Judge Harold Baer
Black homeowners in Detroit obtained "predatory" loans from subprime lender New Century Mortgage Co., which sought bankruptcy in 2007. They alleged Morgan Stanley's racially discriminatory policies violating the Fair Housing Act (FHA), Equal Credit Opportunity Act (ECOA) and Michigan's Elliot-Larsen Civil Rights Act (ELCRA) caused New Century to target Detroit-area borrowers for loans disparately impacting blacks. District court denied dismissal of plaintiffs' FHA claims. Distinguishing TRW v. Andrews, it found the FHA claims subject to the discovery rule, and thus timely. Plaintiffs' FHA claims did not accrue until they knew or had reason to know that Morgan Stanley's policies were discriminatory. Further, plaintiffs' allegations sufficiently showed disparate impact. However, their ECOA and ELCRA claims were dismissed. Unlike the FHA, the ECOA lacks exceptions to its limitations period allowing for a limited discovery rule that the FHA does not. The fact that plaintiffs continue to suffer the effects of their "toxic loans" is insufficient to revive their claims, on the basis of a continuing violation, where implementation of Morgan Stanley's challenged policies ceased with New Century's bankruptcy application in 2007.
