Comments on: Updated/Corrected: WaMu Eliminates Jumbo Option ARM, Other Changes

By: This Week in Blogs : LEADCRITIC

This Week in Blogs : LEADCRITIC — Fri, 16 Nov 2007 18:16:40 +0000

[...] Blown Mortgage announces that WaMu eliminates the Option Arm. [...]

By: EyesWideOpen

EyesWideOpen — Fri, 16 Nov 2007 16:46:38 +0000

Jumbo Option ARMS got WAMU in trouble for the simple reason that right now they’re not making money on the product for investors. They done the research and to many borrowers are just making the minimum payment. Just look at their stock value. Any borrower that can go full doc for the pay option are more likely to make more than the minimum payment. It’s basic economics coming to the front of mortgage lending!

What we now know is killing us.

By: The WaMu Dude

The WaMu Dude — Fri, 16 Nov 2007 12:30:25 +0000

I have to take issue with both the headline and tone of this article. WaMu has NOT eliminated the Option ARM. Read it again – all of the changes announced yesterday were to JUMBO Option ARMs. You can still do stated income cashout Option ARMs up to 80% so long as you stick to conforming loan size limits.

While this will certainly have a significant impact in California, it will not affect more than 10-20% of production in the rest of the country.

By: Not Quite Removed

Not Quite Removed — Fri, 16 Nov 2007 10:12:45 +0000

Note: On the wholesale side Wamu is still doing conforming option arms (both refi and purchase). Jumbo option arms, however, must be full doc purchases to be accepted.

By: gilbert navarro

gilbert navarro — Fri, 16 Nov 2007 03:09:10 +0000

hello:i’m with countrywide i have arm loan with them i’ve been trying to have countrywide modify my loan they jusy keep giving the run around,why they can’t they say that countrywide as modify 40-60 thosands loans but!not mine i’ve contacted many mortgage lenders concering my problem.countrywide saids to get to a second job!or borrow from friends,i have a arm loan at 8.125%,low equity on my home,the value of my home decreases everyday.i want a 30 year fixed,but!no one wants help,if theres no equity nobody wants my bussiness.home owners have no rights,i just want my payments lower i’ll contiuel payments my mortgage.gilbert navarro(can someone lead me to honest lender,who will work with me)

By: Fielding Mellish

Fielding Mellish — Fri, 16 Nov 2007 02:56:43 +0000

I’m surprised they’re completely ceasing to originate Option ARMs, since that will remove any hope of their trying to plausibly deny that Option ARMs have been lousy loans. It might have been better PR to keep the Option ARMs among their product offerings, but in such a way that no one would actually want them: full-doc, low LTV only, requiring 3-4pts at closing, for example.

WaMu’s correspondent side (shut down > 1 year ago) was fairly straight-laced (since WaMu had devoured the correspondent divisions of NorthAmerican, Dime, Fleet, PNC), but their wholesale reps were among the most aggregious in inviting fraud by brokers, most notably by arranging undisclosed 2nd mortgages on top of ostensibly 80LTV Stated Income/Stated Asset loans. At its core, WaMu has always been rotten. Much of their broker-generated portfolio will also prove to have been rotten. Their best & cleanest channel -correspondent – was the one they’d shut down.

By: BorisB

BorisB — Fri, 16 Nov 2007 01:39:28 +0000

Not surprising. WaMu is heavily weighted with Option ARMs and other neg am products in it’s portfolio. It will be interesting to see if they remain in wholesale.