"We should have kept [Jeremy Lin]. Did not know he was this good," Morey wrote on his official Twitter account on Thursday. "Anyone who says they knew misleading U."
In a separate tweet, Morey praised Lin, writing "Finally, really happy for [Lin]. Very hard working, nice, & humble. He has a great, great future."
Lin has surprised many talent evaluators with his play in the Knicks' past three games.
The undrafted former Harvard standout has averaged 25.3 points and 8.3 assists over his past three games -- all Knicks victories.
In his first start, Lin scored 28 points and had eight assists against the Utah Jazz in a game in which New York (11-15) was missing Amare Stoudemire (death in the family) and had lost Carmelo Anthony just minutes into the first quarter due to a groin injury.
The 23-year-old followed that performance with a 23-point, 10-assist night against the Washington Wizards on Wednesday.
Lin was released in late December by the Rockets to make room for Houston's signing of Samuel Dalembert. Houston already had three point guards on its roster, and all of their contracts were guaranteed. Lin had a non-guaranteed contract.
Earlier in the preseason, Lin was released by the Golden State Warriors, who let him go to create enough salary cap space for a four-year offer sheet worth nearly $43 million to then-restricted free agent DeAndre Jordan. The Clippers matched the offer.
The Knicks signed Lin off of waivers two days after he was released by the Rockets.
New York needed another guard after rookie Iman Shumpert went down with a knee injury in its season-opening win over Boston.
Lin served as the Knicks' third-string guard before he was sent by the team to its D-League affiliate, the Erie BayHawks. Lin spent six days with the BayHawks.
With starting point guard Toney Douglas struggling with his shot, Lin received significant minutes for the first time against New Jersey last Saturday.
He responded with 25 points and seven assists, many of which were recorded against Deron Williams.
Lin is the first player since LeBron James to score at least 20 points and record at least eight assists in his first start. James accomplished the feat as a rookie in 2003.
The game will likely draw a large number of Lin supporters, reflecting his sudden surge in popularity.
Morey, responding to a question about releasing Lin, wrote on Twitter: "[Lin] is a very good player but Linsanity was not happening here this year."
Ian Begley is a regular contributor to ESPNNewYork.com. Information from ESPN.com's Marc Stein was used in this report.