US federal authorities are investigating the Bank of America for potentially violating rules related to the Federal Housing Administration's Direct Endorsement Program (FHADEP).
According to BofA's annual report with the US Securities and Exchange Commission (SEC), the Wall Street giant confirmed that it is under civil investigation over whether it stayed within the rules when it approved and underwrote home loans.
BofA added in the filing that its litigation expense war chest may exceed $6.1bn (£3.7bn, €4.4bn), from previous estimates of $5.1bn at the end of the third quarter.
BofA is the latest in a line of banks to be investigated for mortgage fraud.
JPMorgan stumped up $614m to the US government, at the beginning of the month, in a bid to settle a raft of legal claims against the Wall Street giant, after it admitted that it had committed mass mortgage fraud.
According to court documents, JPM defrauded federal agencies by underwriting sub-standard mortgage loans and has agreed to pay over half a billion dollars to settle the cases.
Court filings show that the largest US bank by assets had perpetrated mortgage fraud by approving thousands of insured loans that were not eligible for insurance by the Federal Housing Administration or the Department of Veterans Affairs.
In 2012, Citi agreed to pay $158.3m while Deutsche Bank agreed to pay $202.3m in similar lawsuits.