Bank of America Corp. (NYSE: BAC), dogged by lawsuits for the past four years, now has another one on it’s plate – and this one may gain the most exposure yet. The most recent lawsuits comes from the federal government, which filed a civil lawsuit against the firm alleging that the second-biggest U.S. bank by assets saddled taxpayers with losses by misrepresenting the quality of home loans it sold to mortgage-finance firms Fannie Mae and Freddie Mac.

The mortgage process has been the target of criticism in recent years, as investors and observers have come to see that after banks give loans and sell them (often to a government agency), they are left with virtually no ‘skin in the game’. The government is suing Bank of America under the Federal False Claims Act, which has become a popular tool for prosecutors seeking to hold banks accountable for alleged mortgage misdeeds and calls for triple damages when the government can show taxpayers were ripped off. Many loans turned bad, leaving the buyers of the mortgages holding worthless paper.

The action, filed Wednesday in federal court in Manhattan, seeks at least $1 billion in damages. The filing represents a novel effort by the government to defray costs tied to the 2008 bailout of Fannie and Freddie, and potentially opens a new front against a banking industry already dealing with hefty legal costs.

The majority of the mortgages and losses related to Bank of America originated in the former Countrywide business, which BofA acquired in 2008. The government alleges Countrywide, which Bank of America acquired in 2008, dismembered quality control and checks on loan quality in 2007 through 2009, in a process called “the Hustle” that aimed to boost the speed at which it originated and sold loans to the companies. The mortgage unit falsely continued to claim the loans qualified for insurance from Fannie Mae and Freddie Mac, the complaint alleges.

This is the second suit Preet Bharara, the U.S. attorney for the Southern District of New York, has brought against banks it accused of duping the federal insurance programs this month. Two weeks ago, his office sued Wells Fargo & Co. (NYSE: WFC), the biggest U.S. mortgage company, of recklessly issuing mortgages and leaving the Federal Housing Administration to pick up the tab.

Fannie Mae stopped buying or guaranteeing new loans delivered by Bank of America this past February amid an impasse over billions in defaulted mortgages that Fannie said Bank of America was obligated to repurchase. Negotiations over resolving the dispute are ongoing, according to both parties. Bank of America has recorded billions in legal fees and settlements since the financial crisis, this one may serve to run up that total yet again.