Edvard Pettersson, Bloomberg

Bank of America Corp.’s Merrill Lynch & Co. unit must face a lawsuit by the Federal Housing Finance Agency, the conservator for Fannie Mae and Freddie Mac, over mortgage-backed securities sold by the investment bank.

U.S. District Judge Denise Cote in New York yesterday denied Merrill’s request to dismiss the FHFA’s securities law and fraud claims, except for fraud claims based on loan-to-value ratios and ownership-occupancy reporting. The judge said FHFA had failed to sufficiently allege fraudulent intent for those claims.

The judge rejected Merrill Lynch’s request to throw out the FHFA’s claims for recession and for punitive damages.

“The amended complaint adequately supports its demand for punitive damages,” the judge said in the ruling. “FHFA alleges that the defendants acted recklessly by seeking to profit from ever more risky mortgage lending while, at the same time, passing on the risk, and ultimately the losses, associated with these practices to the public via their sale of securities to Fannie Mae (FNMA) and Freddie Mac.”

Read more here

Write A Comment

Your email address will not be published.

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Ready to get started?

Speak to a specialist at (888) 737-6344