Sep. 25: A bitcoin primer for dummies like me; Afghan football humor; Saturday Spotlight: Shamrock Home Loans

  A Rhode Island home, whose purported history of paranormal infestation made it the inspiration for the film The Conjuring, has hit the market for $1.2 million. Close by Halloween! The three-bedroom, 3,100 square foot, multiple ghost home is currently a rental property with bookings through 2022. The home first became notorious in the 1970s when a family experienced a series of spooks later documented in a series of books, and the home is currently owned by two paranormal investigators. In more mundane news, every quarter Milliman summarizes key trends in the PMI industry and relevant management comments discussing business trends and outlook. The Private Mortgage Insurer (PMI) market trends and highlights, 2Q 2021 report includes things like a summary of NIW (purchase vs. refinance share and MI penetration rate by loan purpose) and new issuance. 2Q 2021 continued to deliver historically high NIW for the industry. However, Milliman noted the composition of the NIW was more heavily weighted towards purchase originations than in recent quarters. The purchase market is improving! But are turn times? Not really, as shown in this 2021 Lender Operational Challenges Survey.

Saturday Spotlight: Shamrock Home Loans, where Everyone Deserves to Live in a Home They Love

Describe your company (where and when was it founded, and why, what it does, recent growth, and plans for near-term future growth). 

Decades ago, a group of East Providence, RI, friends founded The Shamrock Society, a philanthropic organization with some mirth and merriment in the unwritten bylaws. One of the founding members was Douglas Harrington Sr., a father grounded in faith and integrity, who married his high school sweetheart at age 31, the greatest sales achievement of his career. At 44, Mr. Harrington bought his first home, without a college degree, working two jobs and caring for five children. Unfortunately he lost his wife to a tragic illness and raised his large family as a single parent. One of his children, Dean Harrington, a Providence native, startedShamrock Home Loans in 1989. Who Dean’s father was defines who Shamrock is today, every day: The faith and hard work behind a single parent supporting a large family acts as the nucleus of the culture and hard work of Shamrock employees nationwide.

 

Tell us about what type of volunteer work employees are encouraged to engage in, or charities your company supports, and why. 

 

Shamrock and its employees support a variety of nonprofits such as Homes for Our Troops, Providence Rescue Mission, Teen Challenge, Ronald McDonald House, and a number of pro-life causes such as CareNet Pregnancy Centers and Bags of Hope. The objective is to support charities that receive no tax or government sponsored assistance, but are in alignment with Shamrock’s core values. And Shamrock contributes to the employee care fund that assists employees with urgent expenses that may extend beyond their normal pay or benefits.

What does your company do to help elevate your employees’ growth? Describe any mentoring programs, outside classes or training, in-house training. How does the company help people develop?

Shamrock’s leadership team is involved with C12, a national Christian Business and Coaching forum, to ensure that an organization is both inclusive and in line with core values. Leaders receive feedback from thousands of faith driven, results-minded CEOs and executives to encourage and challenge one another. Peer-to-peer groups work together to avoid costly mistakes, support better decision-making processes, and to establish solid business plans for growth. Shamrock has deployed EOS (Entrepreneurial Operating System) organization-wide, elevating LO and branch manager performance in supportive and deeply motivating ways. EOS aligns sales, marketing, operations, secondary and compliance across established core values in order to drive measurable results that everyone can celebrate. EOS has led to faster cycle times, increasing employee satisfaction, and improving customer satisfaction on every closed loan.

Tell us how your company maintains its culture in a work-from-home environment, or how you plan on bringing employees back into the office, if applicable.

Shamrock’s culture is not dependent on where the employee is, it exists in who we hire. Our operating practice with “EOS” firmly aligns both practice and culture in order to drive agreed upon results with the coworkers who are aligned with the same culture and mission, and a commitment to technology and employee flexibility enables a culture of growth, innovation, and accountability. Employees can work anywhere and anytime, while maintaining a closely connected work culture.

Things you are most proud of that don’t have to do with sales.

Family-owned Shamrock is proud to be one of the oldest mortgage banks in the United States free of investment banking or public market interests. We are growing nationwide, committed to developing the next generation of mortgage leaders and making significant investments in college graduates and others new to mortgage lending, training, and coaching them to the highest levels of performance in the industry.

Fun fact about Shamrock

The average age of Shamrock’s employees is 38 years old, showing the commitment to training college graduates and those new to mortgage lending to understand and grow in the business. And the average employee has a tenure of over 14 years with the company!

Cryptocurrency

RPM’s Dick Lepre wrote a fine primer on cryptocurrency for dummies, like me. As countries or lenders discuss accepting electronic currencies, it is important to be educated about it.

“At this point crypto is a speculative asset with no intrinsic value and it is important to remember how important a stable currency is to a functioning society. Cryptocurrency is hip but there is little discussion of its risks. The stability of a society depends on the stability of its economy and the stability of an economy depends on the stability of its currency. Keep that in mind when discussing Cryptocurrency.

“A cryptocurrency is a digital currency in which encryption techniques are used to regulate the generation of units of currency and verify the transfer of funds. These operate independently of any central bank.

“Some cryptocurrencies come into being by a process called “mining.” You “mine” by solving computationally difficult problems on your computer and are rewarded with the currency. There has been a lot written about then significant amount of electricity necessary to create Bitcoin, the best-known cryptocurrency. Bitcoin consumes about 0.55% of the world’s electricity. A better assessment might be a comparison with the energy consumption of traditional banking. Bitcoin was created by someone using the pseudonym Satoshi Nakamoto publishing the notion in October 2008 in a research paper called “Bitcoin: A Peer-to-Peer Electronic Cash System.” Interestingly to this day no one knows who Satoshi Nakamoto really is. Whoever Satoshi Nakamoto is, the person mined the original 1-2 million bitcoins which would now be worth between $45 – $90 billion.

“Bitcoin transactions are performed using a blockchain which is a public ledger of all bitcoin transactions. These transactions are of the form of payer A sends x bitcoins to payee B. A and B must have unique digital signatures and do not provide a clue as to who A and B really are. These transactions are not sent to a single authority but rather to a network of nodes. A network node validates the transaction, updates its copy of the ledger, and then broadcasts the ledger additions to the other nodes which add that transaction to their ledger. One’s bitcoins then actually exist in this blockchain. This prevents someone from spending the same bitcoin twice absent an authority such as a bank.

“Bitcoin may be the best-known cryptocurrency but a new cryptocurrency comes out almost every day. These are called Initial Coin Offerings. (ICOs.) Few of these stick for lack of getting enough people interested.  I regard the issuance of these new ICO’s as essentially pump-and-dumps.

“The largest challenger to bitcoin is ethereum. Ethereum was co-created by Vitalik Buterin. Buterin was born in Russia, moved to Canada when he was 6 and now lives in Singapore. He was one of the winners of a Peter Thiel Fellowship award in 2014. Buterin was 19 years old when he co-created ethereum.

“Ethereum has some advantages compared to bitcoin. It is not only a cryptocurrency but its software architecture is built around the notion of smart contracts. A smart contract example might be a rental agreement. The landlord and the tenant execute a rental agreement in an ethereum appropriate language called Solidity. Once the landlord receives the ethereum payment the smart contract initiates transfer of the security key for the apartment to the tenant.

“Ethereum also updates the blockchains much more frequently that bitcoin. Transfers take place in seconds rather than an hour or more.

“Apart from these technologies ethereum has another very strong ally. This is called the Enterprise Ethereum Alliance.

 

“Because of the difficulty of tracing exactly who is paying whom in the cryptocurrency world these have been notorious for facilitating criminal activity. The Silk Road dark web site sold, among other things, illegal drugs all using bitcoin. Ransomware such as WannaCry demands payment in bitcoins.

 

Techies, Criminal, Businesses.

“In essence cryptocurrency is now in its third stage. The first stage was techies starting bitcoin and realizing that they had created something akin to money. Stage 2 was the Silk Road crime phase. I think that the third stage will be adoption of blockchain technology by businesses. I believe that this will happen but lose the cryptocurrencies per se and instead use dollars and Euros.

“Cryptocurrencies are not money! Economics textbooks define “money” as something with three properties. It is 1) a medium of exchange meaning that you can buy stuff with it, 2) a unit of account, and 3) a store of value. In order to be a medium of exchange something would have to measure both your income and expenses or, at minimum something this you could buy most anything with. A unit of account measures, for example, the relative value of a pound of apples to a pound of avocados. A store of value is important if your income now is higher than your expenses and you want to save your income. If you save it in a store of value you should be able to buy as much stuff with that in 10 years as you could today.

“I don’t think that cryptocurrencies satisfy any of these conditions. Cryptocurrency is not money it is a speculative commodity with no intrinsic value. Also, money (at least until now) is something that is backed by government. In 18th century U.S. money (banknotes) was backed by banks. It used to be the case that banks or government issued money was convertible to precious metal. In a real manner the massive increase in money supply by the Fed may eventually lead to central bank issued money being taken less seriously.

“There are downsides to cryptocurrencies. You either trust your money with a cryptocurrency exchange platform such as Coinbase or hold it yourself. Cryptocurrency exchange platforms have no regulatory authority and it is not clear that you can recover your crypto if the platform becomes insolvent.

“If you hold it yourself, and lose your crypto wallet, your money is gone. There is no party to appeal to in order to recover your wallet. If you have cryptocurrency in a wallet you need to make a backup which is not on the same device and, if you have a sizable amount you need to secure that backup in a safe place. This article asserts that 20% of All BTC is lost and unrecoverable. Stefan Thomas, a German-born programmer living in San Francisco, has two guesses left to figure out a password that was worth about $220 million in January 2021. Also if someone hacks your wallet your money is gone.

“Cryptocurrency is extremely price volatile. Price can often change 10% in a single day. The volatility of crypto prices has made some people rich, but it is also the reason why cryptocurrencies are not money. For anything to threaten the US$ or Euro it would need stability of value. Volatile crypto exchange rates vs the US$ make it impractical. You do want to be paid in crypto on Friday and find on Saturday that since everything you buy is in dollars the purchasing power of your paycheck is 10% less. The odd thing is that the “you can get rich with this stuff” appeal of crypto is precisely what makes it useless.

 

“Crypto is a high-risk speculative asset. It is not money. Interestingly Bitcoin has become the ‘official currency’ of El Salvador. This is a piece by monetary economist Steve Hanke on what is behind this. One irony is that El Salvador had a dollarized economy which was working fine for 20 years.

“The real risk: Currency stability is the core of a nation’s economy. The stability of a society depends on the stability of its economy and the stability of an economy depends on the stability of its currency.

“Blockchain technology is not cryptocurrency. Blockchain technology creates a distributed ledger of transactions. This paper provides a description of the advantages. While blockchain technology is associated with cryptocurrencies they are not the same thing. We may find that the technology gets adopted without the cryptocurrencies. This technology has two advantages: 1) it is faster allowing the receiving party to instantly access transfers and 2) then distributed ledger of transactions would have to provide greater security than present tech. The smart contracts technology can be deployed with the US dollar as currency.” Thank you, Dick!

The Afghan Quarterback

The coach had put together the perfect team for the Chicago Bears. The only thing that was missing was a good quarterback. He had scouted all the colleges and even the Canadian and European Leagues, but he couldn’t find a ringer who could ensure a Super Bowl win.

Then one night earlier this year, while watching CNN, he saw a war-zone scene in Afghanistan. In one corner of the background, he spotted a young Afghan Muslim soldier with a truly incredible arm. He threw a hand-grenade straight into a 15th story window 100 yards away.

KABOOM!

He threw another hand-grenade 75 yards away, right into a chimney.

KA-BLOOEY!

Then he threw another at a passing car going 90 mph.

BULLS-EYE!

“I’ve got to get this guy!” Coach said to himself. “He has the perfect arm!”

So, he brings him to the States and teaches him the great game of football. And the Bears go on to win the Super Bowl.

The young Afghan is hailed as the great hero of football, and when the coach asks him what he wants, all the young man wants is to call his mother.

“Mom,” he says into the phone, “I just won the Super Bowl!”

“I don’t want to talk to you, the old Muslim woman says. “You are not my son!”

“I don’t think you understand, Mother,” the young man pleads. “I’ve won the greatest sporting event in the world. I’m here among thousands of my adoring fans.”

“No! Let me tell you!” his mother retorts. “At this very moment, there are gunshots all around us. The neighborhood is a pile of rubble. Your two brothers were beaten within an inch of their lives last week, and I have to keep your sister in the house so she doesn’t get assaulted!” The old lady pauses, and then tearfully says,

“I will never forgive you for making us move to Chicago!”

Visit www.robchrisman.com for more information on our industry partners, access archived commentaries, or to subscribe to the Daily Mortgage News and Commentary. If you’re interested, visit my periodic blog at the STRATMOR Group web site. The current blog is, “An M&A Snapshot.” The Commentary’s podcast is live and at any place you obtain your podcasts (like Apple or Spotify).

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Rob Chrisman