Industry News

Morgan Stanley accused of discriminatory lending policies

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Policies imposed by Morgan Stanley on its wholesale mortgage lending subsidiary discriminate against minorities, a complaint to federal regulators alleges -- the first time such charges have been leveled against a Wall Street investment firm over the securitization and sale of mortgage loans on the secondary market. Morgan Stanley is accused of redlining by establishing high minimum loan amounts in programs offered by its subsidiary, Saxon Mortgage Inc., and not offering those programs for properties on American Indian reservations. Morgan Stanley has allegedly restricted Saxon Mortgage from making some types of loans in rural Alaska and Puerto Rico, Guam and the U.S. Virgin Islands. The accusations are made in a complaint by the National Community Reinvestment Coalition to the Department of Housing and Urban Development (HUD) and the Securities and Exchange Commission (SEC). The complaint "recognizes the important role that Wall Street plays in providing liquidity to the...