In the months and years to come, dozens of books will chronicle the subprime lending boom and bust that resulted in record numbers of foreclosures and massive losses at some of America’s most prominent banks (as well as the dismissal of Merrill Lynch CEO Stan O’Neal and his 9-figure parting gift, but that’s another story).

But for now, there are only really a handful, and Pittsburgh reporter Richard Lord’s American Nightmare: Predatory Lending and the Foreclosure of the American Dream is one of the best. Based on interviews with dozens of ripped-off subprime borrowers, contractors, mortgage brokers, and bankers, Lord presents a disturbing tale of the wild west of the housing market: Usurious interest rates are charged to borrowers who could have qualified for lower interest conforming loans, terms are changed at closing, and

predatory balloon payment and prepayment penalties are imposed on consumers who lack the sophistication to know what they’re doing.

Lord plus discusses the collateralized debt obligations that the loans were bundled into, and how the securitization of mortgages left brokers with little incentive to give society loans that they could, for instance, afford to pay off. Lord doesn’t fairly predict the subprime meltdown that would aftereffect in huge writedowns at nearly all the big banks (This book was published in 2005), but he comes shut.

If you want to understand the darkest side of the subprime lending industry, Lord’s book is definitely worth a look until better, more updated stuff comes out.

Original post by Zac Bissonnette

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