The State of California reached a $6.55 million settlement with two former Countrywide executives in a high-profile lawsuit filed by the state regarding predatory lending practices.

Former Chief Executive Angelo Mozilo and Countrywide President David Sambol deny the allegations in the lawsuit, which accuse Countrywide of false advertising and unfair competition in marketing mortgages and home equity lines of credit.

The $6.55 settlement will be used to aide Californians affected by the mortgage crisis and provide grants to help home owners facing foreclosure, California Attorney General Kamala Harris said in a public statement about Wednesday’s settlement.

Countrywide was acquired by Bank of America Corp. in 2008.

The original lawsuit filed in June 2008 also had included Countrywide as a defendant. Countrywide reached a settlement in October 2008, agreeing to provide about $6.8 billion nationwide in loan modifications and foreclosure relief.

Countrywide has faced a series of legal battles and fines. In October 2010, Mozilo also had agreed to pay $67.5 million in penalties to settle civil fraud and insider-trading charges by the Securities and Exchange Commission.

Source: “California Settles With Two Former Countrywide Executives,” Dow Jones Business News (Feb. 2, 2011)