I should save this post about WaMu for a Friday Funny

This is such a joke I can’t stand it.   Washington Mutual is saying that lenders who broker to them, must adhere to tougher standards.    According to this article, from CNN:

"brokers who do business with the company must show evidence that they explained to borrowers key terms of the loans they are recommending – such as the amount, whether the interest rate or the payments may change, and if the loan has a fee for prepayments."

This should happen automatically with all loans.  I’m all for it.  The current forms that are used, such as Good Faith Estimates and Truth in Lendings could definitely stand for some improvement. This is not the funny part…the following is:

"In addition, brokers should also disclose the amount of their compensation, Washington Mutual said, adding that it would try to call every borrower represented by a broker before closing to review the loan terms."

A bank, who does not disclose what they’re compensation is "on the back end" is insisting that mortgage brokers do…guess what, mortgage brokers all ready do disclose their YSP or SRP.   Banks, like Washington Mutual do not!  In addition, Washington Mutual is stating that they will try to call every borrower to review the loan terms.   Yah, sure.  I want a Washington Mutual representative to contact my clients.   I doubt it would be to make sure they understand the terms.   I’ll bet it’s to see if they can undercut the loan originator who was sending Washington Mutual the loan in the first place.

Washington Mutual is one of the grand-daddys of the mortgage time-bomb: the option ARM. They’ve been schlepping this product to their clients for years.  And suddenly now they are going to try to improve standards of mortgage brokers when it’s banks like theirs that have created these programs and have been pushing them to Mortgage Brokers to pawn our clients for them?   

From Business Week’s Nightmare Mortgages

"There’s no way to camouflage what Harold, a former computer technician who asked BusinessWeek not to publish his last name, is about to face. He’s disabled and has one source of income: the $1,600 per month he receives in Social Security disability payments. In September, 2005, Harold refinanced out of a fixed-rate mortgage and into an option ARM for his $150,000 home in Chicago. The minimum monthly payment for the first year is $899, which he can afford. The interest-only payment is $1,329, which he can’t. The fully amortized payment is $1,454, which his lender, Washington Mutual (WM ), gets to count on its books. WaMu, no fly-by-night operation, said it couldn’t comment on Harold’s case, citing confidentiality issues."

Gee, wonder who’s going to counsel borrowers of loans originated by Washington Mutual?

In my seven years of working as a Mortgage Professional, I believe I’ve managed to send Washington Mutual two transactions.  Both were at the customers request.  The last one was years ago.   I don’t need WaMu and I don’t embrace their new standards.

I just may have to pull my few bucks from my checking account with WaMu (the last time I called my friend of the family to reorder my checks, I was routed to a call-center in the Philippines) and try to find some Ma and Pa Bank to keep my spare change in.

I’m not laughing anymore.


  1. Hi Rhonda,

    Many months ago, I commented on a blog post over at raincityguide (it was so long ago now I’d have to search to find it) about something called “informed consent.”

    This is what doctors are required to do before we consent to a medical procedure.

    The co-owner of my company believed that informed consent would someday come to mortgage lending. We believed this so much that we wrote a class on it a couple of months ago for mortgage lenders (yes, it is approved for CE) called “informed consent!”

    This may start with brokers, but someday, if we wish hard enough, banks just might have to do the same.

    Personally, I do not believe that I will see banks and brokers being treated the same in my lifetime. Why? 1) They’re not the same; and 2) Banks have more lobbying dollars.

    Is this fair? No.
    Will we see more unfair rules and laws aimed directly at mortgage brokers? Yes.

    I predicted this in April.

  2. Jillayne, it smacks of what other lenders have done when payoffs are ordered for a refi at escrow, they FED EX an offer to the borrower.

    For example, I send a loan to Wells Fargo. A few years go by and my client returns and wants to refi. I send the loan to another company. When the payoff is ordered, Wells sends out a package making an offer to the very client I once sent to them.

    It’s dirty pool and so is WaMu’s “excuse” to correct the very problem THEY were a BIG part of creating.

    BTW I used Wells as an example in this comment because they were one of the lenders who did this.

  3. Wait until you read the report on mortgage fraud just released from the Mtg Bankers Association. I don’t want to be in a room near you when you get even more angry than you are now. 🙂

  4. I thought I was getting hoarse from my cold…maybe it’s from me screaming! 😉

  5. Rhonda:

    I though the same thing when I read that announcement. I wonder how much this is about ensuring the client is happy with the terms or an opportunity for their call center monkeys to try to undercut the broker.

    I can see the conversation now. “Oh, your broker didn’t tell you they jacked up your rate so they can make $3000 in ysp? We can give you the same loan with no ysp is you like…”

  6. Meanwhile, the bankers do not disclose their YSP. It stinks!

    I loved this post you did on brokers vs. bankers:


  7. It is amazing to watch money evolve from worthwhile to worthless.The United States is running the country on borrowed money. People are not succeeding in life, they are buying success and going bankrupt because they are not following any restraint or fear of loss. Their is always cheaper money to buy in the US. This is so
    dangerous and I believe the value of the US dollar would crash if the actual value that is placed on our own currency was understood by the rest of the world.

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