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.

Aguirre announced the lawsuit, filed in San Diego County Superior Court on Wednesday morning, at a news conference in front of an abandoned, fire-damaged house in a neighborhood hit hard by foreclosures.

The house, now in Countrywide's possession, had until December belonged to 61-year-old Vietnam War veteran Manuel Coriz, who now lives nearby.

Boards cover the house's windows. Its front entrance is charred and burned debris is scattered among tall weeds in its yard, the result of a fire set by transients who had moved in after Coriz moved out, said San Diego Police Department Sgt. James Filley.

"Every day I see my house and I cry," Coriz said. "I lived there for 21 years and I lost everything."

Aguirre's lawsuit, brought in the name of the people of California, names four current and former Countrywide officers, including former CEO Angelo Mozilo, and alleges they personally profited from selling shares of the lender's stock while knowing its subprime loans did not comply with company policies.

"The Countrywide executives who originated these subprime loans were engaged in a massive fraud on homeowners, borrowers and investors," Aguirre said. "They enriched themselves by over $1 billion."

"We have the big stick of being found in violation of the law and the carrot of taking something that is a nonperforming asset, that all these houses are, and making it a performing asset by keeping the families in it."

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