Late Wednesday afternoon Associate Circuit Judge Brenda Stith Loftin ruled that St. Louis County does have the authority to enforce a new ordinance that requires banks offer mediation to homeowners on the edge of foreclosure.
St. Louis County Counselor Pat Reddington said their central argument before the court was that they were not trying to regulate banks.
“We’re trying to protect our residents,' Reddington said. "We argued, and the court found, that was in the kind of police power the county has.”
Reddington said the ruling could pave a legal path for similar ordinances across the state, including one being developed by St. Louis City. But, she acknowledged that the legal battle over the ordinance may not be over, and the ruling could be appealed in the future.
The Missouri Bankers Association and other groups had sued to block the county from enforcing the ordinance, and bankers have repeatedly said that the county’s mediation plan will have a chilling effect on credit for home loans.
A representative with the Missouri Bankers Association could not be immediately reached for comment late Wednesday afternoon.
Because Missouri banking law does not require any sort of mediation before foreclosure, a key part of the lawsuit to block the ordinance was a state statute that reads:
Notwithstanding any law to the contrary, any order or ordinance by any political subdivision shall be consistent with and not more restrictive than state law and regulations governing lending or deposit-taking entities regulated by the division of finance or the division of credit unions.
However, in her ruling Judge Loftin’s wrote that the statute has yet to be ruled on or cited by a Missouri court.
Loftin also wrote in her judgment:
The government may regulate the use of property through its police powers. It is well settled under Missouri law that a municipal ordinance, which is fairly referable to the police power of the municipality, and which discloses upon its face to have been enacted for the protection, and the furtherance, of the peace, comfort, safety, health, morality, and general welfare of the inhabitants of the municipality cannot be held invalid as wrongfully depriving any right or privilege guaranteed by the Constitution, state or federal
The complete written judgment can be found here.