You Can Hurt Your Score By Shopping Around for the Best Rates 61
You Don't Have to Use Credit to Get a Good Credit Score 62
You Have to Pay Interest to Have a Good Credit Score 63
Adding a 100-Word Statement to Your File Can Help Your Score If You Have an Unresolved Dispute with a Lender 64
Your Closed Accounts Should Read "Closed By Consumer," Or They Will Hurt Your Score 65
Credit Counseling Is Worse Than Bankruptcy 65
Bankruptcy Hurts Your Score So Much That It's Impossible to Get Credit 66
Coping with a Credit Crisis 69
Figure Out How to Free Up Some Cash 72
Evaluating Your Options 75
Prioritize Your Bills 75
Match Your Resources to Your Bills and Debts 77
Figuring Out a Repayment Plan 78
The Real Scoop on Credit Counseling 80
Should You File for Bankruptcy? 84
The Effects of Bankruptcy Reform 85
The Type of Bankruptcy That You File Matters 86
Choose Your Path and Take Action 87
The Pay-Off Plan 88
Credit Counseling 88
Bankruptcy 88
Rebuilding Your Score After a Credit Disaster 89
Credit Report Repair 91
Scrutinize Your Report for Serious Errors 91
Know Your Rights 93
Organize Your Attack 94
What You Need to Know About Unpaid Debts and Collections 95
What You Need to Know About Statutes of Limitations 99
Should You Pay Old Debts? 102
"But You've Got the Wrong Guy!" 105
Adding Positive Information to Your File 106
Try to Get Positive Accounts Reported 106
Borrow Someone Else's History 106
Get Some Credit or Charge Cards If You Don't Have Any 107
Use Your Credit Well 108
Pay Bills on Time 108
Use the Credit You Have 108
Keep Your Balances Low 109
Pace Yourself 109
Don't Commit the Biggest Credit Repair Mistakes 109
Identity Theft and Your Credit 111
New Laws That Might Help 115
How to Reduce Your Exposure to Identity Theft 117
Buy a Shredder 117
Get a Locking Mailbox 117
Protect Your Outgoing Mail 117
Keep Track of Your Receipts 118
Keep Your Financial Documents Under Lock and Key 118
Get Stingy with Your Social Security Number 118
Know What's in Your Wallet 119
Ask About Shredding Policies 119
Don't Let Your Debit Card Out of Your Sight 120
Opt Out of Credit Card Solicitations, Junk Mail, and Telemarketing 120
Don't Use a Cell or Cordless Phone to Discuss Financial Matters 121
Be Wary of Telephone Solicitors and Emails Purporting to Be from Financial Institutions 121
Monitor Your Social Security Statements 122
Monitor Your Credit Reports 122
Consider a Credit Freeze 124
What to Do If You're Already a Victim 131
Keep Good Notes of Every Conversation You Have Regarding the ID Theft 131
Contact the Credit Bureaus by Phone and Then with a Follow-Up in Writing 132
Contact the Creditors by Phone and Then Follow Up in Writing 132
Contact the Police or Local Sheriff 132
Contact Bank and Checking Verification Companies 133
Contact the Collection Agencies 133
Get Legal Help 134
Don't Give Up 134
What to Do If the Credit Bureau Won't Budge 136
Emergency! Fixing Your Credit Score Fast 139
Repairing Your Credit in a Matter of Hours: Rapid Rescoring 140
Boosting Your Score in 30-60 Days 143
Pay Off Your Credit Cards and Lines of Credit 143
Use Your Credit Cards Extremely Lightly 144
Focus on Correcting the Big Mistakes on Your Credit Reports 144
Use the Bureaus' Online Dispute Process 144
See If You Can Get Your Creditors to Report or Update Positive Accounts 145
What Typically Doesn't Work 145
Disputing Everything in Sight 145
Creating a "New" Credit Identity 146
Closing Troublesome Accounts 146
Insurance and Your Credit Score 147
History of Using Credit Scores to Price Insurance Premiums 149
But What's the Connection? 151
What Goes into an Insurance Score 155
Keeping a Lid on Your Insurance Costs 156
Start Thinking Differently About Insurance 156
Raise Your Deductibles 157
Don't Make Certain Kinds of Claims 158
Be a Defensive Driver 160
Use the Right Liability Limits 160
Drop Collision and Comprehensive on Older Cars 161
Shop Around 161
Protect Your Score 162
Keeping Your Score Healthy 163
The Do's of Credit Health 164
Pay Off Your Credit Card Balances 164
Have an Emergency Fund 166
Have Adequate Insurance 168
The Don'ts of Credit Health 169
Don't Buy More House Than You Can Afford 169
Don't Overdose on Student Loan Debt 171
Don't Let Your Fixed Expenses Eat Up Your Income 171
Don't Raid Your Retirement or Your Home Equity to Pay Off Credit Cards 172
Credit and Divorce: How Your Ex Can Kill Your Score 173
Get Your Credit Reports 174
Take Action 174
Don't Be Late 175
Dealing with Mortgages, Car Loans, and Other Secured Debt 175
Consider a Fraud Alert or Credit Freeze 176
Look for Lenders Who Aren't FICO-Driven 176
In Conclusion: The Three-Year Solution 177
Index 179
