PR - WaMu Implements New Standard for Mortgage Brokers

Washington Mutual (NYSE: WM) today unveiled a new, industry-leading standard for mortgage brokers with whom it does business to help ensure that borrowers fully understand the terms of the loan their brokers are requesting in addition to the total compensation the borrower will pay to the broker for their services.

As part of its new broker standard, WaMu will require evidence that the broker has made certain disclosures to the borrower early in the application process, including:

• key terms of the loan requested by the broker such as loan amount, loan term, whether the interest rate and mortgage payments may change, and whether the borrower’s pricing package carries a prepayment fee, and
• the amount of all compensation the borrower will pay the broker for their services, including broker points, or administrative or processing fees, and whether the broker has requested a yield spread premium.

In addition, a WaMu representative will attempt to call every borrower who is represented by a broker prior to closing to review the key loan terms directly with the customer.

"We believe our mortgage broker standard and direct call program should become the new industry benchmark for brokers and lenders across the nation," said Kerry Killinger, WaMu Chairman and CEO. "By adopting these standards, together we can increase consumer knowledge of the home loan process and bring about positive, meaningful change to the mortgage industry."

"Our wholesale business is an important component of our lending strategy and we value our relationships with the high-quality and customer-focused brokers we do business with," said David Schneider, WaMu’s Home Loans President. 

WaMu has a long history of taking a leadership role in addressing the credit needs of its communities and setting the highest standards for responsible lending. In 2001, WaMu established its Responsible Mortgage Lending Principles, becoming one of the first lenders to create specific principles to guide its mortgage lending activity.

Since that time, the company has continued to take proactive steps to respond to the needs of borrowers. These industry innovations include the commitment to refinance up to $2 billion in subprime loans, announced in April, to assist current borrowers feeling the effects of this challenging environment. WaMu also led the industry in implementing subprime lending standards that eliminated subprime stated-income loans and subprime adjustable rate mortgage loans with initial fixed-rate terms of less then five years (effectively the 2/28 and 3/27 products). The standards also require tax and insurance escrow accounts with all new subprime loans WaMu originates and a WaMu conversation with the borrower before loan documents are prepared.