The Latest: Reminded of vote, lawmaker scuttles venture
SANTA FE, N.M. (AP) — The Latest on New Mexico’s efforts to eliminate predatory small loans (all times local):
A New Mexico state senator says he is abandoning a private business opportunity to act as a credit ratings agency to the storefront loan industry under provisions of a new law after it was revealed that he voted for the legislation earlier this year.
Republican Sen. William Sharer of Farmington has been an outspoken critic of legislation designed to counteract predatory lending and allow borrowers to build a credit history as they pay off high-interest installment and title loans.
At a legislative committee meeting Wednesday, Sharer initially reacted in disbelief when told by another lawmaker that he had voted for the law according to written records and a webcast recording. He later described his “yes” vote as unintentional.
Earlier at the meeting, Sharer said major credit agencies are unlikely to want to track repayment of storefront loans, while noting his own financial interest in a collection agency that sells credit reports.
Sharer said after the hearing that installment loan businesses recently approached him in search of a willing credit ratings agency, and that he would turn down the opportunity.
Full implementation has been delayed for a New Mexico law that protects against predatory lending by lowering maximum interests rates on small, short-term loans.
New Mexico Financial Institutions Division Director Christopher Moya says detailed regulations are unlikely to be drafted until March or April, for a law that goes into effect Jan. 1.
Consumer advocates say detailed regulations are crucial to consumer protection provisions and enforcement of the state’s overhaul of the small-loan industry.
Moya and colleagues at the Financial Institutions Division say the regulations have been delayed because of the unexpected workload associated with the collapse of a nonprofit trust for the disabled.
Moya said a cap on interest rates of 175 percent still goes into effect Jan. 1, along with other major provisions of the new law.
New Mexico is nearing a year-end deadline for storefront lenders to cap annual interest rates at 175 percent under a new law.
Consumer advocate Ona Porter of the nonprofit Prosperity Works estimated Tuesday that the interest cap will save New Mexico consumers some $500 million over the next two years.
Regulators are briefing lawmakers on Wednesday on progress toward implementing the law that reins in interest charges on automobile title loans and cash advances against paychecks and tax returns.
The store-front lending industry has defended triple-digit interest rates as a way to ensure borrowing options for low-income residents in New Mexico, where high poverty and unemployment rates are chronic.
Consumer advocates are promoting several new small-loan alternatives with moderate interest rates for people with little or no credit history.