WaMu Shake-Up Puts Focus on Cross-Sales and Operations

Two top mortgage executives of Washington Mutual are out of work after the lending giant decided to realign the way it conducts business.

Departing WaMu is Craig Davis, president of the thrift's home loans and insurance division, and Eric Spence, executive vice president of residential production.

WaMu named Deanna Oppenheimer as president of the company's banking and financial services group, and she will oversee the residential mortgage area.

In a statement released by the company, Ms. Oppenheimer said that WaMu's new management team "will be focused on accelerating household growth and cross-sales, driving operational excellence and taking advantage of the natural synergies that exist in the two complementary businesses."

Officially, Mr. Davis, 52, retired on Sept. 30, the day WaMu announced the realignment of its business units into two main areas - retail customers and commercial clients. Mr. Spence departed about a week earlier.

A company spokesman said Mr. Spence left "to pursue other opportunities."

The sudden retirement of Mr. Davis comes about three weeks after the company disclosed that it would book a loss in the third quarter in regard to mortgage loan sales because of problems in tracking loan commitments.

Asked whether Mr. Davis' retirement is related to the anticipated loss on loan sales, a WaMu spokesman said the company's realignment "makes it less likely that operational difficulties will occur in the future." The spokesman added, "Craig chose to retire."

He noted that the realignment process could take several months. He said at this time there are no plans to change the way the company funds loans. "There are no changes to the mortgage channels," he said.

Mr. Davis will remain as an advisor to WaMu until year-end.

One source familiar with the matter said the anticipated loss on loan sales represents a "major screw-up" at WaMu.

Another source close to the thrift noted that although WaMu will not make money on "gain-on-sale," he said the "lender will still earn money," adding that it might be able to adjust some of its servicing impairment accounts to make up for the hit. WaMu will report third-quarter earnings later this month.

WaMu has been a major buyer of other institutions the past four years and has grown rapidly because of the deals. However, some inside the company have complained that the acquisitions have created tremendous operational difficulties because of all the different lending and servicing platforms.

"When volumes are tremendous, the operational problems get covered up, but now that volumes have slowed, the multiple platforms become an issue," said a source.

WaMu serviced $727 billion of home loans as of June 30.

Joining Oppenheimer's team is 18-year mortgage industry veteran Tony Meola, who will serve as Executive Vice President over home lending sales and distribution, and Marito Domingo, who will continue to oversee capital markets. Mike Kula will continue as chief financial officer.

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