Magazine article American Banker

After Setback, Predator Laws Foes Vow to Appeal

Magazine article American Banker

After Setback, Predator Laws Foes Vow to Appeal

Article excerpt

The mortgage industry suffered a major setback in its fight against the growing patchwork of anti-predator measures last week when a California judge upheld Oaklands ordinance.

Randy Lively, the president of the American Financial Services Association, the trade group that sued to stop the citys measure, said in an interview Tuesday that his organization plans to petition the state Supreme Court.

We challenge local jurisdictions right to legislate on predatory lending, Mr. Lively said. The group contends that only states can enact such laws.

This is the first time that the group has lost an appeal in a state court when trying to shut down a local anti-predator measure. It has won challenges in Philadelphia, Atlanta, and Dayton, Ohio.

Its lawyers, from the San Francisco firm Severson & Werson, have argued in California courts that it was the Legislatures intent when it passed a predatory-lending law in the fall of 2001 to preempt any local measures.

Lead counsel Mark Kenney, a managing partner at Severson, also said the Oakland ordinance is in conflict with the state law on a number of points. For instance, the ordinance holds secondary-market investors liable for damages.

Donald Lampe, a partner at the Greensboro, N.C., law firm Womble Carlyle Sandridge & Rice PLC, said that if the Oakland ordinance goes into effect, it could set a precedent for California.

Mr. Kenney said that the Supreme Court would have 60 days to decide whether to review the petition after it is filed. If the court refuses to hear the case, the ordinance and a weaker one in Los Angeles, which has been put on hold pending the outcome of the Oakland suit could go into effect before yearend. …

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