SAN DIEGO, Calif. (Legal Newsline)-Representatives from the state attorneys general in Illinois and California say the $8.68 billion settlement negotiated in early October by the two states will not be impacted by last week's ruling to consolidate all such lawsuits into the federal court in San Diego.

"The settlement filed in the Los Angeles is not going to be heard in San Diego County, because it's done," Dan Simas, deputy press secretary for the California attorney general's office, told Legal Newsline.

Following a Sept. 25 hearing in Boston, a federal multidistrict litigation panel ruled to consolidate all predatory lending cases against Countrywide Financial Corp.

The order stated that the federal court in San Diego was the best place to for the many cases filed against the nation's largest home mortgage lender because all of the cases dealt with similar claims.

"Centralization ... will eliminate duplicative discovery, avoid inconsistent pretrial rulings, including the issue of class certification in some actions; and conserve the resources of the parties, their counsel and the judiciary," the court order stated.

California and Illinois reached a settlement agreement with Bank of America, the financial giant that purchased Countrywide in July that includes loan modification for those facing foreclosure and financial compensation for those who were victims of predatory loans.

Simas said the terms of the settlement were filed by California Attorney General Jerry Brown in Los Angeles Superior Court on Tuesday, the same day the federal panel made its consolidation ruling.

The consolidation ruling, Simas said, "really doesn't effect our settlement with Countrywide."

Robyn Ziegler, a spokeswoman for Illinois Attorney General Lisa Madigan, agreed the court ruling made sufficient provisions to allow the settlement to proceed.

"The order mentions that we and California have settled our cases," she told LNL, "and that Countrywide withdrew its motion" to consolidate those lawsuits.

The settlement with Countrywide did not include lawsuits filed by Brown against Angelo Mozilo, former chairman and chief executive officer of Countrywide, and David Sambol, former president of Countrywide. Those two cases, Simas said, will be consolidated with the remaining cases against Countrywide in the federal court in San Diego.

Simas said the attorney general's "first order of business" is to request those two cases be returned to the state's jurisdiction.

"We have a motion to remand it back to state court. We want it to be heard in state court," Simas said.

San Diego City Attorney Mike Aguirre hailed the move to consolidate the cases, including his own filed against Countrywide, in San Diego, saying it would make the city "Ground Zero for mortgage fraud litigation."

Aguirre said he has reached out to Countrywide and the California attorney general's office to work together to help homeowners save their homes from foreclosure. But the attorney general's office said its legal work will continue to stand alone.

"We took on Countrywide for the people of California," Simas said. "He is more than welcome to pursue his case for his own constituency."

Robert Gnaizda, general counsel for Greenlining Institute, said the decision to consolidate the cases will help efforts to protect homeowners.

"Mike Aguirre has a pro-active approach," Gnaizda said, "that many of the attorneys general are lacking. He is the least likely to accept backsliding by Bank of America, and perhaps the most likely to pursue additional remedies in the context of the $25 bullion bailout for Bank of America."

Greenlining Institute is an advocacy group based in Oakland that has been active in pushing for a freeze on foreclosures during the past year.

Aguirre, who sued Washington Mutual and Wachovia for its predatory lending practices within the last week, said his involvement in the case will allow for the massive and tedious work of reworking hundreds of thousands of loans to their fair value will take more commitment than Countrywide is currently offering.

"This is going to turn into much more practical litigation now," Aguirre said.

The city attorney wants assurances in the settlement that Countrywide and Bank of America will provide sufficient staff to rework these loans. Aguirre said his office has been flooded with phone calls from Countrywide loan holders who say they can't get a hold of a live person at the mortgage company.