The Missouri Supreme Court recently ruled that a St. Louis County ordinance requiring lenders to mediate with borrowers prior to foreclosure was void ab initio because it was not directed to a matter of purely municipal concern.

A state bankers association challenged the validity of a County ordinance titled “Mortgage Foreclosure Intervention Code.” The ordinance purported to address “the national residential property foreclosure crisis” and its impact on the County’s property values, tax base, budget, assessments, and collection of real property taxes. It implemented a program requiring lenders to provide residential borrowers an opportunity to mediate prior to foreclosure. While the case was pending, the Missouri Legislature enacted a law that expressly prohibited local municipalities from adopting ordinances that would delay enforcement of loan agreements.

The Missouri Supreme Court struck down the ordinance as unconstitutional. Although the Missouri Constitution gives "charter counties," such as St. Louis County, authority over police powers that takes precedence over state legislative authority, such municipal police powers may be exercised only over matters of purely local concern. “Municipal regulations meant to address a national crisis, which affect every state in the country"—such as the impact of foreclosures—"are not a matter of such distinctly local concern that the County is authorized to legislate pursuant to its delegated police power.” Because the County's ordinance went beyond the County's constitutional powers, the Missouri high court held that the ordinance was unconstitutional and void ab initio.