A jury found Bank of America Corp. (BAC.N) liable for fraud over defective mortgages sold by its Countrywide unit, but the bank is contending it doesn't owe the $2.1 billion the U.S. governmnet is seeking in penalties, Reuters reported. Prosecutors inititally asked for $863.6 million, but the amount was later bumped up to $2.1 billion.

According to a Wednesday court filing, lawyers for Bank of America said the government's request "contradicts every pertinent legal principle" and called it a "dramatic departure from reality."

Bank of America said it's only obligated to pay the amount it made in profit from selling the loans, which it says was zero, Reuters reported.

In the civil lawsuit, a federal jury in New York in October found Bank of America and Rebecca Mairone, a former executive at Countrywide (which BoA acquired in July 2008), each liable for fraud.

The case delved into a mortgage-lending process at Countrywide known as the "High Speed Swim Lane" or "HSSL," and also called the "Hustle." The U.S. government contended that Countrywide emphasized and rewarded employees for the quantity instead of the quality of loans produced and removed checklists intended to make sure loans were valid, Reuters reported.

Bank of America and Mairone denied wrongdoing, and the former said it has been evaluating options for an appeal.

In its response on Wednesday, Bank of America said that the U.S. government was incorrect by basing the penalty on the gross "gain" from the loans. The bank said that the law requires the penalty amount to be calculated by measuring "pecuniary gain," or amount of profit the bank made from selling the defective "High Speed Swim Lane" loans. According to the filing, that amount was estimated to be zero.