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Is WaMu Talking to JPM?

JPMorgan Chase & Co. is talking to Washington Mutual here about possibly buying the nation's largest thrift, according to industry sources.

One source close to WaMu said, "There's a lot of suits walking around the hallways" at the lender's headquarters in Seattle.

If the two wind up combining forces, the resulting servicing platform would have $1.37 trillion in housing receivables, ranking third nationwide behind Countrywide Financial Corp., Calabasas, Calif., and Wells Fargo Home Mortgage, San Francisco, according to figures compiled by Mortgage Servicing News and the Quarterly Data Report. (Bank of America has agreed to purchase CFC, which would create a $1.9 trillion servicer. See related story.)

A WaMu/JPM combo would result in a company with a market share of 15.12%. (See table.) Among the nation's largest banks/investment banking firms JPM, so far, has emerged relatively unscathed by the subprime crisis.

In the fourth quarter it wrote down the value of its subprime-related collateralized debt obligations by $1.3 billion but still managed to post a profit for the quarter.

The JPM-WaMu rumors are not new. In years past, the two parties have engaged in sale talks, investment bankers said.

Another possible buyer of WaMu is Wells, sources said. All three lender/servicers - WaMu, Wells and JPM - said they do not comment on market rumors.

Among residential servicers, Chase Home Finance (JPM's mortgage unit) ranks fourth with $753 billion and WaMu fifth with $625 billion.

WaMu has a market cap (stock price times outstanding shares) of $11.5 billion. BoA agreed to buy CFC for just $4 billion.

Like many mortgage lenders, WaMu has been plagued by rising delinquency levels and credit losses as a result of the downturn in the housing sector. (c) 2008 Mortgage Servicing News and SourceMedia, Inc. All Rights Reserved. http://www.mortgageservicingnews.com/ http://www.sourcemedia.com/

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