Judge allows suits against BofA to proceed

A US federal court judge has allowed Deutsche Bank AG and the mortgage unit of France's BNP Paribas SA to proceed with their lawsuits against Bank of America related to losses they incurred in connection with the collapse of mortgage lender Taylor Bean & Whittaker Mortgage Corp. Bank of America was a trustee for notes issued by Taylor Bean's Ocala Funding LLC unit.
Ocala used proceeds from note sales to Deutsche Bank and BNP Paribas's mortgage unit to buy Taylor Bean mortgages. But when Taylor Bean collapsed it was unable to repay the notes. Taylor Bean was once the 12th-largest mortgage originator in the United States but went bankrupt in August.
Deutsche Bank and BNP filed the original suit in November 29 saying that Bank of America breached its obligations on a total of more than $1.7 billion of mortgage-related transactions. Judge Robert Sweet, of the US district Court in Manhattan, dismissed some claims against Bank of America. He allowed others relating to their claims of breach of contract to proceed, saying the two had stated "a plausible claim" against Bank of America. His opinion was filed on Wednesday. A Bank of America spokeswoman was not available for comment.
Sweet, dismissed the claims by the parent company BNP Paribas, which was added later as a plaintiff, saying it lacked standing. The lender for Taylor Bean was Colonial Bank of Montgomery, Alabama, which Bank of America sued in 2009, charging it with refusing to return more than $1 billion it received from Freddie Mac for loan purchases BofA helped fund. Bank of America last year filed suit against the Federal Deposit Insurance Corp over the $1.75 billion of investor losses mainly from the 2009 collapses of Colonial and Taylor Bean.
Deutsche Bank accused Charlotte, North Carolina-based Bank of America in one lawsuit of breach of contract for failing to safeguard more than $1.25 billion of cash and mortgage loans from deals in 2007 and 2008. In the other lawsuit, BNP Paribas Mortgage Corp said Bank of America refused to pay $480.7 million of principal and interest on secured notes when the sum came due on August 10.