Isn't the rule of thumb 10% down the point to cut and run, or is that old school?
WaMu said it has cut ties to eAppraiseIT until it can investigate the situation."We have absolutely no incentive t o have appraisers inflate home values," the mortgage lender said in a statement. "Inflated appraisals are contrary to our interests. We use third-party appraisal companies to make sure that appraisals are objective and accurate."
However, analysts at Keefe Bruyette & Woods were less sanguine about Washington Mutual's outlook and suggested a bleak scenario.
"We believe that the only reason that Washington Mutual was not named as a defendant in the suit is strong federal pre-emption laws for thrifts preclude success for state lawsuits against Savings and Loan institutions," the analysts said.
"In our view, the lawsuit raises an issue of considerable risk to Washington Mutual: that poorly performing securitized loans will be put back to WaMu (WM) from bondholders on the basis of fraudulent appraisals and WaMu would be forced to put bad loans back on its balance sheet," the analysts concluded in their research report Friday.
So... here's a tip: As the Fed cuts, look for commodities of every stripe to soar, the dollar to fall, and truly outrageous stock market bubbles to form in the countries of our largest trading partners. Will the average American ever figure out the connection between the price of gas – and just about everything else – and the size of Wall Street's write-offs and Congress' budget deficits? Probably not in my lifetime.
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