Morgan Stanley said Wednesday that it will lay off 1,000 employees in the U.S. and the UK as it moves to retrench its ailing residential mortgage business. Citing "continued deterioration in the mortgage markets," the firm said it will close its UK-based mortgage business, Advantage Home Loan, while it cuts back on its U.S. footprint as well. “Given the continued dislocation in the mortgage markets, we have restructured our residential mortgage business to ensure we are appropriately positioned for the environment going forward,� said Anthony Meola, COO of Morgan Stanley's U.S. residential business. The company said it will continue to service mortgage loans via Fort Worth, Texas-based Saxon Mortgage Services, Inc.; it will also still offer residential mortgages to its retail brokerage clients through Morgan Stanley Credit Corporation. Some quotes from Bloomberg:
"They should have gotten out of it two to three years ago, but they were making too many fees like everyone else in the business," said Malcolm Polley, chief investment officer at Stewart Capital Advisors in Indiana, Pennsylvania, who manages $1 billion, including Morgan Stanley shares. "I would not expect them to be the first ones or to be the last ones to do this." "When the mortgage markets shut down you need to be nimble and lay off some of these workers," said William Fitzpatrick, who helps manage $1.8 billion at Optique Capital Management and last month sold 300,000 Morgan Stanley shares. "This is typical of the cycle."
It's a never-ending source of amusement to hear money managers opine on the mechanics of the mortgage industry. But maybe that's just those of us here at HW.