A national trade association yesterday sued the city of Toledo in Lucas County Common Pleas Court to overturn a recently approved ordinance regulating predatory lending practices.
American Financial Services Association of Washington claims the legislation passed by city council is vaguely written, conflicts with state law, and is unconstitutional. The lawsuit was assigned to Judge Robert Christiansen.
Council approved the ordinance, 11-1, on Nov. 5. Councilman Betty Schultz was the only dissenter. At the meeting, Mayor Jack Ford broke a 6-6 tie on a motion that would have delayed a vote on the measure for two weeks.
A delay on the ordinance was sought because concerns that local banks, as federally regulated institutions, should be exempted. The ordinance, co-written by Mayor Ford and former Council President Peter Ujvagi, will go into effect Feb. 10.
The legislation regulates practices in the mortgage lending business, including the phrasing of statements that provide information on the appraisal of property and income of borrowers.
According to the complaint, the association represents about 400 companies that provide more than $200 billion in credit through home-equity loans, mortgages, and other secured loans. Its members include mortgage lenders, credit card issuers, independently owned consumer finance companies, diversified financial services companies, and automobile financial companies.
The association is asking for a hearing on a temporary injunction to prevent the legislation from going into effect. A hearing has not been scheduled.