San Diego sues Bank of America to halt foreclosures

By Marty Graham

SAN DIEGO (Reuters) - San Diego's city attorney said on Wednesday he filed a lawsuit against Bank of America Corp and its Countrywide unit to prevent the mortgage lenders from foreclosing on homes in the city, which he aims to make a "foreclosure sanctuary."

City Attorney Michael Aguirre plans to file similar lawsuits against Washington Mutual Inc, Wells Fargo & Co and Wachovia Corp in an effort to make the lenders negotiate with mortgage borrowers facing foreclosure.

"We would like to see San Diego become a foreclosure sanctuary," Aguirre said.

Housing markets across Southern California, including the city of San Diego and the county of the same name, are seeing steep increases in foreclosure rates because so many homes bought there earlier this decade involved subprime mortgages and other types of risky loans.

So far this year, 20,000 homes in San Diego County, with a population of 2.9 million, have been lost to foreclosure as borrowers fail to keep up with mortgage payments and some analysts forecast the number may rise to 40,000 by the end of the year.

"We haven't seen the lawsuit and can't comment," Bank of America spokeswoman Shirley Norton said.

In a statement provided by Norton, Bank of America said it had been reviewing in detail Countrywide's operations since acquiring the lender earlier this month and the combined company would no longer sell subprime mortgages.

"We are working hard to combine our two companies and are confident we will be recognized as a leader in responsible lending practices," the statement said.