NEW YORK ( TheStreet) -- Bank of America's (BAC) twisted legal entanglements related to the fallout from Ocala Funding brings to light the reverberations and complexities created by such special-purpose vehicles.
Deutsche Bank (DB) and BNP Paribas filed suit against Bank of America on Wednesday, alleging that the Charlotte, N.C.-based lender failed to make good on $1.7 billion worth of secured notes issued by Ocala. Deutsche Bank claims it is owed $1.2 billion, while BNP Paribas claims it is owed $480.7 million.
In another lawsuit tied to Ocala in August, Bank of America asked a judge to block Colonial BancGroup from selling over $1 billion worth of loans held by the vehicle.
Deutsche Bank and BNP Paribas claim that Bank of America owes them money because the bank acted as collateral agent, custodian, indenture trustee and depositary for the notes. Bank of America claimed that Colonial held the underlying loans as custodian, agent and bailee, but that even when bailee letters were terminated, Colonial refused to return proceeds to BofA.All of the lawsuits stem from the failure of Taylor, Bean & Whitaker Mortgage Corp. in August, and have been exacerbated by Colonial's seizure by the Federal Deposit Insurance Corp. later that month. The FDIC became receiver for Colonial, making it in charge of collateral payments. It sold some of the bank's assets to BB&T (BBT) later that month. Ocala was created as a liquidity facility for Taylor, Bean & Whitaker. The vehicle relied on mortgage loans as collateral, pending their sale to Freddie Mac (FRE). However, Taylor, Bean & Whitaker was delisted as an approved seller of mortgages to Freddie Mac shortly before its bankruptcy.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV