FMCC Federal Home Loan Mortgage Corporation (QB)

WASHINGTON—The Justice Department asked a federal appeals court to reconsider its ruling throwing out a civil mortgage-fraud case against Bank of America Corp., saying the court had "overlooked a wealth of evidence" in reaching its decision.

The Second U.S. Circuit Court of Appeals in New York had ruled in May that the government hadn't proven fraud by Bank of America's Countrywide unit, only breaches of a contract, in a stunning setback for the government.

The Justice Department said the three-judge panel had overlooked the terms of the contract that support its case. It asked in papers filed Thursday that the court reconsider the case and send it back for another trial if it reached the same conclusion.

The government had initially faced a deadline last month to decide whether to appeal the case but had sought more time, saying the case was of "particular concern" for the Justice Department and that it needed input from other officials.

Legal experts had viewed the ruling as potentially affecting not just similar civil-fraud cases, but potentially also criminal fraud cases that involve contracts.

The case started with a civil lawsuit that the U.S. attorney's office in Manhattan filed against Bank of America in 2012. It alleged a precrisis program by Countrywide Financial Corp.—created before the giant mortgage lender was taken over by Bank of America—called "Hustle" had generated shoddy mortgages and then misrepresented those loans when selling them to Fannie Mae and Freddie Mac, which had to be bailed out by the government during the financial crisis.

Bank of America declined to comment.

Write to Aruna Viswanatha at Aruna.Viswanatha@wsj.com

(END) Dow Jones Newswires

August 04, 2016 17:25 ET (21:25 GMT)

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