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SEC, Justice Department Sue BofA Over $855M RMBS Offering

The ""Securities and Exchange Commission"":http://www.sec.gov/ (SEC) and ""Justice Department"":http://www.justice.gov/ filed separate complaints against Bank of America and certain subsidiaries for allegedly misrepresenting an $855 million offering of residential mortgage-backed securities (RMBS), according to statements Tuesday.

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The SEC's complaint filed in U.S. District Court for the Western District of North Carolina stated the offering, known as BOAMS 2008-A, was sold as ""prime"" securitization. However, more than 70 percent of the offering originated through the bank's wholesale channel of third-party mortgage brokers. Even though the wholesale channel loans carried greater risk, the bank did not disclose information regarding the associated risks to investors, according to the complaints.

In addition, more than 40 percent of the 1,191 mortgages in the offering did not conform to the bank's own guidelines, according the Justice Department's statement. The complaints allege that as a result of the misrepresentations, investor losses are expected to exceed $100 million.

In a statement, a BofA spokesperson told ""_The New York Times_"":http://dealbook.nytimes.com/2013/08/06/justice-sues-bank-of-america-over-mortgage-securities/, ""These were prime mortgages sold to sophisticated investors who had ample access to the underlying data and we will demonstrate that.""

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