Bank of America Sued in N.Y. Over Mortgage-Backed Securities

Bank of America Corp. was sued by Bank Hapoalim BM (POLI) and Principal Life Insurance Co. for fraud and breach of contract over the sale of almost $960 million worth of mortgage-backed securities.

Principal Life sued Charlotte-based Bank of America over its investment in $239 million worth of the securities, according to documents filed in New York State Supreme Court in Manhattan on March 30. Principal Life, a unit of Des Moines, Iowa-based Principal Financial Group, sued JPMorgan Chase & Co. in the same court earlier this month over $114.9 million worth of the securities.

Bank Hapoalim, Israel’s second-biggest bank by assets, sued over $721 million. Pools of home loans securitized into bonds were a central part of the housing bubble that helped send the U.S. into the biggest recession since the 1930s. The housing market collapsed, and the crisis swept up lenders and investment banks as the market for the securities evaporated.

Lawrence Grayson, a spokesman for Bank of America, said he had no immediate comment on the lawsuits.

The cases are Principal Life Insurance Co. v. Bank of America Corp. (BAC), 651015/2012 and 651017/2012, and Bank Hapoalim B.M. v. Bank of America Corp., 651022/2012, New York State Supreme Court (Manhattan).

To contact the reporter on this story: Chris Dolmetsch in New York at cdolmetsch@bloomberg.net

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net