Washington Mutual Will No Longer Issue A Couple Of Complex Mortgages

FROM DOW JONES NEWSWIRE: Washington Mutual Inc. (WM) will discontinue two complex mortgage products as it cuts back on riskier loans amid the subprime mortgage mess and falling home prices.

The bank also added $1 billion to the assistance program announced in April 2007 to help subprime mortgage borrowers stabilize their finances and avoid foreclosure.

Critics have blamed part of the mortgage crisis on banks and other lenders who allowed borrowers to buy homes with little or no money down and devised complicated mortgages that borrowers may not have understood.

Washington Mutual, the nation’s largest thrift, said it would end all negative-amortizing loans. Negative amortization occurs when the loan payment for any period is too small to cover interest charges, thus causing the loan’s outstanding balance to increase.

It also is halting WaMu Mortgage Plus loans, which combined a first mortgage and a home equity line of credit into a single loan.

Washington Mutual originally funded the borrowers’ assistance program with $2 billion. Chief Executive Kerry Killinger said it has helped more than 7,500 homeowners try to avoid foreclosure. The program allows eligible subprime borrowers who stay current on their loans and anticipate pending payment increases to apply for new discounted fixed-rate loans or other mortgages.

 

SEATTLE–(BUSINESS WIRE)–Washington Mutual (NYSE:WM) today announced that it is dedicating an additional $1 billion as part of its borrowers’ assistance program designed to help WaMu homeowners with subprime mortgage loans stabilize their finances and avoid foreclosure.

Since the fund was first established in April, 2007, WaMu has helped more than 7,500 homeowners work to avoid foreclosure. Now that we have utilized most of the initial funding, we are adding an additional $1 billion to the original commitment for a total of $3 billion dedicated to assisting our borrowers, said Kerry Killinger, chief executive officer of Washington Mutual.

Under the program, eligible WaMu subprime borrowers who remain current on their existing loans and anticipate pending payment increases may apply for new discounted fixed-rate loans or other mortgage products available to them.

A team of loan specialists provide counseling and assistance to WaMu subprime customers who have the means and motivation to take the actions necessary to keep their homes. A toll-free number (1-800-881-7099) is available to WaMu customers who would like to inquire about this expanded program.

The company also continues to encourage any WaMu borrower whose loans may have become delinquent to immediately reach out to the companys experienced team of mortgage professionals who can help determine if there are workout options available to help keep borrowers in their homes.

For more information about WaMus comprehensive homeownership preservation efforts, visit www.wamu.com/wamucares.

Streamlined Product Suite

As part of the companys retail-focused business strategy, WaMu also announced a simplified set of home loan products that are available to customers through WaMus Retail Banking stores and Internet and telephone sales channel.

Weve carefully selected a core set of products that continue to meet the home purchasing and financing needs of qualified borrowers, while also recognizing the current mortgage lending environment, said David Schneider, president, WaMu Home Loans.

WaMus prime first mortgage product set falls into four basic categories: fixed rate mortgages; hybrid amortizing adjustable rate mortgages (ARMS); hybrid interest-only ARMS; and Home Equity products. WaMu will discontinue all negative amortizing loan product options, and will also cease to offer its WaMu Mortgage Plus loan product.

WaMu continues to provide a broad range of attractive loan options for most consumers looking to purchase or refinance a home. Weve been offering home loans since 1890 and remain dedicated to responsibly meeting the home financing needs of the communities we serve, added Schneider.

About WaMu

WaMu, through its subsidiaries, is one of the nations leading consumer and small business banks. At March 31, 2008, WaMu and its subsidiaries had assets of $319.67 billion. The company has a history dating back to 1889 and its subsidiary banks currently operate approximately 2,500 consumer and small business banking stores throughout the nation. WaMus financial reports and news releases are available at www.wamu.com/ir.

About Luke Ford

Raised a Seventh-Day Adventist at Avondale College in Australia, Luke Ford moved to California in 1977. He graduated from Placer High School in 1984, reported the news at KAHI/KHYL radio for three years, attended Sierra College and UCLA, was largely bedridden by Chronic Fatigue Syndrome for six years, and converted to Judaism in 1993. From 1997-2007, Luke made his living from blogging. Living by Beverly Hills (Alexander90210.com), he now teaches the Alexander Technique (moving the way the body likes to move). Lessons cost $100 each and last about 45 minutes. In 2011, Luke completed a three-year teaching course at the Alexander Training Institute of Los Angeles. His personal Alexander Technique website is Alexander90210.com. Luke is the author of five books, including: » The Producers: Profiles in Frustration » Yesterday’s News Tomorrow: Inside American Jewish Journalism
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