The Garrett, Watts Report (March 15, 2008)

March 16th, 2008 · 1 Comment


To Our Clients, Colleagues and Friends:   

· We’ve noticed that HUD is getting slower and slower in approving FHA applications.  They received 1,290 applications in the 4th quarter of 2007, and that was up from 330 applications a year earlier.  That’s a four-fold increase in applications, and you can be certain that FHA didn’t increase staffing by four–fold.  Some applications are now taking up to 3-4 months or longer!  This is ridiculous.

· We were listening to a senior management team discuss vendor selection for a back-end tracking system.  We heard lots of interesting ways they analyzed the companies, but perhaps one of the most critical was a key question the CEO asked about each vendor. He wanted o know, quite simply, how many people they had working full-time on their system.  His point was excellent.  Sales people aside, he wanted to know how many staff were available to answer questions, fix things, and work on new improvements. And it matters.  It matters a great deal.  So we’ll pass this along as a key question to ask of each and every technology vendor you deal with. You’d be surprised at how thinly staffed some of these vendors are.

· We saw that Australia ’s Macquarie Bank has stopped issuing their first lien HELOC mortgages here in the U.S. They said that “If home prices are devalued, we are in essence making borrowers unsecured loans when the home equity line of credit is drawn. So the value of the home is decreasing, while the borrower’s indebtedness is holding steady, which increases the risk…”  Guys, use lower LTV’s and your problem goes away!

· Where does Macquarie Bank make a ton of money?  They buy government infrastructure around the world and manage it for the cash flow. They own tolls roads in Illinois , Indiana , Virginia , England and France , along with bridges, dams, airport parking lots and airports themselves around the world.  In fact, they’re currently trying to buy Chicago ’s Midway Airport .   It’s a fascinating business model they have.

· Do you like biographies?  One of the more interesting ones we’ve read lately is a biography on Woodrow Wilson, written by (and this will surpris you) Sigmund Freud. And yes, of course, it’s all done from a psycho-historical perspective.  Freud’s premise is very interesting, and, of course, very Freudian.

· A year ago Countrywide’s servicing dept. handled about 1,175 loans per servicing employee, and that number is now down to about 980.  The reason,, obviously, is that delinquencies and foreclosures are more labo