SAN DIEGO -- City Attorney Michael Aguirre said Monday he intends to file additional litigation against subprime mortgage lenders in an effort to halt further foreclosures in San Diego.

His announcement comes on the same day mortgage lender Countrywide reached a settlement with 11 states designed to provide up to $8.68 billion in relief to borrowers, including $3.5 billion to Californians.

California Attorney General Jerry Brown filed suit against Countrywide on June 30, before it was acquired by Bank of America, alleging that the mortgage lender deceived borrowers by misrepresenting loan terms, loan payment increases and their ability to pay.

Aguirre sued Countrywide on July 23, also alleging that the mortgage giant engaged in unlawful lending practices that contributed to widespread foreclosures in San Diego.

Aguirre's lawsuit sought an injunction to stop lender foreclosures in San Diego and called for civil penalties against Countrywide.

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

Aguirre, who is up for reelection on Nov. 4, said his office will also work to ensure that Countrywide and Bank of America complies with the settlement agreement and halts certain foreclosures.

The city attorney also said that by Friday, his office will file litigation against other sub-prime mortgage lenders.

"What we want to do is make this universal," Aguirre said. "We want to stop every foreclosure of a subprime loan in order to provide the time and provide the forum to work those loans out so that they can go from nonperforming to performing."

In a statement, Brown said the settlement with Countrywide will give homeowners "direct relief from the catastrophic damage caused by Countrywide."

"Countrywide's lending practices turned the American dream into a nightmare for tens of thousands of families by putting them into loans they couldn't understand and ultimately couldn't afford," he said.

The settlement will enable eligible subprime and pay-option mortgage borrowers to avoid foreclosure by obtaining a modified and affordable loan, according to Brown's office.

"The loans covered by the settlement are among the riskiest and highest defaulting loans at the center of America's foreclosure crisis," the statement said. "Assuming every eligible borrower and investor participates, this loan modification program will provide up to $3.5 billion to California ..."

Brown's office said the settlement was reached with Countrywide Home Loans, Countrywide Financial Corp. and Full Spectrum Lending, a division of Countrywide Bank.

The states party to the settlement, negotiated by the offices of the attorney generals of California and Illinois, are California, Arizona, Connecticut, Florida, Illinois, Iowa, Michigan, North Carolina, Ohio, Texas and Washington.

The settlement does not include former Countrywide Financial Corp. Chairman and Chief Executive Angelo Mozilo or David Sambol, the corporation's former president and chief operative officer. Brown will continue to prosecute a case against Mozilo and Sambol, his office said.

According to Brown's office, the settlement will result in:

Suspension of foreclosures for eligible borrowers with subprime and pay-option adjustable rate loans pending determination of borrower ability to afford loan modifications.

Loan modifications valued at up to $3.4 billion worth of reduced interest payments and, for certain borrowers, reduction of their principal balances.

Waiver of late fees of up to $33.6 million.

Waiver of prepayment penalties of up to $25.6 million for borrowers who receive modifications, pay off, or refinance their loans.

$27.9 million in payments to borrowers who are 120 or more days delinquent or whose homes have already been foreclosed.

Approximately $25.2 million in additional payments to borrowers who, in the future, cannot afford monthly payments under the loan modification program and lose their homes to foreclosure.

The program will be available to homeowners with subprime and pay-option adjustable-rate mortgages in which the borrower's first payment was due between Jan. 1, 2004, and Dec. 31, 2007.

In addition to agreeing to direct relief to borrowers, Bank of America, which negotiated the settlement after acquiring Countrywide, has agreed to suspend offering, under its own name or through Countrywide, subprime loans or loans that can negatively amortize.

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