14 Feb, 2008
Mortgage Strategy staff
Advantage has closed its doors to business.
Mortgage Strategy can exclusively reveal that Morgan Stanley, the
specialist lender's parent company, informed Advantage staff
this afternoon that the business would cease trading within hours.
One source says: "Staff were told that as of 5.30pm today
there would be no more business and no more Advantage.
"There was a meeting at 3.30pm today and this was announced
by Morgan Stanley."
Advantage pulled its Homebuy and Flexishare products in December
but David Connolly, director of marketing and products, insisted at
the time that the ranges would return in 2008.
A spokeswoman for Morgan Stanley says the US investment bank also
plans to scale back its US residential business.
In a statement issued this evening, it says it will discontinue
Advantage and that approximately 1,000 employees in the US and the
UK will be affected by a restructure of its residential mortgage
Anthony Meola, chief operating officer of Morgan Stanley's US
residential business, says: "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."
Morgan Stanley will continue to service mortgage loans in the US
through its Saxon Mortgage Services platform, based in Fort Worth,
And the bank will still offer residential mortgages to its retail
brokerage clients through Morgan Stanley Credit Corporation.
It is understood that Advantage staff are now in a three month
consultation period and have been paid two months' salary. If
they remain with the firm for the three month period, they are
expected to receive a further two months' pay.
Morgan Stanley is expected to retain the shell of the Advantage
business, with a view to sell it to a third party.
Talks with a number of parties are understood to have taken place,
with GE Money Home Lending tipped as the most likely buyer.
GE has a history of snapping up unwanted lenders, including a 20%
stake in Solent last May.
Advantage was unavailable to comment.