{"id":276532,"date":"2010-02-04T12:25:59","date_gmt":"2010-02-04T17:25:59","guid":{"rendered":"http:\/\/mortgagenewsclips.com\/2010\/02\/04\/the-garrett-watts-report-february-4-2010\/"},"modified":"2010-02-04T12:25:59","modified_gmt":"2010-02-04T17:25:59","slug":"the-garrett-watts-report-february-4-2010","status":"publish","type":"post","link":"https:\/\/mereja.media\/index\/276532","title":{"rendered":"The Garrett, Watts Report (February 4, 2010)"},"content":{"rendered":"

\u00a0<\/p>\n

\"garrett-watts1\"<\/a><\/p>\n

To Our Clients, Colleagues and Friends,\u00a0<\/p>\n

We mentioned recently that Google was sitting on $24.5 billion in cash.\u00a0 Apple has $40 billion in cash, and even after paying out huge dividends, Microsoft still has $37 billion in the green stuff.<\/p>\n

For all you baseball fans, here are the all-time leaders in at bats:<\/p>\n\n\n\n\n\n\n\n
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1.\u00a0 14,053\u00a0\u00a0\u00a0\u00a0\u00a0 Pete Rose<\/span><\/span><\/p>\n<\/td>\n<\/tr>\n

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2.\u00a0 12,364\u00a0\u00a0\u00a0\u00a0 Hank Aaron<\/span><\/span><\/p>\n<\/td>\n<\/tr>\n

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3.\u00a0 11,988\u00a0\u00a0\u00a0\u00a0\u00a0 Carl Yastrzemski<\/span><\/span><\/p>\n<\/td>\n<\/tr>\n

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4.\u00a0 11,551\u00a0\u00a0\u00a0\u00a0\u00a0 Cal Ripken<\/span><\/span><\/p>\n<\/td>\n<\/tr>\n

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5.\u00a0 11,434\u00a0\u00a0\u00a0\u00a0\u00a0 Ty Cobb<\/span><\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

It would be interesting to make some assumptions about the seasons that guys like Ted Williams and Willie Mays lost while in the military and see where they rank.<\/p>\n

From a friend at the FDIC:\u00a0 \u201cWe are doing a LOT of hiring right now, in case you want to make your readers aware.\u00a0 These are temporary jobs (2+ years) mainly located in So. California , No. Florida , Chicago , Dallas and some other spots here and there.\u00a0 These are bank resolutions jobs – closing banks and liquidating them. Jobs link:\u00a0 https:\/\/jobs1.quickhire.com\/scripts\/fdic.exe\/runuserinfo?Haveusedbefore=5<\/a>\u00a0\u00a0 Okay, you guys. This may be a great way to get back on the merry-go-round!<\/p>\n

Unless you think California will default on its bonds, you can buy California Lease Revenue Bonds maturing in 19 years and yielding 5.82%.\u00a0 Since they\u2019re tax exempt, this is the equivalent of about 9.5%.Since we mentioned movies last week (1) Avatar has now grossed $594 domestically and $2.04 billion worldwide, and (2) The Sound of Music sure does have its fans.\u00a0 We\u2019ve got about 15 e-mails defending it, about half of which were mildly sarcastic, as in \u201cAre you out of your mind?\u00a0 I hope you know more about banking than you do about movies.\u201d<\/p>\n

Writing this Report is easy, but it\u2019s editing it that\u2019s hard.\u00a0 Oscar Wilde once wrote out editing one his works: \u201dI was working on the proof of one of my poems all the morning, and I took out a comma. In the afternoon I put it back in again.\u201d\u00a0<\/p>\n

Most mortgage bankers we speak to are planning to expand and do even more volume in 2010 than in 2009. We don\u2019t want to name names, but we spoke to one Orange County (CA) owner whose company closed about $530 million last year who told us that that \u201cWe\u2019ll close $400 million in 2010 if we\u2019re lucky, and will probably do $350 million.\u201d\u00a0 It\u2019s so refreshing to see such a realistic approach.\u00a0 And it\u2019s no wonder that their warehouse lender likes them so much.
\n\u00b7\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Look at some of these Neighborhood Watch scores. Kate Berry of American Banker did some excellent investigative reporting on this.\u00a0 Notice how poor the scores are for the homebuilder controlled companies?<\/p>\n\n\n\n\n\n\n\n\n
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41%\u00a0\u00a0\u00a0 Bank of America<\/span><\/span><\/p>\n<\/td>\n<\/tr>\n

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76%\u00a0\u00a0\u00a0 U.S. Bank<\/span><\/span><\/p>\n<\/td>\n<\/tr>\n

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115%\u00a0\u00a0\u00a0 GMAC Bank<\/span><\/span><\/p>\n<\/td>\n<\/tr>\n

\n

129%\u00a0\u00a0\u00a0 Lennar Homes (Universal) <\/span><\/span><\/p>\n<\/td>\n<\/tr>\n

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136%\u00a0\u00a0\u00a0 DR Horton Homes<\/span><\/span><\/p>\n<\/td>\n<\/tr>\n

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160%\u00a0\u00a0\u00a0 CTX Mortgage (Centex)<\/span><\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

These numbers are as a percentage of the national average.\u00a0 This means that Bank of America\u2019s loans default only 41% as often as the national average. HUD has made it clear that every three months it will review all FHA loans originated over the preceding two years.\u00a0 It also said that it can terminate any lender whose default and claims rate was more than triple that of its region.
\n\u00b7\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A friend got a massage recently and we guessed \u201cThe masseuse told you that you were really tight, isn\u2019t that right?\u201d They must teach that in massage school.\u00a0 Same thing with fishing guides. Probably the only thing they learn in Guide School is that whenever the clients aren\u2019t catching anything, you just say \u201cI can\u2019t believe it.\u00a0 Yesterday we limited out by noon.\u201d<\/p>\n

Wizard of Oz didn\u2019t make the top ten grossing movies of all time, but here\u2019s the original ending before the Hays Commission censors forced MGM to make it more acceptable<\/a>.\u00a0\u00a0<\/p>\n

We were looking at Obama\u2019s new budget and we have a few thoughts on dealing with the deficit:\u00a0 $135 billion for the Dept. of Agriculture? Except for food stamps, do we even need this department? What do they do, teach farmers how to farm?\u00a0 Let farmers hedge their production with futures and forward sales.\u00a0 $82 billion for the Education Department?\u00a0 Education is run at the state end local level, so what does this department even do?\u00a0\u00a0 Have schools gotten better since this department was formed 25-30 years ago? NASA ($18 billion) and Commerce ($14 billion) are small potatoes, but would anyone even notice if we cut their budgets by half?\u00a0 And $206 billion for a Labor Department? What do they do there?\u00a0 They might need a little to run the National Labor Relations Board and a few things like that. If part of their budget is for unemployment, keep that but dump everything else they do.\u00a0 As Ronald Regan once said, there may not be easy solutions, but there are simple ones.<\/p>\n

We get asked every so often about accounting packages, and we pretty much like them all. QuickBooks is kind of weak on security, but it works.\u00a0 We like Great Plains , MAS-90, and maybe our favorite is AMB, the only one we know of which is designed specifically for mortgage banking.<\/p>\n

Leakage:\u00a0 One company tells us they have a hard time tracking leakage loan by loan.\u00a0 They asked if it would work to track it in the aggregate month-by-month. Absolutely yes. Even\u00a0 if you can\u2019t do it at a loan level detail, you\u2019ll learn a lot if, say, you know you build in a profit of 150 bps on FHA loans and over a trailing three months, you averaged only 139 bps. That\u2019s almost as good as doing it loan by loan.<\/p>\n

A new group we just discovered: Vampire Weekend.\u00a0 Good music from the U.K.<\/p>\n

We wrote about Bob Gibson last year, and here\u2019s what Hank Aaron had to say about him:\u00a0 “Don’t dig in against Bob Gibson or he’ll knock you down.\u00a0 He’d knock down his own grandmother if she challenged him.\u00a0 Don’t stare at him, don’t smile at him, and don\u2019t talk to him.\u00a0 He doesn’t like it.\u00a0 If you happen to hit a home run, don’t run too slow, and don’t run too fast.\u00a0 If you want to celebrate, do it in the clubhouse. And if he hits you, whatever you do, don\u2019t charge the mound.\u201d\u00a0 We spoke with Willie Mays once, and he said he never dug in against Gibson.\u00a0 \u201cIt just made him even angrier.\u201d\u00a0 Here\u2019s a rare photo of Gibson actually smiling.
\nWe once sent the above quote (\u201dDon\u2019t stare at him, don\u2019t smile at him, and don\u2019t talk to him\u2026\u2026\u201d) to a friend who wrote back, saying \u201cMy wife shares some of those same characteristics.\u201d
\n\u00b7\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 One of our clients is looking to sell its retail mortgage bank.\u00a0 The Company has its full HUD Eagle and is located in California .\u00a0 Please contact Corky Watts 408-395-5540.\u201d<\/p>\n

\u00b7\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 You know about DiTech, right? The fellow who founded it, Paul Reddam, initially built a company called SC Funding which really cracked the code on getting mortgages from credit unions. It was fabulously successful. He then founded DiTech and then sold it to GMAC. And if you\u2019ve ever seen those TV ads for Cash Call, we hear that\u2019s his company as well.\u00a0 We haven\u2019t seen Paul in years, but he really had the knack.\u00a0 By the way, before going into mortgage finance, he was a professor of philosophy at USC.\u00a0 And a nice guy, as well.<\/p>\n

\u00b7\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 We\u2019d like to have a serious poll. Can you send us your best estimate of the average cost (i.e. loss) to you of a re-purchase? If you have a sense of what it is in dollars, can you translate that into your best guess in basis points and send that in as well?\u00a0 We really appreciate your help.<\/p>\n

Garrett, Watts & Co.<\/a><\/p>\n

Bonus:\u00a0 How To Use Return On Capital To Determine Profitability<\/strong><\/a> \"pdf_button\"<\/p>\n

\u201cHelping lenders increase revenues, control costs, and better manage risk.\u201d
\nCorky Watts\u00a0\u00a0\u00a0\u00a0\u00a0 (CWatts@GarrettWatts.com)\u00a0
\nMike McAuley\u00a0\u00a0 (MMcAuley@GarrettWatts.com)
\nJoe Garrett\u00a0\u00a0\u00a0\u00a0\u00a0 (JGarrett@GarrettWatts.com)<\/p>\n

<\/span><\/span><\/p>\n

\n<\/img><\/a> <\/img><\/a> <\/img><\/a> <\/img><\/a>\n<\/div>\n

<\/p>\n","protected":false},"excerpt":{"rendered":"

\u00a0 To Our Clients, Colleagues and Friends,\u00a0 We mentioned recently that Google was sitting on $24.5 billion in cash.\u00a0 Apple has $40 billion in cash, and even after paying out huge dividends, Microsoft still has $37 billion in the green stuff. For all you baseball fans, here are the all-time leaders in at bats: 1.\u00a0 […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[7],"tags":[],"class_list":["post-276532","post","type-post","status-publish","format-standard","hentry","category-news"],"_links":{"self":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts\/276532","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/comments?post=276532"}],"version-history":[{"count":0,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts\/276532\/revisions"}],"wp:attachment":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/media?parent=276532"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/categories?post=276532"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/tags?post=276532"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}