Editoral Focuses on New Mexico Payday Loan, Cash Advance Regulations
By J.J. CameronPayday Loan Writer
The question of payday loans in New Mexico has been in the news a lot recently. Now, regulations appear to be in place - and one editoral from The Alibi seems to think it's about time. Let's paraphrase:
The number of cheap payday loan offices around the nation has increased from 300 in 1992 to almost 22,000 in 2003, according to a report by the Congressional Research Service. If you're strapped for cash, these payday loan companies offer short-term loans or cash advances as long as you have a checking account, a form of identification and a pay stub.
The high cost and high risk of these faxless payday loans, however, has caught the attention of Gov. Bill Richardson and Attorney General Patricia Madrid. During the last legislative session, the governor backed legislation - HB 409 - that would have imposed regulations on the payday lending loans industry, but it was killed in the Senate.
The failing of this bill prompted the governor to take another approach to solving the payday loan problem. The Financial Institutions Division and the governor's task force on payday advance lending have published regulations to help protect New Mexico consumers.
“It was abundantly clear that we could not wait another year without any sort of regulation of payday lenders,” says Edward J. Lopez, Jr., superintendent of Regulation and Licensing.
The regulations, as proposed, would:
- Cap fees to $15.50 per $100
- Specify that payday loans could only be renewed twice
- Assure that a maximum of 25 percent of the borrower's monthly income could be loaned
- Guarantee that consumers would not be required to repay personal loans made by anyone without a state license.
Jean Ann Fox, director of consumer protection for the Consumer Federation of America, plans to comment on the regulations.
“New Mexico does not limit what licensed lenders can charge, currently,” she says. “They don't have much limitation at all.”
Based on what they proposed, New Mexico would still allow small payday cash loans to be made to struggling families that cost over 400 percent annual interest. And they would still permit loans based on asking people to write checks [when] they don't have money in the bank to cover them.
Craig Parr has been in the finance industry for 15 years and is the regional director of Cash, Co., a company that operates payday loan offices in New Mexico. He said:
“Regulation does need to be in place. They need to do it sometime. What they are trying to put in now is on the extreme side of it … but we can live with it."
