Subprime lenders are waging last-ditch efforts against a predatory-lending ordinance set to take effect July 31 in Philadelphia, one they say will drive them out of the city.

“The whole industry is still hoping this will go away,” said Don Dybalski, a banker with Ivy Mortgage in Trevose, Pa.

With about a week left before the Pennsylvania state legislature recesses for the summer, lobbyists are pushing a bill that would preempt the Philadelphia measure, give the state’s banking regulators new powers in regulating mortgage companies, and apply federal high-cost-loan regulations statewide.

Lenders’ hopes also hinge on the outcome of a civil case filed against the City of Philadelphia in May by the American Financial Services Association, which argues that the city did not have the authority to legislate in the financial services business. The case is scheduled to be decided on July 31. (The association would not comment on the lawsuit’s progress.)

The ordinance has tough restrictions on loans with rates 4.5 percentage points above Treasury securities of comparable maturity. Lenders say it is draconian and that the measure would make it harder for people with poor credit histories to obtain a loan.

The ordinance would also require lenders — even banks and credit unions that are exempt from other provisions in the rule — to file disclosures with the city outlining the annual percentage rate and the points charged on each loan.

Lenders’ antidote is a bill in the state House, the Consumer Equity Protection Act. Modeled after the federal Home Ownership and Equity Protection Act, which sets the interest rate trigger for regulated loans at 10 percentage points above Treasury securities with comparable maturities, the Consumer Equity Protection Act would add new restrictions on loans with balloon payments and single-premium credit insurance and give the Pennsylvania Department of Banking more power to punish unscrupulous mortgage lenders.

Officials from the Association of Community Organizations for Reform Now contend that by introducing the state bill, legislators are usurping Philadelphians’ will.

But Leonard Bernstein, a partner with Reed Smith LLP, said the state legislature “is also the will of the people; that is a democratically elected body.” He noted that Mayor John Street of Philadelphia is among those who have been critical of the ordinance.

Consumer groups are particularly concerned with a section of the state bill that would force borrowers suing lenders to prove the lender operated in a pattern of abusive lending. More important, no attorney fees could be awarded.

Irv Ackelsberg, managing attorney for Community Legal Services in Philadelphia, said that by putting the burden of proof in civil cases on the consumer and restricting the award of legal fees, the bill would cripple consumers seeking redress. Proving such patterns of lending takes a lot of time and money, he said, which victims of predatory lending typically don’t have.

Mr. Ackelsberg further contended that allowing consumers to sue is fundamental to many consumer protection laws, including the Home Ownership and Equity Protection Act. Regulators lack the resources to protect all consumers, so people have to fend for themselves through litigation, he said.

Denis O’Toole, chief lobbyist for Household International Inc. in Prospect Heights, Ill., countered that Mr. Ackelsberg was merely creating business for trial lawyers, and nothing else. He said the bill offers more protections than current federal regulations, and consumer groups should recognize that.

The bill’s prospects are unclear. Observers said that the best chance to get it through would be to tack it on to a Senate bill, which could be considered in the House by the end of the week. If that bill passed, it would merely go back to the Senate, where it could be approved by a simple vote.

Mr. O’Toole said the bill has a good chance of passing in the House.

But Franklin L. Kury, a lobbyist with Reed Smith LLP, had doubts about the bill’s chances of passing before the summer recess. He said the Assembly’s main focus now is passing a budget and allocating funds it received from a settlement with tobacco companies, and that once that work is done legislators may cut out for the summer.

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