Tomahawk, WI 11/05/2013 (BasicsMedia) – Bank of America Corp (NYSE:BAC)Investors have decided to do away with a  lawsuit against American International Group Inc. in which the latter was thought to be preparing lawsuit against billions of dollars in Mortgage backed securities that the bank had issued in 2011. Bank of America had warned its investors that it faced substantial litigation risks if the lawsuit was to go forth. This is according to a US district judge John G Koelt in his ruling posted on the Manhattan federal court. Bank of America argues that the alleged omissions had not misled investors because BoA’s exposure was in Public domain.

AIG had sued Bank of America in 2011 for over $10 billion claiming it was a victim of massive fraud in losses on Mortgage and bond investments issued by Countrywide which Bank of America had acquired. It is thought Countrywide Financial Corporation had misled AIG as they tried to profit on bundling of mortgages into securities. Bank of America experienced a decline of stocks by a high of 20% as soon as AIG lodged the claims with the courts. It is claimed  Bank of America and other defendants had created mortgages  securities backed by shoddy loans, the bank is also believed to have sold the investments entirely based on inflated credit ratings  that masked greater risks.

 The intricate of the lawsuit got even worse for one of Americas largest bank with another housing regulator seeking a total of $6 billion from the bank to settle claims that the bank sold faulty mortgages to Fannie Mae and Freddie Mac. Two years ago the Federal Housing Finance Agency had sued the Bank of America for issuing faulty mortgage bonds in an effort of trying to recoup losses. Under the lawsuit Fannie Mae and Freddie mac have been able to recoup a total of $187.5 billion in federal aid in an effort of trying to cover their losses resulting from the fraudulent mortgages and Bonds.

 Bank of America CEO Brian T Moynihan is seeking ways of limiting additional costs that may result from the lawsuit especially after its full takeover of Countrywide Financial Corporation. The FHFA had sued Bank of America for the fraudulent mortgage securities in an effort of trying to recoup as much as $200 billion. Bank of America is believed to have created most of the fraudulent bonds followed by JPMorgan’s $33 billion. UBS AG which is Switzerland biggest bank had earlier agreed to settle $885million over claims it was also part of the fraudulent mortgage backed securities.

Bank of America Corp (NYSE:BAC) as a result of the mortgage scandal has decided to cut thousands of Jobs as its Mortgage sector continues to be probed which looks set to result in reduced revenues at the close of the current financial year. The bank has already laid 1200 employees on a sector that solely handles Mortgage origination. The bank intends to cut another 3000 jobs in the fourth quarter.

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