Morgan Stanley has asked a judge to dismiss a suit filed by MetLife Inc. over mortgage-backed securities, saying that the insurer knew the U.S. housing market was starting to deteriorate before it bought most of them, Bloomberg reported yesterday. MetLife had invested about $56.5 billion in residential mortgage-backed securities before 2008, making it a “sophisticated investor,” and the insurer that same year bought the mortgage unit of First Horizon National Corp., which had originated loans for securities in the case, lawyers for Morgan Stanley said today during a hearing before New York State Supreme Court Justice Eileen Bransten. The New York-based insurer knew that underwriting standards for mortgages had started to deteriorate and had already begun to reduce its exposure to mortgage-backed securities by mid- 2007, before it made 36 of the 52 purchases at issue in the case, Morgan Stanley attorneys said in a court filing. The case is Metropolitan Life Insurance Co. v. Morgan Stanley, 651360/2012, New York State Supreme Court, New York County (Manhattan).
