Loans Originated Without Sufficient Funds: Wamu
Mortgage firm Washington Mutual Inc. lost a round in court. "The Department of Labor has told Washington Mutual Inc. to rehire a loan executive, ruling that the company fired her in retaliation for blowing the whistle on certain mortgage practices."
"Theresa Hagman was vice president in the custom construction disbursement loan fulfillment center in California. Hagman noticed a sharp increase in loans on which borrowers defaulted, mainly because of insufficient due diligence during origination to determine whether there were sufficient funds to complete home construction."
"Hagman 'raised concerns that the bank was not following its written policies as required by law and therefore loans were being funded and underwritten without proper documentation or other safeguards,' the Labor Department ruling says. 'As a result, the bank, and consequently its shareholders, were put at financial risk' because Wamu was violating a number of federal laws and regulations on banking."