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Morgan Stanley settles mortgage probe with fine

dw.de | February 26, 2015

Morgan Stanley said Wednesday it had reached a "preliminary agreement" with US regulators to pay $2.6 billion (2.28 billion euros) in fines for its role in pushing the US financial system to the brink of collapse in 2008 and triggering a global recession.

It was the latest settlement between a major bank and the US Justice Department, which has launched investigations into a number of American financial institutions over the sale of mortgage-backed securities.

The settlement resolves claims the civil division of the Justice Department "indicated it intended to bring against the company," Morgan Stanley said in a securities filing.

Shady dealings with gullible customers
The mortgage industry's practices brought the US finance system to its knees in 2008, when millions of homeowners defaulted on their loans and had their homes repossessed by the banks.

Specifically, the probe focused on the company's due diligence on loans it purchased for securitization, its communications with ratings agencies as well as its disclosures to investors.

It also looked into the bank's handling of servicing and issues related to foreclosure, according to a November 2014 filing by Morgan Stanley.

While sizeable, the amount Morgan Stanley agreed to pay pales in comparison to the fine levied against Bank of America, which also profited from shady dealings with gullible customers.

That fine totaled $16.6 billion and marked the largest settlement in history between the US government and a company.

Regulators have also accepted payments by JPMorgan Chase and Citigroup in similar cases. In all, they have collected more than $35 billion in penalties.


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CFLA was founded by the Nation's Leading Foreclosure Defense Attorneys back in 2007 to serve the Foreclosure Defense Industry and fight pervasive Bank Fraud. Since opening our virtual doors, CFLA has rapidly expanded to become the premier online legal destination for small businesses and consumers. But as the company continues to grow, we're careful to hold true to our original vision. For us, putting the law within reach of millions of people is more than just a novel idea—it's the founding principle, just ask Andrew P. Lehman, J.D.. With convenient locations in Houston and Los Angeles, you can contact Our National Account Specialist and General Manager / Member Damion W. Emholtz at 888-758-2352 for a free Mortgage Fraud Analysis or to obtain samples of work product, including cutting edge Bloomberg Securitization Audits, Litigation Support, Quiet Title Packages, and for more information about our Nationally Accredited and U.S. Department of Education Approved "Mortgage Securitization Analyst Training Certification" Classes (3 days) 24 hours for approved CLE & MCLE Credit (Now Available Online).

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