Richard Bitner left GMAC to start his own mortgage company on the eve of the subprime boon, a gilded age for housing finance professionals that has since soured. Kellner Mortgage Investments at one point had 65 employees and underwrote $225 million worth of loans, many of the subprime variety.

Bitner sold his business before the market collapsed and decided to write a memoir of his experiences in housing finance. As he says, he wanted to write a Liar's Poker for the mortgage banking set. Confessions of a Subprime Lender: An Insider's Tale of Greed, Fraud, and Ignorance (John Wiley & Sons, Inc.) offers wacky anecdotes of colorful characters in the industry, some of their customers and a glimpse of how an industry attracted masses to the housing market much the way gold brought panners to California in 1849.

Some of the professionals Bitner introduces to readers include a mortgage broker who falls in love with a client's girlfriend. In an effort to win her affections, this broker works hard to get the client a loan and later asks the client's girlfriend out for a date. Disaster ensues.

Richard Bitner Then, there is the broker offering home loans out of a nail salon: "Welcome to US Center, Hair, Nails, Mortgages," reads a sign in the startup.

"It's a freaking soap opera," Bitner says of the unusual clients and brokers he encountered. "Everyone has their own unique story. After a while you're like, 'Wow. Where does it make sense to pull the trigger on this, [and] where doesn't it?'" he says, referring to the tough process of underwriting mortgage loans for less credit-worthy borrowers. "I wanted [the memoir] to be open and transparent. There was no agenda. I think we tried very hard to manage the risk side of it."

For newcomers and old pros in the mortgage industry, the book offers insight into how subprime took off and many of the nuts and bolts of mortgage finance. It may have captured a golden era for mortgage banks. In his memoir, Bitner says tactics used by these mortgage professionals fall into three categories: honest, dysfunctional and corrupt.

As he writes, "If there's a demand for a product or service, someone is brokering it. Whether it's real estate, technology or sex, brokers are paid to connect people who want something with those who supply it."

The following are excerpts from IDD's interview with Bitner.

IDD: What happens now in housing? Do you think we'll see improvement this year?

Bitner: No, not a chance in hell. One of the things the Street is finally realizing is ... you have another wave coming behind this which has to do with the Alt-A stuff, particularly the pay option ARMs. We have viewed this as a subprime crisis, but the reality is we as an industry simply forgot how to manage risk and underwrite files intelligently. That carried over to the Alt-A side piece, folks who had better-than-subprime credit but still were not proving income or assets or verifying jobs or all of the above.

What we saw was really an erosion of guidelines. We went from asking for a solid verification of rental from a management company to 'now we'll start taking private verifications of rent,' which effectively means the note from your mom is good enough to prove that you have got a housing history. It's those types of things that we start to see getting chipped away at.

The reality is we have a ways to go before we get out of the weeds with this.The holy grail is inventory, always and forever. We are at what--10-and-half, 11 months [worth of supply] nationally? We have been hovering in that 10- to 11-month range for awhile now. I just don't think we are going to go in the other direction over the next 24 to 36 months.

IDD: Is the problem now beyond subprime into prime? What we consider Alt-A today 10 or 15 years ago would have been considered subprime.

Bitner: By the time we got to 2004 and 2005, we went, 'Where is the line even delineated?' All of a sudden we're standing here saying, 'OK we're a subprime lender, but is this really an Alt-A product or is a subprime product?' It kind of all meshed into one at the end of the day in terms of fundamentals of underwriting. The only difference was where the credit score was.

IDD: So, now it's a problem with prime, too. If you look at Freddie and Fannie monthly volume summary data delinquencies are double what they were a year ago.