San Diego City Attorney Mike Aguirre said today he has filed suit against Bank of America, and plans to do the same against a handful of other mammoth mortgage lenders, in an attempt to stop subprime foreclosures in San Diego.
Aguirre says he has the authority to sue Bank of America — specifically its subsidiary Countrywide — under state law that allows the city attorneys of large cities to sue companies that engage in unfair, unlawful or fraudulent business practices.
There is more than ample evidence, Aguirre says, that Countrywide and other lenders were engaged in one or all of those things in issuing subprime loans to borrowers who didn’t have the means to take on such debt.
“Foreclosure is an equitable remedy for bonafide debt,” Aguirre said. “But if the debt is not bonafide, then there is historic precedent to stop foreclosures.”
Aguirre said he will file similar suits against Washington Mutual, Wells Fargo and Wachovia. He said he is following the lead of city attorneys in Cleveland, Buffalo and Baltimore, who this year have sued mortgage companies and investment banks to, among other things, recover tax revenue lost because of foreclosures.
He said his ultimate goal is to get the companies to agree to a large-scale workout of the terms of subprime loans taken out by San Diego residents.
“This is a classic market failure,” Aguirre said. “And consumer law exists to provide these kinds of remedies.”