Bank of America Corp.'s Merrill Lynch & Co. unit must face a lawsuit by the Federal Housing Finance Agency (FHFA), the conservator for Fannie Mae and Freddie Mac, over mortgage-backed securities sold by the investment bank, Bloomberg News reported today. U.S. District Judge Denise Cote 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 that 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.
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