[Update 1: adds comment from Bank of America] Ambac Assurance Corporation, the guarantor of structured finance obligations for Ambac Financial Group Inc. (ABK), is suing Bank of America Corporation (BAC) over losses associated with fraudulent mortgages allegedly originated and sold as securities by Countrywide Financial. Ambac claims it was mislead about the quality of loans the monoline insured as securities between 2004 and 2006. Bank of America took over Countrywide in 2009. According to the Ambac complaint filed on Tuesday, the firm engaged in 12 transactions with Countrywide consisting of more than 268,000 loans, which served a total collateral of about $16.7 billion. Ambac decided to review its portfolio after masses of loans began to default. The filing said that, to date, over 35,000 loans ($1.95 billion) have defaulted or been charged-off, costing Ambac $466 million in claim payments. Ambac has so far reviewed 6,533 Countrywide loans, 97% of which it found did not comply with the failed institution's representations and warranties. "Countrywide's loans did not bear the represented attributes or conform to Countrywide's own underwriting guidelines," the filing said, "And in many cases were made to borrowers with little or no ability to repay their loans." Ambac Financial recently made announcements that it could potentially go bankrupt after state regulation prohibited Ambac Assurance from paying dividends to its holding company. The state of Wisconsin requires a company's capital to level with its surplus. Ambac's capital, as a result, fell below par. Managing director for investor relations at Ambac, Peter Poillon, said he couldn't directly attribute Ambac's bankruptcy to the deals with Countrywide. He told HousingWire "because of our exposure to those transactions and others, Ambac Assurance is no longer able to issue those cash dividends to holding company." Bank of America said it had no comment about the subject. Write to Christine Ricciardi. Disclosure: The author holds no relevant investments.