November 25, 2009
NEW YORK — Deutsche Bank AG and France’s BNP Paribas SA separately sued Bank of America Corp on Wednesday over allegations the largest U.S. bank breached its obligations on a total of more than $1.7 billion in mortgage-related transactions.
Both lawsuits in Manhattan federal court related to a funding vehicle for Taylor, Bean & Whitaker Mortgage Corp, once the 12th-largest mortgage originator in the United States that originated thousands of home loans each year but went bankrupt in August.
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.
A representative for Bank of America was not immediately available to comment.
Deutsche Bank said it invested $750 million in asset-backed commercial paper issued by the Ocala Funding LLC vehicle on December 13, 2007, and invested $450 million more on June 30, 2008.
Also on June 30, 2008, Paribas collectively with Deutsche Bank invested about $481 million in the commercial paper issued by Ocala.
The agreements contained carefully crafted safeguards for the investments, Deutsche Bank’s lawsuit said.
“As it turned out, the faith of DB and other investors was misplaced,” it said. “In myriad ways, BOA failed to carry out its various duties designed to protect DB’s investment, and these failures substantially damaged Ocala and DB’s investment.”
The cases are Deutsche Bank AG v Bank of America, U.S. District Court for the Southern District of New York, No. 09-9784; and BNP Paribas Mortgage Corp v Bank of America, No. 09-9783 .
