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WaMu's Credit Losses, Default Estimates Rise.(Managing REO)(Financial report)
Byline: Ted Cornwell
Seattle-Washington Mutual lost $3.3 billion in the second quarter as credit losses continued to pile up, forcing the company to boost its loan loss reserves by $3.7 billion.
That brings WaMu's total loss provision to $8.46 billion as of June 30.
The company's home loan business accounted for $1.3 billion of the total loss, though much of the mortgage-related loss provisioning is actually included in WaMu's retail banking group.
The company said it changed its assumptions for determining loan loss provisions to reflect "continued declines in housing prices nationwide." Nonperforming assets rose sharply from 2.87% of the company's assets at the end of the first quarter to 3.62% at the end of the second.
WaMu's projections for home price depreciation are more pessimistic than those of some others in the banking industry. John McMurray, chief enterprise risk officer, said during the company's conference call that WaMu anticipates a peak-to-trough decline in home prices of about 30% nationally.
"We expect the worst rate of decline to be reached some time during the middle of this year, and then we expect house prices to ...
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Source: HighBeam Research, WaMu's Credit Losses, Default Estimates Rise.(Managing REO)(Financial...