The American Civil Liberties Union accused Morgan Stanley of violating civil rights laws by encouraging a lender to push more expensive and risky mortgages in black neighborhoods of Detroit.
The ACLU and others filed the lawsuit Monday on behalf of five homeowners who took out loans from New Century Mortgage Corp., a subprime lender that has since collapsed. Morgan Stanley said the allegations were “completely without merit.” The lawsuit claims Morgan Stanley pushed New Century to make the risky loans because Morgan made its profit at the start of the process and sold the loans before they could go bad.
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