The Tale of Washington Mutual: Suprised?

“It was the Wild West,” said Steven M. Knobel, a founder of an appraisal company, Mitchell, Maxwell & Jackson, that did business with WaMu until 2007. “If you were alive, they would give you a loan. Actually, I think if you were dead, they would still give you a loan.”

The NYT is featuring an article detailing the rise and fall of Washington Mutual. It’s an interesting read, but shouldn’t come at a surprise. After all, you could get a state-income, stated-asset loan from them with minimal effort. In fact, I distinctly remember working with a small developer who was looking to build multi-family homes, who had worked out a $2M+ mortgage with Washington Mutual based upon nothing more than 10% down and his stating his income and assets, all without any verification. The cost of not providing any documentation? 50 basis points, 25 basis points for not proving his income, and another 25 for not having to prove his assets.

It really was the wild, wild west, and the residential shoe has dropped. The question which remains to be answered is whether or not the other shoe – commercial mortgages – will drop. Based on some of the deals that were getting done on the commercial side (for example, high loan-to-value, non-recourse loans for vacant buildings based upon the stabilized value) during 2005-2006, the answer would have to be yes, though it should be noted that the extent to which commercial mortgages will be afflicated will also be less.

That said though, a CPN article summarizes a Fitch report issued last week in which Fitch noted the increasing volume of CMBS delinquencies.

Similar Posts:

• JP Morgan to Acquire Washington Mutual Assets
• JPMorgan To Cut 12,000 From Washington Mutual
• Nearly 20% of Construction Debt is Delinquent
• Commercial Lending Down 54%
• Lehman’s Ship Sinking; Bank of America Acquiring Merrill Lynch

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