Clients’ home equity lines frozen

Morgan Stanley is said to have frozen some of its clients’ home equity credit lines especially those whose properties have lost their values. The current housing crisis and credit squeeze have caused lenders such as Morgan Stanley to tighten its credit to protect itself from further losses due to loan defaults.

Consumers fell behind on home equity credit lines at the fastest pace in two decades in the first quarter.

Morgan Stanley has already taken about US$14.4 billion of losses related to leveraged loans and collateralised debt obligations (CDOs).

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