Lundstom sponsors bill on predatory lending

Kristen Davenport
Legislative Reporter

SANTA FE — A bill which would prohibit predatory lending practices has passed the New Mexico House of Representatives, a big hurdle on the path to getting the bill into law.

Rep. Patty Lundstrom, a Democrat from Gallup, is sponsoring the "payday" borrowers protection act, which sets limitations on the amount and kinds of payday loans a company can give.

The proposed law has been adamantly opposed by the payday loan industry, which says the bill could drive them out of business.

The bill passed the House by a vote of 55 to 4 on Tuesday. But Lundstrom's bill, like all others right now, faces a tough challenge: Making it through both sides of the legislature before the session closes down.

The New Mexico Legislature ends its 60-day session at noon on March 22 only 10 days and more than 1,000 bills remain on the docket. Representatives and Senators are working well into the night and will work this weekend.

Lundstrom says she plans to talk to the Senate leadership today to see if the payday loan law could get only one committee assignment in the Senate, and therefore have a shot at passing the full Senate.

The proposed law, sponsored by both Lundstrom and Rep. Al Parks, D-Albuquerque, limits loans to $1,000 or less and limits administrative fees on payday loans. It also prohibits compound (rollover) interest and puts a cap on the amount of interest a lender can charge.

Lundstrom said she believes the bill strikes a balance between providing consumer protection while allowing payday loan companies to survive.

"For too long, this industry has gone unregulated and it is the uneducated consumer who becomes the victim."

The proposed law also prohibits "deceptive and intimidating collection practices."

If the bill did pass the Senate, it would then need Gov. Bill Richardson's signature. Lundstrom says she has not talked to Richardson, "but I think they are watching this bill."

"I think everyone has really been watching this bill," Lundstrom said. "The financial services director said this is the first time in eight years since payday loans started that we've had a (regulatory) bill make it to the floor."

The biggest challenge, she said, is the "mad scramble" and end-of-session priorities. "Gosh I hope this gets through," Lundstrom says. "You can't imagine the amount of work that has gone into this."