Bank of America's Merrill Lynch unit has failed to quash a lawsuit over shoddy mortgage bonds
Bank of America’s Merrill Lynch has unit failed in its attempt to quash a $1 billion lawsuit filed by two trusts.
The trusts sued Merrill on behalf of investors who bought more than $1 billion in mortgage-backed securities, according to a Bloomberg report. In 2006, Merrill bought more than 6,000 mortgages from third-party originator ResMAE Mortgage Corp., packaged them into securities and sold them to investors. The lawsuit alleges that Merrill misrepresented the quality of the mortgages backing the securities and seeks to force Merrill to buy back the loans.
ResMAE went bankrupt in 2007. The trusts said Merrill was obligated to repurchase loans in which representations and warranties were breached by the defunct institution.
Merrill made a motion to dismiss the suit in September, but the New York State Supreme Court dismissed the motion, saying the financial institution had guaranteed ResMAE’s obligations under a transfer agreement. A Manhattan appellate court upheld that decision Tuesday.
The trusts sued Merrill on behalf of investors who bought more than $1 billion in mortgage-backed securities, according to a Bloomberg report. In 2006, Merrill bought more than 6,000 mortgages from third-party originator ResMAE Mortgage Corp., packaged them into securities and sold them to investors. The lawsuit alleges that Merrill misrepresented the quality of the mortgages backing the securities and seeks to force Merrill to buy back the loans.
ResMAE went bankrupt in 2007. The trusts said Merrill was obligated to repurchase loans in which representations and warranties were breached by the defunct institution.
Merrill made a motion to dismiss the suit in September, but the New York State Supreme Court dismissed the motion, saying the financial institution had guaranteed ResMAE’s obligations under a transfer agreement. A Manhattan appellate court upheld that decision Tuesday.
