Bank of America lost its bid on Tuesday to overturn a jury verdict that resulted in a $1.27 billion civil penalty over the packaging and selling of toxic residential mortgage-backed securities to Fannie Mae and Freddie Mac in the run-up to the financial crisis, according to media reports.

The bank's bid to reverse the jury decision was rejected by U.S. District Judge Jed Rakoff in Manhattan. The bank's request for a new trial was also denied by Rakoff.

The U.S. Department of Justice sued Bank of America in August 2013, accusing the bank's Countrywide division of misrepresenting the mortgage-backed securities it sold to Fannie Mae and Freddie Mac in the years leading up to the financial crisis through a program known as the High Speed Swim Lane (HSSL, or “Hustle”). The government said the program emphasized speed over quality of the loans sold, and staff members were rewarded according to sales volume.

Larry Grayson, a spokesman for Bank of America, declined to comment on Tuesday's verdict but did say that the bank planned to appeal the underlying decision.

Bank of America was ordered to pay a $1.27 billion penalty in July 2014 as a result of its alleged role in the “Hustle” case. The bank had been fighting to overturn that verdict  since, claiming that the HSSL program ended prior to its acquisition of Countrywide.

Charlotte, North Carolina-based Bank of America acquired Countrywide in 2008 for $4 billion, but has since had to pay many more billions in settlements, legal costs, and loan buybacks as a result of that acquisition. In December, it was announced that former Countrywide executive Edward O'Donnell will collect $57 million for his role in filing a whistle-blower lawsuit against Bank of America in the HSSL case. O'Donnell filed his suit under the False Claims Act.

In a separate case, Bank of America agreed to a record $16.65 billion settlement with the Department of Justice in August 2014 over the packaging and selling of toxic residential mortgage-backed securities.

By Brian Honea