Black homeowners sue Morgan Stanley for racial discrimination

Plaintiffs say bank violated their civil rights, seek class action status

Several black homeowners have accused Morgan Stanley of violating their federal civil rights, and they’re taking the bank to court.

Today, the American Civil Liberties Union (ACLU) filed suit against the bank on behalf of five plaintiffs, all black homeowners from Detroit, saying Morgan Stanley offered large incentives to a subprime lender to originate mortgages that it knew were likely to go unrepaid. All the plaintiffs got loans from New Century Mortgage Corp., a subprime lender, and all those loans have collapsed. The suit claims that Morgan Stanley didn’t consider borrowers’ risk when approving loans because it received its profit at the outset, before passing the loan on to subprime lenders.


Cathleen Flahardy

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