Bank of America was sued by the Justice Department over allegations that it lied to investors about the riskiness of the loans backing a 2008 mortgage deal.
The Charlotte, North Carolina-based bank misled investors about the loans in a securitization of more than $850 million in residential mortgage-backed securities, the Justice Department said today in a statement on the civil claims. The Securities and Exchange Commission filed a parallel case today at federal court in North Carolina.
"As we proceed with this case, and pursue additional investigations, we will continue to use every tool, resource and appropriate authority to ensure stability, accountability and -- above all -- justice for those who have been victimized," Attorney General Eric Holder said today in the statement.
The Justice Department estimated that investors in the securitization deal would sustain losses that would exceed more than $100 million.
"These were prime mortgages sold to sophisticated investors who had ample access to the underlying data," said Bill Halldin, a Bank of America spokesman, in an e-mail statement. "The loans in this pool performed better than loans with similar characteristics originated and securitized at the same time by other financial institutions."
Bank of America, led by Chief Executive Officer Brian T. Moynihan, has spent more than $45 billion on litigation, settlements and refunds to investors as part of the fallout from the 2008 credit crisis and the purchases of Countrywide Financial and Merrill Lynch.
The bank said last week it had received subpoenas and information requests regarding mortgage securities and collateralized debt obligations created during the housing boom.