No matter how you cut the cake, Bank of America (BAC) could be on the hook for billions of dollars in damages as the mega bank fights the claims of bond insurer MBIA (MBI) in court.

MBIA versus BofA is just one of the key cases involving the insurer's claims that it lost on bonds backed by toxic mortgages that it insured for Countrywide (now BofA).

An expert witness for MBIA submitted testimony for the trial, suggesting BofA is on the hook for roughly $4.023 billion in rescission damages. However, that number is from late 2011 and is likely to have risen since then. More recent estimates have put the number closer to the $4.5-to-$5 billion range. In fact, MBIA CEO Jay Brown said during an earnings call this year that "our direct economic damages from the unpaid Bank of America put-backs are now approaching $5 billion, reflecting both incurred losses and accrued statutory interest." However, MBIA's right to rescission-related damages is being contested by the parties.

Joseph Mason, Endowed Chair of Banking at Louisiana State University, made that estimation after determining the sum of the present value of past claims paid by MBIA on BofA-Countrywide loans minus the premiums received. The calculation also includes expected future claims minus the anticipated premiums received, according to Mason's report for the court.

BofA declined to comment on the damage estimates.

Rescission damages essentially are dollars paid to unwind a financial contract with the goal of putting the parties back to their original position before entering a deal.

Mason recommended the rescission-damages formula in his report for this case, saying the amount of a total repurchase of the defective loans could amount to approximately $3.6 to $3.96 billion.

"The repurchase remedy, however, is designed for small numbers of defective loans that have not yet been removed from the pools and is not efficient as an ex post remedy for the large-scale material misrepresentations and material breaches in this case," Mason wrote in his testimony for the court.

For BofA, the MBIA suit is just one of many cases challenging loans that Countrywide made and eventually sold off to investors via the securitization process, putting insurers and other parties on the hook.

The MBIA v. Countrywide case has raised concerns that litigation against big banks, especially BofA over Countrywide loans, are creating a silent litigation storm where the exposures are well into the billions. Still, the exact loss exposure estimate remains somewhat uncertain to date with it unknown what type of settlements or decisions will be released by the courts.

When looking at just the top 11 mortgage originators, Compass Point Research & Trading said those banks could incur a cumulative loss of $94.7 billion on putback claims associated with the private-label market as well as Fannie Mae and Freddie Mac.