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ORDINANCE NO.An ordinance to prohibit predatory lending practices for home loans in theCity of Los Angeles.
THE PEOPLE OF THE CITY OF LOS ANGELESDO ORDAIN AS FOLLOWS:
 Section 1. A new Chapter XVI is added to the Los Angeles Municipal Code toread:
ARTICLE I
 
SEC. 162.00. TITLE.
This Chapter shall be known as the “Anti-Predatory Loan Ordinance of the City ofLos Angeles.”
Sec. 162.01. DECLARATION OF PURPOSE.
 The purpose of this chapter is to prohibit certain predatory lending practices inthe City of Los Angeles.
Sec. 162.02. DECLARATION OF FINDINGS.
 
A.
As a charter city, the City of Los Angeles has home rule authority to make andenforce all laws and regulations relating to municipal affairs, including the power toregulate business practices to promote the health, morals, safety, property, good order,well-being, general prosperity or general welfare of Los Angeles residents.
B.
Predatory lending on home loans is a widespread, significant and growing problemin the City of Los Angeles, threatening the well-being and general prosperity of itsresidents, and the City as a whole. Predatory lending practices lead to conditions ofblight, result in the loss of affordable housing, increase displacement and economicdislocation, reduce property values, erode the tax base, and increase the strain on Cityservices.
C.
The City of Los Angeles has unique socioeconomic and market conditions, includingan aging housing stock and a diverse population, that make its residents particularlysusceptible to predatory lenders. Neither state law nor federal law adequately addressthe unique circumstances found in Los Angeles. Consequently, predatory lending is amunicipal affair and a matter of unique local interest and concern for the City ofLos Angeles.
 
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D.
The regulation of home mortgage lending practices by the City to prevent predatorylending by prohibiting certain lending practices, and requiring independent counselingon home refinance loans, serves the public interest, is necessary to protect the health,morals, safety, property, general welfare, well being and prosperity of the residents ofLos Angeles, and is within the home rule powers and police powers of the City.
Sec. 162.03. DEFINITIONS.
As used in this chapter, the following terms are defined below.“
Affiliate
" means any Business Entity that controls, is controlled by, or is under commoncontrol with, another entity, as set forth in the Federal Bank Holding Company Act of1956 (12 U.S.C. §1841,
et seq.
), as that statute may be amended from time to time, andincludes any successors in interest or alter egos to the Business Entity."
Annual Percentage Rate
" means the Annual Percentage Rate for a Home Loancalculated according to the provisions of the federal Truth in Lending Act (15 U.S.C.§1601,
et seq.
) and its implementing regulations, as that statute or those regulationsmay be amended from time to time."
Borrower
" means singularly or collectively any natural Person or Persons with anobligation to repay a Home Loan, including without limitation a co-Borrower, cosigner, orguarantor.“
Business Entity
" means any individual, domestic corporation, foreign corporation,association, syndicate, joint stock company, partnership, joint venture, limited liabilitycompany, limited liability partnership, sole proprietorship, or unincorporated associationengaged in a business or commercial enterprise."
City
" means the City of Los Angeles.“
Credit Counselor
” means a housing or credit counselor, who:
(1)
is not an Affiliate of a Lender; and
(2)
has been approved by the United States Department of Housing and UrbanDevelopment, the State of California, or the City of Los Angeles; and
(3)
has completed a training program approved by the Los Angeles City HousingDepartment."
High-Cost Refinance Home Loan
" means a Home Loan, the proceeds of which arenot used to finance the purchase of the secured real property, that meets either of thefollowing two conditions:
 
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(1)
the Annual Percentage Rate of the loan exceeds by more than sixpercentage points the yield on Treasury securities having the period of maturitytypically used by Lenders within the industry as the basis for Home Loans. TheLos Angeles Housing Department shall annually designate the period of maturitytypically used for Home Loans in the rules and regulations. For the purposes ofthis section, the yield on Treasury securities shall be that in effect on the 15thday of the month immediately preceding the month in which the application forthe extension of credit is received by the creditor;
(a)
If the terms of the Home Loan provide for an initial low interest ratefollowed by a subsequently higher interest rate, then the highersubsequent rate shall be used for determining the Annual PercentageRate under this definition;
(b)
If the terms of the Home Loan provide for an Annual Percentage Ratethat varies in accordance with an index plus a margin, then the rate that isin effect on the date of loan consummation shall be used for determiningthe Annual Percentage Rate under this definition;
(c)
If the terms of the Home Loan provide for an initial low interest ratefollowed by Annual Percentage Rate that varies in accordance with anindex plus a margin, then the rate determined by the index plus the marginthat would have been in effect on the date of loan consummation shall beused for determining the Annual Percentage Rate under this definition.
(2)
the Points and Fees exceed four percentage points of the Total LoanAmount, however Points and Fees of up to $1500 shall not subject a Home Loanto the provisions of this chapter.
 
"
Home Loan
" means a consumer credit transaction secured by real property located inthe City of Los Angeles, other than a reverse mortgage as defined in California CivilCode §1923, that meets the following criteria:
(1)
the real property contains or will contain either (a) one to four residentialunits, or (b) an individual residential condominium or cooperative unit, and theBorrower shall occupy one of the units as the Borrower’s principal dwelling. Inthe case of multiple Borrowers, at least one of the Borrowers shall occupy one ofthe units as the Borrower’s principal dwelling.
(2)
the principal amount of the loan does not exceed the current conforming firsttrust deed loan size limit for a single-family dwelling as established by theFederal National Mortgage Association."
Lender
" means any Person or Business Entity that extends a Home Loan or arrangesfor the extension of a Home Loan. Notwithstanding the above, a “Lender” does notinclude a bank chartered under the federal National Bank Act (12 U.S.C. § 21
, et seq.
),
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