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I am unsure how a City actually prohibits the practice. Most of the applicable law is state law and cities usually cannot change state law.

Oh, yeah... JAFO! Welcome to the world of politicos dreaming of being White Knights coming to save all those victimized borrowers!

Several cities nationwide have decided to take matters into their own jurisdictional hands and establish local statutes (if states have statutes, do cities have citutes?) adding complexity and uncertainty to the process in the name of consumer protection.

A few of the more notable cities;
Cleveland, OH
Oakland, CA
Los Angeles, CA (proposed)

To counter the momentum, several major lenders have "inquired for guidance" (which, in legalese so I'm told, means "requested countersuit") of the federal regulators regarding federal law over-riding local and state lending law.

[IIRC, the federal agency is the OTS... but I'm unsure and don't have the time right now to surf & verify my regulatory acronyms.]

This, of course, is especially aimed at Georgia's statewide decisions, but is also being used to attempt uniformity over city regulations as well.

FURTHER... FannieMae just announced it is withdrawing from all public presentation events. This is being interpreted as due to the fact that they are being sued for pulling out of Georgia, as well as potentially for other reasons.

It's going to start getting muddier and muddier. The politicos want to tell the lenders how they will be allowed to do business, AND they want the banks to be FORCED to do business as well.

Stay tuned...
Dave Donhoff
National Mortgage Broker/Banker
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