Wells Fargo, Morgan Stanley Under Scrutiny for Mortgage Handling

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Houston law firm Gibbs & Bruns LLP has accused Wells Fargo (NYS: WFC) and Morgan Stanley (NYS: MS) of failing to service more $73 billion in residential mortgage-backed securities (RMBS), triggering a default.

"Servicing" refers to billing and collecting loan payments, as well as overseeing foreclosures.

The law firm is representing bondholders that have 25% or 50% or more of the voting rights in $20 billion of debt and less than the applicable 25% or 50% in $53 billion more, according to a press release from the law firm. A total of $28 billion was issued by Morgan Stanley and $45 billion was issued by Wells Fargo.


A partner at Gibbs & Bruns, Kathy Patrick, represented a bondholder group that reached a settlement with Bank of America in 2011 over a $424 billion portfolio, Bloomberg reported.

The article Wells Fargo, Morgan Stanley Under Scrutiny for Mortgage Handling originally appeared on Fool.com.

Fool contributorJohn Divineowns shares in none of the companies mentioned above. You can follow him on Twitter@divinebizkidand on Motley Fool CAPS@TMFDivine.The Motley Fool owns shares of Bank of America and Wells Fargo. Motley Fool newsletter services have recommended buying shares of Wells Fargo.The Motley Fool has adisclosure policy. We Fools may not all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. Try any of our Foolish newsletter servicesfree for 30 days.

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