* Review finds “underwriting deficiencies” - Bloomberg
* Says deficiencies caused $720,000 in losses - Bloomberg
Oct 4 (Reuters) - Bank of America Corp (BAC.N) could face fraud claims after its Countrywide mortgage division submitted incorrect mortgage information on some government insured-loans, Bloomberg reported on Tuesday.
The unit of the largest U.S. bank by assets submitted incorrect borrower data and had “material underwriting deficiencies” on half of 14 loans reviewed during an audit by the U.S. Department of Housing and Urban Development, Bloomberg reported.
The HUD Office of Inspector General’s report said the deficiencies generated $720,000 in losses, and a HUD regional inspector general recommended the agency pursue legal remedies, Bloomberg reported.
The HUD audit report also recommended the bank review all loans that defaulted within the first six months of their creation, repay the $720,000, and implement a quality-control program, Bloomberg said.
A fraud suit would be the latest blow in Bank of America’s continuing battle over its troubled home loan portfolio.
Investors have been pushing the bank to repurchase billions in soured mortgages packaged into mortgage-backed securities.
Some analysts have projected the bank will need to raise as much as $50 billion in capital to cope with the mortgage problems.
Bank of America and other U.S. banks face added mortgage losses and costs if the Federal Housing Administration, a subset of HUD, rejects claims the banks make on soured loans backed by the government program.
In May, the U.S. government sued Deutsche Bank AG (DBKGn.DE) for more than $1 billion, alleging the German bank misled the FHA as it arranged for mortgage insurance.
A Bank of America spokesman was not immediately available for comment.
Reporting by Joe Rauch; Editing by Richard Chang