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Breaking News: Wamu Is Exiting the Wholesale Mortgage Business!

Early details are still flowing in, but we have received an E-mail from our WAMU rep confirming that Wamu has exited the wholesale mortgage business. Any submission of a loan not received by Wednesday of this week will not be eligible to close with Wamu.

Done. Finished. Over.

This ranks up there as some of the biggest news to ever hit our business, with this year shaping up as one of the most eventful albeit challenging years in the history of the mortgage industry.

One could speculate that the combination of billions of option ARM originations, the acquisition of Subprime lender Long Beach Mortgage, and WAMU's massive high CLTV HELOC concentration have combined to contribute to this watershed decision.

The other theory is the continued rumor that this is the next step in a behind the scenes acquisition by the likes of a larger and more solvent Bank such as Chase or Wells Fargo.

But as they say......the show must go on.

Our rep, who is now out of job, used to always end his voice mails with the following funny saying:

"Send me a loan, not a bone, for we are your lender and not a pretender".

Sadly, they are no longer "our lender" as of today.

Posted by Janet Guilbault California Mortgage Banker/Broker on 04/07/2008 06:40 PM

Comments (22)

newsworthy, california mortgage expert, california mortgage, mortgage crisis

Post is included in group: LOANS

22 Comments on Breaking News: Wamu Is Exiting the Wholesale Mortgage Business!

APR

2008

Janet - and the changes just keep coming...but as you said "the show must go on". Thank you for the update.

Survival of the fittest. These guys were not much of a player in our market. I wish more local players were still in the market as they have few places to go and they feel like its their money at risk.

Interesting. I had always thought that Chase ws likely to absorb WaMu. However, they decided instead to drown in the quicksand of Bear Stearns.

Lenn: Many people came right out and predicted that Wamu would be a part of Wells Fargo by the end of this year.

That may still happen. But they have clearly decided they are tired of the mortgage business they get from brokers.

Not sure if they will continue to offer mortgages directly to the consumer...maybe someone knows and will comment.

Eric: These guys were pretty huge players for us. I am sad to see them go, but had a feeling those option ARMS would get them in deep doo-doo.

Wow! This is getting a bit scary. I don't even want to know what's going next....

APR

2008

We had rarely every used these guys but I gotta admit, it is getting a bit scary indeed. Where does this leave their Retail Operation? Also of note and speculation, what will become of Wholesale Lending and Mortgage Brokers.....

Jason: Would love to hear your take on what will become of wholesale lending. I do not see this discussed very much around the Rain, but it is a huge issue that could completely change the face of the real estate industry.

Janet~ Good information. It is a little spooky out there these days. It will be interesting to see what shapes up when the dust all settles.

Janet - Look for a post in the near future.

Jason....Remember when I told you about our new mortgage broker..the top producer with a Masters Degree and a mind like a steel trap? Here is what he said about Wamu closing:

"I bet my life savings that the condition of the 5 million infusion was that all broker business cease"

Funny, they DID happen right at the same time. Funny, they ARE blaming the brokers for the bad loans.

Looking forward to your post. We need to discuss this topic.

It is interesting to wonder if WAMU will even survive! The terms of the cash infusion are not so advantagious for WAMU! I've been watching the news most of this morning. I have my business accounts there, and wonder if it would make sense to move them!

On CNBC this morning they said that if you wanted a mortgage from Washington Mutual, you would have to go to one of their locations to get it and that they are shutting down their network of mortgage origination offices.

Regarding the future of wholesale originations, my prediction is that it will get back to the way it was prior to 1995 or so. The refinance booms that happened in the early 90's, the advent of sub prime and a prolonged real estate sales boom made it possible for the "market" to sustain way more lenders (wholesale and retail) than what is possible in what is would be called a "normal" market.

If you think back to the early 90's and before, you didn't have retail mortgage origination offices in strip malls throughout the country. Nor did you ever hear mortgage companies advertising on the radio or on TV. There simply weren't enough transactions to support this type of market presence.

Contraction in the industry will happen, but the fundamental advantages of brokers will remain. Lower cost of production combined with greater flexibility will continue to make brokers attractive to the borrowing public. The ability to buy a mortgage cheaper than they can originate that same mortgage will continue to make brokers attractive to large financial institutions.

This sounds like a post, doesn't it? I had better hurry and to beat Jason to the punch! ;0)

Bob Mitchell

ValueList Real Estate Services, Inc.

Janet, Thanks for the post. This business is forever changing. Thanks!

Yeah, I saw them on the implode list.

Hi Janet: Here's my post on the future of wholesale mortgage origination. Hope you enjoy it.

Bob Mitchell

ValueList Real Estate Services, Inc.

They were dirty! I never did an option ARM or a Hybrid Option Arm for that matter. But there were guys in my office that fed them to WAMU b/c they were so loose. I tribute it to GREED. I am not saying the reps were greeedy at all, it is the bank itself that was so loose and now it is getting bit by the hand that fed it. This is potentially historic news with all of their home loan centers (something like 176) closing. Crazy.

WAMU had horrible turn times and crappy customer service in our market. they have been gone a long time, they just made it official.

Over the past year and a half at least, WAMU has been making it more and more difficult to broker loans to them as a relatively small, relationship based shop. They wanted at least a million or more committed to them monthly or they wouldn't work with us. Chase is next. They are also going to cut off wholesale business to brokers who don't submit at least a minimum dollar amount monthly. I think this is the beginning of the end for mortgage origination as we know it. Especially if the new Fed Rule 1305 is implemented as written.

I haven't read Bob's post on the future of wholesale origination yet - I wonder if we agree...

Please read Bob's excellent post...link in his comment above. Lisa, he does not agree with you. He thinks brokers are here to stay and so do I.

Today when my clients asked me what was going on I said this "Wamu wants to do less loans because that segment of their business is not making money. What do you do when a product is losing money? You sell less of it. By cutting off the broker, they just caused their mortgage business to plummet, which was the whole idea.

Do I also think that somewhere in the mix of decisions the brokers were BLAMED? I do.

I've had a chance to read Bob's post now. Its a great post and I agree that Brokers are here to stay - but we need to spend more time together - sharing best practices and standing united on the issues that really matter. Our voices as the very best consumer advocates are getting lost in the national broker smear campaign. And we can't ignore that there is pending legislation in our state that will wipe us out if not addressed.

JUN

Hi,

Great post.I always try to live away from the brokers.They see only their benifits.What is mortgage loan.Mortgage loan is a loan which uses real estate as a security. The mortgage loan is an agreement to deposit a home or other real estate as security. A borrower can either obtain this loan directly from the lender, or sometimes consult mortgage brokers who are more experts in handling the whole process well. This unit analyses the financial situation of the borrower and provide them the most suitable lenders. It is relatively better to let experienced brokers handle your home mortgage loan. Read More

http://www.allfinancialservices.net

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