The National Community Reinvestment Coalition said Monday that it filed a civil rights complaint against Morgan Stanley and some of its subsidiaries, including Saxon Mortgage Inc.
According to the advocacy group, Morgan Stanley and subsidiaries discriminated against minority borrowers seeking home financing through an illegal practice referred to as redlining.
Redlining is defined as the outright refusal to extend credit, lend, sell, or provide insurance to people in a given area.
Usually high-risk, geographical areas such as crime-ridden inner-cities are avoided completely despite the fact that certain individual clients may be fully qualified.
“Morgan Stanley and Saxon intentionally structured underwriting to deny homeownership” to qualified African-American, Latino and other minority applicants, said John Taylor, president of the coalition.
Ironic, considering seemingly everyone who applied for a home loan got one over the last few years, as evidenced by our current mortgage crisis.
The coalition has asked the Department of Housing and Urban Development and the Securities and Exchange Commission to investigate the matter in the hopes of barring Morgan Stanley “from selling, buying, investing in, serving as a trustee, or participating in any pooling and servicing agreements involving mortgage loans underwritten using the discriminatory loan programs…”
The loan programs in question include ScorePLUS and ScorePLUS2, which were both cited for limiting lending to select areas in the country and having unreasonabily high minimum loan amounts.
The complaint was brought under the Fair Housing Act of 1968.
Morgan Stanley responded by expressing doubt that the claim carried any weight, but said it would review the complaint.
“The mortgage lending policies of Morgan Stanley and its affiliates do not discriminate on the basis of race or national origin,” bank spokeswoman Jennifer Sala said. “We are confident the allegations will prove meritless.”