The US department of justice has sued Bank of America for more than $1 billion in the first fraud suit over defective home loans sold to Fannie Mae and Freddie Mac, government- -backed mortgage companies.

The legal action, alleging that the bank committed civil fraud, opens a new front in the protracted reckoning for the US mortgage crisis. It could spell more trouble for the bank’s rivals, many of which are already mired in litigation.

Countrywide, the California- based mortgage lender that BofA bought in 2008, used a process called the “hustle” and “high speed swim lane” to deal with loans rapidly without checking their quality, the lawsuit said. Countrywide removed bonuses linked to the quality of loans and paid them solely on volume, the lawsuit claims. – The Financial Times Limited 2012