March 30 (Bloomberg) -- A unit of Bank of America Corp.’s Merrill Lynch was sued by a trust seeking more than $309 million in damages for alleged breaches of representations and warranties related to the sale of more than 5,000 mortgages.
The trust filed the lawsuit in New York State Supreme Court in Manhattan yesterday, accusing Merrill Lynch Mortgage Lending of failing to buy back loans as required by agreements reached in 2007, according to a court filing.
The trust also accused Merrill Lynch and H&R Block Inc.’s Sand Canyon unit of breaching similar representations and warranties made about other mortgage loans. Sand Canyon, formerly known as Option One Mortgage Corp., stopped originating mortgage loans in December 2007, sold its servicing assets to American Home Mortgage Servicing, and discontinued remaining operations in April 2008.
Merrill Lynch in or about 2007 securitized more than 5,900 residential mortgage loans from two separate originators to serve as the basis for securities sold to investors, the trust said in the court filing. The loans were eventually sold to Merrill Lynch Mortgage Investors and then conveyed to the trust, which were then sold to investors.
“Merrill Lynch and Sand Canyon both breached the above-referenced representations and warranties,” the trust said in the suit. “For example, information supplied by the trustee reveals that over 180 mortgage loans were delinquent as of the applicable cut-off date and/or the date of the closing of the certificates to the public. These breaches have not been remedied by Merrill Lynch or Sand Canyon.”
The suit also accuses trustee Citibank N.A. of not taking enforcement actions with respect to the alleged breaches.
Lawrence Grayson, a spokesman for Charlotte, North Carolina-based Bank of America, declined to comment on the lawsuit.
Gene King, a spokesman for Kansas City, Missouri-based H&R Block, and Citigroup Inc. spokeswoman Shannon Bell also declined to comment on the lawsuit.
The case is MGRID LLC v. Merrill Lynch Mortgage Lending Inc., 651140/2013, New York State Supreme Court (Manhattan).
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