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During the lending mania, as Wall Street’s mortgage machinery hummed and the money poured in, millions of loans were bought and sold, zipping across town or around the world.

Now that this giant factory is pretty much shut, details are emerging about how its assembly lines actually operated. And as a dispute between two European banks and Bank of America indicates, the revelations aren’t pretty.

Starting in late 2007, Deutsche Bank invested $1.2 billion in a mortgage financing vehicle known as Ocala Funding; alongside it was BNP Paribas, a French bank that put $481 million into the same vehicle.

Ocala issued short-term notes and from the proceeds, bought mortgages that it could promptly sell to Freddie Mac, the government-sponsored enterprise. Bank of America was trustee, collateral agent, custodian and depositary agent to Ocala — its back office, in essence.

Ocala was busy: roughly $1 billion in mortgages flowed in and out of it each month. Because of its structure, Deutsche Bank and BNP viewed Ocala as a fairly low-risk investment.

For example, Ocala could not hold mortgages that it was waiting to sell to Freddie Mac for more than 60 days, and it could buy only loans that had been reviewed and were physically held by the original lender.

But there were a couple of problems with the set-up: the company writing the mortgages funneling through Ocala was Taylor Bean & Whitaker, a lender that filed for bankruptcy last August.

And to make its loans, Taylor Bean used money from Colonial Bank, a Montgomery, Alabama, institution that also went belly-up. The Federal Deposit Insurance Corporation took over Colonial in August.

Sorting through the wreckage of those related failures has generated more questions than answers so far. Taylor Bean was shut down by the Federal Housing Administration, citing possible mortgage fraud.

According to people briefed by those winding down Taylor Bean’s operations, who requested anonymity in order to preserve professional relationships, there are signs that the company sold some of its loans to more than one buyer.

In any event, Ocala says mortgages worth more than half a billion dollars are missing. And the FDIC is withholding the release of mortgages worth hundreds of billions held at Colonial that Ocala investors say are theirs.

The government contends that it is not clear that Bank of America — as a representative for Ocala — paid for them.

Deutsche Bank wrote down its investment in Ocala by almost $500 million in the third quarter of this year.

BNP and Deutsche Bank have sued Bank of America in federal court in Manhattan. Both accuse Bank of America of breaching its custodial and trustee duties to Ocala. The suits shed light not only on the complexities of the mortgage machine but on how fail-safe mechanisms in these Byzantine structures didn’t work.

People familiar with the mortgage machine’s innards say problems were industrywide.

If you look at the way these structures were built up, there were supposed to be safeguards at every step to make sure all these things were done properly,” said Max Gardner, a lawyer in North Carolina, representing financially troubled consumers. “When you see so many problems across the country with the total inability to produce the documents, then it really makes you wonder: did they really do this?”

According to the court documents, Bank of America dropped a number of balls. It improperly transferred $3.7 billion out of Ocala to accounts that had no connection to the investment vehicle, Deutsche Bank said, and it didn’t track the mortgages bought and sold on behalf of Ocala. Bank of America also misstated the amount of mortgages held as security for Ocala, the suit contends.

Last August, for example, after Taylor Bean failed, Bank of America reported that Deutsche Bank’s investment was secured by mortgages valued at over $1.16 billion. But, Bank of America’s records showed at least $470 million of these mortgages had already been delivered to Freddie Mac, the lawsuit said. Ocala’s trustee “failed to maintain internal documentation necessary to establish Ocala’s ownership of purchased mortgages,” Deutsche Bank maintains.

Asked about the lawsuits, a Bank of America spokesman provided a statement: “We share BNP and Deutsche Bank’s concern about the handling of funds by Taylor, Bean & 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.”

But Bank of America said it was misguided to hold it responsible for the problems: “We fulfilled our contractual obligations in our limited administrative role with respect to the Ocala facility, and will vigorously defend ourselves.”

To be sure, a full investigation of the Taylor Bean and Colonial failures may show that Bank of America was victimized by those institutions. In August, Bank of America sued Colonial for breach of contract and civil theft, contending that it failed to hand over more than $1 billion it had received from Freddie Mac for Ocala loans purchased this year from June 11 to Aug. 4.

Given losses as large as these, it’s no surprise that there is finger-pointing all around. Unfortunately, it won’t be known for some time, if ever, who is responsible for the Ocala losses.

This much is clear: The mortgage machine that created so many loans amid the mania seems riddled with flaws. Until investors are satisfied those problems are solved, the mortgage market is likely to remain in its depressed state.