Morgan Stanley has kicked off the sale of its mortgage-servicing arm Saxon Mortgage Services, The Post has learned.
The investment bank has quietly reached out to a handful of prospective buyers, including Ocwen Financial Corp. to gauge interest in the mortgage company, which Morgan Stanley acquired at the top of the housing boom.
The bank’s decision to offload the mortgage processing subsidiary comes nearly two months after Goldman Sachs sold its mortgage servicing unit, Litton Loan Servicing, to Ocwen for about $600 million, — including $264 million in cash and the retirement of $337 million in debt.
Morgan Stanley is hoping Saxon, which weighs in at roughly the same size and profile as Litton, fetches a similar price, sources said. A Morgan Stanley spokesman declined to comment.
Morgan Stanley shelled out about $700 million for Saxon in 2006 as a part of a plan embarked on by many big investment banks. Those firms saw owning mortgage servicers as a fast way to bag more fees and get easier access to mortgages, which then could be turned into mortgage-backed bonds.
But then the housing markets imploded.
Morgan Stanley already has shelled out $2.5 million to pay fines related to Saxon overcharging homeowners, and buyers might be looking to have the investment bank guarantee the costs of any future foreclosure fiasco liability.