Mary Salzer

  

There are two kinds of Long Beach Mortgage Loans....that is really confusing, however, the ones that were originated prior to WAMU being so prevalent in the situation, i.e. owners of Long Beach Mortgage and the others...the ones that they made when they became the de facto owners of Long Beach Mortgage. There was an interesting period of time there....and WAMU divested a lot of them into the Deutsche and Bear Sterns Pools. This was done in 2004 and 2005...then they started holding a whole bunch of them and retained the servicing....

Some of these loans are quite awful, and the more awful they are the more prone they are to modify them. They also have a variety of pools and investors to answer to in those pools.

Now the actual WAMU loans are not as adaptable and as easy to modify for them due to the way those pools were sold out and insured. So there are really 3 different types of WAMU First Mortgages that are wafting around out there. We have not seen their Option ARMS yet, but those will make about 4 different types of First Mortgages that they will have to deal with.

WAMU is very concerned about political "correctness" and as such are very proactive on the worst of the worst from Long Beach Mortgage products and still proactive on all of the other products, but not as prone to do long term modifications or for that matter really dump the rates on them. They will take the conservative position and one that no one can really find fault with if it were to be investigated.

So I am not surprised with the 7.50% interest rate for 2 to even 5 years on the modification positions that they are taking on the less aggressive products. They are also tailoring the work outs to the income streams of the borrowers far more so than others.