Hello from the great Northwest! It probably wasn't more than 3 months ago that I attended a seminar co-sponsored by Genworth Financial and Washington Mutual. Wa. Mu. assured all of us brokers that wholesale was here to stay and was actually quite profitable. Fast forward to today and Washington Mutual announced that they are exiting the wholesale loan business, closing all of their home loan centers, and originating loans exclusively through their retail branches. How far the mighty have fallen.
Nor only do I have friends who work for Wa. Mu. but my company had a significant number of loans placed with Wa. Mu. the last few years. I think Washington Mutual is a class outfit and I'm pulling for their survival. I remember when they were a much smaller Northwest only bank. Now who knows. Their shareholders meeting is April 15; it will be very interesting to see what happens.
Eventually all these bad things will shake themselves out. It may take the rest of this year but the hangers-on will prosper. In the meantime, obviously, the wild ride isn't over. Who's next? Will Countrywide actually complete its merger with Bof A? Are there other Bear Stearns out there? I'm always interested in your thoughts. I believe Wa. Mu. will survive although it might be a takeover candidate now; especially if they keep losing money which is projected. Have a great night and keep the faith!
Paul
Paul McFadden
Sara: I'm not sure. They're pretty much back to retail banking at this point.
Pam: Get some sleep! I know how interesting this stuff is to us. You just have to be careful.
John: That's an interesting perspective. Obviously, I like to see more competition as opposed to less. It keeps everyone honest.
Pam: We'll probably need to stay buckled up for most of this year. Eventually the dust will settle. Until then, enjoy the ride! May you all prosper!
Paul
Paul, I'm sorry to disagree with you but WAMU is nefarious at best in my opinion. They have been the major purveyor along with CW of option arm slime and the chickens are coming home to roost (not to mention their HELOC exposure). Chase can't bail them out because their buckets are into Bear Stearns; while JPM has deep pockets, they aren't that deep. In 2006 and 2007 I began noticing that over 35% of WAMU's quarterly earnings came from CINA (capitalization of negative amortization)...they were counting neg am loans that were increasing in size as part of their earnings. That is accounting that is no less than FUBAR. In King country, 20%+ of the mortgage originations that occurred in 2006 were option arms (multiple sources: Credit Suisse, MBA, et al)...WAMU was like a Columbian Drug Cartel, pumping more and more mortgage cocaine into the market.
I have been polite to folks who said they originated option arms "responsibly" but it is interesting that I have not met a single originator who admits to being a part of the option arm sleaze. I am sad for the employees who are part of t he collateral damage, that is a tragedy. But I have not respect for WAMU as a former stock owner, originator, or customer.
Thanks, Rich. I appreciate your sentiments. I never originated any of the alternative loans and feel good about that. I think a lot of the LO's didn't know what these loans entailed; they just saw dollar signs. It's going to be an interesting year, that's for sure! Enjoy the ride!
Hi Joe: I think the mortgage companies are simply fighting for survival at this point. I feel like we've either hit bottom or we're awful close. Time will tell.
Paul
I worked for WAMU for a time. I have to admit, I am not surprised at this news at all to tell you the truth. We often funded loans that at the surface appeared to be "iffy". It was not unusual to approve a 500K HELOC, SISA for a borrower that said they made $72,000.00, their job? Hotel maid. Those kind of borrowers that they turned a blind eye to, led to the problems WAMU is now experiencing in my opinion.
Thanks, Charlene, for your comments. Wa. Mu. wasn't the only culprit. The money was easy and now it's not. A lot of people got caught with their pants around their ankles. That's the way the free market works. You've gotta love it! Take care.
Paul