UPDATE 1-Deutsche Bank, Paribas sue BofA on mortgage deals

* Deutsche Bank alleges BofA failed to secure $1.25 bln

* BNP Paribas says Bank of America owes $480.7 mln

* BofA says banks "misguided" to hold it responsible (Adds Bank of America says it fulfilled obligations; reference to BofA lawsuit in August)

By Grant McCool

NEW YORK, Nov 25 (Reuters) - Deutsche Bank AG (DBKGn.DE) and France's BNP Paribas SA (BNPP.PA) separately sued Bank of America Corp (BAC.N) on Wednesday, claiming that the largest U.S. bank breached its obligations on a total of more than $1.7 billion of mortgage-related transactions.

Both lawsuits, filed in in Manhattan federal court, relate to Ocala Funding LLC, a funding vehicle used by mortgage originator Taylor, Bean & Whitaker Mortgage Corp. TBW was once the 12th-largest mortgage originator in the United States but went bankrupt in August.

The lender for TBW was Colonial Bank of Montgomery, Alabama, which Bank of America sued in August, charging it with refusing to return more than $1 billion it received from Freddie Mac FRE.N for loan purchases BofA helped fund. [ID:nNBNG40532]

Deutsche Bank accused Charlotte, North Carolina-based Bank of America in one lawsuit of breach of contract for failing to safeguard more than $1.25 billion of cash and mortgage loans from deals in 2007 and 2008.

In the other lawsuit, BNP Paribas Mortgage Corp said Bank of America refused to pay $480.7 million of principal and interest on secured notes when the sum came due on Aug. 10.

Bank of America spokesman Bill Halldin said the bank had fulfilled its contractual obligations and would defend itself against the allegations in court.

"We share BNP and Deutsche Bank's concern about the handling of funds by Taylor, Bean and Whitaker and Colonial Bank and have been actively pursuing recoveries in the Colonial and TBW bankruptcies on behalf of these and other investors in the Ocala facility," the spokesman said in a statement.

"BNP and Deutsche Bank's effort to hold Bank of America responsible, however, is misguided. We fulfilled our contractual obligations in our limited administrative role with respect to the Ocala facility."

Deutsche Bank said it invested $750 million in asset-backed commercial paper issued by the Ocala Funding LLC vehicle on Dec. 13, 2007, and invested $450 million more on June 30, 2008.

Also on June 30, 2008, Paribas collectively with Deutsche Bank invested about $481 million in the commercial paper issued by Ocala.

The agreements contained carefully crafted safeguards for the investments, Deutsche Bank's lawsuit said.

"As it turned out, the faith of DB and other investors was misplaced," it said. "In myriad ways, BOA failed to carry out its various duties designed to protect DB's investment, and these failures substantially damaged Ocala and DB's investment."

The cases are Deutsche Bank AG v Bank of America, U.S. District Court for the Southern District of New York, No. 09-9784; and BNP Paribas Mortgage Corp v Bank of America, No. 09-9783 . (Reporting by Grant McCool; Editing by Tim Dobbyn and Steve Orlofsky) ((grant.mccool@thomsonreuters.com; +1-212-393-9461; Reuters Messaging: grant.mccool.reuters.com@reuters.net))