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Morgan Stanley cutting 600 jobs, basing unit in Irving
 
 

Morgan Stanley cutting 600 jobs, basing unit in Irving

09:37 AM CDT on Wednesday, October 3, 2007

From Wire Reports

NEW YORK – Morgan Stanley said Tuesday it is cutting about 600 jobs and slimming down its mortgage business, after a credit crisis upended the home loan industry this summer and forced other investment banks into similar moves.

As part of a plan to fuse its three U.S. residential mortgage businesses into one subsidiary based in Irving, Morgan Stanley will close certain offices and cut 500 jobs in the U.S. and 100 in Europe – about 1 percent of its workforce.

Morgan Stanley said reshuffling these businesses will make the company more efficient and will provide the opportunity to profit once the industry recovers.

Morgan Stanley said it plans to merge Saxon Capital, Morgan Stanley Credit Corp. and Morgan Stanley Mortgage Capital Holdings and base the combined business in Irving. The company will keep regional centers in Fort Worth; Foothill Ranch, Calif.; Riverwoods, Ill.; and Tampa, Fla. Some offices will be closed, Morgan Stanley said.

"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 company's statement.

Two weeks ago, the Wall Street investment bank missed analysts' expectations for the fiscal third quarter and took a writedown of $940 million for corporate loans stuck on its books.

Making cutbacks "is the direction everybody is going," said Sanford C. Bernstein & Co. analyst Brad Hintz. "This is Wall Street voting with their feet about how rapidly the mortgage market is coming back. They are saying it is not coming back quickly."

The mortgage industry plunged into distress this summer as more borrowers missed payments on their home loans and investors soured on risky mortgage debt. That made it harder to sell home loans and forced dozens of lenders out of business.

Morgan Stanley joins retail and investment banks, including Bear Stearns Cos. and Lehman Brothers Holdings Inc., in revamping its mortgage business.

Shares of Morgan Stanley climbed $2.09, or 3.3 percent, to close at $66.10 Tuesday.

The Associated Press and Bloomberg News contributed to this report.




 

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