Morgan Stanley Sued Over Risky Loans to Black Home Buyers

Morgan Stanley Sued Over Risky Loans to Black Home Buyers

Bloomberg BusinessWeek (10/16, Van Voris, 1M) reports, "Morgan Stanley was accused in a race-bias lawsuit of urging a home lender to target black borrowers with high-risk mortgages so the bank could profit from buying and securitizing the loans." On Monday, five African-American "Detroit-area homeowners sued Morgan Stanley today in New York for violating civil-rights laws covering housing and credit." The suit alleges Morgan Stanley "encouraged New Century Financial Corp., the bankrupt mortgage company, to make 'combined-risk loans' to borrowers who couldn't pay." These high-interest loans resulted in default and foreclosure.