Merrill Lynch must face mortgage securities suit, judge says

Bank of America Corp.’s Merrill Lynch unit must face a lawsuit filed by two trusts that hold and administer mortgages on behalf of investors who own more than $1 billion worth of securities collateralized by the loans. More

To continue reading this article, please do one of the following.



justice

Merrill Lynch must face mortgage securities suit, judge says

BLOOMBERG FILE PHOTO/JIN LEE
MERRILL LYNCH, the Bank of America subsidiary, has been ordered by a New York Supreme Court justice to face a lawsuit filed on behalf of investors who own more than $1 billion of securities collateralized by Merrill.
Posted 9/13/13

NEW YORK - Bank of America Corp.’s Merrill Lynch unit must face a lawsuit filed by two trusts that hold and administer mortgages on behalf of investors who own more than $1 billion worth of securities collateralized by the loans.

The trusts sued Merrill Lynch Mortgage Lending Inc. in New York State Supreme Court in Manhattan in December, seeking to force it to repurchase loans that allegedly didn’t conform to representations and warranties about their quality and characteristics.

Merrill in 2006 bought more than 6,000 mortgages with an original principal balance of more than $1.1 billion from a third-party loan originator, ResMAE Mortgage Corp., and turned them into tradeable securities that were sold to investors, according to the complaint.

ResMAE filed for bankruptcy in February 2007 and the trusts pursued claims against ResMAE in bankruptcy through LaSalle Bank, demanding that it buy back loans on which borrowers had missed their first or second payments or provide other compensation, according to the complaint. LaSalle in July 2008 settled those claims on behalf of five Merrill-sponsored trusts, including the two plaintiffs in the suit.

Contractual obligations

The trusts said Merrill is obligated to buy back loans in which the representations and warranties were breached by ResMAE, which can no longer fulfill its contractual obligations because it has been liquidated in bankruptcy. Merrill had asked Justice Melvin Schweitzer to dismiss the suit, saying it’s not responsible for breaches made by ResMAE.

Schweitzer, in a ruling dated Sept. 10 and made public today, denied the motion to dismiss, saying Merrill has guaranteed the obligations of ResMAE under a transfer agreement.

“The force of the trusts’ arguments subordinates Merrill’s unreasonable positions, however cleverly put they may be,” Schweitzer said.

“We think the ruling is mistaken and intend to appeal it,” Lawrence Grayson, a spokesman for Bank of America, said in an email.

Calendar
PBN Hosted
Events

Join PBN and two panels of successful female executives, business owners and entrepreneurs as we delve into what women should do to advance their careers, and become leaders in the corporate world and their own enterprises.
  • Book of Lists Party
    Save the date - January 15, 2015 for PBN's Book of Lists Party at the Providence ...
Advertisement
Purchase Data
Book of Lists
Lists
Book of Lists cover
PBN's annual Book of Lists has been an essential resource for the local business community for almost 30 years. The Book of Lists features a wealth of company rankings from a variety of fields and industries, including banking, health care, real estate, law, hospitality, education, not-for-profits, technology and many more.
Data icons
Data can be purchased as single lists, in either Excel or PDF format; the entire database of the published book, in Excel format; or a printed copy of the Book of Lists.
  • Purchase an e-File of a single list
  •  
  • Purchase an e-File of the entire Book of Lists database
  •  
  • Purchase a printed copy of the Book of Lists
  •  
    National
    Local
    Latest News
    Advertisement