Stocks of large financial companies, such as Bank of American and Goldman Sachs, have taken a pounding Friday over a likely lawsuit concerning mortgage sales.

The Federal Housing Finance Agency accuses the banks of misrepresenting the quality of mortgages packaged to Fannie Mae and Freddie Mac during the robust housing market. The agency likely will argue that the banks missed evidence that borrowers incomes were falsified or inflated, and that they failed. Targets of the lawsuit are, among others, Bank of America., Goldman Sachs, J.P. Morgan and Chase.

Bank of America stock is taking a hard hit, falling nearly 7 percent to $7.38 at late-morning trading. This follows a request by the Federal Reserve for the bank to show what measures it could take if the economy worsens, according to Reuters. Bank executives responded to the Fed's request with options that includes offering a separate class of shares tied to the performance of Merrill Lynch.

The company has had difficulty in the past month or so. It recently settled lawsuits for $8.5 billion on investors' claims that they were misled on the value of mortgage-backed securities sold by Countrywide Financial, a Bank of America-owned asset.

Goldman Sachs plunged approximately 5 percent to $106.60. The stock is falling close to its 52-week low of $103.16, well off its high of $175.34. This follows Thursday's report that the Feds have ordered Goldman Sachs to hire an outside consultant to review mortgage loans, and were asked to identify and compensate borrowers who had their homes wrongly foreclosed.

Just last week, Goldman Sachs shares took on report that its CEO, Lloyd Blankfein, had hired a prominent D.C. criminal attorney. No other information has been provided about Blankfein's move.

Other financials have taken a major hit as well. J.P. Morgan fell 3.7percent to $34.96. Morgan Stanley fell 4.4 percent to $16.19.Wells Fargo dipped 3.6 percent to $24.31.

Although exacerbating the losses, the stock prices did not center on the expected lawsuit exclusively. Stocks across the board fell over reports that the U.S. did not net any job growth during the quarter, with the unemployment rate remaining stagnant at 9.1 percent.  The Dow Jones Industrial Average and Nasdaq are down 2 percent at 11,263.72 and 2,496.36, respectively. The S&P 500 is down 2.2 percent at 1,178.08.