July 22 (Bloomberg) -- Washington Mutual Inc., the biggest U.S. savings and loan, reported a $3.3 billion second-quarter loss as tumbling home prices left a record number of borrowers unable to keep up with mortgage payments.

The loss of $6.58 a share compared with net income of $830 million, or 92 cents a share, a year earlier, the Seattle-based company said today in a Business Wire statement. The cost of uncollectible loans jumped 58 percent to $2.2 billion from the previous period.

Chief Executive Officer Kerry Killinger, stripped of the chairman position last month, is facing increased pressure from investors after the stock dropped 87 percent over the past year and his peers from Citigroup Inc. and Wachovia Corp. were fired. Washington Mutual has been forced to raise capital, reduce the size of its home-lending business and slash 10 percent of its workforce amid mounting losses from subprime loans and adjustable-rate mortgages.

``So much of their business has been in the lower-quality loans,'' said Stephanie Hall, an analyst at Gradient Analytics, a research firm in Scottsdale, Arizona. The mortgages are ``higher risk relative to other large-capitalization banks.''

The company rose 34 cents or 6.2 percent to $5.82 at 4 p.m. today on the New York Stock Exchange and has tumbled 57 percent this year.

Provisions for losses increased to $5.9 billion from $3.5 billion in the first quarter. Hall said she expects $9.6 billion in bad loans over the next 12 months.

Other Earnings

U.S. foreclosure filings rose 53 percent in June from a year earlier, with one in every 501 U.S. households in some stage of the process, according to RealtyTrac Inc.

Washington Mutual, known as WaMu, was the last of the six biggest U.S. lenders to announce quarterly results. Wachovia Corp., the fourth-biggest, reported an $8.9 billion loss earlier today, slashed its dividend 87 percent and announced $2 billion of cost cuts. Citigroup Inc. recorded a $2.5 billion loss last week, while JPMorgan Chase & Co., Bank of America Corp. and Wells Fargo & Co. reported drops in profit.

WaMu has $3 billion of losses in the prior two quarters as foreclosures climbed to a record. In California, home to half of the company's loans, one in every 192 householders was in some stage of foreclosure last month, 2.6 times the national average, according to RealtyTrac.

(The company plans to discuss results at 5 p.m. New York time. Dial +1-888-324-6919.)

To contact the reporter on this story: Ari Levy in San Francisco at alevy5@bloomberg.net

Last Updated: July 22, 2008 16:18 EDT