AIG is suing Bank of America for more than $10 billion over mortgage securities. AIG claims that the bank is not being honest in how it sold residential mortgages. AIG says the Bank of America sold said mortgages that were overvalued.
AIG is claiming that Bank of America, and two other units it took overÂ—Merrill Lynch and CountrywideÂ—sold them hundreds of thousands defected mortgages. The original buying price was $28 billion. A list of complaints on how the Bank of America mishandled their mortgages include, but are not limited to, inflated home appraisals, allowed borrowers to misstate their income, and selected the riskiest mortgages for securitization.
Bank of America is denying it, of course. They say AIG knew about the risks involved in buying mortgages and it's not their fault that the mortgages were defected. The bank recently settled a lawsuit with Bank of New York for $8.5 billion over the same issues as with AIG. AIG is trying to intervene in that ruling. They're calling for a more thorough investigation.
One example of a possible bad move on Bank of America's part is that, in one report, the owner of a construction business said she was the owner of said business for 25 years. According to her records, she would have been 10 years old when she first became owner.