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"It wasn't the ordinance we wanted, but it will do for a start,' was the consensus among leaders who pushed the first-ever local regulation of predatory subprime mortgage lending through Chicago's City Council in August.

"At least the city is formally recognizing how severe a problem we have with predatory lending here and taking steps to bar lenders doing business with the city from engaging in the practice," Gale Cincotta of NTIC said.

The two 'triggers' at the heart of the ordinance were weaker than groups wanted. The triggers would disqualify lenders who engage in predatory practices from doing business with the city.

The first trigger covers the annual percentage rate, or APR. Lenders who hold the first lien on a mortgage, i.e. lenders who would be paid off first in the event of a foreclosure, would be subject to the ordinance if they charged an APR greater than 6 percent plus the T-bill rate (the 30-year constant rate of maturity, reported by the Federal Reserve and used in fair lending laws; 5.71 percent as of August 21)--11.71 percent in today's numbers. Lenders of so-called junior mortgages, such as second loans (for example, the originator of a $5,000 home repair loan that did not include debt consolidation), would be subject to the ordinance if they charged an APR of 8 percent plus the T-bill rate, or 13.71 percent in today's numbers.

The other trigger under the ordinance is the percentage of the loan the lender charged in fees. Predatory loans under the ordinance would be those on which the lender charged the greater of $800 or more than 5 percent of a loan's principal in fees. Fees deemed predatory under the ordinance would include prepayment penalties after 36 months, and payments to mortgage brokers.

Loans would be considered predatory if they met one of the triggers and did any of practices listed under this ordinance. The ordinance also defines certain practices as predatory, such as restricting monthly payments on a subprime loan to no more than 50 percent of a borrower's total monthly bills and "flipping"--the practice of repeated refinancings on the same property. Deceptive marketing and sales practices generally are also defined as predatory, as are some types of balloon payments, and some charges associated with home improvement loans.

Chicago groups plan to use the ordinance with the state, with the feds, with the banking regulators, and with anybody else who wants to get involved in predatory lending.