Morgan Stanley announced this morning the restructuring of its residential mortgage business in response to current market conditions and long term growth strategies, resulting in the displacement of 600 employees.
The restructuring is aimed to reduce loan origination to levels that meet existing market demand, while integrating the firms multiple mortgage ventures under a single platform.
The changes leave roughly 500 employees without jobs in the United States, and about 100 employees in Europe without work, including 90 from UK mortgage subsidiary Advantage.
“The industry has experienced a fundamental paradigm shift that will require banks to rethink product offerings and capital structures and to provide greater transparency to investors in securities backed by pools of mortgages,” Bruce Witherell, global co-head of the residential mortgage business, said in the statement.
Morgan Stanley currently operates three separate mortgage businesses in the United States, including a wholesale subprime origination unit, a retail prime origination division, and a correspondent business, which it plans to consolidate into a fully integrated mortgage company based out of Irving, Texas.
“The consolidation of our mortgage businesses will result in increased efficiencies and superior service for our clients. It will also best position the Firm for growth when opportunities present themselves in the future,” said Tony Tufariello, Managing Director and Global Head of Securitized Products
“Morgan Stanley remains committed to building the leading vertically-integrated mortgage business and growing our Saxon Capital servicing operations despite the cyclical downturn in the mortgage markets, he added.”
Morgan Stanley purchased subprime mortgage lender and servicing unit Saxon Capital Inc. for $705 million last December.
It’s been reported that 200 jobs were lost at a Saxon Capital data center near Richmond, Virginia, representing nearly the entire staff aside from a select few.
One ex-employee said, “It was all of the Virginia office of Saxon. Office closed, only staff remaining [include a] ghost crew and IT who will most likely be gone after they have the Texas office fully operational.”
“Account Managers, AE’s, Underwriters, Closer, Funders, Post Closers, Retail and Wholesale are gone. There were also staff reductions in CA and a few in Tampa which was newly opened.”
Shares of Morgan Stanley were up $2.05, or 3.20% to $66.06 in midday trading on Wall Street.
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