To Our Clients, Colleagues and Friends:   

· We were recently reading the résumé of someone we know who’s one of the most qualified women we know in mortgage lending. Her resume had phrases like Self-Starter, Highly Motivated, Great Interpersonal Skills, Proven Leadership, and Outstanding Communicator. Our thought: Drop these. She obviously wouldn’t have been so successful if she didn’t have these skills, and besides they’re clichés.  Neither of us has looked for a job in the last 30+ years, so we probably don’t know what we’re talking about.  But unless you’re just starting your career, we think these phrases are unnecessary.

· On the topic of the new loan limits, you do know they expire on December 31 of this year, right?  Your planning process should address what you’ll do after this date.

· The numbers are in for 2007, and do you know how many credit cards solicitations were mailed last year? An astounding 7.2 billion. Here’s how tough that business is:  The response rate was 41 basis points, and 48% of all offers include a 0% teaser rate. Actually, we don’t understand.  Except perhaps for kids graduating from high school, doesn’t everyone already have enough credit cards?

· On this Day in History, February 15, 1959, Fidel Castrol appointed himself Premier of Cuba.  Despite our wish to get him out of power, he has survived ten Presidents:  Eisenhower, Kennedy, Johnson, Nixon, Ford, Carter, Reagan, Clinton , and two Bushes.  Speaking of bad guys, today is Kim Jong-il’s birthday.  He’s the North Korean leader who has been starving his people for years.
This Day in History Part II. It was on February 15, 1989 when the last Soviet soldier left Afghanistan . Before the year was out, a defeated, exhausted and dispirited Soviet Union started to disintegrate, and, by 1991, had ceased to exist.

· We’ve been thinking a lot lately about leadership and how we measure our leaders. Do you measure someone by their last act, or by the sum of their acts?  We have many readers and clients who spent years building great companies, only to see them fail or nearly fail in the 2^nd half of 2007. 
We had a North East client for whom we did a small project last year.  Ten years ago he was an underwriter.  He became a loan officer, eventually started a mortgage company and grew its net worth to $8 million.  Buybacks killed him last year, and the company is now in bankruptcy.  How do we measure him?  Do we look at the great company he built for 7-8 years, the jobs he created, the homeowners he helped?  Or do we measure him strictly by the last six months of his company’s existence?

What about our own George Washington?  His Revolutionary War career was essentially just one defeat after another.  He finally won at Trenton and then, of course at Yorktown when the British surrendered.  But his won-loss record must have been something like 3-11.  How do we measure him?  Well, we know how history looks upon him, and most people don’t even know about all those many battles he lost.

We’re not historians, and we don’t know the best way to write the history of any one leader. In general, we lean toward measuring people by the sum of all their actions, and in business, that is achieved only one way:  What value did that leader create from his first day to the present. You can’t look at today’s value v. the peaks, but must simply measure today’s value as compared to when he or she started the process.  Does this make sense?

· Ever been tempted to get the heck out of the mortgage business and buy a franchise? For $9,200 you can buy a Winzer Corp. auto-repair shop, or you can also spend $1.7 million for a Ponderosas Steakhouse franchise. Believe it or not, the 149 Arthur Murray Dance Studio franchises have seen their income rise an average of 84% each of the past three years.

· The two biggest banks in Singapore are the Overseas Chinese Banking Corporation (OCBC) and the Development Bank of Singapore (DBS), two great institutions.  Both now have non-Asian CEOs, each a Caucasian veteran of Citigroup.  Interesting.

· Inflation in housing prices has been, essentially, driven by demographics for decades.  The Baby Boom generation produced huge numbers of families, the pig-in-the-python phenomenon. But what happens when the python has finished digesting the pig?  As people age, they stop buying homes and start being net sellers.  They also die.  The key demographic is that the generation that comes after the Baby Boomers is much smaller, so it clearly looks like we’ll eventually have a whole lot more sellers of homes than buyers.  And we all know how that works with supply and demand. The Baby Boomers start turning 65 in another 3-4 years, and it seems inevitable that the boom in housing prices will be slowly winding down over the next 20 or so years.  It’s not a prediction so much as an inevitability.

· Are you thinking about getting your FNMA approval? We can handle the whole thing for you. Contact Corky to get started!

Joe Garrett and Corky Watts -   Garrett, Watts & Co.