New Mexico rules to cap payday loan fees
May 18, 2006 - Albuquerque, New Mexico
Gov. Bill Richardson and Attorney General Patricia Madrid today announced new regulations aimed at curbing the predatory loan business in New Mexico.
The regulations, which target payday lenders, would go into effect July 16 after a public comment period in June.
Chief features of the regulations set a fee cap of $15.50 per $100 borrowed and limits the total amount borrowed at 25 percent of the borrower's gross income.
Now, it is estimated that people pay fees of between $25 and $35 on loans of $100. That can lead to a cycle of debt the consumer might never be able to pay off, observers say.
"We have to do this," Richardson said during a news conference in Albuquerque today. "We have to stop abusive practices against consumers."
The regulations would:
- Set a flat fee for new loans and renewals at $15.50 per $100.
- Give consumers the sole discretion of renewing a loan two times at a maximum fee of $15.50 per $100.
- Cap the amount of borrowed money at 25 percent of the consumer's gross income.
- Give consumers the chance to enter into a longer-term payment plan -- up to 130 days -- with no additional fees after a second loan renewal.
"In the past," Madrid said, "people had only two weeks to pay. We are going to lengthen the time. They all want to pay. Now, we are going to make that possible."
Madrid has attempted to get legislation regulating payday loans passed since she became attorney general in 1999, to no avail.
These regulations, she said, do not require legislative approval.
Ed Lopez, superintendent of the state Regulation and Licensing Department, said the public will have the opportunity to comment on the payday regulations from June 15 to June 28.
The Albuquerque Tribune, Ollie Reed Jr., Tribune Reporter
Related Stories - New Mexico
- House, Senate lawmakers agree on payday loan restrictions [March 16, 2007]
- Payday loan regulation bill passes Senate [March 16, 2007]
- Military looks to change laws regarding payday loans [September 12, 2006]
- Court wacks payday-loan rules [August 31, 2006]
- Consider options before going to a payday lender [July 15, 2006]
- One family shows there is a way out from the payday loan cycle [July 15, 2006]
- Lawmakers work to make payday loans more manageable [July 14, 2006]
- New Mexico Payday Loan Regulation [May 29, 2006] -
- New Mexico puts the brakes on new payday loan licenses [May 25, 2006]
- Judges won't hear payday loan cases [May 19, 2006]
- New Mexico rules to cap payday loan fees [May 18, 2006]
- Payday loan company makes travel donations to ... Richardson [April 1, 2006]
- Tsosie filibusters payday loan bill [February 23, 2006]
- Payday loan bill revised [February 12, 2006]
- House approves bill to regulate payday lending [February 7, 2006]
- Customer warns: 'These places are back breakers' [February 4, 2006]
- Indian Affairs Committee panel proposes payday-loan limit [December 08, 2005]
See: Recent News | Archived News | RSS Newsfeeds | News by State
Go to PLIWatch.org home.