It’s been more than five years since the mortgage crisis began, but the fallout keeps coming. Remedies for risky loans and questionable behavior are still being pursued in legal actions.
The American Civil Liberties Organization filed suit against Morgan Stanley (NYSE:MS) today for violating the Fair Housing Act and the Equal Credit Opportunity Act, reports The New York Times. The suit alleges that Morgan Stanley used predatory loan practices to sell mortgages to African-American borrowers who couldn’t afford them. The loans were produced through New Century Financial with money loaned by Morgan Stanley.
The action is the latest in a series of suits against large banks. They’ve come from all manner of parties, including investors and both federal and state agencies.
Last week, federal prosecutors filed suit against Wells Fargo (NYSE:WFC) for making “reckless” loans that ended up costing the government. A month ago, the Department of Justice sued Bear Stearns, now a part of JPMorgan Chase (NYSE:JPM), for misconduct in the packaging of mortgage securities.
Morgan Stanley has already paid $102 million to settle an investigation by Massachusetts. The ACLU is hoping that this suit will be certified as a class action.
More about housing and lenders:
- U.S. Government Sues Wells Fargo for Mortgage Fraud
- Housing Market Looks Like It’s Rebounding
- Los Angeles Sues U.S. Bancorp for Being ‘Slumlord’