Monitor: Morgan Stanley Begins Delivering Consumer Relief under Settlement with New York State
BOSTON, Aug. 9, 2016 /PRNewswire/ -- Morgan Stanley has taken the first steps towards fulfilling its consumer-relief obligations under the February 11, 2016, settlement agreement with New York State, Eric D. Green, independent Monitor of the consumer-relief portion of the settlement, reported today.
The agreement settled potential legal claims against Morgan Stanley that it or its affiliates violated New York law in connection with the creation, packaging, marketing, underwriting, sale, structuring, arrangement, and issuance of mortgage-based securities. Morgan Stanley agreed to provide $550 million under the settlement agreement, including consumer relief valued at $400 million to be distributed in the State of New York by the end of September 2019.
In the first of his required public reports on the settlement, Professor Green said that the consumer relief that Morgan Stanley has submitted for credit under the settlement to date consists of forgiveness of the debt that the bank is owed on 19 first-lien mortgage loans, totaling $10,468,806 of reportable credit.
This initial batch of forgiveness, representing less than 3 percent 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. 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."
"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 Professor Green, who is a professional mediator and a retired Boston University law professor.
Professor Green noted that 11 of the initial 19 loans were for homes located in Hardest Hit Areas, census tracts identified by the U.S. Department of Housing and Urban Development as containing large concentrations of distressed properties and foreclosure activities. The average principal forgiven on these loans was more than $430,000. Eighteen of the 19 homes involved were "underwater" before the forgiveness, meaning that the homeowners owed more on their mortgages than the homes were worth. After the debt forgiveness, all 19 homes had loan-to-value ratios of 100% or lower, meaning that the homeowners either had equity in the homes or at least did not continue to owe more than they were worth.
The Settlement Agreement also requires that the consumer relief not be implemented through any policy that violates the Fair Housing Act or the Equal Credit Opportunity Act. Professor Green and his team also are monitoring Morgan Stanley's compliance with that obligation.
"Morgan Stanley has committed to do its part to help New York residents who are still in their homes but struggling with their mortgage payments," Professor Green said. "I have been charged to monitor and report on how well Morgan Stanley keeps its commitment. I recognize and accept the serious responsibility of my assignment."
The initial report is available at the Monitor's website at: http://morganstanley.mortgagesettlementmonitor.com. The website provides further details about the settlement, plus contact information for Morgan Stanley, New York Attorney General Eric T. Schneiderman's office, and agencies that provide legal or tax advice to consumers.
The Monitor's mailing address is: Monitor of the Morgan Stanley Mortgage Settlement, P.O. Box 10300, Dublin, OH 43017-5900, and the e-mail address is [email protected].
SOURCE Monitor Eric D. Green
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