Boise Real Estate Blog

Why Washington Mutual (WAMU) Will Fail

I avoid short sales like the plague, but I am nonetheless doing one now.

The house is a nice 3BR, 2BA home in a desirable West Boise subdivision.

At the peak of the market a couple of years ago, it was probably worth around $212,000 to $215,000.

By the time my seller realized she wasn’t going to get rich after all, and after she had grown weary of $600/month negative cashflow and flaky tenants, we listed it at $184,500 last Spring.

It didn’t sell, she had to evict a nasty tenant who trashed the place, and it soon became apparent that her only option was a short sale because she was unable and unwilling to write a big check to get rid of it.

She owes $191,000, thanks to the “flexible” lending policies of Countrywide ($103,000 1^st loan), and WAMU ($88,000 2^nd loan).

Countrywide couldn’t care less about the problem because they can simply foreclose on their $103,000 1^st and wipe out WAMU’s $88,000 2^nd loan at foreclosure.

(Think of it as Countrywide buying the house for $103,000)

After several months, we finally managed to sell it for $165,000, subject to WAMU’s approval.

We’ve been in escrow for several weeks now, my seller has tried in vain to contact WAMU multiple times, and either gets disconnected phone numbers or gets Kumar (who claims his name is “Bob”) in the Bangalore Customer Service Call Center.

Kumar tells my seller they haven’t received her paperwork despite my seller having faxed it several times.

She has also mailed it in several times.

Can you spell i-n-e-p-t?

Today, the buyers withdrew their offer in utter frustration because we haven’t even been able to confirm that WAMU has received the lengthy list of required paperwork from my seller.

The buyers, understandably, would like to buy a home and have had enough of being stalled with no response from WAMU.

Fun, huh?

Now you know why I don’t do short sales.

And you also know why WAMU lost $3.3 BILLION in the 2^nd quarter of this year.

Granted, that’s not a lot of money, but if you lose $3.3 BILLION a quarter for a year or two, it starts to add up to real money.

My guess is that WAMU’s inability to find their paperwork and respond will end up costing them $88,000 on just this one deal when Countrywide forecloses.

And, if this is how they handle all of their delinquent loans, their days are surely numbered as a viable financial institution.

Kerry Killinger is the CEO of WAMU.

If you happen to read this, Kerry, how about giving me a call?

Think of it as an $88,000 phone call.

I’m here and I’d love to talk to you.

P.S.  This home went back on the market today.  If you’re interested in a great buy and are patient enough to wait on WAMU to respond, please contact me.

September 2nd, 2008 Posted in Inside Real Estate  Print This Post