The depth of the housing crisis should not surprise anyone who has kept a place on their night table for a few widely hyped books on the meltdown in the last year.
But for those who are still scratching their heads, trying to figure out what’s happening to the nation’s financial system, there’s an onslaught of soon-to-be and more-recently published books to choose from. “Six Days that Shook the World,” by New York Times contributor Roger Lowenstein, and “Too Big to Fail,” by Times reporter Andrew Ross Sorkin are just a few to look out for in the near future.
Meanwhile, though books like “The Subprime Solution,” which was written by Yale economist Robert Shiller, have already received widespread attention, others have been lower-profile, and may require digging through the shelves of a local Barnes & Noble. And then there are those like the “Trillion Dollar Meltdown,” by Charles Morris, that are getting updates. Morris is releasing his “Two Trillion Dollar Meltdown” this spring.
The latest batch of books span all categories. For those who want to get an overview in under an hour, “The Skinny on the Housing Crisis” fits the bill. For others who want to know who to hold accountable, several new books offer dramatic narratives that look at the business executives who worked in the subprime mortgage business. And, for investors, there are plenty of books on how to turn a profit in the midst of a meltdown.
As New York developers, brokers and buyers try to navigate the new real estate terrain, one thing is certain — that there’s a voracious appetite for books with explanations, and no shortage of authors willing to oblige. Here’s an abbreviated roundup of some of the books that are out there:
The Skinny on the Housing Crisis: What Every Homeowner and Homebuyer Needs to Know
By Jim Randel, Clover Leaf Publishing
This comic-book-style read offers a quick and painless way to learn about mortgage securitizations, payment-option loans and even tranches. Randel, an attorney and real estate broker, tells the tale of newlyweds Beth and Billy, who get suckered into buying a house with an adjustable-rate subprime loan that they can’t afford. The couple eventually loses their home to foreclosure, and the strain of the experience proves so traumatic that they end up getting divorced. A whole network of opportunistic businesspeople takes advantage of them, including their real estate agent, a crooked appraiser, their mortgage broker and even their lawyer. After each transaction Beth and Billy make in their ill-fated quest to realize the American Dream, Randel offers explanations of some of the unsavory industry practices and questionable types of loans that led to the housing crisis.
Confessions of a Subprime Lender: An Insider’s Tale of Greed, Fraud, and Ignorance
By Richard Bitner, John Wiley & Sons
Richard Bitner — who’s been making the rounds on the publicity circuit over the last few months — describes the self-deceptions and the culture of denial that pervaded the subprime mortgage industry during its boom years. He’s in a position to know, having spent five years as the owner of Dallas-based subprime lender Kellner Mortgage Investments. Bitner had a better record than most: During his tenure at Kellner, his firm had an average delinquency rate of 3 percent, in comparison to the industry average of 20 percent. However, as competition increased, he found he was underwriting riskier loans and dealing with sketchy characters, such as a vice president of one of the largest mortgage operations in Cleveland who turned out to be a convicted felon with a penchant for throwing knives around his office. Nobody comes out unscathed in this insider’s account of the subprime mortgage industry, which describes the business practices of Wall Street investment firms and rating agencies, as well as the brokers and lenders who set up homebuyers with mortgages they couldn’t afford.
Chain of Blame: How Wall Street Caused the Mortgage and Credit Crisis
By Paul Muolo and Mathew Padilla, John Wiley & Sons
Two noted financial reporters go behind the scenes to show what went on inside corporate boardrooms and at investor luncheons during the unwinding of the mortgage and credit crisis. Their protagonist is Angelo Mozilo, the perennially tan, well-coiffed CEO of Countrywide Financial, who started out as an errand boy from the Bronx and ended up founding what was to become America’s largest home-mortgage lender. Mozilo is portrayed as a complex figure who on one hand played a leading role in increasing homeownership by minorities, but who also got caught up in peddling problematic mortgage products such as payment-option adjustable-rate loans — known in the industry as the “I’ll-worry-about-it-tomorrow” option. The authors show, however, that there was plenty of blame to go around. They describe how a widely shared belief that housing prices would continue to rise helped sustain the shaky business models and complex financial instruments that are now collapsing.
The Abandoned Property Investor’s Kit: Find the Owner, Buy Low
By Reggie Brooks, John Wiley & Sons
A nuts-and-bolts approach to investing in abandoned properties, this book falls more into the get-rich-quick vein. It was penned by a former telephone company employee who discovered a way to turn a profit after coming home from work one day and watching an infomercial advertising real estate seminars. Brooks signed up for the class and took careful notes; today, he is known as “Mr. Abandoned Property” and says he makes about $40,000 a month buying and selling abandoned homes. His book is peppered with tips on how an investor with little or no money can end up profiting from deals involving abandoned properties. He discusses creative financing techniques such as wrap-around mortgages. The book also comes with a free subscription to an online course that Brooks says is worth $395.
Foreclosure Myths: 77 Secrets to Making Money on Distressed Properties
By Chip Cummings and Ralph Roberts, John Wiley & Sons
Right now, many investors are not keen on buying foreclosed properties in New York City: Housing prices have begun to fall in neighborhoods hit hard by foreclosure, there is no bottom in sight, and the subprime mortgage market has dried up, limiting resale potential. But in neighborhoods and parts of the country where prices have already taken a nosedive, there is opportunity, according to veteran real estate investors Chip Cummings and Ralph Roberts. Their book is structured around refuting the “myths” that have developed about investing in foreclosed properties. Most of the advice is quite useful for both veterans and neophytes. It includes tips on how to evaluate foreclosure properties before an auction, how to purchase a house pre-foreclosure, and how to finance a purchase with little or no money down. Interestingly, the first myth that the authors set about disabusing is that buying a foreclosure is taking advantage of someone else’s misfortune.
Financial Shock: A 360 degree Look at the Subprime Mortgage Implosion, and How to Avoid the Next Financial Crisis
By Mark Zandi, FT Press
As they say, hindsight is everything: In spring 2008, Zandi, the chief economist and co-founder of Moody’s Economy.com, and many others believed that the “financial turmoil [had] reached an apex in mid-March, when the Federal Reserve stepped in to engineer the sale of Bear Stearns.” In fact, in the last chapter of Zandi’s informative book on the developing subprime mortgage crisis, he states, “As this is being written about a year after the subprime mortgage shock hit, the worst appears to be over.” Well, maybe not. In the book, Zandi does identify weaknesses he says could (and did) further destabilize the financial system — declining housing prices, increasing foreclosures, the credit default swap markets, leveraged and mortgage-backed securities and banks having to take massive write-downs. His book is especially good at describing how foreign money helped fuel the expansion of the U.S. credit and housing markets.