MANHATTAN (CN) – Deutsche Bank and BNP Paribas do not have a claim that Bank of America converted $1.68 billion in mortgage loans, a federal judge ruled.
Taylor, Bean & Whitaker Mortgage Corp., described in court documents as formerly the nation’s largest nondepositary residential mortgage lender, created Ocala Funding LLC, which issued two series of liquidity notes, in 2005 and 2008.
BNP said it owned all 852 shares of the outstanding 2005 issue, which it bought for $480.7 million; Deutsche said says it owned all 2,126 of the outstanding 2008 issue, purchased for more than $1.2 billion.
Bank of America served as Ocala’s indenture trustee, collateral agent, depositary and custodian.
In August 2009, law enforcement raided Taylor Bean’s offices and Freddie Mac terminated its relationship with the mortgage giant. Bank of America defaulted under the base indenture days later, and Ocala did not repay the money owed to Deutsche Bank and BNP.
Taylor Bean filed for bankruptcy on Aug. 24, 2009.
On May 4, 2009, Bank of America allegedly had agreed to buy the loans from Taylor Bean, then sold “nearly all” of them to Freddie Mac.
The plaintiffs claimed Bank of America should have used the money from these sales to pay them; but Bank of America said they could not prove any connection to these loans.
On Aug. 25, U.S. District Judge Robert Sweet agreed with Bank of America.
“Defendants are correct that plaintiffs’ complaints do not allege that they own or have a right to possess the loans; rather, they assert that they hold notes issued by Ocala that were secured by Ocala’s mortgage loans and other assets,” the order states.
Deutsche Bank and BNP Paribas have 30 days to replead and state a valid claim.
U.S. District Judge Robert Sweet signed the order on Aug. 26, and released the document on Aug. 30.