Fed Orders Review Of Thousands Of Morgan Stanley Foreclosures

Yesterday, Morgan Stanley finally finished selling off its one remaining unit involved in servicing subprime mortgages. Today, the Federal Reserve gave Morgan Stanley some unwelcome news: It must review thousands of foreclosures processed by that now-former subsidiary.

Saxon Mortgage Services was only the 34th largest servicer in the country, but it still managed to foreclose on more than 60,000 homes — more than a quarter of all the home loans it serviced — in 2009 and 2010.

But as you’ve probably guessed by now, it looks like not all of those foreclosures may have been done in a by-the-book manner.

Among the allegations made by the Fed against Saxon are claims that employees filed foreclosure documents without verifying their contents and that they filed mortgage documents with courts that were not properly notarized.

According to the Fed statement, the reviews are meant to “provide remediation to borrowers who suffered financial injury as a result of wrongful foreclosures or other deficiencies identified in a review of the foreclosure process.”

Even before selling off Saxon, Morgan Stanley had agreed to pay any civil financial penalties assessed against the subprime servicing unit.

Former Morgan Stanley Unit Cited for Foreclosure Violations [WSJ.com]


Edit Your Comment

  1. r-nice says:

    Sweet castle. I wonder how this review process will take.

  2. homer2324 says:

    it’s just too bad that those kicked out of their home probably don’t have the means to file lawsuit against morgan stanley, even if MS was found to be at fault.

    • Lyn Torden says:

      Is someone confusing a fair and equitable judicial system with the US judicial system?

  3. Conformist138 says:

    A loan provider had to foreclose on a QUARTER of the loans they made?! There is no way that is totally legit. Either there were some shenanigans when the loans were issued or when the houses were foreclosed (or both), but no competent lender ends up with a 25% default rate- someone screwed up somewhere.

  4. Robofish says:

    That castle looks like Enchanted Forest on rt 40… maybe I’m wrong though. But damn if it doesn’t remind me of it.