A consent order has been issued against Morgan Stanley by the Federal Reserve, which alleges ‘a pattern of misconduct and negligence in residential mortgage loan servicing and foreclosure processing at its subsidiary, Saxon Mortgage Services Inc.’
According to the Fed, the consent order requires Morgan Stanley to retain an independent consultant to review foreclosure proceedings initiated by Saxon that were pending at any time in 2009 or 2010. Morgan Stanley announced the sale of Saxon's mortgage servicing business to Ocwen Financial Corp. last October and is no longer involved in servicing residential mortgages.
‘The review is intended to provide remediation to borrowers who suffered financial injury as a result of wrongful foreclosures or other deficiencies identified in a review of the foreclosure process,’ says the Fed. ‘The foreclosure review will be conducted in a manner consistent with the reviews currently under way at several large mortgage servicers that consented to enforcement actions brought by the banking agencies last year.’
The Fed adds that it plans to announce ‘monetary penalties’ against Morgan Stanley as part of its review.