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
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