Saxon Mortgage to Lay Off 680 Workers
A group including $78 billion-asset M&T and $9 billion-asset Sterling Financial ratcheted up their servicing portfolios by a fifth or more in 2011. Nonbanks are scooping up problem loan servicing, but banks still have a distinct funding advantage.March 20
Saxon Mortgage, a servicing firm owned by Morgan Stanley (MS), is shuttering two of its Texas processing facilities and laying off roughly 680 of its workers.
The Dallas Business Journal reported on its website Thursday that Saxon plans to close facilities in Irving and Fort Worth and will start laying off workers in late May. The layoffs are expected to continue through the end of the year, the company said in a filing with the Texas Workforce Commission last week.
Earlier this week, Morgan Stanley sold the bulk of Saxon's assets to Ocwen Financial (OCN) for $73.8 million, but that deal did not include Saxon employees. With the sale, Morgan Stanley has largely exited the servicing business.
The planned layoffs cap an eventful stretch for Saxon and Morgan Stanley. Apart from the sale, Morgan Stanley was hit this week with an enforcement order from the Federal Reserve alleging that Saxon engaged in a "pattern of misconduct and negligence in residential mortgage loan servicing and foreclosure processing" during 2009 and 2010.
The order requires Morgan Stanley to hire an independent consultant to review Saxon's practices and make restitution to any borrowers "who suffered financial injury as a result of wrongful foreclosures."