When it was a “Mid-Century Modern” bank, Washington Mutual served my clients well.

It provided market rate mortgages which it held in the branch’s own portfolio. (WaMu advertised that its “WM Mortgage Loans” were never sold). Your home is a place to live, raise your family- not an investment.

Whether it’s a MCM (Mid-Century Modern) or other, that’s the way it should be regarded, loved and cherished. And a good home mortgage, preferably locally held and serviced made all this possible for me and my clients. As did many other Seattle natives, I started with “School Savings” pictured as a mural on the wall of a branch.
WaMu and many other of the troubled banks and mortgage lenders got off on the wrong  foot when they went after the derivative bundled mortgages that were in demand by big operative builders like Toll Brothers as covered in this very inclusive 10/16/05 NYT Magazine article- Chasing Ground.

WaMu Endgame

Surprise: WaMu is looking for a buyer.  From the New York Times:

Goldman Sachs, which Washington Mutual has hired, started the process several days ago, these people said. Among the potential bidders that Goldman has talked to are Wells Fargo, JPMorgan Chase and HSBC. But no buyers may materialize. That could force the government to place Washington Mutual into conservatorship, like IndyMac, or find a bridge-bank solution, which was extended to thrifts in the new housing regulations.

Citigroup is also considering an offer, but would likely be able to buy Washington Mutual only if it emerged from a receivership, according to a person close to the situation. JPMorgan is maintaining its posture that it will not bid unless it receives government support, according to another person briefed on the matter.

I’m not so sure that any bank is in shape to purchase WaMu in its current form. Perhaps it could be broken up into smaller pieces. Its deposit base is probably worth more than anything else on its books right now.

I’m sad. I can remember walking into Washington Mutual Savings in Downtown Everett on the corner of Colby and Pacific with my dad to open up a passbook savings account.  I’ve had an account there just about my whole life.  My daughter’s school savings accounts are there.  I know many people who work at WaMu.  I worked at WaMu as a bank teller many years ago under a very smart, savvy woman named Margaret Bradley who was a very fine role model for a young woman like me in the early 1980s.  Washington Mutual was “The Friend of the Family.”  I bought that old commercial line and repeated it for years.

I know. It’s just a bank.  I’ll get over it. 

There are many WaMu employees that live and work here in the Seattle area who had much of their retirement investments within WaMu’s stock options.  Whatever the outcome, this can’t bode well for our employment numbers here in the greater Seattle area.  I’m under the FDIC limit and will keep my accounts open, and will not be moving them to a new bank. I’ll be seeing this through with them. 

This makes me wonder if it will be easier for homeowners to get their short sales and loan modifications approved. 

Wall St Journal: TPG Move Opens Doors for WaMu

Bloomberg: WaMu’s Biggest Shareholder Waives Compensation Pact

Calculated Risk: WaMu For Sale

Seattle Times: With Stock Sinking, WaMu Appears Headed for Sale

Seattle PI: WaMu Puts Itself up For Sale

Major Changes with Appraisals for Conforming Loans

This morning it was announced from OFHEO that Fannie Mae and Freddie Mac have agreed to some major changes with regards to how appraisals will be ordered for conforming mortgages:

“…including eliminating broker-ordered appraisals, prohibiting appraiser coercion, and reducing the use of appraisals prepared in-house or through captive appraisal management companies in underwriting mortgages. The agreements also enhance quality control in the appraisal process and establish a complaint hotline for consumers. The agreements include a Home Valuation Code of Conduct that the Enterprises will apply to lenders selling mortgages to Fannie Mae or Freddie Mac. The Code becomes effective on January 1, 2009.”

It’s ironic to me this is eliminating “broker-ordered” appraisals and “reducing the use of captive appraisal management companies” when it was Washington Mutual’s actions with eAppraisal that caused New York Attorney General Cuomo to investigate.

The appraiser I use has been doing his job for over 30 years. I trust him and respect his work. Last year, when he had an appraisal come in low on a property that was in a bidding war with zero down financing, I didn’t doubt him. The agents were furious…even the homebuyer wanted a new appraisal. They wound up buying the home for the appraised value instead of the bid-up price. I wonder if they realize what a favor he did for them by providing a true appraisal? (He’s come in low on some refi’s too). I have to admit, I’m less than happy realizing that I may not be able to rely on using his services for appraisals once the new guidelines go info effect.

I’m concerned that obtaining a conforming appraisal will be very similar to how VA appraisals are done: a crapshoot lottery. This is all well and good as long the appraisers in the pool are all competent and efficient. However when there is no competition for business, will it breed complacency?

I’m also wondering what will happen with the cost of appraisals. Presently, I have a rate sheet from my appraiser and I know how much the cost will be for each transaction after we have loan approval. Unless Fannie and Freddie decide to control what an appraiser will charge, the fees can vary. How will loan originators be able to provide accurate Good Faith Estimates without knowing who the appraisal will be through?

More questions than answers right now…and more changes with mortgages are on the horizon with HUD’s announcement of what the median home prices are due in about ten days.

Update: Fannie Mae is accepting comments until April 30, 2008.

We're not in a declining market…we're just soft

I just received this memo from Washington Mutual:

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Please be aware that most of King, Snohomish, and Pierce counties are now considered to be in a “soft market.” This means that your LTV max will be reduced by 5% from the normal established maximum if your loan is in a soft market on a conforming loan (ie, our Flex 100 will now be countered to 95% LTV if your loan is in a soft market).

WaMu has provided a calculator to determine if your zip code is “soft”…yes, Billiruben, even my West Seattle zip is soft…so is Bellevue and every other zip code I’ve popped in their system.

About a week or so ago, Chase issued a memo (for second mortgages/home equity loans) that Pierce, Thurston and Clark Counties have a -5% factor and Asotin has a factor of -10%.

PMI Mortgage Insurance Company will no longer insure loans over 97% loan-to-value and are limiting the loan to value to 90% in “distressed markets”.

The photo is of my 12 year old cat, Louise. She’s soft.