A magistrate judge has recommended dismissal of a U.S. Department of Justice lawsuit accusing Bank of America of defrauding customers on prime mortgages, according to a court document filed Thursday.
The department filed the suit in August, claiming the Charlotte bank misled investors on the risks involved with loans backing securities that ultimately soured. Bank of America had marketed the loans as prime loans, but the government alleged that the bank didn’t follow its own underwriting standards, meaning the loans ended up to be much riskier.
The magistrate judge ruled Thursday that the laws the government sued under did not properly apply, according to the court filing. He recommended the claims be dismissed.
The Department of Justice filed an objection to the judge’s decision Thursday. The court must still rule on whether to accept the magistrate judge’s decision. That ruling can then be appealed.
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