WaMu: REO Costs $1B
Washington Mutual disclosed in its second-quarter financial report that the level of its foreclosed asset expenses for real estate-owned will increase to "approximately $1 billion for the year."
In prepared remarks explaining the company's second-quarter results, chief financial officer Tom Casey said the added REO expense will contribute to expenses related to WaMu's overall "restructuring and resizing costs."
WaMu now expects that total "non-interest expense" for 2008 will be in the range of $9.2 billion and $9.4 billion.
John McMurray, WaMu's chief enterprise risk officer, said that home loan credit problems have steadily migrated across the portfolio, starting with subprime loans, then spreading to home-equity loans and option ARM products.
"We expect other prime loans, which are mostly five and seven year hybrids, to follow option ARMs closely in this timing, but don't anticipate they will experience the same level of delinquencies," he said.
WaMu's total net charge-offs in the second quarter increased to $2.2 billion from $1.4 billion in the first quarter. (c) 2008 Mortgage Servicing News and SourceMedia, Inc. All Rights Reserved. http://www.mortgageservicingnews.com/ http://www.sourcemedia.com/