WaMu Honored Broken Locks

Meanwhile, during a conference call with investors and analysts, Washington Mutual acknowledged more details about the loan pipeline problems that led to a shake-up in the senior management of the company's mortgage group in the third quarter.Kerry Killinger, chairman and chief executive officer of WaMu, said that as a result of both interest rate volatility and operational problems, some WaMu loan applications were not funded during the rate-lock period through no fault of the consumer. He said WaMu honored the interest rate locks despite the rising rate conditions, which caused WaMu to sell the loans at a loss, as previously disclosed. In addition, problems with the "timeliness" of information flows about the mortgage application pipeline led to insufficient hedging of the interest rate risk in the hedging. Mr. Killinger said WaMu is now confident that those operational problems have been corrected.