Payday Loan Writer
The debate is over. Critics of payday loans in New Mexico have won.
The Albuquerque Tribune reports that state officials said new regulations, which take effect Aug. 31, are needed to place curbs on the instant payday loan lending industry to help New Mexicans who use such short-term payday advances.
"These regulations are tough, sensible limits designed to protect consumers from unfair lending practices," Governor Bill Richardson said Monday. "We expect industry opposition and lawsuits on this issue but we will continue to fight to help New Mexicans who are struggling to make ends meet."
In anticipation of a legal battle from faxless payday loan companies, Attorney General Patricia Madrid has filed a lawsuit that asks a state district court to affirm the authority of the state Regulation and Licensing Department to issue the new regulations.
Madrid has tried unsuccessfully to get legislation regulating payday loans passed since she became attorney general in 1999. The latest rules will require all cash loans in New Mexico to be interest free. No longer will lenders be able to charge more than a $15.50 fee per $100 borrowed.
Moreover, unlimited personal loan renewals will be prohibited. Individuals will have the sole discretion to renew - and they can only do so twice. The law also will limit the amount of all outstanding bad credit payday loans a person has throughout the state with licensed lenders to 25 percent of their gross monthly income.
State officials say a new centralized computer database will monitor compliance with this rule. Regulation and Licensing Superintendent Edward J. Lopez Jr. said his department will enforce a moratorium on new payday loan lending licenses until all payday lenders set up the database to monitor compliance with the regulations.
Such a database will track who is borrowing, how much they borrow and where and how many payday loans they have throughout the state.