Lt. Gov. Denish & A.G. King Call for Major Reform of Predatory Lending

Lt. Gov. Diane Denish and Attorney General Gary King today called for tough legislation to hold the predatory lending industry accountable for taking advantage of our most vulnerable families. With the holiday season in full swing and many New Mexicans looking for extra dollars to buy last minute gifts, it's a timely topic. Denish and King warned New Mexicans to avoid predatory lending schemes during the holidays, which can often lead to a never-ending cycle of debt. 

“Predatory lending doesn’t just happen on Wall Street, it’s happening right here in New Mexico every day. By taking advantage of loopholes, certain payday lenders are making millions each year by holding New Mexico’s most vulnerable families hostage,” said Lt. Gov. Denish. “That’s why I am calling for tough new laws that cap interest rates and protect New Mexico families. Major reform of the predatory lending industry is long overdue.”

“During this holiday season, many New Mexicans will be looking for a few extra dollars to buy last minute gifts, but before taking out a predatory title or installment loan, it’s important to know the facts. I encourage all New Mexicans to seek other options before getting trapped in a never-ending cycle of debt,” said Lt. Gov. Denish.

“For the past two years the Lt. Governor and I have been sharing our concerns about predatory small loan products and agree that there needs to be a concerted effort in the legislature to address such practices,” said Attorney General King. “I am pleased to have the Lt. Governor as a partner in our efforts to combat predatory lending in New Mexico. Earlier this year my office filed lawsuits against two lenders who were using a loophole in the law to continue to charge extremely high rates, in some cases, more than one-thousand percent. These practices take advantage of consumers and are against public policy and will be vigorously challenged by the Attorney General's Office.”

In 2007, Lt. Gov. Denish led the charge to pass strong payday loan reforms to protect New Mexico consumers. However, certain bad actors in the industry developed a loophole that allows them to avoid New Mexico’s consumer protection laws. The result is today New Mexican families are frequently being placed in title and installment loans where they are charged as much as 1000 percent APR.

Lt. Gov. Denish is calling on legislators to support Senate Bill 33 that will:

• Cap interest rates for all payday loans. For loans of $2,500 or smaller, the APR must not exceed 45 percent. For loans larger than $2,500, the APR must not exceed 36 percent.

• Establish a statewide database to track the number of loans issued, rates of loans issues, interest rates and specifics of the loan. This will put additional oversight on the predatory loan industry and so the state can protect vulnerable citizens from unfair and illegal loan agreements.

Sen. Peter Wirth (D-Santa Fe) has pre-filed the legislation for this upcoming session.

“I applaud Lt. Gov. Denish for once again looking out for New Mexico families,” said Sen. Wirth. “In these difficult economic times it is more important than ever that we take on predatory lenders. I look forward to aggressively pushing this critical legislation in the upcoming legislative session.