NEW YORK ( TheStreet) -- Bank of America ( BAC)'s legal expenses continue piling up, as another big lawsuit came to light Tuesday from investors who bought mortgage backed securities (MBS), bonds stuffed with home loans made by Countrywide Financial during the crisis.

Bank of America saw $1.5 billion on litigation expenses in the fourth quarter of 2010, up from $500 million in the previous quarter, according to financial statements.

For the year, Bank of America spent some $3 billion on litigation. Those costs do not include "special items," such as a $3 billion settlement with Fannie Mae ( FNMA) and Freddie Mac ( FMCC.OB) over Countrywide MBS or a $2 billion "goodwill impairment charge," in Bank of America's Home Loans and Insurance Business.

That last charge reflects a $2 billion drop in the estimated value of the business segment "as a result of increased uncertainties, including existing and potential litigation exposure and other related risks, higher servicing costs including loss mitigation efforts, foreclosure-related issues and the redeployment of centralized sales resources to address servicing needs," according to a Jan. 3 filing Bank of America made with the Securities and Exchange Commission.

Private investors are also suing Bank of America over Countrywide MBS. The highest-profile private investor suit to date being brought against the bank comes from BlackRock ( BLK), Pacific Investment Management Co. the Federal Reserve Bank of New York, MetLife ( MET) and other investors.

However, on Tuesday, Bloomberg reported that several other big companies, including New York Life Insurance Co, TIAA-CREF, and Dexia Holdings had filed a new suit, accusing Bank of America of "massive fraud."

Bank of America CFO Charles Noski said during Bank of America's conference call to report fourth quarter earnings that it would cost Bank of America up to $7-10 billion over several years to resolve additional mortgage disputes. However, Bill Frey, a hedge fund investor, told the Financial Times Monday he believes costs to the bank could be "much much higher" if investors like him are able to organize themselves effectively.

By contrast, the $160 million in legal expenses over two and a half years from Fannie and Freddie, reported by The New York Times on Monday, looks like a relatively small sum.

A Bank of America spokesman declined to give details on the $1.5 billion in litigation costs disclosed in the fourth quarter, which does not include "fees paid to external legal service providers," Noski said during the earnings call.

-- Written by Dan Freed in New York.
Disclosure: TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks.

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