California Supreme Court Tosses Tighter Local Subprime Lending Law

A divided California Supreme Court struck down on Monday Oakland’s landmark 2001 ordinance that sought to protect poor and elderly homeowners from high-cost predatory lending. The court said the ordinance overstepped the bounds of a milder state law that regulates many of the same practices.

Acting on a banking industry lawsuit, the court ruled 4-3 that the state law, enacted eight days after the Oakland measure, prohibited cities from enacting their own, more stringent rules. The ruling also invalidates a 2003 ordinance in Los Angeles.

“By acknowledging the state of California’s power to pre-empt Oakland’s mortgage lending ordinance, the Supreme Court has safeguarded the flow of capital vital to maintaining the widest range of mortgage options for Californians,” said the head of the American Financial Services Association, the lenders’ trade group that sued to overturn the ordinance. Other banking groups supported the suit.

The association said it objected only to “a patchwork of local and municipal ordinances” and not to curbs on lending abuses. But Oakland officials and advocates for the elderly said the ruling left some of the most vulnerable residents at the mercy of cutthroat lenders.

For this complete story, please visit California Supreme Court Tosses Tighter Local Subprime Lending Law.