Washington Mutual, a leading US mortgage lender, today posted a quarterly loss following a rise in defaults on loans.
It reported a loss of $3.3 billion (€2.09 billion) in the three months to June, compared with a $830m profit last year. This was "significantly higher" than forecasts, according to Piper Jaffray which has lowered the stock to "sell" from "neutral".
Washington Mutual is labouring under rising defaults on its mortgage loan book and reported a $3.74 billion increase in loan-loss reserves to $8.46 billion.
It now forecasts total residential mortgage losses of $19 billion.
In a bid to try and save around $1 billion a year the company it plans to leave the wholesale lending market and eliminate all stand-alone home loan units, a move likely to result in 3,000 job losses.
Agencies