NEW YORK, July 31 (Reuters) - UBS sued Bank of

America ( BAC ) for $200 million on Wednesday, saying the

second-largest U.S. bank refused to cover its legal costs

related to risky mortgages issued before the 2008 global

financial crisis.

The Swiss bank bundled mortgages from Countrywide Financial,

which Bank of America ( BAC ) bought in 2008, into securities, and said

Countrywide agreed to indemnify it against claims that the

mortgages were underwritten poorly or fraudulently.

UBS reached an $885 million settlement in 2013 with the U.S.

Federal Housing Finance Agency and a confidential settlement in

2016 with the Federal Home Loan Bank of San Francisco over

Countrywide's loans.

It said that despite extended talks with Bank of America ( BAC )

about indemnification, including for about $53 million of legal

costs, the Charlotte, North Carolina-based bank "ultimately

refused to comply with its indemnification obligations."

Bank of America ( BAC ) did not immediately respond to requests for

comment. UBS declined to comment, including on how the $200

million was calculated. The complaint was filed in a New York

state court in Manhattan.

A slew of litigation since 2008 has sought to hold lenders

liable for the plunging value of residential mortgage-backed

securities once considered safe.

UBS' lawsuit differs by seeking coverage for settlements

related to those securities.

Led by the late Angelo Mozilo, Countrywide became the

largest U.S. mortgage lender by catering to subprime borrowers

who might otherwise struggle to afford homes, often allowing low

initial monthly payments and requiring little documentation.

Countrywide's loans contributed to a housing bubble that

burst as home prices cratered, fueling the financial crisis and

a U.S. recession.

Bank of America ( BAC ) bought Countrywide at a fire-sale $2.5

billion price in July 2008. It ultimately incurred tens of

billions of dollars in legal and other costs from its purchases

of Countrywide and Merrill Lynch, completed six months later.

The case is UBS Americas et al v Countrywide Home Loans Inc

et al, New York State Supreme Court, New York County.