Bank of America Corp was sued by the trustee of a $1.75 billion mortgage pool, which seeks to force the bank to buy back the underlying loans because of alleged misrepresentations in how they were made.

The lawsuit by the banking unit of US Bancorp is the latest of a number of suits seeking to recover investor losses tied to risky mortgage loans issued by Countrywide Financial Corp, which Bank of America bought in 2008.

In a complaint filed in a New York state court in Manhattan, U.S. Bank said Countrywide, which issued the 4,484 loans in the HarborView Mortgage Loan Trust 2005-10, materially breached its obligations by systemically misrepresenting the quality of its underwriting and loan documentation.

Soon after the loans were sold to the trust, they began to become delinquent and default at a startling rate, the complaint said. Out of a sample of 786 of the loans, 520, or 66 percent, breached one or more representations, it said.

U.S. Bank said it demanded that Bank of America fix the breaches or buy back the loans as it had agreed to do, but that it has refused and offered no reason for this refusal.

The lawsuit demands that the bank repurchase all the loans in the pool, or at least those it knows have problems and are hurting investors in the trust.

Bank of America spokesman Lawrence Grayson said the bank is still reviewing the complaint, but the bank does not believe U.S. Bank has the right to demand repurchases under the mortgage pool agreements, or can demand repurchase for loans that are not delinquent or have been paid off.

The Charlotte, North Carolina-based bank paid $2.5 billion to buy Countrywide, but writedowns and legal costs have pushed the estimated cost of that purchase to more than $30 billion.

Last fall, Chief Executive Brian Moynihan said the bank would fight repurchase claims by investors, calling the process hand-to-hand combat.

In 2011, however, he has agreed to large settlements with mortgage financiers Fannie Mae and Freddie Mac , as well as billionaire Wilbur Ross' bond insurer Assured Guaranty Ltd . Then in June, he agreed to pay $8.5 billion to settle a wide range of Countrywide claims.

The $8.5 billion pact requires court approval but has drawn objections from several dozen investors, as well as the Federal Deposit Insurance Corp and the New York and Delaware attorneys general. Bank of America also faces a $10 billion lawsuit by bailed-out insurer American International Group Inc .

Bank of America shares closed down 27 cents, or 3.2 percent, to $8.12 on the New York Stock Exchange.

The case is U.S. Bank NA v. Countrywide Home Loans Inc et al, New York State Supreme Court, New York County, No. 652388/2011.

(Reporting by Jonathan Stempel and Joe Rauch; Editing by Derek Caney, Tim Dobbyn and Carol Bishopric)

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