Securitized mortgage loans are largely blamed for leading to the collapse of the financial sector after the real estate bubble burst, pushing some institutions into bankruptcy and leading to a collossal plunge in the stock market.
The civil division of the U.S. Attorney's office for the Eastern District of California told JP Morgan in May that, based on preliminary findings, the bank had breached securities law.
The probe is part a broad crackdown on financial fraud by a government task force. Banks have also faced intense scrutiny for other housing sector issues, including claims that they baited prospective homeowners with subprime loans.
The news comes after the Department of Justice announced on Tuesday it had sued Bank of America (NYSE:BAC) for misleading investors on the risks of investing in mortgage bonds.
The Justice Department accused Bank of America of neglecting its due diligence and lying to cover up the true nature of the investments. The U.S. Securities and Exchange Commission also got involved, filing a civil suit against the bank.
Shares of Bank of America gained 0.5 per cent mid-afternoon on Thursday.