WASHINGTON – The United States government has filed today two civil charges versus the Bank of America (BOA), accusing the financial institution of mortgage-supported fraud in the bank’s sale of around $850 million in residential mortgage securities.
The filing of the charges is the newest financial and legal pain for the country’s second biggest bank that has already given the nod to pay more than $45 billion in cash to put an end to conflicts as a result of the global financial turmoil of 2008.
As majority of the legal debacles that BOA is being hounded and has already dealt with is tied to the bank’s purchase of Merrill Lynch and Countrywide, the latest charges it is facing are linked to mortgages that the US government claims were securitized and sold by the legacy division of BOA.
The RMBS, or residential mortgage backed securities, at issue were of higher quality level in terms of credit depth compared to the sub-prime mortgage bonds to about January of 2008, the US government bared, several weeks following the report by many banks at Wall Street of billions worth of write downs on holding of such securities.
Meanwhile, the Securities and Exchange Commission and the Department of Justice have filed a similar charge in North Carolina’s district court that accuses BOA of committing false statements and for failing to disclose key details regarding the mortgages that cover the sale of mortgage securities to investors some five years ago.