{"id":455879,"date":"2010-03-21T21:28:04","date_gmt":"2010-03-22T01:28:04","guid":{"rendered":"http:\/\/mortgagenewsclips.com\/2010\/03\/21\/the-garrett-watts-report-march-20-2010\/"},"modified":"2010-03-21T21:28:04","modified_gmt":"2010-03-22T01:28:04","slug":"the-garrett-watts-report-march-20-2010","status":"publish","type":"post","link":"https:\/\/mereja.media\/index\/455879","title":{"rendered":"The Garrett, Watts Report (March 20, 2010)"},"content":{"rendered":"<p>\u00a0<\/p>\n<p><a href=\"http:\/\/garrettwatts.com\/\"><img loading=\"lazy\" decoding=\"async\" style=\"border-right-width: 0px; display: inline; border-top-width: 0px; border-bottom-width: 0px; border-left-width: 0px\" title=\"garrettwatts\" src=\"http:\/\/mortgagenewsclips.com\/wp-content\/uploads\/2010\/03\/garrettwatts7.jpg\" border=\"0\" alt=\"garrettwatts\" width=\"425\" height=\"67\" \/><\/a><\/p>\n<p>To Our Clients, Colleagues and Friends<strong>,\u00a0<br \/>\n<\/strong><\/p>\n<ul>\n<li>There\u2019s that saying that \u201cIn a consolidating industry, (a) you either <em>are<\/em> the consolidator, (b) you sell to the consolidator, or (c) you go out of business.\u00a0 The following charts shows huge consolidation in loan origination market share. Read it and gasp.<\/li>\n<\/ul>\n<p><a href=\"http:\/\/mortgagenewsclips.com\/wp-content\/uploads\/2010\/03\/joe2_001.png\"><img loading=\"lazy\" decoding=\"async\" style=\"border-right-width: 0px; display: inline; border-top-width: 0px; border-bottom-width: 0px; border-left-width: 0px\" title=\"joe2_001\" src=\"http:\/\/mortgagenewsclips.com\/wp-content\/uploads\/2010\/03\/joe2_001_thumb.png\" border=\"0\" alt=\"joe2_001\" width=\"418\" height=\"142\" \/><\/a><\/p>\n<p>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Can you say BofA-Chase-Citi-and-Wells?<\/p>\n<ul>\n<li>We were speaking to a smaller company in the Pacific Northwest which plans to build their own software. These are very smart guys, but we can&#8217;t think of the last company which successfully built their own software.\u00a0 Countrywide did, but they had the resources.\u00a0 The most profitable retail, wholesale and call center shops we\u2019ve seen the past several years all use the obvious suspects: PC Lender, DataTrac, Encompass and even Calyx Point.\u00a0 If these companies can all make over 100 bps per loan using off-the-shelf software, why not mimic them, why try to re-invent what has been proven to work just fine at highly successful companies?<\/li>\n<li>Grammar Police Alert: Find the grammatical mistake in the above paragraph and get a free two year extension on your subscription to this newsletter.<\/li>\n<li>We read, unfortunately, lots of Cease &amp; Desist Orders. (Sorry, we meant Consent Orders.) They\u2019re all ugly, but some are uglier than others, and we often have bank Presidents tell us \u201cYeah, we got one, but it\u2019s not that bad\u201d and they\u2019re often right.\u00a0 We propose that Consent Orders be categorized into four types, from least bad to worst:\u00a0 High Ugly, Mid Ugly, Low Ugly, and Butt Ugly. We doubt the regulators will formally adopt this protocol, just as they never adopted the Texas Ratio, but we\u2019d hope the Ugly Index would become part of the national vocabulary.<\/li>\n<li>Teeny, tiny Saint Mary\u2019s College of California (27-5) won the first game in the NCAA March Madness, and we\u2019re rooting for them all the way.\u00a0 We taught there many years ago and developed a fondness for the school as well as the Christian Brothers who ran it. Perhaps the LaSallian Christian Brothers are not quite as intellectual as the Jesuits, but they were sure a lot more fun.<\/li>\n<\/ul>\n<p><a href=\"http:\/\/mortgagenewsclips.com\/wp-content\/uploads\/2010\/03\/j7.gif\"><img loading=\"lazy\" decoding=\"async\" style=\"border-right-width: 0px; display: inline; border-top-width: 0px; border-bottom-width: 0px; border-left-width: 0px\" title=\"j7\" src=\"http:\/\/mortgagenewsclips.com\/wp-content\/uploads\/2010\/03\/j7_thumb.gif\" border=\"0\" alt=\"j7\" width=\"331\" height=\"219\" \/><\/a><\/p>\n<p>The Order owned a big winery back then, and while their wines were okay, they made a fortune off their Christian Brothers Brandy, its being a huge hit with inner-city drunks.\u00a0\u00a0 The faculty lunches featured the same inedible mystery food the students ate, but with one huge difference. There were always five big wine goblets at each setting, and each table had bottles of five different wines. Let\u2019s put it this way, even though the Brothers had all taken vows of Celibacy, there were apparently no vows taken regarding having a good time.<\/p>\n<ul>\n<li>We heard of a Southern California firm which recently hired someone who\u2019s blown up <em>numerous<\/em> companies. Don\u2019t people check references anymore?\u00a0<\/li>\n<li>Can you believe that Davy Crockett is dead?\u00a0 Every boy growing up in the fifties wore a coonskin hat and watched Fess Parker play Davy Crockett on TV, and if you rent some of his old shows, they still hold up.\u00a0 And it\u2019s interesting to watch him in <em>the Alamo<\/em> .\u00a0 You see him fighting the Mexicans as they swarm into the Alamo and over run the Texans, but you never really see him die. It\u2019s all sort of vague what happens to him as the movie fades out with Davy still there fighting away. Presumably the Disney people knew there\u2019d be a national trauma if the little kids of America saw their hero actually die.\u00a0 Fess Parker did a great job of playing Crocket, and he was the first hero to most boys of our generation.<br \/>\nThe real Davy Crockett was very fascinating. While he was a trapper and backwoodsman, he managed to get elected to congress, and amidst all the dandy dressers there, he showed up in deerskin clothes.\u00a0 He made a few trips up north to solicit interest in his running for President, but nothing ever came of it and he got defeated for re-election. Disgusted with the voters, he told them \u201cThe hell with all of you.\u00a0 I&#8217;m moving to Texas .\u201d He did, and of course he died there defending the Alamo .\u00a0 If we find it, we\u2019ll include here his Inaugural Address to Congress when he was sworn in.<br \/>\n<a href=\"http:\/\/mortgagenewsclips.com\/wp-content\/uploads\/2010\/03\/j6.jpg\"><img loading=\"lazy\" decoding=\"async\" style=\"border-right-width: 0px; display: inline; border-top-width: 0px; border-bottom-width: 0px; border-left-width: 0px\" title=\"j6\" src=\"http:\/\/mortgagenewsclips.com\/wp-content\/uploads\/2010\/03\/j6_thumb.jpg\" border=\"0\" alt=\"j6\" width=\"168\" height=\"212\" \/><\/a><\/li>\n<li>A number of the banks we assisted in setting up Warehouse Lending divisions are now bringing us in to review and audit their operations now that they\u2019ve been up and running for 4-5 months.\u00a0 It\u2019s an effective check-up and a good way to catch flaws and weaknesses in controls before they get too big.\u00a0 For those WH lenders who are interested in having this check-up and audit, give us a call.\u00a0 An ounce of early prevention is worth a pound of loan loss provisions.<\/li>\n<li>Advanta Bank was seized on Friday, an at one time, they and an affiliated company were among the biggest issuers of credit cards to small businesses. At one time they were huge.\u00a0 Now they \u2018re just a memory. And a $636 million loss to the FDIC.\u00a0<\/li>\n<li>We just read the Davis, Polk Summary of the March 15, 2010 Draft of the Restoring American Financial Stability Act introduced by Senator Chris Dodd.\u00a0 It\u2019s quite sweeping and, in the review, it \u201cAbolishes OTS and terminates the power to grant new\u00a0 thrift charters, unlike the House which maintains the thrift charter but creates a Division of Thrift Supervision in the OCC. \u201c\u00a0 Wow.<\/li>\n<li>If we read it correctly, the Act requires that the FDIC insurance premiums will be based more on asset size and not on deposit size. It makes sense, since even though the FDIC is insuring the deposits, it\u2019s assets that create the risk.\u00a0 And look at the BofA and other huge banks.\u00a0 They often have twice as many assets as deposits.<br \/>\n<a href=\"http:\/\/mortgagenewsclips.com\/wp-content\/uploads\/2010\/03\/j52.jpg\"><img loading=\"lazy\" decoding=\"async\" style=\"border-right-width: 0px; display: inline; border-top-width: 0px; border-bottom-width: 0px; border-left-width: 0px\" title=\"j5\" src=\"http:\/\/mortgagenewsclips.com\/wp-content\/uploads\/2010\/03\/j5_thumb2.jpg\" border=\"0\" alt=\"j5\" width=\"244\" height=\"152\" \/><\/a><\/li>\n<li>The Iraqi War is now seven full years long, March 19, 2003 till March, 19, 2010.\u00a0 By contrast, we entered World War II on December 7, 1941, and it was all over on September 2, 1945, less than four years later.<\/li>\n<li>We\u2019ve done well over a hundred FOCIS-<em>plus<\/em> Reviews the past couple of years, and we can\u2019t think of a single one in which we didn\u2019t find ways for the mortgage banking clients to increase earnings. With loan activity slowing down and earnings dropping, now might be a good time to bring us in.\u00a0 We remember one time in 2003 we were only able to find 3 bps of additional revenue for the client.\u00a0 Lately, it seems like we\u2019re finding a minimum of 20-25 bps of additional revenue for our clients.<\/li>\n<li>Sprint Nextel has lost almost nine million customers over the last three years. Unbelievable!\u00a0 As bankers and mortgage bankers, you know how costly it is to attract new customers and why it\u2019s much better to retain one existing customer than to bring in one new one.\u00a0 There\u2019s got to be lesson in Sprint\u2019s plight.<\/li>\n<li>Who were Irving Bank, MCorp, and Continental Illinois. Bankers Trust and Security Pacific? What about First Union, Barnett Banks, Citizens &amp; Southern, Sovran, Norstar, Rainier , Seafirst and Shawmut?\u00a0 Never heard of them?\u00a0 Under age 30? What these banks all have in common is that all were among the nation\u2019s\u00a0 biggest banks in 1985 and none of them survived.<\/li>\n<\/ul>\n<p><a href=\"http:\/\/mortgagenewsclips.com\/wp-content\/uploads\/2010\/03\/j44.jpg\"><img loading=\"lazy\" decoding=\"async\" style=\"border-right-width: 0px; display: inline; border-top-width: 0px; border-bottom-width: 0px; border-left-width: 0px\" title=\"j4\" src=\"http:\/\/mortgagenewsclips.com\/wp-content\/uploads\/2010\/03\/j4_thumb4.jpg\" border=\"0\" alt=\"j4\" width=\"220\" height=\"117\" \/><\/a><\/p>\n<ul>\n<li>The whole paperless thing is still in the infancy stage when it comes to squeezing out significant costs, but it\u2019s absolutely inevitable.\u00a0 One of the paperless vendors we run across is DocVelocity, and it looks pretty good from what we\u2019ve seen.\u00a0\u00a0<br \/>\n<a href=\"http:\/\/mortgagenewsclips.com\/wp-content\/uploads\/2010\/03\/j34.jpg\"><img loading=\"lazy\" decoding=\"async\" style=\"border-right-width: 0px; display: block; float: none; border-top-width: 0px; border-bottom-width: 0px; margin-left: auto; border-left-width: 0px; margin-right: auto\" title=\"j3\" src=\"http:\/\/mortgagenewsclips.com\/wp-content\/uploads\/2010\/03\/j3_thumb4.jpg\" border=\"0\" alt=\"j3\" width=\"269\" height=\"212\" \/><\/a><\/li>\n<\/ul>\n<p>When we talk to clients who are pretty far down the road in going paperless, it\u2019s not always clear that they\u2019re saving money.\u00a0 It is clear, however, that the future will be a paperless one, and it\u2019s probably better to be a bit early to the game than a bit late.<\/p>\n<ul>\n<li>What about Loan servicing? Has the consolidation there been as pronounced as in originations? The answer is a resounding yes as evidenced in the servicing market share chart below.<\/li>\n<\/ul>\n<p><a href=\"http:\/\/mortgagenewsclips.com\/wp-content\/uploads\/2010\/03\/joe2.png\"><img loading=\"lazy\" decoding=\"async\" style=\"border-right-width: 0px; display: block; float: none; border-top-width: 0px; border-bottom-width: 0px; margin-left: auto; border-left-width: 0px; margin-right: auto\" title=\"joe2\" src=\"http:\/\/mortgagenewsclips.com\/wp-content\/uploads\/2010\/03\/joe2_thumb.png\" border=\"0\" alt=\"joe2\" width=\"420\" height=\"108\" \/><\/a><\/p>\n<p>We remember being real newbies back in the late 70\u2019s, and <em>Mortgage Banking<\/em> Magazine (which was then called <em>Mortgage Banker<\/em>) had an article featuring the nation\u2019s largest servicer.\u00a0 It was Lomas &amp; Nettleton with the then astounding portfolio of $10 billion.<\/p>\n<ul>\n<li><a href=\"http:\/\/www.scribd.com\/doc\/19810696\/FOCISPlus-Dont-Find-Yourself\">The attached flier describes FOCIS-plus very briefly.<\/a>\u00a0 We need to update it, though, as it refers to our looking at over 60 areas of your operation.\u00a0 We now look at over 70. And when we find ways to increase earnings, we\u2019ve been able to do so regardless of the channel. We\u2019ve had successful FOCIS-<em>plus<\/em> Reviews (successful means we found ways for them to increase revenues)\u00a0 for wholesale, retail <em>and<\/em> call center companies.\u00a0\u00a0\u00a0<\/li>\n<\/ul>\n<ul>\n<li>The Saturday <em>Wall Street Journal<\/em> has a big article on why schools should have classes on Saturday.\u00a0 If you were a Dartmouth Freshman in 1967, you always had Saturday morning classes, and if you don\u2019t believe it, ask Tom Reddy!\u00a0 Do any recent Dartmouth alums know if they still have this barbaric practice. Did any of you out there also have Saturday classes.?<br \/>\n<a href=\"http:\/\/mortgagenewsclips.com\/wp-content\/uploads\/2010\/03\/j18.jpg\"><img loading=\"lazy\" decoding=\"async\" style=\"border-right-width: 0px; display: inline; border-top-width: 0px; border-bottom-width: 0px; border-left-width: 0px\" title=\"j1\" src=\"http:\/\/mortgagenewsclips.com\/wp-content\/uploads\/2010\/03\/j1_thumb7.jpg\" border=\"0\" alt=\"j1\" width=\"338\" height=\"222\" \/><\/a><\/li>\n<li>We found it. Here\u2019s Davy Crockett\u2019s Congress, and while we\u2019ve run it here before, we can never tire of it: \u201cMr. Speaker, gentlemen.\u00a0 A fellow called the M aster at Arms told me that a new Congressman is supposed to make an introductory speech.\u00a0 Well, here she goes. I\u2019m Davy Crocket, fresh from the back woods.\u00a0 I\u2019m half horse, half alligator, and a little snappin\u2019 turtle.\u00a0 I\u2019ve got the fastest horse, the prettiest sister, the surest rife and the ugliest dog in Tennessee .\u00a0 My father can lick any man in Kentucky and I can lick my father.\u00a0 I can hug a bear too close for comfort and I\u2019ll eat any man alive opposed to Andy Jackson.\u00a0\u00a0 Now some Congressman take pride in saying a lot about nothing, like I\u2019m doing right now. Others don\u2019t do nothing for their pay but listen day in and day out.\u00a0 I wish I may be shot if I don\u2019t do more.\u00a0 Next time I get up before you, I\u2019ll have something to say worth saying.\u201d\u00a0 His speech was greeted with an outburst of wild cheering.<\/li>\n<\/ul>\n<p>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 *\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 *<\/p>\n<p>If you can\u2019t read the caption on the cartoon, it says \u201cFrom now on, Ted, I will speak only when adequately resented by Counsel.\u201d\u00a0\u00a0<br \/>\nUpcoming travel has us in Seattle , Boston , and Florida , but this is pretty tame stuff. My brother, Anthony Garrett, is on a quick in-and-out trip to Afghanistan and Pakistan . There are definitely some bad people in that neighborhood, but it also sounds romantic as hell.<\/p>\n<p>And one final thought: If you\u2019re not making at least 70-75 bps on all production, you\u2019re not making as much money as you should be and could be.\u00a0 Simple divide your pre-tax earnings by your total loan volume, and that\u2019s the number.\u00a0 We have a fair number of clients who earn over 100 bps per loan, and if your company doesn\u2019t, we\u2019re here to tell you that you absolutely can.<\/p>\n<p>Cheers!<\/p>\n<p><a href=\"http:\/\/garrettwatts.com\/\">Garrett, Watts &amp; Co.<\/a>\u00a0<\/p>\n<p><em>Helping <\/em><em>lenders increase revenues, control costs, and better manage risk.<\/em><\/p>\n<ul>\n<li>Mike McAuley\u00a0\u00a0 (<a href=\"mailto:McAuly@GarrettWatts.com\">McAuly@GarrettWatts.com<\/a> )<em><\/em><\/li>\n<li>Corky Watts\u00a0\u00a0\u00a0\u00a0\u00a0 (<a href=\"mailto:CWatts@GarrettWatts.com\">CWatts@GarrettWatts.com<\/a>)\u00a0<\/li>\n<li>Joe Garrett\u00a0\u00a0\u00a0\u00a0\u00a0 (<a href=\"mailto:JGarrett@GarrettWatts.com\">JGarrett@GarrettWatts.com<\/a> )<\/li>\n<\/ul>\n<div class=\"feedflare\">\n<a href=\"http:\/\/feeds.feedburner.com\/~ff\/mortgagenewsclips\/qTBe?a=mdQmuOXVuj0:_6Fmf70tOpQ:yIl2AUoC8zA\"><img decoding=\"async\" src=\"http:\/\/feeds.feedburner.com\/~ff\/mortgagenewsclips\/qTBe?d=yIl2AUoC8zA\" border=\"0\"><\/img><\/a> <a href=\"http:\/\/feeds.feedburner.com\/~ff\/mortgagenewsclips\/qTBe?a=mdQmuOXVuj0:_6Fmf70tOpQ:D7DqB2pKExk\"><img decoding=\"async\" src=\"http:\/\/feeds.feedburner.com\/~ff\/mortgagenewsclips\/qTBe?i=mdQmuOXVuj0:_6Fmf70tOpQ:D7DqB2pKExk\" border=\"0\"><\/img><\/a> <a href=\"http:\/\/feeds.feedburner.com\/~ff\/mortgagenewsclips\/qTBe?a=mdQmuOXVuj0:_6Fmf70tOpQ:F7zBnMyn0Lo\"><img decoding=\"async\" src=\"http:\/\/feeds.feedburner.com\/~ff\/mortgagenewsclips\/qTBe?i=mdQmuOXVuj0:_6Fmf70tOpQ:F7zBnMyn0Lo\" border=\"0\"><\/img><\/a> <a href=\"http:\/\/feeds.feedburner.com\/~ff\/mortgagenewsclips\/qTBe?a=mdQmuOXVuj0:_6Fmf70tOpQ:V_sGLiPBpWU\"><img decoding=\"async\" src=\"http:\/\/feeds.feedburner.com\/~ff\/mortgagenewsclips\/qTBe?i=mdQmuOXVuj0:_6Fmf70tOpQ:V_sGLiPBpWU\" border=\"0\"><\/img><\/a>\n<\/div>\n<p><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/feeds.feedburner.com\/~r\/mortgagenewsclips\/qTBe\/~4\/mdQmuOXVuj0\" height=\"1\" width=\"1\"\/><\/p>\n","protected":false},"excerpt":{"rendered":"<p>\u00a0 To Our Clients, Colleagues and Friends,\u00a0 There\u2019s that saying that \u201cIn a consolidating industry, (a) you either are the consolidator, (b) you sell to the consolidator, or (c) you go out of business.\u00a0 The following charts shows huge consolidation in loan origination market share. Read it and gasp. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Can you say BofA-Chase-Citi-and-Wells? We [&hellip;]<\/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-455879","post","type-post","status-publish","format-standard","hentry","category-news"],"_links":{"self":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts\/455879","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=455879"}],"version-history":[{"count":0,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts\/455879\/revisions"}],"wp:attachment":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/media?parent=455879"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/categories?post=455879"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/tags?post=455879"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}