Merrill Lynch to face lawsuit over MBS

• Bank of America's (BAC +0.2%) Merrill Lynch unit will have to face a lawsuit by two trusts over more than $1B of MBS, rules a judge. Merrill in 2006 purchased over 6K mortgages with principal balance of more than $1B from a 3rd party loan originator and turned them into securities which it then sold.
• The originator - ResMAE mortgage - filed for bankruptcy in 2007, and the trusts say Merrill is obligated to buy back loans in which reps and warranties were breached.