National Community Reinvestment Coalition Files Discrimination Complaint Against Wall Street Securitizer and Subsidiary Mortgage Originator


Morgan Stanley & Saxon Mortgage Face Fair Lending Complaints to HUD & SEC

WASHINGTON, Sept. 24 /PRNewswire-USNewswire/ — The National Community Reinvestment Coalition (NCRC) has filed a civil rights complaint against Morgan Stanley, Morgan Stanley Mortgage Capital Holdings, LLC., Saxon Mortgage, Inc., Saxon Asset Securities Company and Saxon Capital, Inc., (collectively, “Morgan Stanley”) to the United States Department of Housing & Urban Development and the United States Securities & Exchange Commission. This is the first challenge against a Wall Street securitizer that alleges redlining under the Federal Fair Housing Act.

NCRC alleges that that Morgan Stanley intentionally discriminated against minorities seeking mortgages in predominantly African American, Latino, Native American, Asian and Pacific Islander communities throughout the United States. This complaint holds Morgan Stanley accountable for fair lending and SEC violations that it has implemented since acquiring Saxon in December of 2006.

“Morgan Stanley & Saxon intentionally structured underwriting to deny homeownership to qualified African American, Latino, Pan-Pacific and Native American communities across the country” stated NCRC President & CEO John Taylor.

The complaint recognizes the important role that Wall Street plays in providing liquidity to the housing markets and how that role is often performed in a biased and unfair manner. Working families, minorities, and financially vulnerable consumers deserve, but do not consistently receive, equal treatment in the credit markets. Although today’s action addresses the denial of credit to deserving, hard working families, other secondary market practices, such as the securitization of predatory loans, have played a direct role in the current foreclosure crisis. NCRC is actively looking at other legal, as well as programmatic ways to redress those actions.

“It’s shocking that industry leaders like Morgan Stanley are struggling financially because they peddled problematic loans with exploding interest rates, pre-payment penalties and exorbitant fees to more financially vulnerable consumers, while failing to lend to more traditional borrowers,” said Taylor.

The complaint states that Morgan Stanley’s lending policies contain three discriminatory types of exclusion, often characterized as “redlining.” The first type includes policies that restrict the availability of loans by requiring applicants to satisfy minimum property values. These policies, for example, prevent many borrowers whose homes are valued at less than $100,000 from obtaining a loan from Morgan Stanley, regardless of their credit worthiness. The second type of discrimination includes policies that deny loans to residents of Puerto Rico, Guam and the Virgin Islands, while the third type prohibits lending to Native American communities.

The complaint, which will be available at, illustrates the impact of these policies using demographic maps.

NCRC contends in the complaint that there is no legitimate business justification for any of Morgan Stanley’s discriminatory lending policies. Under Morgan Stanley’s minimum property value policies, applicants who meet traditional lending criteria, such as a strong FICO or other credit score, steady income, significant assets, and low loan-to-value ratios, are excluded from consideration for a mortgage loan based solely on the value of their home or the home they are purchasing. Likewise, under its other restrictive policies, Morgan Stanley automatically rejects applicants and loans on the secondary market based solely on the applicant’s location without regard to traditional lending criteria.

“NCRC is asking HUD and the SEC to investigate our complaint and issue injunctive relief prohibiting Morgan Stanley and its divisions and affiliates from selling, buying, investing in, serving as a trustee, or otherwise participating in any pooling and servicing agreements involving mortgage loans underwritten from using the discriminatory lending policies identified in the complaint” stated David Berenbaum, Executive Vice President of NCRC.

Consumers who believe that they have been victimized by discriminatory lending practices may contact NCRC’s civil rights staff either on-line at or by calling 800-475-NCRC.

NCRC is a national non-profit membership organization that promotes economic justice and equal access to credit, capital and financial services to traditionally underserved communities. It has nearly 600 dues-paying organization members across the country. For more information on NCRC, visit us on line at or call 202-628-8866.

SOURCE National Community Reinvestment Coalition

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