“Friend of the family” with malicious intent

28 Oct

Over the weekend, the remnants of what was Washington Mutual officially switched over to a new title. Last year, WaMu went bankrupt and was sold the monstrosity that is JPMorgan Chase. Before Washington Mutual’s eventual buyout by Chase, their motto was “friWashington Mutualend of the family,” and in my experiences, they lived up to it. Apparently, there was a different side to the bank…

In researching the final days of the bank I’ve utilized since I was 15, I found that their downfall might have resulted from poor public relations. In the wake of the housing market crash, WaMu took on predator-like tendencies, targeting home buyers to borrow with an adjustable rate mortgage (ARM). Their justification for this was, “Pay less on your mortgage and take that vacation you’ve always dreamed of.” With the eventual housing market crash and the thousands of home foreclosures every day, I’m pretty sure that putting mortgages aside to pursue vacations is only a pipe dream. Essentially, the nontraditional ARM  tricked customers into borrowing with extremely low rates.  Then after a month, the payments soared to double or triple the amount.

Following a less-deceitful and more transparent plan might have benefited WaMu and their borrowers. Now, thanks to the ARM, WaMu and thousands of borrowers are out of business. It seems as if WaMu forgot that cheating their stakeholders would eventually come back and haunt them. This rule does not apply exclusively to banks; deceiving stakeholders is bad business anywhere. According to an article by the Seattle Times, many borrowers of WaMu felt taken advantage of because of tricky tactics and incomprehensible loan terms. This goes to show that WaMu wasn’t effectively communicating with its customers.

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