2005 House Bill text for HB0065

HOUSE BILL 65

47th legislature - STATE OF NEW MEXICO - first session, 2005

INTRODUCED BY

Patricia A. Lundstrom

FOR THE ECONOMIC AND RURAL DEVELOPMENT AND

TELECOMMUNICATIONS COMMITTEE

AN ACT

RELATING TO FINANCIAL TRANSACTIONS; PROVIDING FOR THE REGULATION OF PAYDAY LOANS; AMENDING, REPEALING AND ENACTING CERTAIN PROVISIONS OF THE NEW MEXICO SMALL LOAN ACT OF 1955.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:

Section 1. Section 58-15-2 NMSA 1978 (being Laws 1955, Chapter 128, Section 2, as amended) is amended to read:

"58-15-2. DEFINITIONS.--The following words and terms when used in the New Mexico Small Loan Act of 1955 [shall] have the following meanings unless the context clearly requires a different meaning. The meaning ascribed to the singular form [shall apply] applies also to the plural:

A. "person" [shall include] includes individuals, copartners, associations, trusts, corporations and any other legal entity;

B. "license" [shall mean] means a permit issued under the authority of the New Mexico Small Loan Act of 1955 to make loans and collect charges therefor strictly in accordance with the provisions of [the New Mexico Small Loan Act of 1955] that act at a single place of business. It shall constitute and shall be construed as a grant of a [revokable] revocable privilege only to be held and enjoyed subject to all the conditions, restrictions and limitations contained in the New Mexico Small Loan Act of 1955 and lawful regulations promulgated by the director [of the financial institutions division] and not otherwise;

C. "licensee" [shall mean] means a person to whom one or more licenses have been issued [hereunder] pursuant to the New Mexico Small Loan Act of 1955 upon [their] the person's written application electing to become a licensee and consenting to exercise the privilege of a licensee solely in conformity with the New Mexico Small Loan Act of 1955 and the lawful regulations promulgated by the director [of the financial institutions division hereunder] under that act and whose name [or names appear] appears on the face of the license;

D. "director" means the director of the financial institutions division of the [commerce and industry] regulation and licensing department;

E. "department" or "division" means the financial institutions division of the [commerce and industry] regulation and licensing department;

F. "deferred deposit loan":

(1) includes any advance of money or arrangement or extension of credit whereby the lender, for a fee, finance charge or other consideration:

(a) accepts a dated instrument from a consumer or an authorization signed by a consumer to transfer or withdraw funds from an account for the specific purpose of repaying a payday or deferred deposit loan;

(b) agrees to hold a dated instrument for a period of time prior to negotiating or depositing the instrument; or

(c) pays to the consumer, credits to the consumer's account or pays another person on behalf of the consumer the amount of an instrument actually paid or to be paid pursuant to the New Mexico Small Loan Act of 1955; but

(2) does not include:

(a) an overdraft product or service offered by a banking corporation, savings and loan association or credit union; and

(b) installment loans made under the New Mexico Bank Installment Loan Act of 1959;

G. "installment loan" means a loan repayable in substantially equal installments of principal and interest for a period of no less than one hundred twenty days to maturity;

H. "payday loan" means a loan in which the business operator cashes a personal check tendered by the consumer and agrees in writing to defer presentment of that check until the consumer's next payday or another date agreed to by the business operator and the consumer, and includes a "deferred deposit loan"; and

I. "simple interest" means a method of calculating interest in which the amount of interest is computed on the outstanding principal balance of a loan for each given period."

Section 2. Section 58-15-3 NMSA 1978 (being Laws 1955, Chapter 128, Section 3, as amended) is amended to read:

"58-15-3. APPLICABILITY OF ACT--EXEMPTIONS--EVASIONS--PENALTY.--

A. [No] A person shall not 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 or the general laws of this state governing money interest and usury.

B. Nothing in the New Mexico Small Loan Act of 1955 shall apply to a person making individual advances of two thousand five hundred dollars ($2,500) or less under a written agreement providing for a total loan or line of credit in excess of two thousand five hundred dollars ($2,500) [for which real estate is pledged as collateral].

C. [Any] A banking corporation, savings and loan association or credit union operating under the laws of the United States or of [New Mexico] a state shall be exempt from the licensing requirements of the New Mexico Small Loan Act of 1955, nor shall that act apply to [any] business transacted by any such person under the authority of and as permitted by any such law nor to any bona fide pawnbroking business transacted under a pawnbroker's license nor to bona fide commercial loans made to dealers upon personal property held for resale. Nothing contained in the New Mexico Small Loan Act of 1955 shall be construed as abridging the rights of any of those exempted from the operations of that act from contracting for or receiving interest or charges not in violation of [any] an existing applicable statute of this state.

D. The provisions of Subsection A of this section apply to [any]:

(1) a person [owning any] who owns interest, legal or equitable, in the business or profits of [any] a licensee and whose name does not specifically appear on the face of the license, except a stockholder in a corporate licensee; and

[to any] (2) a person who seeks to evade its application by any device, subterfuge or pretense whatsoever, including but not thereby limiting the generality of the foregoing:

(a) the loan, forbearance, use or sale of credit (as guarantor, surety, endorser, comaker or otherwise), money, goods or things in action;

(b) the use of collateral or related sales or purchases of goods or services or agreements to sell or purchase, whether real or pretended;

(d) the real or pretended negotiation, arrangement or procurement of a loan through any use or activity of a third person, whether real or fictitious.

E. [Any] A person, copartnership, trust and the trustees or beneficiaries thereof or association or corporation and the several members, officers, directors, agents and employees thereof who violate or participate in the violation of [any] a provision of Subsection A of this section is guilty of a petty misdemeanor and upon conviction shall be sentenced pursuant to the provisions of Subsection B of Section 31-19-1 [(B)] NMSA 1978. [Any] A contract or loan in the making or collection of which [any] an act is done that violates Subsection A or D of this section is void and the lender has no right to collect, receive or retain any principal, interest or charges whatsoever."

Section 3. Section 58-15-5 NMSA 1978 (being Laws 1978, Chapter 6, Section 1, as amended) is amended to read:

"58-15-5. LICENSES--INVESTIGATION OF APPLICATION--ISSUANCE--DENIAL--ISSUANCE OF RENEWAL LICENSE--DENIAL OF RENEWAL LICENSE--FITNESS AND CHARACTER OF APPLICANT--LICENSE FEES--LICENSEE BOUND BY ACT.--

A. Upon the filing of an application, whether it is an original or a renewal, the director shall investigate the facts concerning the application and the requirements provided in this section.

[Any] B. An applicant for license, upon written notice to do so by the director, shall, within twenty days after service of the notice, furnish in writing, under oath, to the director [any and] all additional information required by the director that may be relevant or, in the opinion of the director, helpful [to him] in conducting [his] the investigation.

C. Failure to comply with the director's requirement for supplemental information or the willful furnishing of false information is sufficient [ground] grounds for denial of license.

D. False or misleading information willfully and intentionally furnished to the director prior to the issuance of any license is [ground] grounds for suspension or revocation of any license in accordance with the procedures for suspension or revocation of license in the New Mexico Small Loan Act of 1955.

E. The director shall grant or deny each application for an original license within sixty days from the filing of the application with the required information and fees, unless the period is extended by written agreement between the applicant and the director.

[B.] F. In the event the director finds that:

(1) [that] the financial responsibility, character and general fitness of the applicant for an original license and of the individual members and beneficiaries thereof, if the applicant is a copartnership, association or trust, and of the officers and directors thereof, if the applicant is a corporation, are such as to command the confidence of the public and to warrant belief that the business will be operated lawfully, honestly, fairly and efficiently within the declared purposes and spirit of the New Mexico Small Loan Act of 1955;

(2) [that] allowing the applicant to engage in business will promote the convenience and advantage of the community in which the business of the applicant is to be conducted; and

(3) [that] the applicant has available for operation of the business at the specified location cash or its equivalent, convertible securities or receivables of thirty thousand dollars ($30,000) or any combination thereof;

[he] the director shall enter an order granting the application, file [his] the director's findings and, upon payment of the license fee of [five hundred dollars ($500)] seven hundred fifty dollars ($750), issue and deliver a license to the applicant.

[C.] G. If the director does not make the findings enumerated in Subsection [B] F of this section, [he] the director shall enter an order denying the application, notify the applicant of the denial and retain the application fee. Within thirty days after the entry of such an order, [he] the director shall prepare written findings and shall deliver a copy to the applicant.

[D.] H. Written application for renewal licenses shall be filed on or before March 31 of each year, and thereupon the director shall investigate the facts and review [his] the files of examinations of the applicant made by [his] the director's office and of complaints filed by borrowers, if any. The director shall deliver a renewal license to the applicant if [he] the director finds that:

(1) [that] no valid complaints of violations or abuses of the New Mexico Small Loan Act of 1955 or of the regulations of the director promulgated under that act have been filed by borrowers;

(2) [that his] examinations of the affairs of the applicant indicate that the business has been conducted and operated lawfully and efficiently within the declared purposes and spirit of the New Mexico Small Loan Act of 1955; and

(3) [that] the financial responsibility, experience and general fitness and character of the applicant remain such as to command the confidence of the public and to warrant the belief that the business will continue to be operated lawfully and efficiently within the purposes and spirit of the New Mexico Small Loan Act of 1955 [he shall deliver a renewal license to the applicant].

[E.] I. If the director does not make the findings enumerated in Subsection [D] H of this section, [he] the director may grant a temporary extension of the license not exceeding sixty days pending a hearing; shall enter an order fixing a date for hearing upon the application; shall notify the licensee thereof, specifying the particular complaints, violations or abuses or other reasons for [his] the director's contemplated refusal to renew the license; and shall afford to the applicant an opportunity to be heard. At the hearing, the director shall produce [his] evidence to establish the truth of the charges of violation or other grounds specified in the notice, and the applicant shall be accorded the right to produce evidence or other matters of defense. If after the hearing the director finds that the complaints of violations or other grounds specified in the notice are not well-founded, [he] the director shall issue the renewal license. If [he] the director finds that the complaints of violations or other grounds are well-founded, [he] the director shall enter an order denying the renewal application and notify the applicant of the denial, returning the renewal license fee tendered with the application. Within thirty days after the entry of such an order, [he] the director shall prepare written findings and shall deliver a copy of the findings to the applicant. The order shall be subject to review as provided in Section 58-15-25 NMSA 1978. The court in its discretion and upon proper showing may order a temporary extension of the license pending disposition of the review proceedings.

[F.] J. In connection with the determination of fitness and character of an applicant [under] pursuant to provisions of this section, the fact that the applicant or licensee is a member of or interested financially in, connected or affiliated with, controls or is controlled by or owns or is owned by other corporations, partnerships, trusts, associations or other legal entities engaged in the lending of money whose policies and practices as to rates of interest, charges and fees and general dealing with borrowers are questionable or would constitute violation of the general usury statutes of this state or of the declared purposes and spirit of the New Mexico Small Loan Act of 1955 shall be given such consideration and weight as the director determines.

[G.] K. At the time of issuance of original license and each annual renewal thereof, the licensee for each licensed office shall pay to the director as a license fee for the period covered by the license the sum of [five hundred dollars ($500)] seven hundred fifty dollars ($750) as a minimum, plus an additional seventy-five cents ($.75) for each one thousand dollars ($1,000) or fraction thereof of loans outstanding as of December 31 next preceding, as shown on the applicant's annual report. In the event that the application for annual renewal of the license is delinquent, the licensee shall also pay a delinquency fee of ten dollars ($10.00) per day for each day the licensee is delinquent in filing the application for renewal.

[H. Each] L. A licensee by accepting [any] a license that is issued or renewed or by continuing to operate [any] a licensed office under the New Mexico Small Loan Act of 1955 shall by such action be deemed to have consented to be bound by the lawful provisions of that act and all lawful requirements, regulations and orders of the director promulgated or issued pursuant to any authorization granted in that act."

Section 4. Section 58-15-9 NMSA 1978 (being Laws 1955, Chapter 128, Section 9, as amended) is amended to read:

"58-15-9. EXAMINATION OF LICENSEE'S BOOKS AND RECORDS--WITNESSES.--

A. At least once each year, the director or [his duly] the director's authorized representative shall make an examination of the place of business of each licensee and [such of] the loans, transactions, books, papers and records of the licensee insofar as they pertain to the business licensed under the New Mexico Small Loan Act of 1955 as [he] the director may deem necessary. The licensee shall pay to the [commissioner] director for such annual examination a fee of [two hundred dollars ($200)] four hundred dollars ($400).

B. Within a reasonable time after the completion of an examination of a licensed office, the director shall mail to the licensee a copy of the report of the examination, together with any comments, exceptions, objections or criticisms of the director concerning the conduct of the licensee and the operation of the licensed office.

[B.] C. For the purpose of discovering violations of the New Mexico Small Loan Act of 1955 or of securing information lawfully required under that act, the director or [his duly] the director's authorized representative may at any time investigate the business and examine the books, accounts, papers and records used therein, including income tax returns or other reports filed in the office of the director of the revenue processing division of the taxation and revenue department of:

(1) any licensee;

(2) any other person engaged in the business described in Subsection A of Section 58-15-3 NMSA 1978 or participating in such business as principal, agent, broker or otherwise; and

(3) any person whom the director has reasonable cause to believe is violating any provision of [that act] the New Mexico Small Loan Act of 1955, whether the person claims to be within the authority or beyond the scope of that act.

D. For the purposes of this section, [any] a person who advertises, solicits or holds himself out as willing to make loan transactions in any amount, except persons, financial institutions or lending agencies operating under charters or licenses issued by [any] a state or federal agency or under any special statute, shall be subject to investigation under the New Mexico Small Loan Act of 1955 and shall be presumed to be engaged in the business described in Subsection A of Section 58-15-3 NMSA 1978 as to any loans of two thousand five hundred dollars ($2,500) or less.

[C.] E. To facilitate the examinations and investigations by the director and fully disclose the operations and methods of operation of each licensed office, the licensee shall, in each licensed office, keep on file as part of the records of the office all office manuals, communications or directives containing statements of loan policy to office managers and employees. If the licensee is an individual, corporation, trust or association, the licensee shall keep in at least one office for information of the director a record of the several individuals, firms, beneficiaries of any trust and corporations deriving or receiving any part of the benefits, net income or profits from the operation of the licensee within New Mexico.

[D.] F. For the purposes of this section, the director or [his duly] the director's authorized representative shall have and be given free access to the offices and places of business, files, safes and vaults of all licensees and shall have authority to require the attendance of any person and to examine [him] the person under oath relative to such loans or business or to the subject matter of any examination, investigation or hearing as provided in the New Mexico Small Loan Act of 1955. Notices to appear before the director for examination under oath may be served by registered mail. If the party notified to appear is the licensee, any person named on the face of the license being investigated or any agent, employee or manager participating in the licensee's business and [he] the party fails to appear for examination or refuses to answer questions submitted, the director may, forthwith and without further notice to the licensee, suspend the license involved pending compliance with the notice. Upon failure of any other person to appear or to answer questions, the director may apply to and invoke the aid of any district court of New Mexico in compelling the attendance and testimony of any such person and the production of books, records, written instruments and documents relating to the business of the licensee. [Any] The district court whose aid is so invoked by the director may, in case of contumacy or refusal to obey any order of the district court issued to compel the attendance of the person or the production of books, records, written instruments and documents, punish the person as for contempt of court.

[E.] G. The director shall prescribe rules of procedure for all hearings, examinations or investigations provided for in the New Mexico Small Loan Act of 1955. The director is not bound by the usual common law or statutory rules of evidence or by any technical or formal rules of procedure or pleading and specification of charges other than as specifically provided in the New Mexico Small Loan Act of 1955 but may conduct hearings, examinations and investigations in the manner best calculated to ascertain the substantial rights of the parties interested.

[F.] H. The director has the power to administer oaths, certify official acts and records of [his] the director's office, issue subpoenas for witnesses in the name of and under the seal of [his] the director's office and compel the production of papers, books, accounts and documents. [He] The director shall issue subpoenas at the instance of any party to a hearing before the division upon payment of a fee of two dollars [and] fifty cents ($2.50) for each subpoena so issued.

[G.] I. Depositions may be taken with or without a commission, and written interrogatories may be submitted in the same manner and on the same grounds provided by law for the taking of depositions or submission of written interrogatories in civil actions pending in the district courts of this state.

[H.] J. Each witness who appears before the director by [his] the director's order shall receive the fees and mileage provided for witnesses in civil actions in the district court. Fees and mileage shall be paid by the state, but no witness subpoenaed at the instance of parties other than the director is entitled to compensation from the state for attendance or mileage unless the director certifies that [his] the witness's testimony is material.

[I.] K. Whenever the director has reasonable cause to believe that [any] a person is violating [any] a provision of the New Mexico Small Loan Act of 1955, [he] the director may, in addition to all actions provided for in that act and without prejudice thereto, enter an order requiring the person to desist or to refrain from the violation. An action may be brought on the relation of the attorney general and the director to enjoin the person from engaging in or continuing the violation or from doing any act in furtherance of the violation. In any such action, an order or judgment may be entered awarding a preliminary or final injunction as may be deemed proper. In addition to all other means provided by law for the enforcement of a temporary restraining order, temporary injunction or final injunction, the court in which such action is brought shall have power and jurisdiction to impound and to appoint a receiver for the property and business of the defendants, including books, papers, documents and records pertaining thereto or so much thereof as the court may deem reasonably necessary to prevent further violations of the New Mexico Small Loan Act of 1955 through or by means of the use of the property and business. The receiver, when appointed and qualified, shall have powers and duties as to custody, collection, administration, winding up and liquidation of the property and business as are from time to time conferred upon [him] the receiver by the court."

Section 5. Section 58-15-10 NMSA 1978 (being Laws 1955, Chapter 128, Section 10, as amended) is amended to read:

"58-15-10. BOOKS AND RECORDS--ANNUAL REPORTS--ADDITIONAL INFORMATION.--

A. Each licensee shall keep and use in [his] business such books, accounts and records in accordance with sound accounting practices [as in the director's opinion] that will enable [him] the director to determine whether the licensee is complying with the provisions of the New Mexico Small Loan Act of 1955 and with the orders and regulations lawfully made by the director [under] pursuant to provisions of that act. Each licensee shall preserve the books, accounts and records for at least two years after making the final entry on [any] a loan recorded therein.

B. Each licensee shall, annually on or before March 31, file a report with the director giving such relevant information as [he] the director may reasonably require concerning the business and operations during the preceding calendar year for each licensed place of business conducted by the licensee within the state pursuant to the provisions of the New Mexico Small Loan Act of 1955. The report shall be made under oath and shall be in the form prescribed by the director. A summary of the reports shall be included in the published annual report of the director.

C. At the time of filing each annual report, at the time of the annual examination or at any other time when [any] a license is in effect, the director may, upon written notice, require [any] a licensee to furnish within twenty days in writing, and under oath if so specified by any written notice issued and served by the director upon the licensee, [any and all] additional information as to ownership of any office; operation of any office; books, records, files and papers; and affiliation or relationship with any other person, firm, trust, association or corporation as, in the opinion of the director, may be helpful [to him] in the discharge of [his] the director's official duties.

D. False or misleading information willfully furnished to the director by [any] a licensee in [any] an annual report or pursuant to [any] a notice or requirement of the director is sufficient [ground] grounds for suspension and revocation of license in accordance with the procedures for suspension or revocation of license set forth in the New Mexico Small Loan Act of 1955."

Section 6. Section 58-15-12 NMSA 1978 (being Laws 1955, Chapter 128, Section 12, as amended) is amended to read:

"58-15-12. ADVERTISING [SCHEDULE OF CHARGES].--[A. No] A licensee or other person subject to the New Mexico Small Loan Act of 1955 shall not advertise, display, distribute or broadcast or cause or permit to be advertised, displayed, distributed or broadcast in any manner whatsoever [any] a false, misleading or deceptive statement or representation with regard to the charges, terms or conditions for loans in the amount or of the value of two thousand five hundred dollars ($2,500) or less. The director may require that charges or rates of charge, if stated by a licensee, be stated fully and clearly in such manner as [he may deem] the director deems necessary to prevent misunderstanding [thereof] by prospective borrowers. The director may permit or require licensees to refer in their advertising to the fact that their business is under state supervision, subject to conditions imposed by [him] the director to prevent [any] erroneous impressions as to the scope or degree of protection provided by the New Mexico Small Loan Act of 1955.

[B. Each licensee shall display in each licensed place of business, in a place where it will be readily visible by borrowers, a full and accurate schedule of the rates of charges upon all classes of loans currently to be made by him, stated on a percent per annum basis and also on a percent per month basis.]"

Section 7. Section 58-15-14.1 NMSA 1978 (being Laws 1983, Chapter 95, Section 2) is amended to read:

"58-15-14.1. CHARGES--METHOD OF COMPUTATION.--[Charges on] The simple interest method shall be used for loans made under the New Mexico Small Loan Act of 1955. Charges shall not be paid, deducted or received in advance. Such charges shall not be compounded. However, if part or all of the consideration for a loan contract is the unpaid principal balance of a prior loan, then the principal amount payable under the loan contract may include any unpaid charges [which] that have accrued within sixty days on the prior loan. Such charges shall be computed on the basis of the number of days actually elapsed. [For the purpose of computing charges, whether at the maximum rate or less, a month shall be any period of thirty consecutive days and the rate of charge for each day shall be one-thirtieth of the monthly rate.]"

Section 8. Section 58-15-17 NMSA 1978 (being Laws 1955, Chapter 128, Section 15, as amended) is amended to read:

"58-15-17. REQUIREMENTS FOR MAKING AND PAYING OF LOANS--INCOMPLETE INSTRUMENTS--LIMITATIONS ON CHARGES AFTER JUDGMENT AND INTEREST.--

A. Every licensee shall:

(1) at the time [any] a loan is made within the provisions of the New Mexico Small Loan Act of 1955, deliver to the borrower or, if there are two or more borrowers on the same obligation, to one of them, a statement in English on which shall be printed a copy of Section 58-15-14.1 NMSA 1978, disclosing in clear and distinct terms:

(a) the amount of the loan;

(b) the date the loan was made;

(d) the type of the security, if any, for the loan;

(e) the name and address of the licensed office;

(f) the name of the person primarily obligated for the loan;

(g) the amount of principal;

(h) the agreed rate of charge stated on [a percent per month and] a percent per year basis and the amount in dollars and cents; and

(i) other items allowable pursuant to that act, so stated as to clearly show the allocation of each item included;

(2) for each payment made on account of any such loan, give to the person making it a plain and complete receipt specifying the date and amount of the payment, the amount applied to interest and principal and the balance unpaid. When payment is made in any other manner than by the borrower in person, by an agent of the borrower or by check or money order, the licensee shall mail the receipt to the borrower's last known address or hold the receipt for delivery upon request of the borrower. A copy of all receipts shall be kept on file in the office of the licensee as a part of [his] the licensee's records; and

(3) upon payment of the loan in full, mark plainly every note and promise to pay signed by any obligor with the word "paid" or "canceled" and promptly file or record a release of any mortgage if the mortgage has been recorded, restore any pledge and cancel and return any note and any assignment given to the licensee. A licensee may mark and return a copy of the note, promise to pay or any assignment if the copy accurately reproduces the complete original.

B. [No] A licensee shall not take [any] a note or promise to pay that does not disclose the amount of the loan, a schedule of payments, or a description thereof, and the agreed charge or rate of charge or any instrument in which blanks are left to be filled in after execution.

C. If judgment is obtained against [any] a party or [any] a loan made [under] pursuant to the provisions of the New Mexico Small Loan Act of 1955, neither the judgment nor the loan shall carry, from the date of the judgment, [any] charges against [any] a party to the loan other than court costs, [attorneys'] attorney fees and interest on the amount of the judgment at ten percent a year.

D. [Any] A loan made [under] pursuant to the provisions of the New Mexico Small Loan Act of 1955 that is filed and approved as a claim in [any] a bankruptcy proceeding shall, from a date ninety days subsequent to the date of adjudication, bear interest at the rate of ten percent a year only. This limitation shall not apply when the bankrupt is not discharged in bankruptcy or to any obligation not dischargeable under the provisions of the federal Bankruptcy Act [presently in force or as hereafter amended].

E. [No] A loan made under the provisions of the New Mexico Small Loan Act of 1955 shall not bear interest after ninety days from the date of the death of the borrower in excess of a rate of ten percent a year on the unpaid principal balance of the loan.

F. [No] A loan made under the provisions of the New Mexico Small Loan Act of 1955 shall not bear interest after twelve months from the date of maturity of the loan in excess of ten percent a year upon the unpaid principal balance of the loan."

Section 9. Section 58-15-20 NMSA 1978 (being Laws 1955, Chapter 128, Section 18) is amended to read:

"58-15-20. FEES AND COSTS.--

[(a) FILING OR RECORDING FEES] A. Notwithstanding any provision of [this Act] the New Mexico Small Loan Act of 1955, lawful fees, if any, actually and necessarily paid out by the licensee to [any] a public officer for the filing, recording or releasing in [any] a public office [any] of an instrument securing the loan may be charged to the borrower.

[(b) ATTORNEY FEES] B. Notwithstanding any provision in [any] a note or other loan contract taken or received [under this act] pursuant to the New Mexico Small Loan Act of 1955, attorney fees shall not be charged or collected except [where such] when the note or other contract has been [turned] submitted in good faith to an attorney for collection and after diligent effort to collect [has failed] on the part of the licensee has failed.

[(c) COURTS COSTS Where] C. When suit is filed in [any] a court of competent jurisdiction, court costs shall be [collectable] collectible in accordance with the laws of New Mexico applicable thereto.

[(d) NOTARY FEES PROHIBITED] D. Notary fees incident to the taking of [any] a lien to secure a small loan or releasing such a lien shall not be charged or collected by [any] a licensee, [nor by any] an officer, agent or employee of a licensee [nor by] or anyone within [any] an office, room or place of business in which a small loan office is conducted.

E. Delinquency fees shall not exceed five cents ($.05) for each one dollar ($1.00) of each installment more than ten days in arrears; provided that the total of delinquency charges on any such installment shall not exceed ten dollars ($10.00) and that only one delinquency charge shall be made on any one installment regardless of the period during which the installment remains unpaid."

Section 10. Section 58-15-23 NMSA 1978 (being Laws 1955, Chapter 128, Section 21) is amended to read:

"58-15-23. VIOLATION OF GENERAL USURY LAWS.--The [wilful] willful violation by [any] a licensee or by [any] an officer, manager, director, trustee, executive or employee directly engaged in operating a small loan office under the provisions of [this Act] the New Mexico Small Loan Act of 1955 of any usury statute of this state within [any] an office, room or place of business in which the making of loans as a licensee is solicited or engaged in or in association or conjunction therewith [shall be ground] is grounds for suspension and revocation of license in accordance with the applicable procedures [applicable thereto as] set forth [herein] in that act."

Section 11. A new section of the New Mexico Small Loan Act of 1955, Section 58-15-32 NMSA 1978, is enacted to read:

"58-15-32. [NEW MATERIAL] REQUIREMENTS FOR PAYDAY LOANS.--

A. A payday loan shall not exceed one thousand dollars ($1,000).

B. A payday loan agreement shall include a provision granting the consumer the right to rescind the transaction by returning in cash, or through certified funds, one hundred percent of the amount advanced by a licensee for a payday loan no later than 5:00 p.m. on the first day of business conducted by the licensee following the execution of the payday loan agreement. Unless the provisions of this subsection are followed, a payday loan shall not be subject to the consumer's right of rescission unless both the consumer and the licensee agree to the rescission. If a consumer exercises the right of rescission pursuant to this subsection, no fee for the rescinded transaction shall be charged to the consumer, and the licensee shall not charge or impose on the consumer a fee for exercising the right of rescission pursuant to this subsection.

C. A consumer shall be permitted to make partial payments in any amount on a payday loan at any time prior to maturity.

D. After each payment is made, in full or in part, on a payday loan, the licensee shall give to the person making the payment a signed, dated receipt showing the amount paid, amount credited toward interest and principal and the balance due on the loan.

E. A check written by a consumer for a payday loan shall be payable to the order of the licensee.

F. The licensee shall provide the consumer, or each consumer if there is more than one, with copies of the payday loan agreement in Spanish or English prior to the consummation of the loan.

G. The holder or assignee of a check written by a consumer in connection with a payday loan takes the instrument subject to all claims and defenses of the consumer. A payday loan agreement may not be renewed, refinanced or extended without the mutual written consent of the licensee and the consumer.

H. Small loan companies making payday loans shall have available a consumer information brochure in English and Spanish as determined by the director."

Section 12. A new section of the New Mexico Small Loan Act of 1955, Section 58-15-33 NMSA 1978, is enacted to read:

"58-15-33. [NEW MATERIAL] PAYDAY LOANS--PERMITTED CHARGES.--

A. A licensee may not charge or receive from a consumer, directly or indirectly, interest, fees or charges except as provided in this section.

B. A licensee may charge an administrative fee of not more than five dollars ($5.00) for each new payday loan entered into with a consumer.

C. In addition to the administrative fee, the licensee shall only charge simple interest on the amount of loan proceeds delivered to the consumer in a payday loan. The aggregate amount of interest received by the licensee for a payday loan includes all interest received on the loan, including interest received after any renewals, refinance or extensions. The total aggregate amount may not exceed two times the amount of the original loan agreement principal balance. Once the licensee has received in total aggregate interest equal to two times the original loan agreement principal balance, the payday loan shall be terminated and considered paid in full by the consumer. The interest rate charged on the outstanding balance after initial maturity shall not be greater than the interest rate charged during the initial loan term. Interest on loans shall be computed and paid only as a percentage of the unpaid principal balance.

D. If there are insufficient funds to pay a check or other type of debit on the date of presentment, a licensee may charge a fee not to exceed fifteen dollars ($15.00). Only one fee may be collected on a check or debit even if it has been redeposited and returned more than once. A fee charged pursuant to this subsection is a licensee's only charge for a late payment."

Section 13. A new section of the New Mexico Small Loan Act of 1955, Section 58-15-34 NMSA 1978, is enacted to read:

"58-15-34. [NEW MATERIAL] PAYDAY LOANS--PROHIBITED ACTS.--A licensee shall not:

A. use or threaten to use a criminal process in this or another state to collect on a payday loan;

B. alter the date or other information on a check drawn by a consumer in a payday loan transaction;

C. use a device or agreement that would have the effect of charging or collecting more fees, charges or interest than allowed by law by entering into a different type of transaction with the consumer that has that effect except as specifically permitted by the New Mexico Small Loan Act of 1955;

D. engage in unfair, deceptive or fraudulent practices in the making or collecting of a payday loan;

E. charge a fee to cash a check representing the proceeds of the payday loan;

F. use or attempt to use the check written by the consumer for a payday loan as security for purposes of a state or federal law;

G. make more than one payday loan to a consumer at a time;

H. accept collateral for a payday loan other than the consumer's check;

I. charge interest, fees or charges other than those specifically authorized, including:

(1) charges for insurance; or

(2) collection costs;

J. threaten to take any action against a consumer that is prohibited by the New Mexico Small Loan Act of 1955;

K. include any of the following provisions in a payday loan agreement:

(1) a hold harmless clause;

(2) a confession of judgment clause or power of attorney;

(3) an assignment of or order for payment of wages or other compensation for services;

(4) a provision in which the consumer agrees not to assert a claim or defense arising out of the contract; or

(5) a waiver of a provision of the New Mexico Small Loan Act of 1955;

L. make a payday loan contingent on the purchase of insurance or other goods or services;

M. advertise, display, distribute or broadcast or cause or permit to be advertised, displayed, distributed or broadcast, in any manner, a false, misleading or deceptive statement or representation with regard to the charges, terms or conditions for payday loans;

N. take a check, instrument or form in which blanks are left to be filled in after execution of the check, instrument or form;

O. offer, arrange, act as an agent for or assist a third party in any way in the making of a payday loan unless the third party complies with all applicable federal and state laws and regulations;

P. enter into a payday loan with a consumer who lacks the capacity to consent; or

Q. use provisions in documents associated with a payday loan that are deceptive or misleading."

Section 14. A new section of the New Mexico Small Loan Act of 1955, Section 58-15-35 NMSA 1978, is enacted to read:

"58-15-35. [NEW MATERIAL] SMALL LOAN COMPANIES MAKING PAYDAY LOANS.--Effective January 1, 2006, a licensee that issues payday loans shall file an annual report with the division for data collection purposes on or before the last day of March for the preceding calendar year on forms prescribed by the director. The report shall disclose in detail and under appropriate headings all information that the director requests to determine if the licensee is complying with the provisions of the New Mexico Small Loan Act of 1955."

Section 15. A new section of the New Mexico Small Loan Act of 1955, Section 58-15-36 NMSA 1978, is enacted to read:

"58-15-36. [NEW MATERIAL] REQUIRED DISCLOSURES WHEN MAKING PAYDAY LOANS.--A licensee making payday loans shall provide a notice immediately above the borrower's signature on each payday loan agreement in at least ten-point bold type using the following language:

"(1) A payday loan is not intended to meet long-term financial needs.

(2) You should use a payday loan only to meet short-term cash needs.

(3) You will be required to pay additional interest if you renew the payday loan rather than pay the debt in full when due.

(4) A payday loan is a high-interest loan. You should consider what other lower-cost loans are available to you."."

Section 16. REPEAL.--Sections 58-15-15 and 58-15-19 NMSA 1978 (being Laws 1959, Chapter 201, Section 1 and Laws 1955, Chapter 128, Section 17, as amended) are repealed.