Democracy for New Mexico

Action Alert: Stop Bill to Increase Lending Limits for Pawnshops

SB 185, Increase Pawn Transaction Principal Balance, sponsored by Sen. George Munoz (D-Gallup), would allow pawnshops to increase the amount they can lend to a borrower from $2,000 to $3,500. This is a terrible bill that would make it easier for pawnshops to lure low-income folks, those with bad credit, gambling or other debts, substance-abuse problems, etc. to give up their possessions as loan collateral for what is often only a small percentage of their real worth. This is especially dangerous during a time of economic upheaval like the one we're experiencing.

Loans from pawnbrokers are comparable in some ways to those offered by payday loan predators in that they prey on folks with financial problems and generally charge high monthly interest rates. Anti-poverty advocates should be up at arms over this proposed legislation, and so should anyone who wants to stop predatory lending in its tracks. It allows vulnerable parties to take on higher debt at a usually predatory interest rate.

So far, the bill has received a Do Pass on a 7-0 vote in the Senate Corporations Committee (SCORC), with Senators Lynda Lovejoy (D-Crownpoint), David Ulibarri (D-Grants) and the bill's sponsor, George Muñoz, excused. SB 185 is expected to be heard in the Senate Public Affairs Committee (SPAC) on Tuesday, February 22, and that's where it should be put to rest.

Take Action: Contact your legislators and members of the SPAC and urge them to vote no on SB 185.

Guest Blog: USDA Offers Funding Opportunities for NM Projects

This is a guest blog by Terry Brunner, State Director of the New Mexico Office of USDA Rural Development.

We are at a critical juncture in New Mexico’s history as we approach our Centennial in 2012. Of great concern to us all should be how our rural communities will fare over the next 100 years. Will they continue to struggle or will we make the investments and decisions now to allow for their renewal and prosperity during the century ahead?

Before us lies an extraordinary opportunity, through the American Recovery and Reinvestment Act of 2009 (also known as the Stimulus), to make immediate and necessary investments in our rural communities.

The United States Department of Agriculture New Mexico Rural Development office saw funding increases in many of its programs as a result of the Stimulus. USDA Rural Development in New Mexico almost tripled its regular programmatic spending for dozens of new projects in Fiscal Year 2009 to $354 million. We hope to have another banner year in FY 2010 before the Stimulus expires in September.

As we see tight budgets at the state and local level in New Mexico there is no better time for New Mexico’s communities to consider USDA funding for their projects. USDA Rural Development offers programs in three areas: Community Development, Business and Housing.

Businesses and value added agricultural producers in New Mexico communities with a population less than 50,000 are eligible for our Business Programs. Most types of new or existing enterprises qualify -- manufacturing, wholesale, retail or service. We offer up to a 90% loan guarantee for bankable projects as large as $10 million and can provide smaller guarantees on proposals as high as $25 million. It is our goal to guarantee at least $29 million in business loan guarantees around New Mexico this fiscal year.

We also offer programs to help businesses and agricultural producers save on energy costs. Our Renewable Energy for America program allows USDA to cover 25% of any renewable energy or energy efficiency project for a rural business or an ag producer. If your farm or business hopes to install a new water heater, upgrade swamp coolers or even take advantage of solar, wind power or biodiesel; USDA would like to help with that investment.

For those producers that add value to an agricultural product, we provide up to $100,000 in grant funding for planning costs and up to $300,000 for working capital. Value added projects can include a wide variety of efforts such as turning tomatoes into salsa, carving wood products, and making a popcorn product from locally-grown corn.

On the community side, the stimulus program enhanced greatly our ability to loan and grant to communities less than 20,000 in population for community facilities. USDA Rural Development can invest in community facilities, such as: health care facilities, community centers, libraries, roads, emergency services, and community greenhouses -- just to name a few.

Water and Wastewater infrastructure is of tremendous importance to rural communities in our state. In communities under 10,000, USDA offers loans and grants to help with water and wastewater systems. Hundreds of New Mexico communities have participated in this program over the years and we are prepared to help many more.

To be competitive and innovative, rural communities need access to modern telecommunications. The stimulus set aside billions to increase broadband access in rural America and USDA Rural Development spent $199 million alone in rural New Mexico last year for broadband and telecommunications infrastructure. Not only do we invest in the first, middle and last mile of telecommunications infrastructure but we are very interested in supporting distance learning, telemedicine and other efforts that connect rural communities to the power of the internet.

When we talk about the sustainability of our rural communities, nothing says sustainability more than providing families the ability to make their home in rural New Mexico. In communities under 10,000, USDA provides home loans, home loan guarantees and grants for the construction, purchase or renovation of a home. More than 6,500 New Mexicans currently use our housing programs.

This is just a sample of the many programs USDA Rural Development has to offer. The Stimulus presents New Mexico with unprecedented opportunities to improve the quality of life in rural New Mexico and give rural communities the tools they need to prosper. The time to act is now, while federal agencies like the USDA have the resources to make more investments than ever. If you are interested in any of these programs, I hope you will contact the USDA Rural Development office in New Mexico at 505-761-4950.

This is a guest blog by Terry Brunner, who was appointed by President Barack Obama on September 3, 2009 to serve at State Director for the New Mexico Office of USDA Rural Development.

To submit a piece for consideration as a guest blog, contact me by clicking on the Email Me link on the upper left-hand corner of the page.

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 . “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.