Why is WaMu in so much trouble? My headline says that they can not help themselves. They really can’t.
With the whole world tightening credit and making underwriting standards onerous, WaMu is still making bad and stupid loans to crooks. When I read this story out of the Seattle Times I realized that corruption and fraud come to those who do not do the due diligence to be successful.
The story that follows is bad enough if it was done in 2005 but with all of the problems exposed it is downright criminal for WaMu to let this happen in 2007.
In July 2007, Vijay and Supriti Soni of Corona del Mar, Calif., paid $440,000 for a home at 2129 W. Civic Center Drive in Santa Ana.
Five weeks later, they resold the house to Javier Hernandez, the family gardener and handyman, for $660,000. That’s a 50 percent gain in 38 days — at a time when real-estate prices in Santa Ana were plunging.
But the lender that financed both mortgages, Washington Mutual, took a bath. Last March, Hernandez’s loan went into default and in July the bank foreclosed. On the trustee’s deed, the bank listed the home’s value at $377,137 — $220,000 less than the outstanding loan.
Records show WaMu, America’s largest savings and loan, financed at least 43 mortgages worth $24.5 million on properties bought and sold by members of the Soni family since 2007.
Of the 22 homes sold in that period, at least six have become problems for WaMu: Four were foreclosed, one received a notice of default and another was listed for sale at a $260,000 loss. Total value of WaMu’s mortgages on the troubled properties: $2.7 million.
Read the rest at the Seattle Times.
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{ 4 comments… read them below or add one }
They should be really careful with all that is going on right now with the government tired of the mortgage and lending companies. If I were them I would be extra careful even more than before.
I'm not surprised. You can tell a great deal about a company in one transaction and my only transaction with WAMU showed the company to be unprofessional, unorganized and full of employees unqualified to sell mortgages.
My money is on Wells Fargo Bank to buy them out!
Why should JP Morgan be able to buy my loan for 2/3 of a cent on the dollar. The fire sale at WaMu is fine but let the people with a direct interest be the first to benifit. I would have paid twice what JP Morgan paid.