Two weeks ago I had never heard of Saxon Mortgage. Now I have been notified that I am a valued customer and they will be the new servicer for my Novastar mortgage. Saxon Mortgage Services Inc., a unit of New York-based Morgan Stanley, will acquire the rights to do billing and collection on home loans from NovaStar, the Kansas City, Missouri-based mortgage company said in a statement today. The transaction doesn’t include any of NovaStar’s operations.
Morgan Stanley is the latest bank to scale back its mortgage business amid rising defaults and falling prices in the U.S. real-estate market. They have consolidated mortgage operations and separated 600 more employees from their jobs. However their recent acquisitions do not appear to be scaling down in the least.
Morgan Stanley has three mortgage businesses in the U.S. Saxon Capital, which services and offers subprime loans through brokers; Morgan Stanley Credit Corp., a retail originator of prime loans; and Morgan Stanley Mortgage Capital Holdings, an aggregator of loans purchased from so-called correspondent lenders.
Morgan Stanley bought Saxon for more than $700 million in December of 2006. The price paid for Novastar servicing rights was $175 million. The sale is tentatively scheduled to be completed November 1, 2007.
I don’t know whether the transactions taking place are part of the bail out of subprime lenders, but Morgan Stanley seems to have entered the fray with sword drawn. Morgan Stanley said that it suffered net trading losses on 13 days in the quarter, including that $390 million no-good day in early August. It also said that its trading losses exceeded its value at risk, a barometer of exposure to potential trading losses, six times during the quarter. Let’s see if they can also keep their shield raised.
In the meantime, Saxon provided the notification that they would be the new servicer effective November 1, 2007. After research, the sale hasn’t closed yet and won’t be completed until November 1, 2007. Are they jumping the gun a little, or has Novastar lost the servicing rights whether the sale closes or not? It has me more than a little concerned.
Timothy Blake and Jen provide the most detailed personal finance blog ever, covering major bank complaints, debt settlement scams, and the mortgage crisis. Use Super-Search to find anything, download from the document library and research 6-in-1 personal finance