Feds Sue BofA Over 'Jumbo' Loans
Bank accused of hiding information about risky prime mortgages
By Neal Colgrass, Newser Staff
Posted Aug 6, 2013 3:15 PM CDT
A customer uses a Bank of America ATM in downtown Charlotte, N.C., Tuesday, July 16, 2013.   (AP Photo/Chuck Burton)

(Newser) – The US Justice Department filed another lawsuit against Bank of America today—this one a civil suit claiming the bank had defrauded investors over $850 million in mortgage-backed securities. Investors lost $70 million and will lose $50 million more, the suit contends, after prime mortgages that supported the securities went sour. BofA is accused of hiding information about the riskiness of these so-called "jumbo" loans created for higher-end homes, the Charlotte Observer reports.

In other words, the bank allegedly said prime mortgages were safe bets when in fact they were just as risky as subprime loans. Federal officials also accused the bank of misleading investors about borrowers' income, which BofA apparently failed to verify in many cases. The Justice Department filed a $1 billion suit against the Charlotte-based bank last year, claiming BofA and its Countrywide unit created a scheme to generate thousands of toxic loans.

More From Newser
My Take on This Story
To report an error on this story,
notify our editors.
Feds Sue BofA Over Mortgage Securities is...
4%
10%
8%
70%
1%
7%
Show results without voting
You Might Like
Comments
Showing 3 of 24 comments
Who_Cares
Aug 7, 2013 8:24 PM CDT
So the "FED" will get the money and we customers will have to pay the penalties in form of hidden fees and other charges, that wouldn't be there.
Odaecom
Aug 7, 2013 1:17 PM CDT
It will just result in another slap on the wrist that BofA will use as a tax write-off while getting more "free" money from the fed to loan back to us taxpayers at 18% ...
Hybrid_2.0
Aug 6, 2013 7:04 PM CDT
Hey BOA, gov here. Just wondering if you would please buy some troubled banks and lenders......? See, if you don't the system could become unstable. Hey, and 5 years later and due to witch hunts pushed by the left we will sue for things those companies did...... Now you didn't hear this from me, but we helped them do it!!!! Thanks! Sincerely Gov