Bank of America Corp has been subpeonaed by investigators with the California state attorney general's office in connection with the sale and marketing of troubled mortgage-backed securities to California investors, according to the LA Times. The state is trying to determine whether the bank and its Countrywide Financial subsidiary sold investments backed by risky mortgages to institutional and private investors in California under false pretenses. The subpoenas come as talks continue for a broad foreclosure settlement by a coalition of state attorneys general and federal agencies. California walked away from those discussions with major banks more than two weeks ago, saying what the banks were offering was not enough and the state would pursue its own investigations. California has left the door open to signing on to a bigger settlement, and the BofA subpoenas were seen as a move to exert further pressure on the bank. A person familiar with the matter would not say how much the securities in question cost investors. State and federal officials are also trying to entice California back into talks, this week floating an idea for helping creditworthy homeowners refinance loans that are underwater, or higher than the values of the homes. But the subpoenas could also indicate that Atty. Gen. Kamala Harris is widening her own probe of big mortgage lenders. Harris has created a mortgage fraud strike force with a mandate of looking into all aspects of mortgage fraud, including securitization. Many of these investments plunged in value as the housing market collapsed. Under California's False Claims Act, which makes it a crime to defraud the state, damages of up to three times the amount of the claim can be awarded if the victim was an institutional investor, such as one of the state's pension funds. The subpoenas are the latest assault resulting from Bank of America's 2008 acquisition of Countrywide Financial Corp. as the Calabasas-based lender, then the nation's No.1 home lender, skidded toward bankruptcy. Countrywide helped fuel the housing boom and bust by trying to out-compete all rivals in the high-risk niches of the business: subprime loans to people with bad or nonexistent credit histories, "liar" loans made without verifying income and assets, and mortgages that allowed borrowers to pay so little that their loan balances rose instead of falling. Within months of acquiring Countrywide, Bank of America agreed with then-California Atty. Gen Jerry Brown and his counterparts in other states to cut payments by as much as $8.6 billion on mortgages that the officials said had abused borrowers.  [LA Times, 10/20/11]