Bank of America Corp.'s Merrill Lynch unit was sued by two trusts that hold and administer mortgages on behalf of investors who own more than $1 billion of securities collateralized by the loans, Bloomberg News reported yesterday. Merrill bought more than 6,000 mortgages with an original principal balance of more than $1.1 billion from a third-party loan originator, ResMAE Mortgage Corp., in 2006 and turned them into tradeable securities that were sold to investors, according to the complaint filed yesterday in New York State Supreme Court. ResMAE filed for bankruptcy in February 2007 and the trusts pursued claims against ResMAE in bankruptcy through LaSalle Bank, demanding that it buy back loans where borrowers had missed their first or second payments or provide other compensation, according to the complaint. LaSalle in July 2008 settled those claims on behalf of five Merrill-sponsored trusts, including the two plaintiffs in yesterday's suit.
