{"id":462385,"date":"2010-03-23T13:42:33","date_gmt":"2010-03-23T17:42:33","guid":{"rendered":"http:\/\/mortgagenewsclips.com\/2010\/03\/23\/the-garrett-watts-report-march-madness-issue-march-23-2010\/"},"modified":"2010-03-23T13:42:33","modified_gmt":"2010-03-23T17:42:33","slug":"the-garrett-watts-report-march-madness-issue-march-23-2010","status":"publish","type":"post","link":"https:\/\/mereja.media\/index\/462385","title":{"rendered":"The Garrett, Watts Report (March Madness issue, March 23, 2010)"},"content":{"rendered":"<p>\u00a0<\/p>\n<p><a href=\"http:\/\/garrettwatts.com\/\"><img loading=\"lazy\" decoding=\"async\" style=\"border-bottom: 0px; border-left: 0px; display: inline; border-top: 0px; border-right: 0px\" title=\"garrettwatts\" src=\"http:\/\/mortgagenewsclips.com\/wp-content\/uploads\/2010\/03\/garrettwatts8.jpg\" border=\"0\" alt=\"garrettwatts\" width=\"474\" height=\"74\" \/><\/a><\/p>\n<p>\u00a0<\/p>\n<p>To Our Clients, Colleagues and Friends<strong>,\u00a0\u00a0 <\/strong><\/p>\n<p><strong>\u00a0<\/strong><\/p>\n<ul>\n<li>What\u2019s one of the most important things to look at during Due Diligence on an acquisition target?\u00a0 Investor scorecards have a huge amount of information on the mortgage banks that sell them loans, and these scorecards may be the one, best way to get a quick, broad picture the company. They don\u2019t preclude the need for full Due Diligence, but they\u2019re a good start.<\/li>\n<li>Since we started Garrett, Watts in 2003, and prior to that as bankers, we always said that <em>you can\u2019t manage it if you can\u2019t measure it, <\/em>and one of the many things to concentrate on this year is better reporting.\u00a0 It didn\u2019t matter as much last year.\u00a0 Everyone made tons of money, regardless of how good or bad their reporting was.\u00a0 With profitability much tougher this year, now is the time to slice and dice your business in all the ways that allow you to make better decisions.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<br \/>\n<a href=\"http:\/\/mortgagenewsclips.com\/wp-content\/uploads\/2010\/03\/j8.jpg\"><img loading=\"lazy\" decoding=\"async\" style=\"border-bottom: 0px; border-left: 0px; display: block; float: none; margin-left: auto; border-top: 0px; margin-right: auto; border-right: 0px\" title=\"j8\" src=\"http:\/\/mortgagenewsclips.com\/wp-content\/uploads\/2010\/03\/j8_thumb.jpg\" border=\"0\" alt=\"j8\" width=\"172\" height=\"172\" \/><\/a><br \/>\nA key part of our FOCIS-<em>plus<\/em> Review is to provide companies templates of reports that allow you to understand more about your business than simply how much volume you did and how much money you made.\u00a0 So remember two things (1) <em>You can\u2019t manage it if you can\u2019t measure it<\/em>, and (2) <em>You\u2019ll make better decisions with better data<\/em>.<br \/>\n<strong>\u00a0<\/strong><\/li>\n<li>What\u2019s really frustrating for us is related to Game Theory, the academic discipline having to do with how organizations and people make decisions based on incomplete information. What really bothers us is that mortgage bankers have all the data somewhere in their systems needed to make better decisions, and very few take advantage of this.\u00a0 It\u2019s all about extracting it from your systems (DataTrac, Point, Encompass, PC Lender etc.)\u00a0 and presenting it in a way where you can spot trends, anomalies, and red flags.\u00a0 The templates we mention above are one way of solving this problem.<br \/>\n<strong>\u00a0<\/strong><\/li>\n<li>After years of being on the Board of Directors of banks or working with them, we\u2019re fully aware that Boards can be very much like a cat who sits on a hot stove.\u00a0 As Mark Twain wrote, the cat will never again sit on a hot stove, but neither will it ever sit on a <em>cold<\/em> stove again.\u00a0 In this vein, we spoke recently to an East Coast bank-owned mortgage company which had tried switching to mandatory, took some initial losses, and went back to best efforts. A little probing made us fairly convinced that it wasn\u2019t bad hedging but was actually weak controls and poor pipeline management.\u00a0 We also got the sense that the Board\u2019s attitude was <em>not<\/em> to investigate what happened but to take the attitude that they will never try selling mandatory ever again.\u00a0 Secondary marketing forensics is not easy, but it can be done, and this Board should have investigated what really happened.<br \/>\n<strong><\/strong><\/li>\n<li>A commercial banker whose bank we recently advised on setting up a Mortgage Warehouse Lending told us:\u00a0 \u201cWe\u2019re sure as hell not going to do any construction lending, and my Chief Credit Officer would have a heart attack if I brought him a commercial real estate loan, I don\u2019t care how good it is.\u00a0 There\u2019s hardly any good C&amp;I loans anymore, and if there\u2019s some company out there making money, Wells Fargo\u2019ll be all over them in a minute with better terms than we can ever dream about, so what am I left with?\u00a0 I\u2019m left with Zip, that\u2019s what I\u2019m left with, and after all these years, that\u2019s a helluva note. \u201d<br \/>\nThat\u2019s why this banker now loves Warehouse Lending: \u201cHell, these damn mortgage bankers are the only decent credits left for a little guy like us. They made loads of money last year, they\u2019re flush with cash, and the damn lines are secured by loans that\u2019ve already been sold, for Pete\u2019s sake.\u00a0 I love it, I just love it, and my Board thinks I\u2019m a damn genius.\u201d\u00a0 Take a look at the attachment to learn how your bank might get into Warehouse Lending.<br \/>\n<strong><\/strong><\/li>\n<li>Grammar alert!\u00a0 Grammar alert!\u00a0 When our friendly banker said \u201cThere\u2019s hardly any good C&amp;I loans anymore\u201d that was <em>his<\/em> language, not ours.\u00a0\u00a0\u00a0<strong><\/strong><\/li>\n<li>By the way, we gave out free subscription extensions on this newsletter to 26 Honorary Grammar Policepersons. The poor grammar last week was when we wrote \u201cWe were speaking to a company in the Pacific Northwest which plans to build their own software.\u201d\u00a0 It should have been\u201c\u2026which plans to build <em>its<\/em> own software.\u201d<br \/>\n<a href=\"http:\/\/mortgagenewsclips.com\/wp-content\/uploads\/2010\/03\/j61.jpg\"><img loading=\"lazy\" decoding=\"async\" style=\"border-bottom: 0px; border-left: 0px; display: inline; border-top: 0px; border-right: 0px\" title=\"j6\" src=\"http:\/\/mortgagenewsclips.com\/wp-content\/uploads\/2010\/03\/j6_thumb1.jpg\" border=\"0\" alt=\"j6\" width=\"232\" height=\"232\" \/><\/a><br \/>\nStrunk &amp; White is a book on grammar that we used in 9<sup>th<\/sup> grade back in, gasp, 1963, and it\u2019s still a great book that all writers should have.\u00a0 In 1967, there was even a San Francisco band named <em>Elements of Style<\/em>.<br \/>\n<strong><\/strong><\/li>\n<li>We just read on article in <em>The<\/em> <em>Atlantic <\/em>on<em> <\/em>Treasury Secretary Tim Geithner, and his background is interesting.\u00a0 He was born in Brooklyn, but when he was very young, his father joined the State Department and young Geithner grew up in Rhodesia (now Zimbabwe), Thailand and India. He returned to the states, went to Dartmouth (go Indians!), and got a graduate degree at Johns Hopkins.<br \/>\n<a href=\"http:\/\/mortgagenewsclips.com\/wp-content\/uploads\/2010\/03\/j53.jpg\"><img loading=\"lazy\" decoding=\"async\" style=\"border-bottom: 0px; border-left: 0px; display: inline; border-top: 0px; border-right: 0px\" title=\"j5\" src=\"http:\/\/mortgagenewsclips.com\/wp-content\/uploads\/2010\/03\/j5_thumb3.jpg\" border=\"0\" alt=\"j5\" width=\"282\" height=\"197\" \/><\/a><br \/>\nRemember when it was called <em>The Atlantic Monthly<\/em>? They dropped the word <em>monthly<\/em> when they cut back to only ten issues a year. It\u2019s now just<em>The Atlantic<\/em> .<br \/>\n<em><\/em><\/li>\n<li>We came across the attached <a href=\"http:\/\/www.scribd.com\/doc\/28810524\/ALB-Servicing-1992-1\">servicing growth announcement from 1992,<\/a> and aside from 1<sup>st<\/sup> California Mortgage, the Sequel, are any of these companies still in business?<\/li>\n<li>We wrote last week of a Pacific Northwest company that was developing its own software, and we got this response from a mortgage industry veteran we know and respect:\u00a0 \u201cI think companies who think they have to build their own software have overpowering CTOs in place who speak big and deliver slow\u2026. and once the company has dumped millions into the software development, they can\u2019t back out of the commitment.\u00a0 I\u2019ve seen a number of companies roll out their new software only to regret it within a short period of time.\u00a0 Without a doubt one of the biggest wastes of time and money I have personally seen. Crazy.\u201d<\/li>\n<li>If you own stock in Raiffeisen International Bank, you just got an e-mail noting that they\u2019re merging with another Austrian\u00a0 bank and that they\u2019ve retained<em> Deloitte Auditrei Wirtschaftspr\u00fcfung GmbH<\/em>.\u00a0 That\u2019s one mouthful. By the way, Raiffeisen has banks in, Romania , Bulgaria , Poland , Hungary , Czech Republic , Slovakia , Croatia , Bosnia , Ukraine , Serbia , Russia , Belarus , Moldavia , Kosovo, Slovenia and Albania . It\u2019s a single-stock way to participate in the growth of all of Eastern Europe .<\/li>\n<\/ul>\n<p>We went to their Investor Conference in Kiev a few years ago and about 20 of us had dinner with the Chairman. About every three minutes he insisted that everyone have another shot of vodka. Their website is actually pretty interesting <a href=\"http:\/\/www.ri.co.at\/index.php?id=261&amp;L=1\">http:\/\/www.ri.co.at\/index.php?id=261&amp;L=1<\/a>\u00a0 and this photo is of their executive team, with Dr. Stepic, the guy who kept pouring the vodka, 2<sup>nd<\/sup> from the right.\u00a0<br \/>\n<a href=\"http:\/\/mortgagenewsclips.com\/wp-content\/uploads\/2010\/03\/j45.jpg\"><img loading=\"lazy\" decoding=\"async\" style=\"border-bottom: 0px; border-left: 0px; display: inline; border-top: 0px; border-right: 0px\" title=\"j4\" src=\"http:\/\/mortgagenewsclips.com\/wp-content\/uploads\/2010\/03\/j4_thumb5.jpg\" border=\"0\" alt=\"j4\" width=\"357\" height=\"301\" \/><\/a><br \/>\nThree things: (1) Did you notice all the women in their senior ranks, and (2) check out their suits.\u00a0 Doesn\u2019t it look like most of them are wearing pants a few inches too long? And (3) Doesn\u2019t it also look like the two guys who showed up without red ties were positioned as the bookends?<\/p>\n<ul>\n<li>Saturday classes seem not to have been an only-at-Dartmouth barbarism, as we heard from people who remember them at Vanderbilt and Randolph Mason College . By the way, does anyone remember parietals, lock-outs, and <em>in loco parentis<\/em> ?\u00a0\u00a0\u00a0\u00a0\u00a0<\/li>\n<\/ul>\n<p><strong><\/strong><\/p>\n<ul>\n<li>And what\u2019s the deal with holiday-only foods?\u00a0 Why can\u2019t we have eggnog in any month other than December? And what about yams with semi-burnt marshmallows on top?\u00a0 Why only on Thanksgiving, on just one day of the year?\u00a0 Curious minds want to know.<br \/>\n<a href=\"http:\/\/mortgagenewsclips.com\/wp-content\/uploads\/2010\/03\/j35.jpg\"><img loading=\"lazy\" decoding=\"async\" style=\"border-bottom: 0px; border-left: 0px; display: inline; border-top: 0px; border-right: 0px\" title=\"j3\" src=\"http:\/\/mortgagenewsclips.com\/wp-content\/uploads\/2010\/03\/j3_thumb5.jpg\" border=\"0\" alt=\"j3\" width=\"298\" height=\"188\" \/><\/a><\/li>\n<\/ul>\n<p>\u00b7 Watching tiny Saint Mary\u2019s College (28-5) knock off Big East powerhouse Villanova had us jumping up and down and shouting at the TV.\u00a0 Sports writers will probably make this a Cinderella story, a cute, little team that found magic and wakes up to find itself deep into the NCAA Tournament. This isn\u2019t just luck, and Villanova coach Jay Wright said \u201cThe Gaels can play with anybody in the Big East. There&#8217;s no doubt.\u201d\u00a0 The <em>Wall Street Journal <\/em>wrote that Saint Mary\u2019s is a \u201c\u2026.California school that has five Australians on its roster, some of whom look like they just walked out an East Village bar.\u201d\u00a0\u00a0 We first watched The Gaels (a Gael, is an Irish warrior) in 1958 when they had All American Tom Meschery.\u00a0 We were too young to know what was going on, but we\u2019ve followed them ever since, and in some ways rooted for them more than Cal .<\/p>\n<p>\u00b7 Although the Jason Kidd-Lamond Murray teams were fun to watch, Cal \u2019s basketball teams have disappointed more often than not.\u00a0 Our senior year at Cal featured a team with three future NBA stars, yet they went only 14-15.<br \/>\nSince we\u2019re currently all excited by Saint Mary\u2019s College, a bit of fun trivia is that the actor who played Duke on<em>Hawaii Five-O<\/em>\u00a0 was Herman Wedemeyer, an All- American running back at Saint Mary\u2019s in the 1940\u2019s.\u00a0 His ability to avoid tacklers earned him the nickname Squirmin\u2019 Herman.\u00a0 Book\u2019 em, Danno.<\/p>\n<ul>\n<li>Ferris Bueller 48?\u00a0 Yes, Mathew Broderick turned 48 last week.<br \/>\n<a href=\"http:\/\/mortgagenewsclips.com\/wp-content\/uploads\/2010\/03\/j26.jpg\"><img loading=\"lazy\" decoding=\"async\" style=\"border-bottom: 0px; border-left: 0px; display: inline; border-top: 0px; border-right: 0px\" title=\"j2\" src=\"http:\/\/mortgagenewsclips.com\/wp-content\/uploads\/2010\/03\/j2_thumb6.jpg\" border=\"0\" alt=\"j2\" width=\"150\" height=\"211\" \/><\/a><\/li>\n<\/ul>\n<p>This is one of the all-time best laugh-hard, feel-good movies, and while it\u2019s not quite a coming-of-age movie, it\u2019s probably among the top 5-6 movies about life as an American High Schooler.\u00a0 French social critic Jacques Barzan once wrote that you cannot understand America unless you understand the American high school experience, and this movie capture it perfectly.<\/p>\n<ul>\n<li>We have a great idea for someone whose son or daughter is looking for a good senior thesis.\u00a0 It would be to study the accuracy of Congressional Budget Office projections. A year or so ago, we read an article, possibly in <em>Barrons<\/em>, where the CBO had really missed the mark on the cost of two programs and how those programs really came in much lower.\u00a0 One was the Medicare program to pay for drugs, and they just really overestimated what it would cost the government.\u00a0 Anyway, someone could take all CBO projections from, say 1990 \u2013 2005 and compare them to what really occurred.<\/li>\n<li>Financial historians will probably debate TARP for years to come, but one positive that might have come out of it is that TARP money seemed to give investors the confidence to invest in banks.\u00a0 Perhaps this table demonstrates the point.<\/li>\n<\/ul>\n<p><a href=\"http:\/\/mortgagenewsclips.com\/wp-content\/uploads\/2010\/03\/j1.png\"><img loading=\"lazy\" decoding=\"async\" style=\"border-bottom: 0px; border-left: 0px; display: inline; border-top: 0px; border-right: 0px\" title=\"j1\" src=\"http:\/\/mortgagenewsclips.com\/wp-content\/uploads\/2010\/03\/j1_thumb.png\" border=\"0\" alt=\"j1\" width=\"484\" height=\"136\" \/><\/a><\/p>\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>At the beginning of this newsletter we wrote about Due Diligence and investor scorecards. We\u2019ve done Due Diligence on very small companies being acquired where it took only one of us two days, and we\u2019ve also done it on much bigger transactions, some of which had servicing departments, where it took three of us a full week.\u00a0 Not always, but usually, we uncover things that the buyer had no clue about. And when the acquiring company is a bank or thrift, we try to pay particular attention to those areas we know the regulators will look at.<\/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><em>.<\/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=3fPfzNMzhU8:I5yBoM5pJFU: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=3fPfzNMzhU8:I5yBoM5pJFU:D7DqB2pKExk\"><img decoding=\"async\" src=\"http:\/\/feeds.feedburner.com\/~ff\/mortgagenewsclips\/qTBe?i=3fPfzNMzhU8:I5yBoM5pJFU:D7DqB2pKExk\" border=\"0\"><\/img><\/a> <a href=\"http:\/\/feeds.feedburner.com\/~ff\/mortgagenewsclips\/qTBe?a=3fPfzNMzhU8:I5yBoM5pJFU:F7zBnMyn0Lo\"><img decoding=\"async\" src=\"http:\/\/feeds.feedburner.com\/~ff\/mortgagenewsclips\/qTBe?i=3fPfzNMzhU8:I5yBoM5pJFU:F7zBnMyn0Lo\" border=\"0\"><\/img><\/a> <a href=\"http:\/\/feeds.feedburner.com\/~ff\/mortgagenewsclips\/qTBe?a=3fPfzNMzhU8:I5yBoM5pJFU:V_sGLiPBpWU\"><img decoding=\"async\" src=\"http:\/\/feeds.feedburner.com\/~ff\/mortgagenewsclips\/qTBe?i=3fPfzNMzhU8:I5yBoM5pJFU:V_sGLiPBpWU\" border=\"0\"><\/img><\/a>\n<\/div>\n<p><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/feeds.feedburner.com\/~r\/mortgagenewsclips\/qTBe\/~4\/3fPfzNMzhU8\" height=\"1\" width=\"1\"\/><\/p>\n","protected":false},"excerpt":{"rendered":"<p>\u00a0 \u00a0 To Our Clients, Colleagues and Friends,\u00a0\u00a0 \u00a0 What\u2019s one of the most important things to look at during Due Diligence on an acquisition target?\u00a0 Investor scorecards have a huge amount of information on the mortgage banks that sell them loans, and these scorecards may be the one, best way to get a quick, [&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-462385","post","type-post","status-publish","format-standard","hentry","category-news"],"_links":{"self":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts\/462385","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=462385"}],"version-history":[{"count":0,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts\/462385\/revisions"}],"wp:attachment":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/media?parent=462385"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/categories?post=462385"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/tags?post=462385"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}