HOUSE JOINT MEMORIAL 100

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

INTRODUCED BY

Patricia A. Lundstrom

A JOINT MEMORIAL

REQUESTING THE OFFICE OF THE ATTORNEY GENERAL AND THE FINANCIAL INSTITUTIONS DIVISION OF THE REGULATION AND LICENSING DEPARTMENT TO UNDERTAKE A JOINT STUDY OF CONSUMER LENDING PRACTICES IN NEW MEXICO.

     WHEREAS, there is concern regarding the number of small loan companies that have proliferated in New Mexico in recent years; and

     WHEREAS, small loan companies often make consumer loans with an annual interest rate in excess of five hundred percent per year; and

     WHEREAS, there have been documented instances where consumers have paid fees and interest in amounts several times the original amount of the principal without paying down a significant percentage of the principal; and

     WHEREAS, past practices of the small loan business have resulted in consumers becoming increasingly indebted to lenders; and

     WHEREAS, the New Mexico court system has been inundated by the number of collection actions filed on behalf of small loan companies against New Mexicans; and

     WHEREAS, New Mexicans need access to sources of short-term loans in amounts of one thousand dollars ($1,000) or less without the imposition of draconian fees or interest rates; and

     WHEREAS, small loan companies are entitled to make a reasonable but not an excessive profit on loans made to New Mexicans; and

     WHEREAS, New Mexico may soon enact innovative legislation that will impose a cap on the amount of principal and interest that can be repaid on certain types of consumer loans in amounts of one thousand dollars ($1,000) or less, the impact of which will need to be closely examined;

     NOW, THEREFORE, BE IT RESOLVED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO that the office of the attorney general and the financial institutions division of the regulation and licensing department be requested to undertake a joint study of consumer lending practices in New Mexico to include the following:

          A. the collection and analysis of data by the financial institutions division of the regulation and licensing department regarding loans known as payday loans, car title loans and tax refund anticipation loans;  

          B. the regulatory framework and economics of the business of making closed-end and short-term loans of one thousand dollars ($1,000) or less, including those loans known as payday loans, car title loans and tax refund anticipation loans; and

          C. the implementation of a statewide lenders' information exchange program whereby selected information regarding lending practices can be compiled by and exchanged within the small-loan business community; and

     BE IT FURTHER RESOLVED that the office of the attorney general and the financial institutions division of the regulation and licensing department make available to the appropriate interim legislative committees by August 31, 2006 copies of the study, including recommendations for any appropriate legislative action; and

     BE IT FURTHER RESOLVED that copies of this memorial be transmitted to the governor, the attorney general, the superintendent of regulation and licensing, the director of the financial institutions division of the regulation and licensing department and the co-chairs of the New Mexico legislative council.

- 3 -