Washington Mutual Inc said on Monday that most U.S. housing markets are weakening, creating a “near perfect storm” that may force the largest U.S. savings and loan to set aside more money for bad loans.
Chief Executive Kerry Killinger said the thrift may set aside $500 million more for loan losses than the $1.5 billion to $1.7 billion it had forecast in July. Any increase would be Washington Mutual’s fourth this year.
A $500 million change since July? Wow!
It also plans to move some “nonconforming” loans, which don’t meet Fannie Mae and Freddie Mac purchase requirements, to loans held for investment from loans held for sale. Killinger expects this to result in a $200 million write-down, equal to 15 cents per share according to analysts.
It sounds like the couldn’t sell the loans so they had to keep them.
I guess that’s the banking equivalent of renting your house if you can’t sell it. Or keeping your condo conversions as apartments if you can’t sell them as condos.