Archives for msmon

By Brian Honea, DS News, January 3, 2016

An independent monitor has credited Morgan Stanley with fulfilling approximately 27 percent of its consumer relief obligation under the terms of a February 2016 RMBS settlement with the New York State Attorney General, according to a report from the monitor.

Eric D. Green, a retired Boston University law professor and independent monitor of Morgan Stanley’s settlement, said he has reviewed and conditionally approved approximately $100.2 million in consumer relief activity for Morgan Stanley since early August.

This was Green’s second report on Morgan Stanley’s activity regarding the settlement; in the first report, issued August 9 last year, he credited the investment banking firm with $10.5 million worth of conditional credit. The combined total gives Morgan Stanley $110.7 million in conditional credit (27 percent) toward fulfilling its $400 million settlement obligation, according to Green. Credit is conditional upon Green’s final approval when Morgan Stanley’s total obligation is fulfilled under the terms of the settlement.

Green stated that Morgan Stanley is “off to a good start,” toward satisfying the terms of the settlement as a result of the relief provided from August to December. Morgan Stanley provided consumer relief under three menu items (covering five categories) under the Settlement Agreement, with the largest portion ($57.6 million, more than half) coming in the form of the forgiveness of 502 second-lien loans. According to Green, 302 of those loans were located in areas designed by HUD as Hardest Hit Areas, or those that suffered the worst economic damage as a result of the crisis in 2008.

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By Ben Lane, Housing Wire, December 27, 2016

Over the last few months, Morgan Stanley handed out more than $100 million in consumer relief in the state of New York, pushing the company past the 25% mark in its consumer relief obligations as part of the $3.2 billion settlement it reached earlier this year.

The settlement, which is over its “deceptive” mortgage bond practices in the run-up to the financial crisis, required Morgan Stanley to provide $400 million in consumer relief for New York residents affected by Morgan Stanley’s alleged actions, set to be distributed by the end of September 2019.

A few months ago, a report from Eric Green, the independent monitor of the consumer-relief portion of the settlement, showed that Morgan Stanley had begun fulfilling those consumer relief obligations.

Now, a new report from Green’s office shows that Morgan Stanley is more than a quarter of the way through its consumer relief obligations.

According to Green’s newest report, his office reviewed and conditionally approved credit of $100.2 million since early August for Morgan Stanley’s consumer-relief activities.

Combined with the $10.5 million of conditional credit approved in August, Morgan Stanley has now earned total conditional credit of $110.7 million, or 27% of its $400 million obligation.

“Morgan Stanley is off to a good start,” Green said.

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By Brian Honea, DS News, August 10, 2016

Morgan Stanley has begun to fulfill its consumer relief obligations under a settlement with federal and state regulators in connection with mortgage-backed securities practices, according to a report from independent monitor Professor Eric D. Green.

On February 11, 2016, Morgan Stanley entered into a $3.2 billion settlement with the Department of Justice and New York State in connection with the creation, packaging, marketing, underwriting, sale, structuring, arrangement, and issuance of mortgage-based securities in the run-up to the financial crisis.

The penalty from the DOJ amounted to $2.6 billion, while Morgan Stanley agreed to provide New York State with $550 million—including $400 million in consumer relief by the end of September 2019.

Green said in his first report on the settlement that Morgan Stanley has submitted credit under the settlement of debt that is owed on 19 first-lien mortgage loans totaling approximately $10.4 million in reportable credit. While that total represents less than 3 percent of the overall consumer credit Morgan Stanley agreed to provide, it provided a “test drive” for the monitor and his team to assess Morgan Stanley’s plan for delivering the consumer relief and methodology for calculating how the assistance qualifies for credit under the settlement.

Morgan StanleyBased on the initial review, Green said that Morgan Stanley is “employing a logical and appropriate approach to seeking credit for its consumer-relief efforts” and that “In the coming months, we should get a clearer picture of how quickly Morgan Stanley is delivering on its consumer-relief obligations and how much of what kind of relief is being delivered.”

According to the monitor, 11 of the 19 loans were located in Hardest Hit Areas, which are areas identified by the U.S. Census Bureau has having a high concentration of foreclosure and distressed properties. All but one of the 19 homes were underwater on their mortgages. The average principal forgiven on these loans was more than $430,000, according to Green, and after the forgiveness, all 19 of the homes had an LTV ratio of 100 percent or lower—meaning either they were in positive equity or the owners did not owe more than the homes were worth.

The February 2016 settlement was not the first for Morgan Stanley over mortgage-backed securities practices. In February 2014, Morgan Stanley entered into a settlement with the Justice Department for $2.6 billion to resolve claims that the investment firm packaged and sold toxic MBS in the run-up to the crisis.

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By Ben Lane, Housing Wire, August 10, 2016

Earlier this year, Morgan Stanley agreed to a $3.2 billion settlement over its “deceptive” mortgage bond practices in the run-up to the financial crisis.

Part of that settlement included a commitment to provide $400 million in consumer relief for New York residents affected by Morgan Stanley’s alleged actions, set to be distributed by the end of September 2019.

Now, Morgan Stanley is taking its first steps to fulfill that commitment, by providing principal forgiveness to a handful of borrowers as a “test drive” of its relief plan, according to a new report from Eric Green, the independent monitor of the consumer-relief portion of the settlement.

The settlement stems from Morgan Stanley’s alleged misrepresentations about the security and safety of residential mortgage-backed securities it sold before the financial crisis.

According to the office of New York Attorney General Eric Schneiderman, Morgan Stanley made multiple representations to RMBS investors about the quality of the mortgage loans it securitized and sold to investors, and its process for screening out questionable loans.

Per Green’s report, Morgan Stanley recently began engaging in its consumer relief efforts by forgiving $10,468,806 in principal on 19 first-lien mortgage loans.

“This initial batch of forgiveness, representing less than 3% of Morgan Stanley’s overall consumer-relief obligations under the settlement, provided a ‘test drive’ allowing the monitor and his team of legal, finance and accounting professionals to assess Morgan Stanley’s plan for delivering relief and its methodology for calculating how the assistance qualifies for credit under the terms of the settlement agreement,” Green’s office said in a release. “Based on their initial review, Professor Green said he believes that Morgan Stanley is ‘employing a logical and appropriate approach to seeking credit for its consumer-relief efforts.’”

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By Jacob Passy, National Mortgage News, August 10, 2016

Morgan Stanley has completed $10.5 million in consumer relief, according to the independent monitor of the company’s mortgage-backed securities settlement with New York State.

It received the credit for the forgiveness of debt on 19 first-lien mortgage loans, monitor Eric Green said. Altogether, the credited relief represents 3% of Morgan Stanley’s $400 million in consumer relief obligations as part of the $550 million settlement reached in February.

Eleven of the 19 mortgage loans were located in “hardest hit areas” as identified by the Department of Housing and Urban Development, and 18 were underwater on their loans before the forgiveness.

Green called the initial batch of relief a “test drive” for him and his team of legal, finance and accounting professionals. He also noted that the initial review showed that Morgan Stanley is “employing a logical and appropriate approach to seeking credit for its consumer-relief efforts.”

“In the coming months, we should get a clearer picture of how quickly Morgan Stanley is delivering on its consumer-relief obligations and how much of what kind of relief is being delivered,” said Green, a professional mediator and retired Boston University law professor, in a news release.

The settlement between New York State and Morgan Stanley was reached to resolve claims against the bank that it or its affiliates violated state law in its activities involving mortgage-backed securities.

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