Halah Touryalai, Forbes Staff

Bank of America BAC -1.1%‘s legal troubles just got more complicated today as US regulators accused it of fraud over mortgage securities.

Photo of Bank of America ATM Machine by Brian ...The SEC and Department of Justice filed a civil suit today against BofA claiming the bank defrauded investors when it sold mortgage securities backed by more than $855 million in residential mortgages.

Bank of America entities in 2008 sold the RMBS (residential mortgage backed securities) and told investors they were backed by high quality, prime mortgage loans. In reality, BofA knew that the loans were subject to underwriting errors, that they would become severly delinquent and fail early in the life of the loan, according to the SEC suit.

The suit says an “unprecedented portion” of the mortgage loans had been originated through mortgage brokers unaffiliated with the Bank of America Entities through a so-called wholesale channel.

Continue Reading…http://www.forbes.com/sites/halahtouryalai/2013/08/06/bank-of-america-hit-with-fraud-suits-over-855m-in-mortgage-securities/?partner=yahootix