The ongoing Ocala Funding litigation is presenting more than a few interesting tests to boom-time securitization agreements.

The latest, based on a federal ruling in a Manhattan courthouse last week, is revealing that Bank of America declined to sue itself on behalf of investors.

Those two investors, Deutsche Bank and BNP Paribas Mortgage, asked trustee BofA to sue on behalf of $1.6 billion in loses they suffered on Ocala-issued asset-backed commercial paper.

A month later, BofA refused. But why?

According to Moody's Investor Service Senior Analyst Sally Acevedo: "BoA was acting as Ocala’s indenture trustee, depositary, collateral agent and custodian prior to the TBW bankruptcy and Colonial Bank failure."

As collateral agent and custodian, BofA also represents the interest of the Ocala vehicle. Ocala Funding helped finance mortgage operations at Taylor, Bean & Whitaker. However, Deutsche and BNP Paribas argue that they would not have invested, if not for Bank of America being associated with the deal.

The two European firms pushed their third-party beneficiary rights under the indenture trustee role BofA held in July 2011. A month later BofA said it would not sue, arguing it would cause undue delay in ongoing Ocala Funding proceedings, prejudice BofA and create a judicial burden, according to Moody's.

Last week, U.S. District Court Judge Robert Sweet in Manhattan ruled that BofA's refusal to sue itself clears the way for Deutsche and BNP Paribas to bring lawsuits themselves. This, even though the asset-backed commercial paper investors were not party to documents related to Ocala Funding securitizations.

The multitudinous role of Bank of America in the Ocala Funding structured finance product is not unusual to securitization, to be clear.

"Such language is found in many structured finance transactions, but is rarely tested in court," said Acevedo in an email. "This decision upholds the terms of the documents and helps mitigate the conflicts of interest among different key transaction party roles."

And with the judge ruling that limits can be placed on those roles, investors will be pleased to learn the buck doesn't stop at Bank of America.