The other side of the suit is that what if these people knew they couldn’t pay back the loans but got them anyway. Isn’t that fraud.
By Chris Isidore @CNNMoney October 15, 2012: 12:09 PM ET
NEW YORK (CNNMoney) — The American Civil Liberties Union sued Morgan Stanley on Monday, charging the Wall Street firm discriminated against minority homeowners and violated federal civil rights laws by providing funding for risky mortgages.
The suit, filed in U.S. District Court in New York, is the first lending discrimination case to go after the investment banks that funded the subprime mortgages. Previous suits of this kind targeted the lenders that made the loans.
Wall Street funded the subprime lending boom by bundling the risky loans into mortgage-backed securities. Those securities were then sold to institutional investors and pension funds.
The lawsuit was filed on behalf of five Detroit residents, and asks the court to certify the case as a class action.
“With this lawsuit, real victims of the subprime lending scandal are stepping forward to hold investment banks like Morgan Stanley accountable for the devastation the banks wrought in their lives and in our economy,” said Anthony Romero, ACLU executive director, in a statement.
Morgan Stanley (MS, Fortune 500) denied the allegations.
“We believe these allegations are completely without merit and plan to defend ourselves vigorously,” said the firm in a statement.
Romero said Morgan Stanley is not the only Wall Street firm that participated in funding improper subprime mortgages and that similar suits against other firms could be forthcoming.
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Proprietary OC Housing News home purchase analysis
$565,900 …….. Asking Price
$565,900 ………. Purchase Price
10/8/2012 ………. Purchase Date
$0 ………. Gross Gain (Loss)
($45,272) ………… Commissions and Costs at 8%
($45,272) ………. Net Gain (Loss)
0.0% ………. Gross Percent Change
-8.0% ………. Net Percent Change
#NUM! ………… Annual Appreciation
Cost of Home Ownership
$565,900 …….. Asking Price
$113,180 ………… 20% Down Conventional
3.40% …………. Mortgage Interest Rate
30 ……………… Number of Years
$452,720 …….. Mortgage
$108,103 ………. Income Requirement
$2,008 ………… Monthly Mortgage Payment
$490 ………… Property Tax at 1.04%
$0 ………… Mello Roos & Special Taxes
$141 ………… Homeowners Insurance at 0.3%
$0 ………… Private Mortgage Insurance
$153 ………… Homeowners Association Fees
$2,793 ………. Monthly Cash Outlays
($310) ………. Tax Savings
($725) ………. Equity Hidden in Payment
$119 ………….. Lost Income to Down Payment
$91 ………….. Maintenance and Replacement Reserves
$1,968 ………. Monthly Cost of Ownership
Cash Acquisition Demands
$7,159 ………… Furnishing and Move In at 1% + $1,500
$7,159 ………… Closing Costs at 1% + $1,500
$4,527 ………… Interest Points
$113,180 ………… Down Payment
$132,025 ………. Total Cash Costs
$30,100 ………. Emergency Cash Reserves
$162,125 ………. Total Savings Needed
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