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Friday, April 25, 2008

Genworth: Hoocoodanode?

by Calculated Risk on 4/25/2008 12:05:00 PM

Here is another comment from Genworth Conference Call (hat tip Scott):

Question Eric Berg, Lehman Brothers: Is there anything that sort of stands out in this whole experience - whatever inning we are in here - whether it’s what’s happening in California or the extent of the decline in Florida, the willingness of certain high fico score borrowers to walk away. If there is one or two things that really jump off the pages of data that you have looked at and have led you say "Wow I would have never expected that" what has surprised you the most about lets say what’s going on or customer behavior in whole complicated situation?

Kevin at Genworth: I continue to get surprised every day. The biggest change to me has been the rapid deterioration of both the Florida and the California experience, uh, nobody ever would have predicted the extent of the home price downgrade in those markets But if I step back from that, the other thing we’ve all learned through this period is it gets back to the fundamentals of sound, prudent underwriting, if you are underwriting properly, and you had good linkage between those underwriting standards and what the investors are paying for those loans in the secondary market. It’s all about liquidity, when the liquidity dried up and went away things jumped off the charts - I really think at the end of the day that is probably one of the biggest drivers of this once liquidity exited the market everything accelerated, or decelerated, or whatever you want to call it.
emphasis added