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Savings and loan offers to refinance subprime mortgages

Posted on February 13 By MLP Blog

Washington Mutual Inc., the largest U.S. savings and loan, offered to refinance $2 billion worth of mortgages at lower interest rates to help subprime borrowers meet rising payments on their homes.

Homeowners who anticipate higher payments on a Washington Mutual adjustable-rate subprime mortgage can apply for assistance, the Seattle-based thrift said Wednesday in a statement.

One of the options is a 30-year, fixed-rate loan that charges half a percentage point of interest less than borrowers would otherwise pay.

Washington Mutual has about $20.4 billion in subprime loans on its books, or about 9 percent of the $217 billion loan portfolio. Late payments on subprime loans industrywide reached a four-year high in 2006, according to the Mortgage Bankers Association, and foreclosure filings jumped 47 percent last month from a year earlier, RealtyTrac Inc. reported Wednesday.

"Customers who work with us to develop a payment plan are more likely to succeed in avoiding foreclosure and balancing other household financial obligations," David Schneider, president of Washington Mutual's home loans group, said in the statement.

The program is available only to subprime-mortgage customers whose payments are up-to-date. The company said it also has a group focused on helping borrowers who are behind on payments to keep their homes.

Shares of the thrift gained the most since May 2004, rising $2.04, or 5.1 percent, to $42.17. The stock has fallen about 5.1 percent in the past year, trailing the KBW Bank index's 7.4 percent gain.

Washington Mutual reported after the markets closed Tuesday that first-quarter profit declined 20 percent as losses mounted on subprime mortgages.

At the same time, the company reported a better net interest margin, the difference between what it pays for deposits and what it charges for loans.

Chief Executive Officer Kerry Killinger said Washington Mutual was hurt during the first quarter by "unprecedented deterioration in the subprime mortgage business," according to remarks prepared for a conference call Tuesday.

Found here.

This entry is filed under Lenders , Arm , Foreclosure , Refinancing , Subprime . You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response.
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