City Attorney Sues WaMu Over Lending Practices

SAN DIEGO -- City Attorney Michael Aguirre filed a lawsuit Friday against Washington Mutual, alleging that the bank engaged in unlawful subprime mortgage lending practices.

The lawsuit seeks civil penalties and an injunction to stop further lender foreclosures on subprime mortgages statewide.

The 17-page complaint alleges that Washington Mutual, which was recently taken over by JPMorgan Chase, was involved in "unlawful, unfair or fraudulent predatory lending practices."

It is the second lawsuit filed against a major mortgage lender by the San Diego City Attorney's Office in recent months.

Aguirre said his office will bring another lawsuit against an undisclosed home loan company by Tuesday.

"We believe that all subprime, predatory loan foreclosures should be brought to a halt and that those loans should be reworked," Aguirre told reporters.

Aguirre sued Countrywide Financial Corp. and new parent company Bank of America in July, also alleging unlawful lending practices.

California Attorney General Jerry Brown filed a similar suit, along with 10 other states, against Countrywide the month prior, alleging that the mortgage lender deceived borrowers by misrepresenting loan terms, loan payment increases and the homeowner's ability to pay.

Earlier this week, Countrywide announced a settlement that will provide up to $8.68 billion in relief to borrowers, including $3.5 billion to California. The deal temporarily halts certain foreclosures on subprime mortgages made by Countrywide and helps borrowers refinance.

It's unclear if the attorney general plans to bring similar lawsuits against Washington Mutual and other lenders.

The settlement reached between Countrywide and the attorney general rendered much of Aguirre's lawsuit moot, but he has said he will still pursue civil action against the company's executives.

Aguirre, who is up for reelection on Nov. 4, sent a letter to the attorneys for Bank of America, urging them to take steps under the settlement agreement to help 300 homeowners in San Diego avoid foreclosure.

His letter calls on BofA to outline its home retention program and to make available trained staff via phone to help out those who face foreclosure from a Countrywide-generated subprime mortgage.