Lending money to nearly anyone who asked for it

WaMu Built Empire on Shaky Loans


... one mortgage four years ago raised eyebrows. The borrower was claiming a six-figure income and an unusual profession: mariachi singer.

Mr. Parsons could not verify the singer’s income, so he had him photographed in front of his home dressed in his mariachi outfit. The photo went into a WaMu file. Approved.

On one loan application in 2005, a borrower identified himself as a gardener and listed his monthly income at $12,000, Ms. Zaback recalled. She could not verify his business license, so she took the file to her boss, Mr. Parsons.

He used the mariachi singer as inspiration: a photo of the borrower’s truck emblazoned with the name of his landscaping business went into the file. Approved.


For WaMu, variable-rate loans — option ARMs, in particular — were especially attractive because they carried higher fees than other loans, and allowed WaMu to book profits on interest payments that borrowers deferred. Because WaMu was selling many of its loans to investors, it did not worry about defaults: by the time loans went bad, they were often in other hands.


By 2005, the word was out that WaMu would accept applications with a mere statement of the borrower’s income and assets — often with no documentation required — so long as credit scores were adequate, according to Ms. Zaback and other underwriters.

“We had a flier that said, ‘A thin file is a good file,’ ” recalled Michele Culbertson, a wholesale sales agent with WaMu.

Martine Lado, an agent in the Irvine, Calif., office, said she coached brokers to leave parts of applications blank to avoid prompting verification if the borrower’s job or income was sketchy.

Comment: WaMu is now owned by JPMorgan Chase.


  1. JP, are getting strict all of a sudden? I never saw anything before that said comments with links will be rejected. I've liked some of the links that on occasion people have made.

    Anyway, I appreciate your website. I really, really hope you're wrong and that things will get better. But on the other hand, I don't think we should bury our heads in the sand. I appreciate your posts about the devaluation of the dollar. Unfortunately, things could get much worse. I certainly have no idea, but I like your honesty in that you bring up hard topics. Let's hope it gets better, but it's good to realize that it could get worse.

  2. JP, I hope you don't reject this post. http://www.infowars.com/?p=6960

    It's a video by Pat Robertson where he makes predictions about the upcoming year. I'm not saying I agree or disagree with him or that I like or dislike him. All I'll say is that his comments, to me at least, are very intriguing. I don't quite understand what he's saying. He's talking about hyperinflation and oil going to $300 a barrel, but he also says the economy will recover. Huh? So which is it? Hyperinflation or a recovery?......The article and the website surrounding the video is a little odd and far out, but also interesting........

    If by some odd chance you don't reject this and it gets through, what does anyone else think of the video?

  3. At first I thought this was some weird, out of the way, bizarre website that picked up this story. I was wrong; this video and his predictions are all over the Internet. It was interesting to see that on other articles they bring up how he has often been wrong in his yearly predictions. I think he looked good at the beginning of this particular video because he replayed some from last year where he actually was correct.

  4. My last mortgage was with WAMU--I admit I did wonder why they were perfectly happy with a 42-45% debt to income ratio. Thankfully, I wasn't, and had things down below 20% within months after moving.

    Getting strict? Nah, just recovering a touch of sanity, I think. Hopefully the gov't doesn't work to prevent that any more than it already has.

  5. Bike Bubba, I think Mr. Anonymous was referring to JP getting strict, not the government or mortgage lenders. I along with others just noticed that all of a sudden he has a warning how anonymous posts with links will be rejected. I don't remember that from before. Maybe he didn't like the linking that people were doing???

  6. I'm getting spammed ... I;m OK with links if it is not spam

  7. Got it. Wasn't trying to accuse you of insanity, JP! :^)

    But I was accusing the government of the same, sad to say....


Any anonymous comments with links will be rejected. Please do not comment off-topic