Close Menu

Contact us

Contact Us

AIG Files Mortgage Securities Fraud Lawsuit against The Bank of America

Posted on October 14th, 2011

American International Group has filed a lawsuit against Bank of America, claiming that the bank sold billions of dollars in fraudulent mortgage-backed securities.

The lawsuit has been filed in the New York Supreme Court and comes after an investigation into the manner in which several large banks sold mortgage loans. The AIG lawsuit claims more than $10 billion in losses, and is believed to be the single largest mortgage securities-related lawsuit by a single investor.

According to the lawsuit, Bank of America and its Merrill Lynch and Countrywide Financial units sold mortgage securities that were flawed by fraudulent actions and misrepresentations. Among other things, Bank of America misrepresented the quality of the mortgages it was selling. Bank of America with Merrill Lynch and Countrywide Financial sold mortgages to borrowers who were clearly unable to repay the loans. These loans were then repackaged into supposedly low-risk securities, and sold to investors like AIG.

This lawsuit is one among several lawsuits that are being filed by private investors who believe that banks misrepresented facts, luring customers into buying high-risk securities during the housing boom. There are already 90 mortgage fraud lawsuits demanding $197 billion. AIG is already in the process of preparing similar lawsuits against other banks and financial institutions including J.P. Morgan Chase, Goldman Sachs and Deutsche Bank. For AIG, which would’ve gone bankrupt had it not been for the $180 billion government bailout in 2008, these lawsuits are aimed towards recovering some of its losses during the financial crisis that year.

To Los Angeles securities fraud lawyers, the increasing numbers of lawsuits against banks and large financial institutions stand in sharp contrast to the action by the U.S. Justice Department. The agency has not taken action against any of the major banks, and in fact, is currently in the process of wrapping up many of its investigations without pressing charges.

Related Link:-