AMERICAN FINANCIAL SERVICES ASSOCIATION, Plaintiff and Appellant, v. CITY OF OAKLAND et al., Defendants and Appellants.
No. S119869
Supreme Court of California
Jan. 31, 2005.
1239
Severson & Werson, Mark Joseph Kenney, Jan T. Chilton and Donald J. Querio for Plaintiff and Appellant.
Arnold & Porter, Laurence J. Hutt, Dennis G. Lyons, Howard N. Cayne, Michael C. O‘Brien and Nancy L. Perkins for California Bankers Association as Amicus Curiae on behalf of Plaintiff and Appellant.
Horvitz & Levy, Lisa Perrochet and Bradley S. Pauley for National Home Equity Mortgage Association as Amicus Curiae on behalf of Plaintiff and Appellant.
John A. Russo, City Attorney, Barbara J. Parker, Chief Assistant City Attorney, John Truxaw and Daniel Rossi, Deputy City Attorneys; Cotchett, Pitre, Simon & McCarthy, Joseph W. Cotchett, Marie Seth Weiner, Steven N. Williams and Jamie N. Gonzalez for Defendants and Appellants.
Norma P. Garcia for Consumers Union of U.S., Inc., as Amicus Curiae on behalf of Defendants and Appellants.
Kevin D. Stein for California Reinvestment Committee as Amicus Curiae on behalf of Defendants and Appellants.
Maeve Elise Brown for the National Housing Project, AARP, Association of Community Organizations for Reform Now (ACORN), Congress of California Seniors, Consumer Credit Counseling Service of the East Bay, Lao Family
Paul S. Cohen for Centro Legal de la Raza and La Raza Centro Legal as Amicus Curiae on behalf of Defendants and Appellants.
Robert Gnaizda for Greenling Institute as Amicus Curiae on behalf of Defendants and Appellants.
Patricia G. Price for Legal Assistance for Seniors as Amicus Curiae on behalf of Defendants and Appellants.
John T. Fellows III, City Attorney (Torrance) for The League of California Cities as Amicus Curiae on behalf of Defendants and Appellants.
OPINION
BROWN, J.— “Predatory lending” is a term generally used to characterize a range of abusive and aggressive lending practices, including deception or fraud, charging excessive fees and interest rates, making loans without regard to a borrower‘s ability to repay, or refinancing loans repeatedly over a short period of time to incur additional fees without any economic gain to the borrower. Predatory lending is most likely to occur in the rapidly growing “subprime” mortgage market, which is a market generally providing access to borrowers with impaired credit, limited income, or high debt relative to their income. Mortgages in this market tend to be in smaller amounts, and with faster prepayments and significantly higher interest rates and fees, than “prime” mortgages.
In 2001, California enacted legislation to combat predatory lending practices that typically occur in the subprime home mortgage market. (
I. FACTUAL AND PROCEDURAL BACKGROUND4
On October 15, 2001, American Financial Services Association (AFSA) filed this action against the City of Oakland and the Redevelopment Agency of the City of Oakland (City) seeking a declaration that the Ordinance was preempted by state law, and an injunction against its enforcement. On October 25, 2001, by stipulated order, the Ordinance was stayed pending, as relevant here, final resolution of this action. In December 2001, the trial court denied AFSA‘s motion for a preliminary injunction against enforcement of the Ordinance, and AFSA appealed from that order.
The parties then filed cross-motions for summary judgment. On June 21, 2002, the trial court entered an order finding that the Ordinance was preempted to the extent that it exempted federally chartered lending institutions from its restrictions. The court held that the sentence exempting such institutions should be severed from the Ordinance. Subject to elimination of the federal exemption, the court denied AFSA‘s summary judgment motion and granted the City‘s. Judgment was entered severing the sentence exempting federal lenders, dismissing AFSA‘s complaint, and deeming the Ordinance valid as modified.
AFSA appealed from the judgment, and the City cross-appealed. The Court of Appeal ordered the appeals and cross-appeal consolidated. The court held the Ordinance was not preempted by either Division 1.6 or
We granted AFSA‘s petition for review.
A. Background
According to its legislative history, the purpose of Division 1.6 was to regulate and thereby curtail predatory lending practices that typically occur in the subprime mortgage market.5 Division 1.6 applies to any “covered loan,” which is a “consumer loan in which the original principal balance of the loan does not exceed” $250,000 “in the case of a mortgage or deed of trust,” and either of two conditions are met.6 (
Division 1.6 contains numerous prohibitions and limitations with respect to covered loans. For example, a person who originates covered loans shall not (1) “make a covered loan that finances points and fees in excess of” the higher of $1,000 or 6 percent of the original principal balance, exclusive of points and fees (
Moreover, a covered loan shall not (1) include a “prepayment fee or penalty after the first 36 months after the date of” loan consummation, but “may include a prepayment fee or penalty up to the first 36 months after the date of” loan consummation under certain conditions (
Similarly, the Ordinance regulates predatory lending practices in home loans in Oakland. (Oak. Mun. Code, §§ 5.33.010, 5.33.030.) A “home loan” does not include a reverse mortgage, and is defined as a “loan of money, including without limitation a line of credit or an open-end credit plan,” if certain criteria apply. (Id., § 5.33.030.) One criteria is that the “principal amount of the loan does not exceed the current conforming first mortgage loan size limit for a single-family dwelling as established by the Federal National Mortgage Association.” (Ibid.) Since January 1, 2005, that amount has been $359,650.7 In addition, the borrower must incur the loan primarily for personal, family, or household uses, and the loan must be secured in whole or in part by a deed of trust, mortgage, or similar security device on real property located within Oakland. (Oak. Mun. Code, § 5.33.030.) The real property must (or will) contain either one to four residential units or “individual residential units of condominiums or cooperatives,” one of which is or will be the borrower‘s principal dwelling. (Ibid.)
A “high-cost” home loan is a home loan that meets one of two specified thresholds.8 (Oak. Mun. Code, § 5.33.030.) The Court of Appeal observed
Like Division 1.6, the Ordinance contains numerous prohibitions and limitations with respect to home loans and “high-cost” home loans. The Ordinance prohibits prepayment penalties for high-cost and certain refinanced home loans, and limits prepayment penalties for other home loans. (Oak. Mun. Code, § 5.33.040(A).) For home loans generally, no lender may (1) “finance any credit life, credit disability, credit property, or credit unemployment insurance, or any other life or health insurance premiums when making a home loan“; (2) “recommend or encourage a borrower to default or not to make a payment on a home loan or any other debt, when such lender action is in connection with the closing or planned closing of a home loan that refinances all or part of the borrower‘s debt“; or (3) “make a home loan that violates any applicable provision” of certain federal laws regulating lending. (Oak. Mun. Code, § 5.33.040(B), (C), (D).)
In addition, the following practices are prohibited for high-cost home loans: (1) making the loan without obtaining written certification from an independent and approved housing or credit counselor that the borrower has contacted the counselor and either received counseling about the advisability of the loan transaction or waived in writing the counseling option; (2) making a loan unless the lender reasonably believes the borrower will be able to make the scheduled payments based on certain detailed criteria; (3) financing points and fees exceeding $800 or 5 percent of the loan amount, whichever is greater; (4) making a loan “that includes terms under which more than two periodic payments required under the loan are consolidated and paid in advance from the loan proceeds provided to the borrower“; (5) charging a fee to modify, renew, extend, or amend a loan or defer any payment, except under certain conditions; (6) including terms that allow the lender to accelerate the indebtedness in its discretion except for certain circumstances; (7) including a provision increasing the interest rate if the borrower defaults or is delinquent, except for certain circumstances; (8) making a loan that “pays off all or part of an existing home loan or other debt of the borrower, and the borrower does not receive a reasonable and tangible net benefit from the new
Thus, Division 1.6 and the Ordinance are similar in that they regulate the same subject matter, i.e., predatory lending practices in home mortgages. However, Division 1.6 and the Ordinance differ in significant respects with regard to how they regulate these predatory practices. For example, Division 1.6 does “not impose liability on an assignee that is a holder in due course” and the provisions of the division do not apply to “persons chartered by Congress to engage in secondary mortgage market transactions.” (
In addition to other enforcement mechanisms, Division 1.6 and the Ordinance both allow for civil and criminal penalties and for civil enforcement by borrowers, including punitive damages. (
We now turn to the question of whether these similarities and differences may coexist or, if instead, the Ordinance is preempted by Division 1.6.
B. Analysis
“Under
A conflict between state law and an ordinance exists if the ordinance duplicates or is coextensive therewith, is contradictory or inimical thereto, or enters an area either expressly or impliedly fully occupied by general law. (Sherwin-Williams, supra, 4 Cal.4th at pp. 897-898.) Relying solely on the Legislature‘s failure to include express preemption language and the unique local interests of Oakland, the City contends that Division 1.6 sets only “statewide minimum standards, not statewide uniform standards, for subprime
“[I]t is well settled that local regulation is invalid if it attempts to impose additional requirements in a field which is fully occupied by statute.” (Tolman v. Underhill (1952) 39 Cal.2d 708, 712 [249 P.2d 280] (Tolman).) “[L]ocal legislation enters an area that is ‘fully occupied’ by general law when the Legislature has expressly manifested its intent to ‘fully occupy’ the area [citation], or when it has impliedly done so in light of one of the following indicia of intent: ‘(1) the subject matter has been so fully and completely covered by general law as to clearly indicate that it has become exclusively a matter of state concern; (2) the subject matter has been partially covered by general law couched in such terms as to indicate clearly that a paramount state concern will not tolerate further or additional local action; or (3) the subject matter has been partially covered by general law, and the subject is of such a nature that the adverse effect of a local ordinance on the transient citizens of the state outweighs the possible benefit to the’ locality [citations].” (Sherwin-Williams, supra, 4 Cal.4th at p. 898.)
Here, of course, there is no express preemption language in Division 1.6. However, there are clear indications of the Legislature‘s implicit intent to fully occupy the field of regulation of predatory lending tactics in home mortgages.
“Where the Legislature has adopted statutes governing a particular subject matter, its intent with regard to occupying the field to the exclusion of all local regulation is not to be measured alone by the language used but by the whole purpose and scope of the legislative scheme.” (Tolman, supra, 39 Cal.2d at p. 712; Wilson v. Beville (1957) 47 Cal.2d 852, 859 [306 P.2d 789] (Wilson) [same]; see In re Lane (1962) 58 Cal.2d 99, 102-103 [22 Cal.Rptr. 857, 372 P.2d 897] (Lane).) “State regulation of a subject may be so complete and detailed as to indicate an intent to preclude local regulation. [Citations.] In this connection it may be significant that the subject is one which . . . requires uniform treatment throughout the state.” (Chavez v. Sargent (1959) 52 Cal.2d 162, 177 [339 P.2d 801] (Chavez), disapproved on other grounds in Petri Cleaners, Inc. v. Automotive Employees, etc., Local No. 88 (1960) 53 Cal.2d 455, 474-475 [2 Cal.Rptr. 470, 349 P.2d 76].)
“The denial of power to a local body when the state has preempted the field is not based solely upon the superior authority of the state. It is a rule of necessity, based upon the need to prevent dual regulations that could result in uncertainty and confusion. Thus, the term ‘conflict’ as used in
Thus, in Wilson, supra, 47 Cal.2d at page 856, we held that a person seeking compensation for a municipal taking does not lose his claim by failing to file it with the city as required by the city charter. We observed the “exercise of the power of eminent domain is a matter of statewide concern.” (Id. at p. 859.) “The Legislature has provided a complete and detailed system for exercising the right of eminent domain and assessing compensation,” such that charter provisions making more onerous the recovery of compensation were invalid. (Id. at pp. 859-861; id. at p. 860 [“The Legislature has fully occupied the field of eminent domain“].) “If the city may enact such legislation or charter provisions the land owner is denied equal protection of the laws for the state statute would fix the limitation where the condemnor was a public utility but a different one would prevail where the condemnor was a municipal corporation. There is no distinction between such condemnors. The city along with public utilities are made equally liable by the Constitution.” (Id. at p. 861.)
Similarly, in Eastlick v. City of Los Angeles (1947) 29 Cal.2d 661, 665 [177 P.2d 558] (Eastlick), the plaintiff‘s claim in a personal injury action based on state law “concededly was complete as measured by the requirements of the state law.” However, the city argued judgment in the plaintiff‘s favor should be reversed because of her failure to itemize the damages in her claim as required by the city charter. (Id. at pp. 664-665.) We held that the Legislature had provided “a general scheme for the presentation of such liability claims to be effective throughout the state. . . . [W]ith respect to the subjects covered, the [state] statute occupies the entire field and it impliedly precludes control to that extent by municipal or local regulation.” (Id. at p. 666.) A municipality “may not impose more onerous conditions affecting any other matter covered by the statute, such as the contents of the claim.” (Id. at p. 667.) “[T]he provisions of that statute ‘are exclusive’ in regulating the presentation of claims arising under the Public Liability Act, and no city
Likewise in Birkenfeld v. City of Berkeley (1976) 17 Cal.3d 129, 152 [130 Cal.Rptr. 465, 550 P.2d 1001], we held that a charter city‘s “requirement that landlords obtain certificates of eviction before seeking repossession of rent-controlled units cannot stand in the face of state statutes that fully occupy the field of landlord‘s possessory remedies.” We observed that requiring “landlords to fulfill the elaborate prerequisites for the issuance of a certificate of eviction by the rent control board before they commence the [state] statutory proceeding would nullify the intended summary nature of the remedy.” (Id. at p. 151.) Citing Wilson, supra, 47 Cal.2d 852, and Eastlick, supra, 29 Cal.2d 661, we also noted that “[c]ity charter provisions purporting to impose far less burdensome prerequisites upon the exercise of statutory remedies have been held to be invalid invasions of the field fully occupied by the statute.” (Birkenfeld, at p. 152; see Healy v. Industrial Acc. Com. (1953) 41 Cal.2d 118, 122 [258 P.2d 1] [If “there is any conflict between charter provisions and the compensation sections of the Labor Code, the latter must prevail. Under power expressly granted to it by the Constitution, the Legislature has established a complete system of workmen‘s compensation which obviously is a subject of state-wide concern, and it is well settled that in such matters the general law is paramount“]; Lane, supra, 58 Cal.2d at pp. 103-105 [“city ordinance attempting to make sexual intercourse between persons not married to each other criminal is in conflict with the state law and is void” given the “Penal Code sections covering the criminal aspects of sexual activity are so extensive in their scope that they clearly show an intention by the Legislature to adopt a general scheme for the regulation of this subject,” and “although living in a state of cohabitation and adultery is prohibited [citation], neither simple fornication or adultery alone nor living in a state of cohabitation and fornication has been made a crime in this state“]; Isaac v. City of Los Angeles (1998) 66 Cal.App.4th 586, 599 [77 Cal.Rptr.2d 752] (Issac) [ordinance giving a utility lien priority over other recorded liens invalid “because it disrupts California‘s statewide statutory scheme of lien priority“]; id. at p. 600 [“lien priorities on real property a matter of statewide concern because statewide uniformity in lien priority is essential“].)
Like the statutory schemes considered in Wilson, Eastlick, and Birkenfeld, Division 1.6 comprehensively regulates predatory lending practices in home mortgages. It delineates at length what mortgages are covered, what lending acts are prohibited, who can be held liable for violations of Division 1.6, the various enforcement mechanisms available, who may invoke such enforcement mechanisms, and defenses to such violations. The provisions of Division 1.6 “are so extensive in their scope that they clearly show an intention
Moreover, in regulating such lending tactics in home mortgages, the Legislature was not suddenly entering an area previously governed by municipalities and unexplored at a statewide level. To the contrary, as the City acknowledges, regulation of mortgage lenders has historically occurred at the state, not the municipal, level. (See, e.g.,
Indeed, when asked at oral argument, the City could point to no other instance in over 150 years of state history where a municipality had attempted to regulate mortgage lending. Thus, state activity in the area of regulation of mortgage lending was not only historically dominant, it was exclusive. (Cf. United States v. Locke (2000) 529 U.S. 89, 108 [146 L.Ed.2d 69, 120 S.Ct. 1135] [finding no presumption against federal preemption regarding regulation of maritime commerce]; compare Bronco Wine Co. v. Jolly (2004) 33 Cal.4th 943, 974 [17 Cal.Rptr.3d 180, 95 P.3d 422] [strong presumption against federal preemption of state wine label regulation given that state activity in this area historically extensive and dominant].) Thus, mortgage lending is unlike the area of gun control law, on which the City and the dissent rely, in which courts have concluded that the Legislature has chosen to legislate narrowly, and “rather than intending to deprive municipalities of their police power to regulate handgun sales, . . . has been cautious about depriving local municipalities of aspects of their constitutional police power to deal with local conditions.” (California Rifle & Pistol Assn., Inc. v. City of West Hollywood (1998) 66 Cal.App.4th 1302, 1318 [78 Cal.Rptr.2d 591]; see Great Western Shows, Inc. v. County of Los Angeles (2002) 27 Cal.4th 853, 865, 866 [118 Cal.Rptr.2d 746, 44 P.3d 120] (Great Western) [noting state
Moreover, it is beyond peradventure that effective regulation of mortgage lending, and in particular here abusive practices in such lending, “requires uniform treatment throughout the state.” (Chavez, supra, 52 Cal.2d at p. 177; see Northern Cal. Psychiatric Society v. City of Berkeley (1986) 178 Cal.App.3d 90, 101 [223 Cal.Rptr. 609] [” ‘Certain areas of human behavior command statewide uniformity, especially the regulation of statewide commercial activities’ “].) California‘s housing market is one of its most critical, and securities based on home loans in this market are sold not only on a statewide, but on a national level. (Eggert, Held Up in Due Course: Predatory Lending, Securitization, and the Holder in Due Course Doctrine (2002) 35 Creighton L. Rev. 503, 536 [“Through securitization, the source of capital for mortgage funding has been transferred from the savings industry, which used deposits to fund loans, to the capital markets and the portfolios of institutional investors“].) Commercial reality today would confound any effective regulation of mortgage lending based on potentially hundreds of competing and inconsistent measures at the local level. Rather, centralized command over such mortgage lending practices provides an essential “regulatory lever.” (California Fed. Savings & Loan Assn. v. City of Los Angeles (1991) 54 Cal.3d 1, 23 [283 Cal.Rptr. 569, 812 P.2d 916] (Calif. Fed.).)
We therefore conclude that through the enactment of Division 1.6, the Legislature has fully occupied the field of regulation of predatory tactics in home mortgages. While in other cases the determination of whether the state and local laws occupy the same “field” may be somewhat nuanced, little is left to the imagination of even the most casual reader here. Both Division 1.6 and the Ordinance regulate predatory lending tactics in home mortgages, and do so in parallel fashion. The Ordinance, like Division 1.6, addresses at length what mortgages are covered, what lending acts are prohibited, who can be held liable for violations of the Ordinance, the various enforcement mechanisms available, who may invoke such enforcement mechanisms, and defenses to such violations. As previously observed, it is undisputed the Ordinance applies to at least all home loans covered by Division 1.6. Moreover, the Ordinance regulates many of the same predatory practices addressed by Division 1.6, and prevalent in subprime lending, such as excessive prepayment fees, making loans without any reasonable expectation they can be repaid, refinancing with no benefit to the borrower, encouraging default on an existing loan in connection with refinancing that loan, financing unnecessary products such as credit insurance, unfairly accelerating indebtedness, and financing excessive points and fees. Thus, the Ordinance is not
In drafting Division 1.6, the Legislature balanced two compelling and competing considerations, i.e., the need to protect particularly vulnerable consumers from predatory lending practices and the concern that homeowners not be unduly hindered in accessing the equity in their own homes. (See, e.g., Sen. Judiciary Com., Analysis of Assem. Bill No. 489 (2001-2002 Reg. Sess.) as amended June 21, 2001, p. 2 [“Although many subprime lenders offer a vital service to some low-income borrowers who would not otherwise qualify for credit, many other low-income borrowers have been victimized by improper practices . . . referred to . . . as ‘predatory practices’ “]; Assem. Republican Bill Analysis, Analysis of Assem. Bill No. 489 (2001-2002 Reg. Sess.) as amended Sept. 6, 2001, p. 3 [noting federal regulators “believe that responsible sub-prime lending can expand credit access for consumers,” and that ” ‘a practice that can be abusive in some contexts can also-in [the] absence of fraud or deception-be highly beneficial to consumers . . . . Well meaning but haphazard reactions on the part of the regulators . . . may have the unintended consequence of hurting those whom we intend to help’ “]; Assem. Com. on Appropriations, Analysis of Assem. Bill No. 489 (2001-2002 Reg. Sess.) as amended May 1, 2001, p. 2 [“The cycle of high-cost loan refinancing can ultimately deplete the homeowner‘s equity and result in foreclosure“].) While destructive lending practices occur most often in connection with subprime lending, such lending is not inherently abusive, and has enabled an entire class of individuals with impaired credit to enter the housing market or access the equity in their homes. (See U.S. Gov. Accounting Off., Rep. on Federal and State Agencies Face Challenges in Combating Predatory Lending, testimony of David G. Wood before Sen. Special Com. on Aging (Feb. 24, 2004) p. 4.) Severe regulation of subprime lending might cause lenders to cease making such loans in California, or preclude borrowers from obtaining a loan based on equity in their home even though such loans can serve a legitimate need. (Cal. Dept. of Real Estate, Enrolled Bill Rep. on Assem. Bill No. 489 (2001-2002 Reg. Sess.) Sept. 27, 2001, p. 7.) Moreover, increased regulation generally entails additional cost, decreasing further the availability of loan funds to subprime borrowers. Thus, the Legislature was aware regulation of certain predatory practices in mortgage lending, practices which occur most often in the subprime market, could have the unintended consequence of hurting those the legislation was intended to help, and sought to balance these competing concerns. The Ordinance, and the possibility of other divergent and competing local measures
Taking just one example, Division 1.6 expressly does “not impose liability on an assignee that is a holder in due course” and the provisions of the division do not apply to “persons chartered by Congress to engage in secondary mortgage market transactions.” (
Thus, contrary to the City‘s and the dissent‘s assertion, Division 1.6 does not set “statewide minimum” standards beyond which municipalities are free to regulate. (Dis. opn., post, at p. 1271; id. at p. 1275.) Rather, the Legislature‘s full occupation of this field preempts the Ordinance‘s regulation even of those mortgages not addressed by Division 1.6, such as loans between $250,000 and $359,650. For the reasons cited above, it is difficult to imagine how the state could maintain a centralized and uniform command in regulating predatory tactics in home mortgages if municipalities were free to regulate the area with respect to loans in amounts in excess of the state statutory ceiling.
Thus, in Lane we held that a city ordinance, making criminal sexual conduct the state Penal Code did not, was preempted because the state had fully occupied the field of regulation of sexual conduct by enacting a detailed legislative scheme. (Lane, supra, 58 Cal.2d at pp. 103-105; see Issac, supra, 66 Cal.App.4th at p. 601 [“absence of any specific statewide legislation . . . does not create a statutory loophole inviting local legislation, because of the pervasive statutory scheme already in place governing lien priority“].) Similarly here, the Legislature‘s decision that certain mortgages, such as loans in
The City and the dissent essentially assert, however, that Oakland has a higher incidence of subprime lending and the predatory tactics associated with such lending than other areas of the state, and hence may suffer more than other parts of California the resulting blight and poverty such tactics can foster. (Dis. opn., post, at pp. 1268–1271, 1275.) Assuming this is correct, and while these would be important local concerns, they do not give the City a license to regulate a highly complex financial area comprehensively addressed by state law. Such an approach would mean that any city which claimed to experience a disproportionate number of foreclosures, or instances of securities fraud, could simply write its own measures regardless of any confusion these competing measures may foster. Rather, the state‘s interest in uniformity in the area of mortgage lending law demonstrably transcends the concerns of a particular municipality, and is a “convincing basis for legislative action . . . based on sensible, pragmatic considerations.” (Calif. Fed., supra, 54 Cal.3d at p. 18.) In this situation, the City must “defer to legislative estimates regarding the significance of a given problem and the responsive measures that should be taken toward its resolution.” (Id. at p. 24.)
The City relies on certain language in Sherwin-Williams, supra, 4 Cal.4th at page 904, taken out of context, to support its argument that the failure on the part of the Legislature to include express preemption language means that it had no implied intent to preempt. In Sherwin-Williams, there existed at all relevant times a statute that provided, ” ‘Nothing in this code shall invalidate an ordinance of, nor be construed to prohibit the adoption of an ordinance by, a city, city and county, or county, if such ordinance regulates the sale of aerosol containers of paint or other liquid substances capable of defacing property.’ ” (Sherwin-Williams, at p. 899, quoting former
We observed that former
We found that the amended
As can be seen, Sherwin-Williams was decided based on a significantly different statutory landscape than we encounter here. Unlike Sherwin-Williams, the City points to no language in Division 1.6 which states that nothing in its provisions shall invalidate a local ordinance if such ordinance regulates predatory mortgage lending practices. Hence, the Legislature‘s failure to include an express preemption provision in Division 1.6 does not ineluctably mean there is no implied preemption. Significantly, aside from the Savings Association Law (
The City and the dissent rely on testimony at a Senate subcommittee hearing held shortly before the passage of Division 1.6, urging inclusion of an express preemption provision, and the fact that several members of the Legislature had a brief conversation regarding preemption at that subcommittee hearing, in asserting Division 1.6 does not impliedly preempt the Ordinance. (Dis. opn., post, at pp. 1266–1267.)
Of course, by definition, the Legislature‘s implicit full occupation of a field occurs only when there is no express intent in the state law. We disagree with the Court of Appeal‘s statement that “when the Legislature is silent on preemption, courts presume there is no intent to preempt.” Adopting this approach would be a notable departure from our implied preemption precedents. Instead, in such circumstances we consider factors including the language and scope of the adopted measure, the history behind the adopted measure, and the history of regulation in the area, as we have done in this and other field preemption cases. (E.g., Great Western, supra, 27 Cal.4th at pp. 860-867; Tolman, supra, 39 Cal.2d at p. 712 [Legislature‘s “intent with regard to occupying the field to the exclusion of all local regulation is not to be measured alone by the language used but by the whole purpose and scope of the legislative scheme“].) Neither the City nor the dissent offers a reason why we would not consider such language, scope, and purpose merely because at some point during the bill enactment process the issue of express preemption may have arisen. Nor do they demonstrate that these traditional indicators of legislative intent point toward allowing hundreds of cities in California to enact their own mortgage lending laws, an area historically regulated by the state.
Taken to its logical extreme, the City‘s and the dissent‘s approach would eliminate the doctrine of implied preemption at least to the extent someone somewhere ever suggested to the Legislature an express preemption clause would be useful, and the Legislature declined to adopt that suggestion. Such a standard would be easily manipulable, and would punish constituents who attempt to educate the Legislature about their concerns to the extent their concerns were not addressed in the precise manner proposed to the Legislature. Moreover, for well over a century, mortgage lending has occurred at the state, not municipal level, and the effects of such regulation are no longer simply statewide, but national. While we cannot know the reasons for the absence of express preemption language, the Legislature is deemed to be aware of existing law, and may have comfortably assumed that given such state dominance in mortgage lending regulation, and having omitted express preemption provisions in other mortgage lending laws without such an omission being read as a license for local regulation, that an express preemption provision was unnecessary. Indeed, unlike the dissent, we are reluctant to reward the opponents of preemption when nothing in the statutory language or history suggests they persuaded the Legislature to consider relinquishing its historical control of this particular regulatory field and to tolerate municipal, and possibly conflicting, regulation.
In addition, our prior cases establish that even when the Legislature amends a bill to add a provision, and then deletes that provision in a subsequent version of the bill, this failure to enact the provision is of little
Moreover, while the possibility of including express preemption language may have arisen at one committee hearing, and in certain letters from constituents,12 it is scarcely mentioned in the remainder of Division 1.6‘s
Similarly, in recounting the opposition arguments to Assembly Bill Nos. 489 and 344 (the cleanup bill for Assembly Bill No. 489), the enrolled bill reports for the State and Consumer Services Agency, the Department of Real Estate, and the Department of Financial Institutions do not mention the absence of an express preemption provision. Thus, the Department of Real Estate enrolled bill report states, “[s]ome lenders may leave the California market limiting access to capital for those who need it most. In addition, this bill would effectively preclude equity based lending for covered loans even though it has been demonstrated such loans have served a legitimate need.” (Dept. of Real Estate, Enrolled Bill Rep. on Assem. Bill No. 489, Sept. 27, 2001, p. 7.) Under “[v]otes,” the enrolled bill report notes, “[m]any [m]embers who voted ‘no’ expressed concerns that the passage of the bill would cause lenders to cease making subprime loans in California. In addition, many [m]embers who voted ‘no’ expressed concern that this bill would preclude a borrower from obtaining a loan solely based on the equity in the property, even though such loans may serve a legitimate need.” (Ibid.; State and Consumer Services Agency, Enrolled Bill Rep. on Assem. Bill No. 489, Sept. 20, 2001, p. 7 [“Could eliminate a source of funding for a segment of consumers that are not served by traditional, mainstream lenders (the same argument that is applied to payday loans). Could make California loans undesirable for purchase and investment. Bankers argue that legitimate lenders that charge higher fees and interest rates to people with poor credit to compensate for the greater risk of default (known as subprime lending) will be unfairly restricted“]; Dept. of Financial Inst., Enrolled Bill Rep. on Assem. Bill No. 489, Sept. 27, 2001, p. 8 [“[I]t here is some concern as to the [e]ffect the provisions of this bill will have on the subprime market. As illustrated by the departure of some licensees in North Carolina, some lenders may leave California‘s lending market. The effect on the subprime market could be the reduction of mortgage credit available to higher risk borrowers who do not
The Court of Appeal also noted that the Governor in signing Assembly Bill No. 489 expressly lamented the fact it did not contain express preemption language, and the Legislative Counsel opined a local ordinance would be valid to the extent it did not conflict with state law. We may not consider such postenactment events as a Governor‘s signing statement, and not even the City relies on this circumstance. Moreover, the Legislative Counsel‘s generalized and routine discussion of preemption law is not evidence the Legislature believed an ordinance such as the one challenged here would survive a preemption challenge. The Legislative Counsel expressly observed, “Because we have not been provided with a specific local government ordinance regulating high-cost mortgage lending, we . . . discuss generally the grounds for preemption of a local government ordinance by state law.” (Deputy Legis. Counsel L. Erik Lange, letter to Sen. Machado (Sept. 7, 2001) p. 1.)
AFSA also claims that the Ordinance is preempted by Division 1.6 because it duplicates and contradicts state law and the Ordinance is preempted by
DISPOSITION
The judgment of the Court of Appeal is reversed, and the case remanded to that court for further proceedings consistent with this opinion.
Baxter, J., Werdegar, J., and Chin, J., concurred.
GEORGE, C. J., Dissenting.—I respectfully dissent.
Past California cases establish that a general statewide statute will be held to preempt all local legislative measures only when the state legislation, explicitly or impliedly, “clearly indicates” that the Legislature intended to fully occupy the field and preclude all local regulation. (Sherwin-Williams Co. v. City of Los Angeles, (1993) 4 Cal.4th 893, 898.) Here, the Legislature consciously considered including express preemption language in the statewide statute (division 1.6 of the
I
Unlike our previous implied preemption cases, this is not simply a case in which the Legislature was silent about preemption. Here, there is considerable extrinsic evidence, and a concession from the party arguing in favor of preemption, that the Legislature specifically considered and purposefully rejected an express preemption clause despite extensive lobbying for the inclusion of express preemption language in the state statute. As plaintiff American Financial Services Association (AFSA) itself acknowledges, there
Under normal circumstances, the mere absence of express preemption language would not be dispositive. But here the party arguing in support of preemption explicitly has admitted that there were insufficient votes in the Legislature to enact the bill with an express preemption provision. Specifically, AFSA‘s brief acknowledges that “the Legislature could say nothing for or against preemption without risking defeat of [Assembly Bill No.] 489. So it elected to remain silent.” (Italics added.) The majority fails to acknowledge or afford appropriate consideration to this admission.
Moreover, contrary to the majority‘s reading of the relevant legislative history, I believe this history supports AFSA‘s concession. This is not a situation where the preemption issue was abstract or peripheral. Indeed, the issue of preemption was arguably at the forefront of the debate over Assembly Bill No. 489 (2001-2002 Reg. Sess.) (Assembly Bill No. 489). For instance, the members of the Senate Banking Committee that forged the legislative compromise that led to passage of the bill heard testimony from Oakland City Councilman Ignacio de la Fuente regarding the imminent passage of the Ordinance. In response to this testimony, a committee member expressed concern that without express preemption language, there would be a host of different lending policies from community to community. In response, the bill‘s co-author, Assemblywoman Migden, stated at the August 27, 2001, hearing on Assembly Bill No. 489 by the Senate Banking, Commerce and International Trade Committee: “We‘re trying to make sure that everyone can live with the bill, industry and consumers alike and . . . we‘ve decided . . . to be silent on [preemption], which does lend different interpretations.”
At the same hearing, the committee also heard from numerous financial industry representatives who urged the committee to include preemption language. (Adam Bass of Ameriquest Mortgage Company: “preemption is a major issue“; John Ross, Mortgage Bankers Assn.: “preemption is a big issue for our members“; Brian Kennealy of the Responsible Mortgage Lenders Coalition: “preemption is a very, very important issue to us and our members“; Eleanda Delgado of Irwin Home Equity Corp., agreeing with the others; Bernard Nevins, Cal. Assn. of Industrial Bankers: preemption “can‘t hurt and it would be very bad if you didn‘t do it“; Phil Eisenberg, American Internat. Group: “the preemption issue is fundamental. It‘s not cursory. It‘s not a medium-sized issue. It‘s fundamental“; Tom McMorrow, Countrywide Mortgage and First Union: “Preemption remains fundamental.“) This effort by the financial industry to include express preemption language in the statute
The majority minimizes the foregoing history by arguing that although an express preemption issue “may have arisen” at some point during the bill enactment process, the issue was peripheral. As noted, this ignores AFSA‘s concession that the issue of express preemption not only “arose,” but threatened to derail passage of the bill. Thus, this is not simply a case where “someone somewhere . . . suggested to the Legislature an express preemption clause would be useful, and the Legislature declined to adopt that suggestion.” (Maj. opn., ante, at p. 1261.) This is a case where passage of the bill hinged on the inclusion or exclusion of express preemption language. Thus, this is not a case where the city relies on the mere absence of express preemption to argue against implied preemption. There is significantly more evidence of deliberate exclusion of a preemption provision here, and the majority‘s concern about the demise of the doctrine of implied preemption is unwarranted.
Nonetheless, it can be argued, as AFSA does, that the stalemate on the preemption issue neither supports nor undermines a conclusion as to preemption, and that the court should resort to certain default rules about preemption that it has developed over the years. But one of those rules, indeed the principal rule, is that legislative intent be clearly indicated. As the Court of Appeal noted in California Rifle & Pistol Assn. v. City of West Hollywood (1998) 66 Cal.App.4th 1302, 1317, the Legislature‘s failure to include express preemption language may be critical. “Claims of implied preemption must be approached carefully, because they by definition involve situations in which there is no express preemption. Since preemption depends upon legislative intent, such a situation necessarily begs the question of why, if preemption was legislatively intended, the Legislature did not simply say so, as the Legislature has done many times in many circumstances.” (Ibid.) Hence, the rule has developed that implied preemption properly can be found only when the circumstances “clearly indicate” a legislative intent to preempt. (Sherwin-Williams Co. v. City of Los Angeles, supra, 4 Cal.4th 893, 898.) The need for such a “clear indication” is especially acute when the extrinsic evidence and the concession of the parties demonstrate that the Legislature declined to adopt an express preemption provision because such a provision would not command a majority of the Legislature. A legislative stalemate on preemption is not an indication of a clear intent to preempt local legislation.
II
The majority‘s emphasis on state uniformity and historical regulation patterns also fails to acknowledge properly the respect this court traditionally has accorded to localities regarding issues that have a unique local impact. As we stated in Fisher v. City of Berkeley (1984) 37 Cal.3d 644, 707, “[w]e will be reluctant to infer legislative intent to preempt a field covered by municipal regulation where there is a significant local interest to be served that may differ from one locality to another.” I am particularly troubled by the majority‘s express disapproval of the Court of Appeal‘s contention that ” ‘when the Legislature is silent on preemption, courts presume there is no intent to preempt.’ ” (Maj. opn., ante, at p. 1261.) To the contrary, as the Court of Appeal aptly observed in Gluck v. County of Los Angeles (1979) 93 Cal.App.3d 121, 133, the common thread of our preemption cases is that “if there is a significant local interest to be served from one locality to another then the presumption favors the validity of the local ordinance against an attack of state preemption.”
The regulation of predatory lending undoubtedly is an area of statewide concern. Nevertheless, I am not persuaded that the field is exclusively so, thus leaving no room for local regulation. “The significant issue in determining whether local regulation should be permitted depends upon a ‘balancing of two conflicting interests: (1) the needs of local governments to meet the special needs of their communities; and (2) the need for uniform state regulation.’ [¶] That basic issue, in turn, may in a specific instance be fragmented into the component issues which combine to effect its resolution such as whether local legislators are more aware of and better able to regulate appropriately the problems of their areas, whether substantial geographic, economic, ecological or other distinctions are persuasive of the need for local control, and whether local needs have been adequately recognized and comprehensively dealt with at the state level. Certain areas of human behavior command statewide uniformity, especially the regulation of statewide commercial activities and the conduct of transient individuals, so that mobility may not be burdened unreasonably.” (Robins v. County of Los Angeles (1966) 248 Cal.App.2d 1, 9.)
As the court made clear in Robins, although the need for state uniformity is an important consideration in resolving preemption questions, the interests of the locality also are entitled to considerable weight. “The pervasive question to be answered is: Does the demand for uniformity throughout the state outweigh the needs of local governments to handle problems peculiar to their communities.” (Tri County Apartment Assn. v. City of Mountain View (1988) 196 Cal.App.3d 1283, 1294.)
The record in this case establishes that Oakland‘s Ordinance was adopted because many low-income homeowners in the City of Oakland were targeted by unethical mortgage lenders using predatory lending practices. Many low- and moderate-income homeowners in Oakland were unable to obtain conventional legitimate financing. Local conditions allowed predatory lenders to thrive, and their practices unfairly stripped homes of equity value and resulted in a number of unjust home foreclosures. Often, through fraudulent means, homeowners were charged exorbitant fees and interest rates and unfairly were persuaded to incur mortgage debt in excess of their needs or ability to pay. The record reflects that the Oakland City Council, in passing the ordinance in question, found that the predatory lending problem in Oakland was particularly aggravated “because of the high number of minority and low income homeowners in Oakland, and the pressures of gentrification in certain neighborhoods that increase property values and home equity,” which have led to a situation in which “Oakland residents in low income areas have been perceived to be ‘the house rich and the cash poor’ and thus are prime targets for predatory lending practices.”
Oakland‘s findings mirror the conclusions of the United States Department of Housing and Urban Development (HUD) in an analysis of almost one million mortgages reported nationwide in calendar year 1998 under the Home Mortgage Disclosure Act. (See HUD Rep., Unequal Burden: Income and Racial Disparities in Subprime Lending in America (Apr. 2000), http://www.hud.gov/library/bookshelf18/pressrel/subprime.html [as of Jan. 31, 2005] (HUD Report).) HUD‘s detailed analysis reached four critical conclusions: (1) from 1993 to 1998, the number of subprime refinance loans increased tenfold;3 (2) subprime loans are three times more likely in low-income neighborhoods than in high-income neighborhoods; (3) subprime loans are five times more likely in African-American neighborhoods than in White neighborhoods; and (4) homeowners in high-income African-American neighborhoods are twice as likely as homeowners in low-income White
As HUD‘s conclusions illustrate, Oakland‘s particular interest in regulating subprime loans goes beyond merely protecting its particularly vulnerable citizens. As one amicus curiae points out, “predatory lending is not just a consumer protection issue; it is a community development issue, because it threatens the stability of lower income homeowning neighborhoods . . . . [¶] Predatory home mortgage lending has enormous impacts on targeted neighborhoods. Predatory lending practices, particularly the phenomenon of ‘asset based lending,’ contribute to an increase in the number of foreclosures. This can result in abandoned houses and blighted neighborhoods and contribute to the physical and economic deterioration of lower-income, minority, and inner city communities. ‘Foreclosures, especially in low- and moderate-income neighborhoods turn what might be typically viewed as a consumer protection problem . . . into a community development problem, in which increased foreclosures lead to property abandonment and blight.’ ” (Quoting HUD Rep., Recommendations to Curb Predatory Home Mortgage Lending (June 2000) pp. 24-25, available online at http://www.treas.gov/press/releases/reports/treasrpt.pdf [as of Jan. 31, 2005].)
In view of the community degradation caused by predatory lending, Oakland reasonably could have concluded that it was important to include holders in due course within the Ordinance‘s purview. The bulk sale of mortgage loans on the secondary market is the primary profit incentive for subprime mortgage lenders. (See Eggert, Held up in Due Course: Predatory Lending, Securitization, and the Holder in Due Course Doctrine (2002) 35 Creighton L.Rev. 503, 577 [noting that a primary reason for the rapid growth of the industry “is that the existence of ready capital available to lenders through the securitization of subprime loans has dramatically increased their ability to make those loans“].) The innovation of selling mortgage loans in bulk is, in fact, what fueled the enormous growth of the subprime mortgage industry. (See id. at p. 578) As the City of Oakland points out, “sales of subprime loans by predatory lenders is the inducement and profit-basis for their business practice of encouraging ever higher and larger loans to subprime borrowers, i.e. larger ‘inventory’ of loans for sale to others all to the detriment of the consumer public.” Thus, Oakland reasonably could have
The Legislature was free to conclude that treatment of predatory lending requires statewide uniformity. Alternatively, however, it could conclude that only a statewide minimum standard of conduct is necessary, and that local jurisdictions have some freedom to additionally regulate predatory lenders pursuant to the municipal police power to prevent urban decay and neighborhood blight. Because of the local, varying nature of the problem, this is not a case in which having differing local standards is wholly illogical. (Cf. Tolman v. Underhill (1952) 39 Cal.2d 708, 713 [loyalty oaths for state employees requires uniform treatment]; Northern Cal. Psychiatric Society v. City of Berkeley (1986) 178 Cal.App.3d 90, 102 [no special local interest with regard to regulation of electroshock therapy].) All we can be certain of is that Division 1.6 was the product of a legislative compromise, and that the compromise included deliberate silence on the matter of preemption.
As discussed above, predatory lending is characterized by loans that are aggressively marketed to borrowers who often cannot afford the payments and eventually default on the loans. The city argues that the high rate of default and foreclosure has led to the degradation of entire neighborhoods and has contributed to the already substantial problem of urban blight in Oakland. The field of predatory lending regulation is one in which conditions peculiar to the locality are likely to differ from place to place and where supplemental regulation may well fall within the realm of local government. (Gluck v. County of Los Angeles, supra, 93 Cal.App.3d 121, 133 [upholding a Los Angeles ordinance regulating the placement and display of news racks on public rights-of-way].)
This court has acknowledged that the balance of power between state and local municipalities recognizes that a one-size-fits-all solution is not always in the best interest of the residents of a particular community. (See, e.g., California Rifle & Pistol Assn. v. City of West Hollywood, supra, 66 Cal.App.4th 1302, 1318 [recognizing the need for caution in “depriving local municipalities of aspects of their constitutional police power to deal with
The cases cited by the majority do not compel a contrary conclusion. Although our numerous preemption cases resist easy harmonization, one theme that emerges is that those municipal ordinances that have been found to be preempted have been seen as subverting, in some tangible way, the purpose and intent of the state statute. This is true of each of the cases relied upon by the majority. In Wilson v. Beville (1957) 47 Cal.2d 852, we invalidated a local ordinance that attempted to impose conditions more stringent than those imposed by the state on the exercise of the power of eminent domain by specifying a shorter statute of limitations for the filing of a claim. There, we observed that a “city charter cannot give a shorter time, make more onerous the recovery of compensation, than the legislation has.” (Id. at p. 861). We also observed that “a municipality may not curtail or abridge the rights so granted [right to recover for tort] by specifying, through charter provision, a shorter time limitation . . . than the period fixed by the statute.” (Ibid., italics omitted, citing Eastlick v. City of Los Angeles (1947) 29 Cal.2d 661, 666.) The local legislation thus undermined the statute by making the recovery of compensation more onerous. As such, the local ordinance was invalid because the Legislature had “provided a complete and detailed system for exercising the right of eminent domain and assessing compensation.” (Wilson v. Beville, supra, 47 Cal.2d at p. 860.)
Similarly, in Eastlick, we struck down a requirement in the Los Angeles City Charter that required a personal injury claimant to itemize the damages in her claim. The requirements for a personal injury claim under state law did not require such specificity. (Eastlick v. City of Los Angeles, supra, 29 Cal.2d 661, 666.) Again, as in Wilson, the locality had attempted to abridge and circumscribe a state law right, thereby undermining the purpose of the state regulation. (Ibid.) Likewise, in Birkenfeld v. City of Berkeley (1976) 17 Cal.3d 129, 152, we invalidated a provision in the Berkeley City Charter that attempted to impose additional restrictions on a landlord‘s right to evict a tenant. There, we observed that
The common theme running through these cases is that a locality may not impose additional burdensome requirements upon the exercise of state statutory remedies that undermine the very purpose of the state statute. Here, we are presented with a fundamentally different relationship between the state statute and local regulations. The Ordinance does not appear to undermine any of the stated goals of Division 1.6. To the contrary, the ordinance grants borrowers additional rights not afforded under state law, such as restrictions on prepayment penalties, mandatory credit counseling, and the opportunity to present defenses to secondary buyers of their mortgages if the borrowers have been victimized by predatory lending practices. Far from subverting Division 1.6, the Ordinance furthers the stated goal of the state legislation by providing additional protections to the low-income borrowers in Oakland who are especially vulnerable to predatory lending practices.
The majority argues, however, that the Ordinance does disrupt the balance struck by the Legislature in enacting Division 1.6. The majority asserts that Division 1.6 balanced “the need to protect particularly vulnerable consumers from predatory lending practices and the concern homeowners not be unduly hindered in accessing the equity in their own homes.” (Maj. opn., ante, at p. 1257.) The majority observes that “[s]evere regulation of subprime lending might cause lenders to cease making such loans in California, or preclude borrowers from obtaining a loan based on equity in their home even though such loans can serve a legitimate need. . . . Thus, the Legislature was aware regulation of certain predatory practices in mortgage lending, practices which occur most often in the subprime market, could have the unintended consequence of hurting those the legislation was intended to help, and sought to balance these competing concerns. The Ordinance, and the possibility of other divergent and competing local measures throughout California, upsets that balance.” (Id., at pp. 1257-1258.)
..
The majority‘s implicit assumption is that Oakland‘s Ordinance, by providing for stricter regulation of certain areas of subprime lending, necessarily will cause lenders to cease making loans in Oakland and in California as a whole. (Maj. opn., ante, at pp. 1257-1258.) Had a majority of the Legislature agreed with that proposition, however, it could be expected that the legislation would have included a provision expressly preempting local legislation. The conscious omission of an explicit preemption provision demonstrates that the Legislature could not agree that local legislation would undermine or impair the objectives of the state legislation. Furthermore, should the undesirable consequences forecast by the majority come to pass, the Legislature, of course, would be free to step in and add an express preemption provision to Division 1.6.
The majority also places great emphasis on the City‘s admission that in more than 150 years of California history, no municipality has attempted to regulate mortgage lending. (Maj. opn, ante, at p. 1255.)5 But we never have required a locality to prove a historical practice of regulation to establish the validity of a local regulation. Rather, as outlined above, the proper inquiry requires a clear indication of legislative intent and a studied balance between the need for state uniformity and the particular interest of the locality. Although historical regulatory patterns may be significant in assessing legislative intent, we must assess that history in context. The subprime mortgage industry has undergone tremendous growth in recent years. (See ante, fn. 3.)6 During that period, predatory lending has had a grossly disproportionate
Thus, despite the circumstance that mortgage regulation historically has occurred at the state rather than the local level, we must recognize the concerns implicated by the recent rapid escalation of predatory lending. In view of the documented evidence that predatory lending is especially pervasive in low-income and minority neighborhoods, it is beyond dispute that Oakland and other similarly situated localities have a more significant interest in regulating subprime lending than localities that, because of demographics and composition, are not targeted in similar ways. Local regulation thus is not only constitutionally valid, but practically vital to the affected communities. Although predatory lending certainly is a matter of statewide concern, the specific interests of the communities most affected by the banned practices make the regulation of this field particularly amenable to local variations. Oakland‘s own interest in preventing predatory lending provides ample justification for that locality‘s enactment of stricter and more protective regulations designed to ensure that its residents receive adequate information before saddling themselves with financial obligations that could prove devastating.
In sum, I agree with the city and the decision of the Court of Appeal below that Division 1.6 establishes a floor, not a ceiling, for the regulation of predatory lending practices. As the majority recognizes, the rule of implied preemption is a ” ‘rule of necessity, based upon the need to prevent dual regulations which could result in uncertainty and confusion.’ ” (Maj. opn., ante, at p. 1252.) As discussed above, the Ordinance provides added protections for its citizens that will not result in uncertainty or confusion, and absent a clearly evident legislative intent I believe the Ordinance is not preempted.7
Kennard, J., and Moreno, J., concurred.
Notes
HUD reports that in 1993, there were 80,000 subprime refinance loans reported under the Home Mortgage Disclosure Act. By 1998, this number had increased by more than 900 percent to 790,000. “The magnitude and speed of the increase in subprime lending alone—almost 1000% in just five years—creates a critical need for greater scrutiny and concern. While the rapid growth of subprime lending may, on the surface, appear to be good news for higher-risk borrowers, behind the numbers there is some evidence that some portion of subprime lending is occurring with borrowers whose credit would qualify them for conventional loans. Subprime lending may expose borrowers to higher up-front fees and interest rates than they would bear if they had obtained prime loans.” (HUD Rep., supra, http://www.hud.gov/library/bookshelf18/pressrel/subprime.html.)
have arisen in this market. In fact many real estate loans are specifically exempted from consumer protections in these laws.” (Assem. Com. on Appropriations, Analysis of Assem. Bill No. 489 as amended May 1, 2001, p. 3.)
Even if there was competent evidence the Legislature had debated and rejected the notion of including an express preemption clause, and deliberately decided to remain silent, such history would merely show that lawmakers left the preemption issue exactly where it would have been if nothing had been said during the bill enactment process. Under such circumstances, and contrary to what the dissent claims, there would still be no basis for straying from our traditional examination of the language, scope, and purpose of the enacted statutory scheme in determining whether the Legislature manifested an implicit intent to occupy the field and preempt all local regulation. Considering that language, scope, and purpose here, as delineated at length above, we find clear indications of such an intent, and conclude the Ordinance is preempted.