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Washington Mutual Dropping Wholesale Mortgages

once one of the largest residential mortgage lenders, Washington Mutual, will stop originating mortgage loans through independent mortgage brokers due to the ongoing mortgage crisis. Washington Mutual, said it was set to receive a seven-billion-dollar cash infusion to help shore up its finances which have been ravaged by mortgage-related losses. Washington Mutual was an early leader to offer subprime adjustable rate mortgages to the general public and by the end of last year the losses started to mount. The company did not provide details on the number of employees affected by the move, although it said it expects the closures to take effect before the end of the second quarter. The bank’s portfolio includes $57 billion in option ARM mortgages; so-called negative amortization loans have been a fast-increasing source of losses for lenders as housing prices have fallen in key markets throughout the United States and put millions of borrowers in the position of owing more on their mortgage than their home is worth.

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