Market Watch reports that Morgan Stanley is laying off 600 employees in its mortgage-related divisions as it consolidates mortgage operations in light of recent market changes. Morgan Stanley owns and operates Saxon Capital which is one of the few remaining subprime lenders in the market place. The move includes 500 state-side jobs and corroborates the recent implode-o-meter subscriber email detailing branch closings at East Coast Saxon offices.
From the article:
Morgan Stanley unveiled plans Tuesday to scale back its residential mortgage business, including cutting 600 jobs, as the investment bank responds to recent turmoil in the real-estate and home-loan markets.
…
“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,” said Bruce Witherell, managing director and global co-head of the residential mortgage business at Morgan Stanley.
I have to say that from a corporate perspective limiting exposure to subprime loans in this market is a key strategic win. As a front-liner I can tell you that subprime is looking, well, more subprime everyday. The people looking for financing continue to be less credit worthy, more stretched financially, and in general terrible credit risks for banks. Saxon, Citi and other remaining subprime lenders who have made fewer changes to their subprime product mix compared to mortgage banks are going to continue to be susceptible to poor portfolio performance. Every day that these guys stay open is another day that poor quality loans are moving through the system.
Saxon has been a last resort type bank where files that have been declined at multiple other institutions are sent to Saxon for a last-ditch shot at being approved. That is never a good distinction for a mortgage bank to have; especially in a deteriorating market place.
Entries (RSS)