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DS News Webcast: Thursday 2/11/2015

Attorneys for investment firm Morgan Stanley made a motion in the New York Supreme Court Tuesday to have two lawsuits filed by the Federal Housing Finance Agency accusing the firm of failing to buy back $2.5 billion worth of faulty residential mortgage-backed securities. FHFA, which is suing on behalf of the RMBS pools' trustees, claims that Morgan Stanley committed a breach of contract by failing to buy back the poor performing loans, which were pooled into securities and sold to Freddie Mac in 2007.

Morgan Stanley has had ongoing legal troubles in the last year with regards to its sales of RMBS prior to the financial crisis, resulting in a series of settlements totaling hundreds of millions. In February 2014, the firm settled a separate lawsuit filed by FHFA for 1 point $25 billion over the selling of faulty RMBS to Fannie Mae and Freddie Mac during the run-up to the financial crisis. In July 2014, Morgan Stanley agreed to pay $275 million to investors for allegedly misrepresenting the delinquency status of subprime mortgage loans in 2007.

A Los Angeles law firm announced a new class action lawsuit against Home Loan Servicing Solutions, making it the latest in a line of suits filed against the mortgage company over its relationship with Ocwen. In its complaint, Glancy Binkow & Goldberg alleges that HLSS, which deals in the acquisition of mortgage servicing assets, made misleading statements and failed to disclose to investors how much its own business depended on Ocwen's and the extent of Ocwen's troubles.

About Author: Jordan Funderburk


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