More on BofA being sued by the U.S.

|About: Bank of America Corporation (BAC)|By:, SA News Editor

Bank of America (BAC -1.1%) defrauded investors by packaging and selling prime jumbo loans whose poor underwriting made them just as risky as subprime loans, according to the DOJ filing.

The loans were made in 2007 and packaged and sold as $850M in MBS in 2008. Investors have already lost $70M with another $50M in losses expected, says the DOJ.

The suit is not terribly unexpected as the bank last week disclosed the DOJ was probing a couple of jumbo mortgage securitization deals.

The case is the first federal suit brought by the President's RMBS Working Group. It's a civil suit, and only the bank has been named. The stock is off a few more pennies than it was 30 minutes ago.

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