Morgan Stanley wealth unit pressured staff to approve risky home loans
A Morgan Stanley spokesman said the bank’s mortgage unit “adheres to robust underwriting standards, supported by extensive internal risk management and regulatory oversight,” and that “there is no evidence that any loan was inappropriately extended.”
The bank said its portfolio carries default rates well below industry averages and called the suggestion that it had compromised its underwriting standards “false.”
Patrick M. Mincey, attorney for the whistleblower, rejected that position. “Our client’s information reveals a Morgan Stanley culture which flouts federal regulations, functioning not as a bank but rather as a no-questions-asked rubber stamp for the Wealth Management Division’s financial advisers,” Mincey said.
MPA has previously reported on how a former non-QM underwriter described nearly identical dynamics, including being pressured by sales teams to approve loans he had flagged as suspect, underscoring that this tension between origination targets and underwriting integrity is not unique to one institution.
Morgan Stanley’s statement said it was “unaware of any regulatory matter, inquiry or investigation” arising from its mortgage lending business.
