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SPONSOR: |
Senate Floor |
DATE TYPED: |
|
HB |
|
||
|
SHORT TITLE: |
Deferred Deposit Loan Act |
SB |
CS/225/SFlS/aSFl#1/aSFl#2 |
||||
|
|
ANALYST: |
Gilbert |
|||||
APPROPRIATION
|
Appropriation
Contained |
Estimated
Additional Impact |
Recurring or
Non-Rec |
Fund Affected |
||
|
FY03 |
FY04 |
FY03 |
FY04 |
|
|
|
|
$0.1
See Narrative |
|
$0.1
See Narrative |
Recurring |
General
Fund |
(Parenthesis
( ) Indicate Expenditure Decreases)
REVENUE
|
Estimated Revenue |
Subsequent Years Impact |
Recurring or
Non-Rec |
Fund Affected |
|
|
FY03 |
FY04 |
|
|
|
|
|
$0.1
See Narrative |
$0.1
See Narrative |
Recurring |
General
Fund |
(Parenthesis ( ) Indicate Revenue Decreases)
LFC Files
Regulation and Licensing Department (RLD)
SUMMARY
Synopsis
of SFl Amendment
Senate Floor Amendment #2 to Senate Floor
Substitute to Senate Bill 225 makes the following change to the original bill: (please note that the word licensee is
misspelled)
Section 9. [NEW MATERIAL] PERMITTED CHARGES AND FEES.--
D. If there are insufficient funds to pay a check on the date of presentment, a licensee may charge a fee of fifteen dollars ($15.00). Only one such fee may be collected between a licencee and the financial institution returning the check with respect to a particular check even if it has been re-deposited and returned more than once. A fee charged pursuant to this subsection shall be a licensee's exclusive charge for late payment.
Synopsis
of SFl Amendment
Senate Floor Amendment #1 to Senate Floor
Substitute to Senate Bill 225 makes the following change to the original bill:
"58-15-3. APPLICABILITY OF ACT--EXEMPTIONS--EVASIONS--PENALTY.--
A. No person except for an employer lending money to an employee shall engage in the business of lending in amounts of two thousand five hundred dollars ($2,500) or less without first having obtained a license from the director. Nothing contained in this subsection shall restrict or prohibit a licensee under the New Mexico Small Loan Act of 1955 from making loans in any amount under the New Mexico Bank Installment Loan Act of 1959 in accordance with the provisions of Section 58-7-2 NMSA 1978
Synopsis
of Original Bill
The Senate Floor
Substitute for Senate Bill 225 creates the Deferred Deposit Loan Act. This Act
defines business practices for deferred deposit (payday) loan companies
(licensees). It sets maximum loan
amounts of $300 and minimum loans of $50, with a maximum interest rate of 44%
percent a year. It requires licensees to
accept partial payments of $5.00 or more.
The Act also requires licensees to not engage in another loan with the
same consumer for a period of thirty days after a loan has been paid. There is an administrative fee limit per loan
of $10.00 per loan and a $15 limit on fees for insufficient funds. The Act requires a $50,000 bond to be posted
by licensees.
SB 225/SFlS also
requires the Regulation and Licensing Department (RLD) Financial Institutions
Division (FID) to establish a complaint process whereby an aggrieved consumer
or other person may file a complaint against licensees and allows the FID to
revoke or suspend licenses. The Act also specifies civil and criminal
penalties.
Significant
Issues
The Deferred Deposit Loan Act also specifies
that:
q
Licensees are required to compile and
report annual statistics concerning all deferred deposit loans.
q
Licensees are required to file copies of
loan contracts and fee schedules with the FID. Copies must then be available
for interested parties and the general public.
q
That “facilitators” exempt from the fee
limitations of the act, which charge fees, interest and other charges greater
than those authorized in the act, to post a warning disclosing that the fees
charged are higher than other financial institutions charge.
q
q
Exemptions to licensing requirements and
fee limitations are defined for state or federal chartered financial
institutions that are exempt by virtue of other state or federal laws.
FISCAL IMPLICATIONS
Deferred deposit
lenders are currently subject to the Small Loan Act and pay an annual fee of
$500 plus $.75/$1000 of loans outstanding.
The Deferred Deposit Loan Act would exempt deferred deposit lenders from
the Small Loan Act, but would subject them to the Deferred Deposit Act, which
has a higher license fee structure than the Small Loan Act as shown below:
(1) an application fee
of seven hundred fifty dollars ($750);
(2) a renewal fee of seven hundred fifty dollars ($750), plus an additional seventy-five cents ($.75) for each one thousand dollars ($1,000) of outstanding loans; and
(3) an investigative
fee of five hundred dollars ($500).
Therefore, this bill would increase general fund
revenue.
Additionally, according to FID, current
allocation of FTE’s is not sufficient to meet the additional workload required
by this bill.
ADMINISTRATIVE IMPLICATIONS
According to the FID, this bill would require them to obtain additional FTE’s in order to perform the responsibilities outlined in this Act. The FID also states that they do not have the examination staff necessary to perform audits of deferred deposit loan licensee records.
TECHNICAL ISSUES
Language
addressing payday loans in existence at the time the law becomes effective
should be considered.
RLG/prr:njw