Houston law firm Gibbs & Bruns LLP has accused Wells Fargo (NYSE: WFC ) and Morgan Stanley (NYSE: 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.