Tuesday, April 03, 2012

Fed Targets Morgan Stanley Over Home Loans

The Federal Reserve on Tuesday said it would seek damages from Morgan Stanley due to "a pattern of misconduct and negligence" in the handling of home loans by one of the investment bank's mortgage servicing units.

The Fed wants Morgan Stanley to review foreclosures overseen by the mortgage-servicing unit to ensure documents were not mishandled and borrowers didn't wrongfully lose their homes as a result of improper documentation.

The Fed's action seeks unspecified monetary damages in addition to changes in mortgage-servicing practices. Morgan Stanley acknowledged it would be responsible for any monetary penalties assessed by the Fed.

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