{"id":90137,"date":"2009-12-19T13:04:43","date_gmt":"2009-12-19T18:04:43","guid":{"rendered":"http:\/\/mortgagenewsclips.com\/2009\/12\/19\/the-garrett-watts-report-december-18-2009\/"},"modified":"2009-12-19T13:04:43","modified_gmt":"2009-12-19T18:04:43","slug":"the-garrett-watts-report-december-18-2009","status":"publish","type":"post","link":"https:\/\/mereja.media\/index\/90137","title":{"rendered":"The Garrett, Watts Report (December 18, 2009)"},"content":{"rendered":"

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

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

\u00b7 Here\u2019s something weird:\u00a0 2009 will be the first year ever in which more cars were sold in China than in the United States .\u00a0 Maybe what\u2019s so shocking is that it\u2019s not<\/em> shocking.\u00b7 Here\u2019s a list of the biggest bank failures of the last few years and how much they cost the government.<\/p>\n\n\n\n\n\n\n\n
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$8.9 billion\u00a0 Indy Mac (CA)<\/span><\/span><\/p>\n<\/td>\n

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$1.6 billion\u00a0 Franklin Bank (TX)<\/span><\/span><\/p>\n<\/td>\n<\/tr>\n

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$4.9 billion\u00a0 Bank United (FL)<\/span><\/span><\/p>\n<\/td>\n

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$1.5 billion\u00a0 United Commercial\u00a0<\/span><\/span><\/span>(CA)<\/span><\/span><\/span><\/p>\n<\/td>\n<\/tr>\n

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$3.0 billion\u00a0 Guarantee Bank (TX)<\/span><\/span><\/p>\n<\/td>\n

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$1.4 billion\u00a0 Downey Savings\u00a0 (CA)<\/span><\/span><\/p>\n<\/td>\n<\/tr>\n

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$2.8 billion\u00a0 Colonial Bank (AL)<\/span><\/span><\/p>\n<\/td>\n

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$1.3 billion\u00a0 Silverton Bank (GA)<\/span><\/span><\/p>\n<\/td>\n<\/tr>\n

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$1.7 billion\u00a0 Corus Bank (IL)<\/span><\/span><\/p>\n<\/td>\n

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$1.0 billion\u00a0 California National Bank<\/span><\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

And no need to write us that we forgot Washington Mutual.\u00a0 They were sold to JPMorgan Chase before actually failing and costing the FDIC money.\u00b7 If you\u2019re a Texas Rangers fan, you\u2019re in for a real treat with your new starter, Rich Harden.\u00a0 Harden has averaged 9.35 strikeouts per nine innings over the past seven years, best in the majors.\u00a0 He\u2019s injured a lot, but when he\u2019s healthy, he\u2019s dominating the way Sandy Koufax and Bob Gibson once were.\u00a0 When he was with the A\u2019s , he\u2019d throw pitches that started off as sliders and ended up as curves or fastballs that morphed, midflight, into change ups.\u00b7 We wrote about the net yield on the credit card yields after charge offs, and we should have noted that this is the gross<\/em> spread and isbefore<\/em> overhead such as mailings, salaries, rent etc.\u00b7 An interesting benefit to real estate bubbles is that during them, a fair number of developers take great risk in developing projects that no sane person would ever build.\u00a0 And they find lenders to go along with their dreams. As a result, we get some unusual and often fun things after the bubble bursts.\u00a0 One interesting such project is The Shire<\/em>, an Oregon development with fake thatched roof homes modeled on the hobbit villages in Lord of the Rings<\/em>.\u00a0 The Bank ( Umpqua ) and the builder have lost money on it, but at least the community will have an interesting neighborhood for years to come.\u00b7 One of our disappointments is seeing how few mortgage banking companies have an annual Plan and Budget.\u00a0 The budget can have much less than a dozen assumptions, and if you set up your spreadsheet properly, you can change assumptions throughout the year as your business changes.\u00a0 In many cases, it\u2019s the CFO who fails to produce a budget, but in other cases, and it kills us to say so, it\u2019s the senior management or ownership which fails to demand one.\u00b7 Wasn\u2019t it Martha Stewart who said you should bake cookies simply to create a wonderful smell in the house?\u00a0 We have a better idea.\u00a0 Bake yams and your house will smell better<\/em> than cookies.\u00a0 Speaking of smells, we were asked recently what we thought was the worst thing about the sixties.\u00a0 It took us half a second to answer the question, and the worst thing about that decade was, in one word, Patchouli Oil\u00a0 Well, two words. (It\u2019s pronounced puh-choo\u2019-lee oil.)\u00b7 We just watched a demo for DataQuick\u2019s Collateral Validation (CV) and it impressed us as\u00a0 more sophisticated than the many automated valuations we see.\u00a0\u00a0 Although CV can<\/em> be used as an AVM, it was apparently designed to test other<\/em> valuations (appraisals, BPO’s, AVM’s) to let lenders know if the value is supported.\u00a0 It comes up with valuations based on 4-5 different appraisal methodologies, reviews them all, and comes up with its own valuation.\u00a0 We also liked that they also show you a price you\u2019d get if you had to sell the property very quickly, kind of a fire sale price. You\u2019ll find DataQuick on the internet somewhere,\u00b7 The University of Texas football program took in $87 million last year, $20 million more than 2nd<\/sup> place Ohio State .\u00a0 That\u2019s a lot of ticket sales and sponsorships!\u00a0\u00a0\u00b7 Here\u2019s an interesting video of the always amazing Chinese acrobats: http:\/\/amazingacts.blogspot.com\/2008\/07\/dont-try-this-at-home.html<\/a>\u00a0 Any country whose people are that disciplined has<\/em> to be taken seriously as a world power.\u00b7 Attorney Dave Medlin helped lots of you negotiate your way through the jungle\u00a0 of repurchases, but he\u2019s also a great mortgage banking attorney in general. He\u2019s also a funny guy.\u00a0 The coffee mugs with his firm\u2019s logo on them look pretty ordinary till you look on the back.\u00a0 There, it lists important phone numbers:\u00a0 California Governor\u2019s Office (916-445-2841), The White house (202-456-1414), The Vatican (001-39-6-6982), and finally, Medlin & Hargrave (510-832-2900).\u00b7 The three principals at Garrett, Watts are Presbyterian, Jewish, and Catholic.\u00a0 And during this Christmas season, it occurs to us that everything that makes Western civilization great is the teaching of those three religions.\u00a0\u00a0
\nMoses and the ancient Hebrews created the idea of the rule of law, without which we\u2019d be living in a Hobbesian world where\u00a0 \u201cthere is no place for industry, because the fruit thereof is uncertain; and consequently no culture, no knowledge, no arts, no letters, no society, and continual fear and danger of violent death; and the life man is solitary, poor, nasty, brutish and short<\/em>.\u201d\u00a0\u00a0 Hobbes thought that it was the Leviathan (i.e. the King) who kept us from living in a state of nature where might made right, but he was wrong.\u00a0 It\u2019s the rule of law that civilizes man, not kings or Presidents.
\nIt was Martin Luther, the first Protestant, who really conceived the idea that the individual mattered. Before the Reformation, the people could only speak to God through the Priests. Luther thought individual men could have a direct relationship with God, and whether or not you believe in a God, this was a revolutionary idea, the idea that each man mattered as an individual.Finally, Christ\u2019s teachings defined the role of compassion as a prerequisite for any civilization. Has there been a more powerful statement in the last 5,000 years than \u201cLove thy neighbor as thyself\u201d?If you think about it, these three lessons apply to believers and atheists alike, and they all helped create the Western concepts of freedom and democracy.\u00a0 Our culture could not exist without (a) the rule of law that Moses brought us, (b) the value we place on the individual over the State, and (c) the fact that we\u2019re all in this together and that we must care about our fellow humans.These were the great lessons of these three great religions, and what better a time than the Christmas holidays to remember them.Merry Christmas and Happy Hanukkah.Garrett, Watts & Co.<\/a>\u00a0\u00a0Free to read:\u00a0 Board Decisions, by Joe Garrett<\/strong><\/a>Helping mortgage lenders increase revenues, control costs, and better manage risk.<\/em><\/p>\n