Bank of America disclosed on Thursday that the Justice Department was weighing whether to bring a civil complaint against it over claims that the bank had improperly handled securities backed by jumbo loans.
The Securities and Exchange Commission is also considering whether to file a civil action over how Merrill Lynch, the brokerage house owned by Bank of America, handled its securities, the bank said in a filing.
The potential actions would be the latest mortgage woes for the bank, which is based in Charlotte, N.C., just as it is trying to move beyond the problems of the financial crisis.
In the filing on Thursday, Bank of America said it was “in active discussions†related to the investigations. As part of those discussions, the bank will seek to argue why bringing a civil charge would be a mistake.
In addition, the New York attorney general may also move against Merrill Lynch over the residential mortgages the bank packaged and sold.
Bank of America was pummeled by a glut of bad mortgages it inherited after acquiring a troubled mortgage lender, Countrywide Financial, in the financial crisis.
And like some of its Wall Street rivals, Bank of America is still grappling with mistakes it made during the housing boom.
In October, federal prosecutors in New York accused Bank of America of churning out loans through its Countrywide unit at such a rapid clip that quality controls were largely ignored.
The bank also is facing a high-stakes lawsuit in federal court that could further crimp profits. In that case, the Federal Housing Finance Authority, which oversees Fannie Mae and Freddie Mac, sued Bank of America and 17 other banks, claiming that the lenders had duped the agencies into buying shaky securities.
As part of its efforts to move beyond the mortgage turmoil, Bank of America reached a $1.7 billion settlement in May to resolve a drawn-out battle with MBIA, the bond insurer, over mortgage-backed securities.
