A judge narrowed a $1 billion lawsuit by the U.S. against Bank of America Corp. over mortgages the bank and its Countrywide unit sold to Fannie Mae and Freddie Mac.

The U.S. sued B of A in October, intervening in a whistle-blower action originally filed by a former Countrywide executive, Edward O’Donnell. The U.S. claimed B of A and Countrywide, which it acquired in 2008, sold thousands of defective loans from 2007 to 2009 to Fannie Mae and Freddie Mac, home-mortgage finance companies now under government control.

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