Mortgage Daily Logo

WaMu Fails

Mortgage News

In the biggest bank failure in history, Washington Mutual Bank has been shut down by federal regulators.

The Office of Thrift Supervision closed the Seattle-based thrift today, an announcement this evening said. The Federal Deposit Insurance Corporation has been appointed receiver.

WaMu had suffered three straight quarters of losses totaling $6.1 billion as a result of a deteriorating real estate market.

The collapse was prompted by a run on deposits that began on Sept. 15. A total of $16.7 billion in deposits were withdrawn. The run left the company too unsafe and unsound to continue operating.

WaMu had been desperately seeking investors domestically and abroad, but came up short.

A bidding process conducted by the FDIC resulted in the acquisition of the $307 billion bank by JPMorgan Chase & Co.

A $1.9 billion payment was made by JPMorgan.

In a statement, JPMorgan noted the acquisition makes it the largest U.S. depository institution — with more than $900 billion in customer deposits. Assets and liabilities of parent Washington Mutual Inc. are excluded from the purchase.

“This deal makes excellent strategic sense for our company and our shareholders. Our people have worked hard to build a strong franchise and balance sheet — making this compelling transaction possible,” JPMorgan Chairman and Chief Executive Officer Jamie Dimon said in the announcement

Branches will open Friday uninterrupted.

“WaMu became an OTS-regulated institution on December 27, 1988 and grew through acquisitions between 1996 and 2002 to become the largest savings association supervised by the agency,” OTS stated. “As of June 30, 2008, WaMu had more than 43,000 employees, more than 2,200 branch offices in 15 states and $188.3 billion in deposits.”

FDIC noted all depositors are full protected and it expects to incur no costs as a result of the failure.

The closing of the thrift on a Thursday was highly unusual for OTC, which usually announces the closing of financial institutions on Friday evenings and works through the weekend to transition deposits to a new entity.

As of June 30, WaMu held $118.9 billion in residential loans for investment, including $52.9 billion in payment option adjustable-rate mortgages and $16.1 billion in subprime loans, OTS said. Home-equity lines-of-credit were $53.4 billion.

JPMorgan noted it would mark down the portfolio by $31 billion and consequently raise additional capital.

The servicing portfolio ended the latest quarter at $689.7 billion.

WaMu is the 13th FDIC-insured institution to fail this year.

Related Posts

NewDay USA CEO Rob Posner Expects 10% Increase in 2019 Mortgage Loan Volume

There is No Such Thing as a Free House …

Over the past several years, those who service loans in the State of Washington(1) have seen a dramatic rise in the number of lawsuits in which delinquent borrowers seek to quiet title to their homes on the grounds that lenders are barred from foreclosing based on...

NewDay USA CEO Rob Posner Expects 10% Increase in 2019 Mortgage Loan Volume

The Mortgage Graveyard 2018 Archives

The Mortgage Graveyard 2018 Archives Failed, Struggling and Acquired Mortgage-Related Companies Non-Bank Closures 3 Bank Failures (FDIC) 0 Credit Union Failures 0 Total Mortgage-Related Failures 3  

NewDay USA CEO Rob Posner Expects 10% Increase in 2019 Mortgage Loan Volume

MBS Statistics

MBS Statistics Non-Agency Issuance 2018 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 1998 1997 1996 1995 1994 1993 1992 1991 1990 Private Label RMBS Issuance (S&P) $80 billion to $100 billion (est) $70 billion $34...

NewDay USA CEO Rob Posner Expects 10% Increase in 2019 Mortgage Loan Volume

Sample E-Mail

Sample E-Mail   Covering the Real Estate Finance Since 1999  Mortgage Industry News free news content | view headlines online  Advertorial Text Ad This ad includes a linked bold headline of up to 50 characters and up to 100 words of text. The ad can be...

Popular posts

How Long Does It Take to Refinance a Mortgage
How Long Does It Take to Refinance a Mortgage

So, you’re interested in refinancing your mortgage. Maybe you want some extra capital to do that home project you’ve always dreamed of, interest rates are nearing record lows, or you want to start consolidating debt. Regardless of the motivation behind the refinance,...

How Does Refinancing a Mortgage Work
How Does Refinancing a Mortgage Work

A home purchase is considered an investment, and a robust one at that. Savvy owners are constantly looking for new ways to reduce debt, save money, pay less in interest, and ultimately build equity. Refinancing is one way to leverage your investment and do just that....

What Does It Mean to Refinance Your Home
What Does It Mean to Refinance Your Home

You can think of refinancing your mortgage as a debt redo. Essentially, you’ll swap out the existing loan for a new one - ideally with better terms and conditions. Only this time it could help you save money on high mortgage payments, rather than just borrow it....

Setting up the Utilities in My New House
Setting up the Utilities in My New House

All the tedious, time-consuming home closing documents have been signed, sealed, and delivered. Your belongings are packed into what seems like a million boxes and you have a solid plan to haul all your existing furniture to the new place. Just as your boxes and...

When Is My First Mortgage Payment Due?
When Is My First Mortgage Payment Due?

Navigating your way through a brand new mortgage loan can be a difficult task, especially for first time homeowners. After handing over a large sum of money for the down payment and closing costs, it’s important to pay attention to the timing of your first mortgage...

Newsletter

Don’t worry, we don’t spam

calculate your monthly mortgage payment

Related Topics

Helpful Links

Daily mortgage rate trends

Best mortgage lenders

First-time homebuyers programs by state

Loan limits by state

Types of mortgages

APR vs interest rate

Understanding PMI