Morgan Stanley Sued for Foreclosure Fraud

By now it should be clear that the extent of fraud permeating the residential foreclosure business is not limited to a handful of bad actors.  Just as Bank of America now faces a putative class action suit alleging it wrongfully and fraudulently foreclosed on homeowners, Morgan Stanley & Co must respond to similar allegations that the financial services giant disregarded procedural safeguards for borrowers when it bundled home mortgages into securities for resale to other institutions.

The suit, brought in federal court in New Jersey, claims that Morgan Stanley and its services routinely brought foreclosure proceedings without holding the necessary rights as mortgagee or assignee.  The suit also alleges that the firms failed to properly review the documentation supporting the foreclosure actions and accuses the firms of fraud, breach of contract, and breaches of fiduciary duties, among other claims.

Among the relief plaintiffs seek include dismissal of the foreclosures pending against class members, a declaration that their mortgages are void and unenforceable, declaratory and injunctive relief rescinding or reforming the mortgages to conform to class members reasonable expectations of the loans, actual and punitive damages, and attorneys’ fees and costs.

Lawyer for the plaintiffs, Lawrence Friscia said of the financial services firm “Morgan Stanley suffers from a fundamental institutional breakdown uniformly harming its mortgage borrowers.”  In its rush to acquire and repackage mortgages for sale Morgan Stanley completely ignored the potential for significant damage or its carelessness, including wrongly ousting homeowners from their homes.

photo courtesy of respres via Flickr

11 comments

Brittany Dudas
Brittany D.5 years ago

Why am I not surprised?

K s Goh
KS Goh5 years ago

Thanks for the article.

Bon L.
Bon L.5 years ago

Thanks for the info.

Melissah Chadwick
Melissah C.5 years ago

thanks

Kaye S.
Rev. Dr. Kaye S.5 years ago

One needs to always be alert.

Robert O.
Robert O.5 years ago

Surprise, surprise.

Nyack Clancy
Nyack Clancy5 years ago

Its about time lawyers get back to work- PLENTY of work for them

Michael Kirkby
Michael Kirkby5 years ago

It's about time we went after these blankety blanks. Of course, let's take it a step further by prosecuting Barney Frank who was instrumental in browbeating and bullying Wall Street and the Republicans under Bushy Boy into lending sub primes to people who had no equity for the most part let alone a job to pay for the mortgage in the first place. Let's prosecute everyone involved. Of course it does speak to human nature doesn't it; wanting something for nothing; something free?
The sad part is that now in a lot of neighborhoods the drug barons set up shop using these empty houses for distribution places. Hmm.