San Diego Looks to Halt Countrywide Foreclosures
San Diego, Calif. is the latest city to attempt to stop a growing tide of foreclosures via legal action, with city attorney Michael Aguirre filing a civil complaint earlier this week against Countrywide Financial Corp. that alleges the former lender engaged in a "pattern of unlawful, fraudulent or unfair predatory real estate lending practices" that has put city residents in jeopardy of losing their homes. "We are asking a court to prevent Countrywide from initiating or advancing any foreclosure on any residential sub-prime mortgages involving properties which are owner occupied in the City of San Diego," said City Attorney Michael Aguirre. "We believe these borrowers are victims of fraud and were roped into unconventional sub-prime loans when they probably could have qualified for a conventional fixed-rate mortgage." The complaint alleges that Countrywide made loans "based predominantly on the foreclosure or liquidation value of a borrower's collateral rather than on the borrower's ability to repay the mortgage," and that the company actively induced borrowers into serial refinancing in order generate fees from loan flipping. "Countrywide originated loans with little or no regard for the borrowers’ financial ability to afford the loans or to sustain homeownership," Aguirre's office said in a press statement Wednesday. Countrywide was acquired by Bank of America Corp. (BAC) on July 1. Bank of America spokesperson Shirley Norton told HW Thursday that BofA could not comment on the case, saying that the bank had yet to receive the complaint. "Since taking ownership of Countrywide on July 1, the Bank of America team has been involved in a detailed review of Countrywide's operations," she said in an email, reiterating BofA's commitment to sustainable home ownership. "We are working hard to combine our two companies, and are confident we will be recognized as a leader in responsible lending practices," she said. San Diego ranked 11th out of 100 major metropolitan statistical areas for foreclosure activity during the second quarter, according to data provided by RealtyTrac. One in every 65 households within the MSA during the second quarter were involved in some form of foreclosure activity during the quarter, a three-fold increase from year-ago levels. Disclosure: The author held no positions in BAC when this story was published; indirect holdings may exist, however, via mutual fund investments. HW reporters and writers follow a strict disclosure policy, the first in the mortgage trade.