In a 4-3 decision, the California Supreme Court has held that California's anti-predatory-lending law pre-empts Oakland's predatory lending ordinance.The ruling, issued Jan. 31, is good news for California, according to the American Financial Services Association, which brought the case against the city of Oakland, because it means that legitimate subprime lenders can remain in business. "This decision means that lenders who serve higher-risk borrowers will be able to operate with parity throughout the state of California, avoiding the balkanization of the regulatory landscape, which would levy compliance costs too high to bear," the AFSA said. Bob Armbruster, president of the National Association of Mortgage Brokers, said the verdict is good news for the industry and consumers. "This is a win for consumers, because there is not another layer of laws put upon them," he said. For the past few years, a battle has been raging in the California courts over the extent of municipal authority to adopt predatory lending ordinances. The Los Angeles City Council passed a similar ordinance in 2002, but agreed to postpone enforcement pending the outcome of the Oakland case.

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