Morgan Stanley said today it is restructing its mortgage business amid what company executives characterized as a "fundamental paradigm shift" in the mortgage business. The restructuring effort will result in a net reduction-in-force of approximately 500 employees in the United States and approximately 100 employees in Europe including 90 from Morgan Stanley's UK mortgage subsidiary, Advantage, the company said in a press statement. Bruce Witherell, managing director and global co-head of the investment bank's residential mortgage business, said that banks will need to "rethink product offerings and capital structures, and to provide greater transparency to investors in securities backed by pools of mortgages." "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. 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, manaing director and global head of securitized products. A source I spoke with characterized the changes as positive for Saxon's servicing operations, and affirmed Tufariello's remarks regarding Morgan Stanley's commitment. "We're hiring like crazy over here," the source noted. Morgan Stanley said its new U.S. residential platform will be headquartered in Irving, Texas and will retain the firm's existing regional operations centers in Ft. Worth, Texas; Foothill Ranch, California; Riverwoods, Illinois; and Tampa, Florida. Several offices will be closed as part of the restructuring with operations transferred to Texas. (For those that don't know, I happen to live in the DFW area. This area has clearly become the new center of the US mortgage universe, especially amid the industry downturn.)