- 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.
More on BofA being sued by the U.S.
Aug 6 2013, 15:44 ET