Washington Mutual said it would close its 186 free standing home loan retail offices and get out of the wholesale lending business by end of the second quarter of this year.  WAMU was a big player in the brokering of loans so this is a big blow to mortgage brokers.

WAMU raised 7 billion from a private equity group called TPG and slashed its dividend to 1 percent per share which should save it about 490 million in capital.

Most of WAMU's trouble came because they choose to specialize in making option ARM loans.  These loans came with low start rate such as 1 or 2 percent.  This minimum payment allowed the borrower to defer the full interest to the back of the loan by ending it to the principle that was borrowered.  This process is called negative amorization.  Now these loans are having problems because people can't get out.  They now owe more than house is worth and can't change to a fix rate.

John Thomas - Certified Mortgage Planner

www.DelawareMortgageLoans.net

 

 
Posted by John Thomas on 04/20/2008 07:13 AM   Comments (2)    

2 Comments on WAMU to Exit Wholesale Lending & Closes 186 Retail Branches

So, is this a good move? Sounds like it is for WAMU.

04/20/2008 07:58 AM by Gary Waters - Real Estate Agent Viera Suntree (Century 21 Baytree Realty www.moving2brevard.com)

I always knew the ARM was a tough one, good job with the post.

Tom Davis - Delaware Realtor

04/25/2008 11:15 PM by Delaware Homes For Sale:FREE Delaware Search: Delaware Real Estate: Tom Davis (Delaware Real Estate: Delaware Homes: Delaware, Dover , ERA)

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Loan Officer: John Thomas (Primary Residential Mortgage Inc.)
John Thomas
Newark, DE
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