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Thursday, November 8, 2007

Why Washington Mutual Got Walloped

November 08 2007
In addition to the deteriorating housing market, the lender was hit by news of an investigation by the New York AG. S&P rates the shares sell. Conditions in the thrift and mortgage industry, for which Standard & Poor's Equity Research has a negative fundamental outlook, took a turn for the worse on Nov. 7. At an investor conference, Washington Mutual announced it believes industrywide mortgage originations will fall to $1.5 trillion in 2008, 25% below the consensus forecast of $2 trillion for 2008, and 37.5% below projections for 2007. The stock weakened on the news. Later in the day, New York State Attorney General Andrew Cuomo announced he has extended his investigation of inflated appraisals of home loans. He had already accused WaMu of pressuring a subsidiary of First American Financial to supply erroneous appraisal information for homes for which WaMu was to write loans.

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