To Our Clients, Colleagues and Friends,  

• The Mortgage Bankers Association is quietly doing some good things to strengthen FHA.  We thought we’d take a moment to commend them. Our own view is that the good reputation mortgage bankers enjoyed for so many years has been sullied by the Mortgage Meltdown, and the MBA can do a lot to revitalize the once-stellar image.
• If you’re curious as to how the CPI works, see this.  We found it interesting.
• The MBA is recommending that FHA mortgagee’s minimum net worth be doubled to $500,000.  A good idea.
• How did we miss it? Last week (Feb. 3^rd) was the 50^th anniversary of the death of rock ‘n roller Buddy Holly in a plane crash.  Interestingly, Bo Diddly used to claim that Buddy Holly stole his sound, and yes, there is some similarity. We met Mr. Diddly ages ago, and while he was pleasant, he also seemed sort of bitter.
• Airlines have been growing their revenue by increasing fees incidental services that once were free.  U.S. Airways is hoping to generate $500 million of revenue in 2009 from such fees.  We know that RESPA limits a lot of what you can do on the fee side, but you should still think about ways you can get more fee income.
• The mighty Bank of America has 23% of its deposits in non-interest bearing accounts.  That’s $205 billion of money they pay no interest on.
• Now Zsa Zsa Gabor and Kevin Bacon are saying they lost money with Bernie Madoff.  The only good thing to come out of this is that the next time a bothersome charity hits you up for a donation, you can tell them you’d love to help out, but that you had all your money invested with Bernie Madoff.
• GMAC said it posted a profit of $7.5 billion in the fourth quarter, compared with a loss of $724 million last year. Talk about a quick reversal of fortune.  There are many good people there, so it’s good to see GMAC healthy again.  ResCap is still losing money.
• Journalist Dave Barry has revealed how Sarah Palin was chosen to run for vice-president.  John McCain, searching for the perfect running mate, told his top aides in a conference call that he wanted “someone who is capable of filling my shoes.”  Unfortunately, he was speaking into the wrong end of his cell phone and his aides thought he said he wanted “someone who is capable of killing a moose.”  Dave Barry insists this is what happened.
• In a world where it’s hard making much more than 3-4% on your money, Wells Fargo, one of the safest banks in America , is paying 7.6% on a preferred stock issue.  It’s trading at about $18.50, or 74% of par,  so the current yield is a bit over 10%.  It will probably be redeemed in several years at $25, so you’ll get a nice capital gain to go with the yield.
• Remember just a few years ago when you could get a 5.0 point rebate on certain types of loans?  The world changes.
• When people complain that taxes are too high, we would remind them of the following rates under various Presidents:  Under Eisenhower, the top marginal rate was 92%.  The Kennedy tax cuts proposed cutting them to 70%.  And of course, Ronald Reagan got them down to the 28% range, largely by promising to eliminate many loopholes. But can you imagine a 92% rate?
• And how about those spreads between best efforts and mandatory?  We see many clients getting an additional 100 bps or more for selling mandatory.  Assuming you meet all the criteria, we can help guide you in moving to this.
• Most mortgage bankers tend to believe in free enterprise and free markets.  As one example, most we speak to are outraged at the bailout of the Detroit Big Three.  But now, and we say this without editorializing, mortgage bankers are asking the government to provide some sort of assistance or guarantees to warehouse lenders.  Interesting.

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Joe Garrett and Corky Watts  -  Garrett, Watts & Co.   -  WHAT WE DO  -  510-469-8633