By Nate Raymond

NEW YORK (Reuters) - A U.S. appeals court refused on Monday to reconsider its decision to overturn a $1.27 billion penalty against Bank of America Corp and a jury verdict finding it liable for mortgage fraud leading up to the 2008 financial crisis.

The 2nd U.S. Circuit Court of Appeals in New York rejected a petition by Manhattan U.S. Attorney Preet Bharara's office to have a three-judge panel rehear the case and give the government at least an opportunity to seek a new trial.

Bharara's office had argued that the ruling in May "overlooked a wealth of evidence" establishing the fraud perpetrated through a mortgage program called "Hustle" run by Countrywide Financial Corp, which Bank of America acquired in 2008.

The appellate court gave no reason for its decision to reject the petition to rehear the case, which was contained in a one-page order.

A spokesman for Bharara declined comment. Bank of America also declined to comment. Marc Mukasey, a lawyer for Rebecca Mairone, a former midlevel Countrywide executive who was also found liable at trial, said he was pleased with the result.

The lawsuit was filed in 2012 following a whistleblower's complaint and remains one of the biggest government enforcement cases to go to trial in connection with the U.S. housing meltdown and financial crisis.

A federal jury in 2013 found Bank of America and Mairone liable for fraudulently selling shoddy loans originated through Countrywide's "High Speed Swim Lane" program, also called HSSL or "Hustle."

The Justice Department said the program rewarded staff for generating more mortgages and emphasized speed over quality, resulting in mortgage financiers Fannie Mae and Freddie Mac being lied to about the quality of loans they bought.

Fannie Mae and Freddie Mac were seized by the government in September 2008 and remain in conservatorship.

Following the verdict, U.S. District Judge Jed Rakoff in 2014 imposed a $1.27 billion penalty on Bank of America and ordered Mairone to pay $1 million.

But the 2nd Circuit ruled in May that the evidence at most showed that Countrywide breached contracts to sell Fannie Mae and Freddie Mac investment-quality loans, and that there was no proof it intended any deception.

The case is U.S. v. Countrywide Home Loans Inc et at, 2nd U.S. Circuit Court of Appeals, No. 15-496.

(Reporting by Nate Raymond in New York; Editing by Peter Cooney)