Meanwhile, Washington Mutual chairman and chief executive Kerry Killinger says the federal guidance on nontraditional mortgages will have a "limited" effect on its payment-option ARM lending program, but he wants to see a level playing field with regard to federal- and state-regulated entities."For the guidance to be truly effective in safeguarding consumers, we do believe all mortgage lenders should be held to the same standards," the CEO told investors and analysts during a conference call on the company's third-quarter results [see previous item]. State regulators are expected to issue similar guidance in a couple of weeks. "We continue to evaluate the guidance," Mr. Killinger said. "However, based on preliminary analysis and initial discussions with our regulator, the Office of Thrift Supervision, while we expect some changes, the impact on the origination of the option ARM products in our Home Loans group appears limited." The giant thrift originated $37.2 billion of home loans in the third quarter, and 30% were option adjustable-rate mortgages. The average credit score is 707, and the loan-to-value ratio of the portfolio is 57%, Mr. Killinger said, adding that demand for hybrid ARMs has increased.

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