Industry News

WaMu tightens mortgage ship

Sues IndyMac for breach of contract, cuts thousands of staff

Learn the New Luxury Playbook at Luxury Connect | October 18-19 at the Beverly Hills Hotel

The abrupt slowdown in the home loan refinance market apparently has sent some lenders on a mission to clean house of all bad loans. Washington Mutual last week filed a lawsuit against IndyMac Bancorp for alleged breach of contract involving loans it acquired from IndyMac after buying PNC Mortgage Securities in 2001. WaMu is seeking $50 million in damages for more than 300 loans IndyMac sold to PNC between 1997 and 2000. The loans allegedly fall into three categories: delinquent payments, improper borrower credit verification and overvalued property appraisals, according to the complaint. Fifty million dollars might seem a paltry sum for one of the nation's largest financial corporations, but WaMu may be trying to recoup some old losses in light of the slowing mortgage market. The company reported an 11 percent drop in 2003 fourth-quarter earnings of $842 million compared with $941 million during the same quarter in 2002. Lenders now are facing lower borrower demand for mortgages...