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Washington Mutual, the largest U.S. savings and loan, Monday said it is putting in place new standards to be used by mortgage brokers with which it does business.
WaMu [WM
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] said the new standards are intended to help borrowers fully understand the terms of their loans and the total compensation being paid to brokers.
The initiative comes after U.S. home loans in foreclosure rose to a record high in the second quarter, according to the Mortgage Bankers Association, marking the third straight quarter in which the foreclosure rate rose to a record-setting level.
Many homeowners have stumbled on their adjustable-rate mortgages, prompting concerns that consumers are not adequately informed about mortgage loan terms and fees.
As part of the new broker standard, WaMu said it will require evidence that brokers have made disclosures to borrowers early in the mortgage application process.
A WaMu representative will also attempt to call every borrower working with a broker prior to a loan closing to review terms directly with the borrower, it said.
The thrift last month cut 1,000 jobs in an effort to cope with slumping housing demand. It is merging its subprime lending business, which focuses on borrowers with weak credit, into its prime business, eliminating the separate sales force.
Shares of WaMu were down 2 cents at $35.39 in early trading on the New York Stock Exchange.
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