A federal judge in New York ordered Bank of America to pay $1.27 billion as a penalty for a case involving Countrywide Financial's "Hustle" mortgage program.

The amount is less than the $2.1 billion that the government was seeking. But the penalty and the judge's harshly written opinion also come at a bad time for the bank, which is in the midst of negotiating a civil settlement with the Justice Department in Washington, DC, and could give the government more leverage to extract a larger fine in that case.