According to the seattlepi.com story, SEC starts inquiry of WaMu, by reporter Bill Virgin; "The Securities and Exchange Commission is looking into Washington Mutual Inc.'s mortgage lending practices, deepening a controversy over whether the Seattle-based company pressured appraisers to come up with inflated values to justify making home loans."
The appraisal controversy, which has figured in several shareholder lawsuits, is one more headache for a company that is already dealing with the slumping housing and mortgage markets. WaMu recently announced thousands of layoffs, concentrated in its home loan business; a write-down in that business that will lead to a fourth-quarter loss; and a 73 percent cut in the dividend. Its stock price is down 68 percent from its close on the last day of trading in 2006. Shares closed Thursday at $14.67.
According to the Wall Street Journal story SEC Probes WaMu on Appraisals :
The SEC's inquiry is in its infancy and involves several possible issues, including whether WaMu accurately disclosed to investors of mortgage-backed securities how its loans were appraised as well as whether the company properly accounted for its loans in financial disclosures to investors of the company, according to the people familiar with the situation.
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