Washington Mutual Completes Dime Acquisition

Washington Mutual, Inc. (WaMu) completed its acquisition of New York’s Dime Bancorp, Inc., according to an announcement this morning. WaMu, which reports assets of nearly one-quarter trillion dollars as of September 30th, said that the acquisition creates a broad-based platform for it’s New York retail banking operations.

The purchase of Dime — which is the parent of North American Mortgage Company — follows a number of recent acquisitions:

The Washington Mutual Expansion Trail

While these acquisitions have helped the company become one of the largest U.S. lenders, the mergers appear to be taking a toll on customer satisfaction. Among large national lenders, WaMu ranked near the bottom of J.D. Power’s recent “Home Mortgage Study”. That study looked at how a lender’s interactions with borrowers influence the likelihood of using that lender again or recommending the lender to others. The report specifically pointed out that secondary loan sales have a disastrous effect on customer loyalty.

A borrower from Sammamish, Washington, wrote MortgageDaily.com that her jumbo loan was purchased from North American Mortgage Company by WaMu. After that point, she said recurring monthly problems with WaMu included untimely payment postings, unjustified late charges and unanswered customer service complaints.

In March, the law firm of Girard & Green, LLP. announced that it filed a class-action lawsuit in Washington state against Washington Mutual Inc., Bank United Corp., and Bank United of Texas, FSB, alleging — among other things — that WaMu breached the mortgage loan contracts which govern their mortgage loan servicing transactions. In its announcement, Girard & Green said that Bank United failed to post payments in a timely fashion, charged “late charges” and additional interest to borrowers as result of late postings and failed to respond to borrower complaints or remove improper charges assessed to borrowers.

Another law firm, Cohen, Milstein, Hausfeld & Toll, P.L.L.C., announced in August that it filed a class action lawsuit in Washington state on behalf of borrowers for whom Bank United performed mortgage loan servicing. That complaint charged WaMu, Bank United Corporation and Bank United of Texas, FSB with violations of the Washington Consumer Protection Act, breach of contract, and breach of the duty of good faith and fair dealing, and made allegations similar to those in the previously-mentioned class action.

“We sent them a payment and had it returned due to ‘no loan Number written on the check’ and charges followed,” wrote a Medford, Oregon borrower. “We sent them our check again and once again they returned it as they wouldn’t accept it because now it was a ‘partial’ payment compared to the Legal and collection charges they imposed upon our loan.”

Bill Ehrlich, Washington Mutual’s executive vice president of corporate relations, was quoted by the Seattle Post-Intelligencer as saying, “as with any large U.S. company, we’re on people’s radar screens.” The story went on to say that the company has taken steps, including a code of responsible lending principles it announced as part of its 10-year, $375 billion community lending commitment.

In June, the Associated Press reported that a Mississippi jury awarded more than $71 million in damages to plaintiffs who accused a WaMu subsidiary of goading customers into renewing loans with undisclosed additional charges. The subsidiary, Washington Mutual Finance Group LLC (formerly City Finance Co), was acquired through the 1997 purchase of Great Western Financial.

One borrower copied MortgageDaily.com on a letter to WaMu’s CEO, Kerry Killinger, suggesting that WaMu’s lack of response to her requests have only made her delinquency worse. She further suggested that WaMu uses chronically late paying borrowers as “a reliable source of revenue for companies as Washington Mutual, which reap millions of dollars in late fees.”

With this kind of sentiment, WaMu certainly has quite a task ahead in building loyalty with its expanded customer base.

Looking Back & Industry Impact

Washington Mutual's (WaMu) acquisition of Dime Bancorp in 2002 was emblematic of the rapid consolidation in the mortgage industry during the early 2000s. This period saw aggressive growth strategies fueled by low interest rates and a booming housing market. WaMu, like many other lenders, sought to dominate the market by acquiring regional players and expanding its footprint. However, this expansion came at a cost. Operational challenges, particularly in integrating acquired companies, led to customer service issues and allegations of mishandled mortgage servicing. These issues foreshadowed larger systemic troubles that would later culminate in the 2008 financial crisis.

At the time, the broader mortgage industry was fueled by risky lending practices, including subprime mortgages and a reliance on securitization. Secondary loan sales, highlighted as a pain point in WaMu’s customer satisfaction rankings, were symptomatic of the industry’s aggressive push toward profit, often at the expense of borrower trust and retention.

Since the 2008 crisis, the mortgage market has undergone significant regulatory reform, including the introduction of the Dodd-Frank Act and the establishment of the Consumer Financial Protection Bureau (CFPB). As of 2025, the market emphasizes stricter underwriting standards and a focus on borrower experience. However, with rising interest rates and affordability concerns in 2025, lenders face renewed challenges, reminiscent of the pressures that plagued the industry two decades ago. The lessons from WaMu’s expansion—and its eventual collapse in 2008—remain a cautionary tale for mortgage lenders navigating today’s volatile market.