Moratoritum on Payday Loans to Remain in Place in New Mexico
By J.J. CameronPayday Loan Writer
As Governor Bill Richardson looks to crack down on payday loans in New Mexico, a moratorium on those companies will remain in place until regulations are decided upon.
Edward J. Lopez, superintenent of the state Regulation and Licensing Department, said New Mexico would not issue new licenses to payday loan businesses until legislation to change the industry is enacted some time in June.
Until then, the state will impose its own set of regulations on the industry, preventing any new businesses from opening, he said.
Darrin Andersen, president of the Community Financial Services Association of America, is not a fan of this approach. He said in a prepared statement that there concerns that state regulations would restrict New Mexicans' access to payday advance lending services.
"CFSA members do not support the placement of arbitrary restrictions on their customers, who are hard-working, educated adults, capable of making appropriate financial decisions for their families," Anderson said.
Steven Schlein, a spokesman for the Financial Services Association, declined to comment on the faxless payday advance moratorium and said he could not expand on the prepared statement until the official version of the proposed regulations is entered on June 15.
The proposed regulations would deliver the following:
- Give consumers sole discretion to renew a payday loan two times, at a maximum fee of $100.
- Prohibit consumers from borrowing more than 25 percent of their gross monthly income on payday loans.
- Provide a payment plan of up to 130 days, with no additional fees, after a second renewal.
- Set a flat fee for new cash loan renewals at $15.50 per $100.
The state will also launch a campaign to inform consumers that they do not have to repay payday loans made by companies not licensed to issue such loans.
Lopez said his department is doing the final cleanup on the proposed regulations, and they will be entered into the Public Register on June 15. There will then be a two-week public comment period.
The comments will be reviewed, and a final decision will be made June 30, Lopez said. It is expected that the new regulations on cash loans will become effective July 15.
After a bit of payday loan controversy, Richardson issued the moratorium and first announced that he would impose new regulations through the Regulation and Licensing Department days after the close of the legislative session, after lawmakers were unable to reach a compromise on a number of different bills dealing with payday loan regulation.
