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.