Yesterday, a delegation from Prosperity Works traveled to Chama, NM to testify before the Indian Affairs Committee about the storefront lending industry in New Mexico. HB 347, passed last session, went into effect in January 2018, capping the interest rate at 175% on all payday and title loans. However, the Financial Institutions Divisions, charged with enforcing the Small Loans Act, has yet to implement a new regulatory process. Without clear rules, lenders may be finding loopholes that allow them to skirt the 175% interest cap.
Since it is impossible to know how well the new law is protecting New Mexicans, Prosperity Works is also petitioning to see the data lenders are compelled to report to the FID about the loan products they are selling.
In addition to capping the interest rate, the new law also requires lenders to provide clear information about the costs of loans, allows borrowers to develop a credit history when they make payments on small-dollar loans, and sets minimum contract terms for small loans, including at least four payments and 120 days to pay off most loans. "The data and reporting transparency we seek is necessary to close loopholes that could render HB 347 ineffective, and to augment existing consumer protections in New Mexico," says Michael Barrio, Prosperity Works Director of Advocacy.
Following testimony from Prosperity Works and the New Mexico Center on Law and Poverty, the Indian Affairs Committee passed a resolution asking the FID to provide a full report as well as a presentation to the committee later this fall.
The passage of HB 347 was a necessary step to protect all New Mexicans, particularly Native American communities who have been aggressively targeted by this industry. Prosperity Works continues to fight for increased consumer protections while working to make sure the existing laws are effective as intended.
Read thefull press release at the New Mexico Center for Law and Poverty.