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Washington Mutual Sells $10 Billion in 1/4-Coupon Mortgage Backed Securities

SEATTLE, May 7, 2003 (BUSINESS WIRE) -- Washington Mutual, Inc. (NYSE:WM) announced today that it has reached a significant milestone with year-to-date sales by its subsidiaries of more than $10 billion in Fannie Mae 1/4-coupon mortgage backed securities (MBS).

"This is a tremendous development and indicates the capital markets are ready to evolve toward more efficient MBS execution," said Marito Domingo, executive vice president of Capital Markets for the Home Loans & Insurance Services Group at Washington Mutual. "The greater acceptance of 1/4-coupon MBS demonstrates their viability in the marketplace."

A 1/4-coupon more closely aligns the MBS coupon with the rate on the underlying mortgage loans, resulting in greater predictability for prepayment speeds. This, in turn, delivers better value to the MBS investor.

The ability to sell MBS in 1/4-coupon increments also allows for easier management of excess servicing fees and, ultimately, a servicer's mortgage servicing rights (MSRs). The prevailing industry practice of selling MBS in 1/2-coupon increments typically requires the servicer of the mortgage loans to retain excess servicing fees, which results in unnecessary volatility for the servicer.

"A 1/4 coupon MBS is a natural financial evolution in a market that has grown increasingly broad and sophisticated," continued Domingo, "and it expands the range of alternatives for the MBS investor."

About Washington Mutual

With a history dating back to 1889, Washington Mutual is a national financial services company that provides a diversified line of products and services to consumers and small- to mid-sized businesses. At March 31, 2003, Washington Mutual and its subsidiaries had consolidated assets of $276.97 billion. Washington Mutual currently operates more than 2,500 consumer banking, mortgage lending, commercial banking, consumer finance and financial services offices throughout the nation. Washington Mutual's press releases are available at www.wamu.com.

SOURCE: Washington Mutual

Washington Mutual
P. Kevin Horn, 206/377-3268
kevin.horn@wamu.net
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