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Texas Investigating WaMu

AG, prompted by news story, looking at servicing issues

October 8, 2003


Recurrent homeowner complaints have Washington Mutual Inc. under fire once again, and this time Texas seeks resolutions.

WaMu, a national leading mortgage lender, is under investigation since last April by the Texas Attorney General's office (AG). According to the AG's office, since April 2002, approximately 200 customer complaints have been filed with the state agency.

Apparently, a story covered by a local news station in the Dallas/Ft. Worth area prompted the investigation, said WaMu spokeswoman Libby Hutchinson. The news story revolved around unhappy WaMu mortgage customers who revealed their complaints, Hutchison said. Consequently, the garnered attention fueled complaints to the AG.

Complaints vary from lost payments, bad customer service, to threats of and improper foreclosures, the AG's office said. The themes resonate in WaMu's list of lawsuits, which has accordingly grown with the lender's business acquisitions.

The following illustrates a timeline of WaMu lawsuits.

WaMu Lawsuit Timeline

  • October 2002 -- A California judge halted Washington Mutual Home Loan Inc., the mortgage lending division of the Seattle banking behemoth, from taking further action on the foreclosure of the Alonso family residence in Yorba Linda, Calif. The lawsuit was sparked by a $51.56 delinquent mortgage payment shortage.

  • January 2002 -- Green Fauth & Jigarjian, LLP, filed a class action lawsuit in Seattle against WaMu. In the complaint, the firm said WaMu's servicing mistakes allegedly resulted "in poor customer service in which borrowers spend untold hours attempting to correct Washington Mutual's errors, improper fees paid by borrowers for which they are not reimbursed, and erroneous negative reports to credit bureaus." Allegations were related with problems primarily arising after WaMu acquired the servicing portfolios of banks like PNC Mortgage and Fleet Mortgage.

  • March 2001 -- Girard & Green, LLP. announced filing a class action lawsuit in Washington state against WaMu, Bank United Corp. and Bank United of Texas, FSB. The law firm represented Bank United borrowers. Allegations included breach of mortgage loan contracts; failing to post payments in a timely fashion, resulting in late charges and additional interest; imposing improper "property inspection" charges; and failing to respond to borrower complaints or remove improper charges assessed.

  • August 2001 -- Cohen, Milstein, Hausfeld & Toll, P.L.L.C., reportedly filed a class action lawsuit against the three lenders previously mentioned. Again, Bank United provided mortgage loan servicing for borrowers. Allegations included the aforementioned and violating the Washington Consumer Protection Act, breach of contract, and breach of the duty of good faith and fair dealing.

  • June 2001 -- A WaMu subsidiary is accused of goading borrowers to renew their loans with undisclosed additional charges. A Mississippi judge awarded over $71 million in damages to plaintiffs.

A lawsuit is always an option, an AG spokeswoman said, if the AG is not able to resolve the consumer complaints in the current investigation.

But, "Washington Mutual, thus far, has been responsive and cooperative," said Texas Attorney General Greg Abbott in an e-mailed statement to MortgageDaily.com.

"We basically advise them of the status of the resolution of any of the complaints they forwarded to us, or in some cases clarified where there was not an error made in our part obviously," said Hutchinson.

"We've been working diligently to improve our customer's experience," added Hutchinson. "Certainly customer service is a huge importance to us and we want to make sure our customers have the best possible experience with our company, and we're working hard to provide that."

Coco Salazar is an assistant editor and staff writer for MortgageDaily.com.

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