A federal judge dismissed two mortgage conversion cases filed against Bank of America (BAC) by BNP Paribas Mortgage Co. (BNP) and Deutsche Bank (DB) this week. The cases relate to BofA’s handling of mortgage loans and proceeds tied to a trust the banking giant oversaw for Ocala Funding, a funding facility tied to the now defunct Taylor, Bean & Whitaker Mortgage. Ocala was created to provide liquidity to TBW’s mortgage origination business. At the time, BofA served as Ocala’s indenture trustee, collateral agent, depository and custodian, according to court records. The cases filed against BofA claim that after TBW’s collapse, BofA declared an event of default as base indenture and Ocala failed to repay money owed to DB and BNP, both of which held Ocala notes. The lawsuits allege BofA, as collateral agent for the plaintiffs, “perfected its first-priority security interest in the loans” and took possession of them. The plaintiffs claim BofA’s maneuvers violated BNP Paribas and Deutsche Bank’s contractual rights in relation to the loans. BNP owned 852 of the outstanding notes, which it purchased for $480.7 million, while the German banking giant owned $1.2 billion worth. New York Federal District Judge Robert Sweet dismissed both conversion claims Tuesday, giving the plaintiffs 30 days to replead their case. Part of the court’s ruling said the plaintiffs’ conversion claims are duplicative of other contractual claims that were filed back in 2009. This week’s decision has no effect on other pending contractual claims. Bank of America declined to comment on the judge’s ruling. Write to: Kerri Panchuk.
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