![\"garrettwatts\"](\"http:\/\/mortgagenewsclips.com\/wp-content\/uploads\/2010\/02\/garrettwatts2.jpg\" "\\"garrettwatts\\"")
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To Our Clients, Colleagues and Friends,<\/p>\n
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- Lots of people sent us the video explaining how OneWest bank got a sweetheart deal from the FDIC.\u00a0 We responded to all of them by stating that we doubted it was true, and sure enough, the FDIC has put out a statement that clarifies the deal and shows how the video was not accurate.<\/li>\n
- This past weekend was the surf contest at Mavericks, just south of San Francisco .\u00a0 The photo below is from the contest.
\n![\"j1\"](\"http:\/\/mortgagenewsclips.com\/wp-content\/uploads\/2010\/02\/j1_thumb2.jpg\" "\\"j1\\"")
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\nThe waves hit 50 feet this weekend, with one surfer saying he thinks they hit 60 feet, and if you don\u2019t believe it, use a ruler and measure the surfer in the lower left corner and see how many would fit into this wave.\u00a0 The waves were so huge that some crashed onto the beach and injured the spectators.<\/li>\n- Someone wrote us about baseball players who just missed certain numbers: \u201cOne of the more regrettable numbers was Lou Gehrig’s homer total, 495.\u00a0\u00a0 If only he knew the later importance of 500, he may have gotten it done.\u00a0 The same is true of the “hits\u201d total:\u00a0 Cap Anson, the greatest 19th century player, had 2,995 hits.\u201d\u00a0 Rickey Henderson ended his career with 297 homeruns, and he could easily have made it 300 if he wanted to.\u00a0 When he left the A\u2019s to go the Yankees, the N.Y. writers said he was a one-dimensional base stealer.\u00a0 Stung by that, Rickey went out and hit 28 homers that year.\u00a0 When the writers said it was a fluke, he hit 29 the next year.<\/li>\n<\/ul>\n
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- We have two ideas on how to create real job growth: (1) A position for people who will interpret, translate and explain hospital bills, and (2) A position for people who will plan college tours that allow you to see seven colleges in six states in five days.<\/li>\n<\/ul>\n
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- We got a good response from people who remembered the M.I. companies that reside in the Mortgage Insurance Cemetery:\u00a0 Commonwealth Mortgage Insurance (CMAC), Foremost<\/strong><\/strong>, <\/strong>Amerin<\/strong><\/strong>,<\/strong> Commonwealth, Home Guaranty Insurance, Investors Mortgage Insurance Company (Tiger IMI), U.S. Mortgage Insurance Corporation,\u00a0 GE Capital Mortgage Insurance,\u00a0 Integon Mortgage Guaranty, Verex Assurance, and CMG Mortgage Insurance.<\/li>\n
- Wouldn\u2019t you feel angry and ripped off if you had donated money to the John Edwards presidential campaign? Could he even be elected dog catcher somewhere?<\/li>\n
- One reason mortgage bankers give us for buying a bank, no matter how small, is that once you own one, you can then get in the list to buy failed banks from the FDIC.\u00a0 Our general view is that the vast, vast majority of mortgage bankers lack the temperament to own and run a bank, but for those that do, this strategy can make sense. We advised one mortgage banking client on purchasing a bank, and after having closed on it only a few months ago, he\u2019s already looking at more acquisitions.<\/li>\n
- From our October 30, 2007 newsletter: \u201cOn the Countrywide earnings call last week, management used the word conservative<\/em> 25 times. \u201c\u00a0 Things sure can look weird when seen after-the fact.\u00a0 Weren\u2019t things pretty much unraveling by that date?<\/li>\n
- Yes, times are very difficult, but great companies typically have visionary leaders. Mary Martin sang about it as Bloody Mary in the great musical South Pacific. \u201dIf you ain\u2019t got a dream, how\u2019re you gonna have a dream come true.\u201d\u00a0 Similarly, if you haven\u2019t got a corporate statement of vision, how\u2019re you gonna have a vision come true.<\/li>\n
- Leakage redux: Once again, leakage is the difference between the profit you build into your rate sheet and what you actually realize when the loan is purchased.\u00a0 If you build in 100 bps of profit for a given loan on your rate sheet, you darn well better realize 100 bps or really close to it when the loan is purchased.\u00a0 If you got only 90 bps, you had 10 bps of leakage. When we see companies really under-performing, it\u2019s almost always leakage.<\/li>\n
- We saw one under-performing mortgage company that was paying pretty outrageous salaries.\u00a0 When we looked at their numbers, the high salaries explained 7-8 bps of under-performance.\u00a0 The other 57 bps of under performance was leakage.\u00a0 Right now, and especially if you\u2019re a mandatory shop, fixing those leaks is the one best quick fix to generating good profits again,<\/li>\n
- The credit crisis of the last few years devastated those who had inadequate reserves to handle repurchases.\u00a0 Don\u2019t make this mistake twice. The Romans actually addressed this 2,000 years ago. Bispeccare in bello non<\/em>.\u00a0 \u201cIn war, you cannot make the same mistake twice.\u201d\u00a0 Everyone had a great 2009, and before you complete your 2009 audit, it might make sense to significantly add to your loan loss reserve.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/li>\n
- If you thinking of buying a bank or going on the Board of one, this is a must read<\/a>:
\n\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/li>\n- Where were you 36 years ago this week?\u00a0 In mid-February, 1974, newspaper heiress Patty Hearst was a student at UC Berkeley.\u00a0 Late at night she was kidnapped by a gang of self-styled urban terrorists with the absurd name of the Symbionese Liberation Army, a group of losers and misfits with delusions of starting a revolution. They demanded as ransom that her family spend $400 million to feed the poor people of San Francisco , and food riots broke out when the family tried to comply. Patty was kept in a dark closet for weeks, raped repeatedly and, ultimately, brainwashed into joining her kidnappers. She denounced her parents as fascist pigs and \u201cenemies of the people\u201d and participated in a string of bank robberies in which innocent people were murdered.\u00a0 Most SLA members were killed in a huge shoot-out with the police in L.A. , and Patty was later captured.\u00a0 The once-pampered heiress served a number of years in jail, and is now a suburban house wife and soccer mom in Connecticut .\u00a0 Her autobiography Every Secret Thing<\/em> is a terrific read.\u00a0<\/li>\n
- We have an Orange County commercial bank looking for someone to run their back office operations.\u00a0 If you or someone you know I interested and has the experience, please send resumes to us at JGarrett@GarrettWatts.com<\/a>.\u00a0 We were there last Thursday, and it was 71 degrees warm.<\/li>\n
- More on repurchases from clients: \u201cAssume Orig. loan amount = 100% of loan value (most repurchases are identified via early term defaults, meaning the UPBs don’t decline much from the original loan amount.\u00a0 So we’ll keep it simple). – About two-thirds of the loans we repurchase are already in advanced delinquency or foreclosure by the time they are repurchased.\u00a0 So, once we buy back the loan, let’s assume a 50% total default rate.\u00a0 If a loan is repurchased today, it will likely roll to loss in the next 12-18 months (depending on judicial\/non-judicial state mix), meaning loss severity will still be elevated.\u00a0 We’re seeing foreclosure liquidations over the past 12 months averaging in the low-mid 60% range.\u00a0 So, assuming maybe a small bounce back in home prices over the forward year & a half, let’s call loss severity at 50%.\u00a0 Loan Balance * Default Probability * Loss Severity. 100% * 50% * 50% = 25% loss.\u00a0 25 points.\u00a0 That’s for a single loan that gets repurchased.\u201d<\/li>\n
- Bank of New York was founded by Alexander Hamilton, and as you remember from American History, he was killed in a duel with Aaron Burr.\u00a0 If you\u2019ve done business with this bank, you also know that it can be stodgy and slow moving.\u00a0 The joke is that as he got ready for his duel, Hamilton told the bank staff \u201cDon\u2019t do a thing till I get back.\u201d Many of you are doing TBA MBS forward sales with fairly obscure broker\/dealers; we\u2019d like to suggest this as a perfect opportunity to examine the counterparty risk with them.<\/li>\n<\/ul>\n
We have a program where (1) we come in and measure your leakage, and (2) find where the leaks are and give you a plan to fix them.\u00a0 We were thinking calling it PLUMBER, standing for P<\/span><\/strong>rofit L<\/span><\/strong>eakage U<\/span><\/strong>ndermining M<\/span><\/strong>ortgage B<\/span><\/strong>ankers E<\/span><\/strong>mergency R<\/span><\/strong>elief.\u00a0 Let us know if it\u2019s just a bit too cute.\u00a0 The service is pretty remarkable in making a huge difference quickly in earnings, but maybe we need a better name for it.<\/p>\n
Garrett, Watts & Co.<\/a><\/p>\n
Today\u2019s bonus: Laws of Lending<\/a><\/strong><\/p>\n
\u201cHelping <\/em>lenders increase revenues, control costs, and better manage risk.<\/em><\/p>\n
- \n
- Mike McAuley\u00a0\u00a0 (MMcAuley@GarrettWatts.com<\/a> )<\/em><\/li>\n
- Corky Watts\u00a0\u00a0\u00a0\u00a0\u00a0 (CWatts@GarrettWatts.com<\/a>)\u00a0<\/li>\n
- Joe Garrett\u00a0\u00a0\u00a0\u00a0\u00a0 (JGarrett@GarrettWatts.com<\/a> )<\/li>\n<\/ul>\n
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<\/p>\n","protected":false},"excerpt":{"rendered":"
\u00a0 \u00a0 To Our Clients, Colleagues and Friends, Lots of people sent us the video explaining how OneWest bank got a sweetheart deal from the FDIC.\u00a0 We responded to all of them by stating that we doubted it was true, and sure enough, the FDIC has put out a statement that clarifies the deal and […]<\/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-325639","post","type-post","status-publish","format-standard","hentry","category-news"],"_links":{"self":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts\/325639","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=325639"}],"version-history":[{"count":0,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts\/325639\/revisions"}],"wp:attachment":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/media?parent=325639"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/categories?post=325639"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/tags?post=325639"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
- Corky Watts\u00a0\u00a0\u00a0\u00a0\u00a0 (CWatts@GarrettWatts.com<\/a>)\u00a0<\/li>\n
- We got a good response from people who remembered the M.I. companies that reside in the Mortgage Insurance Cemetery:\u00a0 Commonwealth Mortgage Insurance (CMAC), Foremost<\/strong><\/strong>, <\/strong>Amerin<\/strong><\/strong>,<\/strong> Commonwealth, Home Guaranty Insurance, Investors Mortgage Insurance Company (Tiger IMI), U.S. Mortgage Insurance Corporation,\u00a0 GE Capital Mortgage Insurance,\u00a0 Integon Mortgage Guaranty, Verex Assurance, and CMG Mortgage Insurance.<\/li>\n
- Someone wrote us about baseball players who just missed certain numbers: \u201cOne of the more regrettable numbers was Lou Gehrig’s homer total, 495.\u00a0\u00a0 If only he knew the later importance of 500, he may have gotten it done.\u00a0 The same is true of the “hits\u201d total:\u00a0 Cap Anson, the greatest 19th century player, had 2,995 hits.\u201d\u00a0 Rickey Henderson ended his career with 297 homeruns, and he could easily have made it 300 if he wanted to.\u00a0 When he left the A\u2019s to go the Yankees, the N.Y. writers said he was a one-dimensional base stealer.\u00a0 Stung by that, Rickey went out and hit 28 homers that year.\u00a0 When the writers said it was a fluke, he hit 29 the next year.<\/li>\n<\/ul>\n