New Mexico Payday Loans

Relevant Legal Excerpts for New Mexico Payday Loans

Section 12.18.7.11 Calculation of administrative fees for payday loans.

The administrative fee of fifteen dollars and fifty cents ($15.50) per one hundred dollars ($100) of principal permitted by Section 58-15-33B shall be pro rated for principal amounts not evenly divisible by 100.

Section 12.18.7.12 Payday loan products - prohibited acts.

A. The term "debt authorizations" as used in Section 58-15-34J includes debit authorizations and draft authorizations.

B. A licensee shall not deposit a post dated check before the date stated on the face of the check.

Section 12.18.7.13 Disclosure of consumer's right to payment plan.

Licensees who offer payday loan products shall provide the consumer with a notice of the consumer's right to enter into a payment plan at the time such payday loan is made as provided by Section 58-15-35. Such notice shall be on a form prescribed by the director. The licensee shall give a copy of the form to the consumer and retain a copy in the licensee's file. In addition to providing the written form to the consumer, the licensee shall read the notice orally to the consumer in either English or Spanish at the option of the consumer.

Section 12.18.7.16 Information regarding consumer ineligibility.

If an inquiry to the certified consumer reporting service results in a consumer being deemed ineligible for a proposed payday loan, the certified consumer reporting service shall provide notification to the licensee stating that the consumer is ineligible for such loan and further providing contact information regarding the consumer reporting service to enable the consumer to directly contact the consumer reporting service.

Section 58-15-32. Requirements for payday loans.

A. No licensee shall make a payday loan to a consumer if the total principal amount of the loan and fees, when combined with the principal amount and fees of all of the consumer's other outstanding payday loan products, exceeds twenty-five percent of the consumer's gross monthly income.

B. Without affecting the rights of a consumer to prepay a payday loan product at any time without additional cost or penalty:

(1) no payday loan shall have a stated maturity greater than thirty-five days;
(2) no payday loan shall have a stated minimum term less than fourteen days unless agreed to in writing by the consumer; and
(3) there shall be a scheduled pay date for the consumer within the term of the payday loan.

C. A payday loan agreement shall include a provision granting the consumer the right to rescind the transaction by returning in cash, or through certified funds, one hundred percent of the amount advanced by a licensee for a payday loan no later than 5:00 p.m. on the first day of business conducted by the licensee following the execution of the payday loan agreement. If a consumer exercises the right of rescission pursuant to this subsection, no fee for the rescinded transaction shall be charged to the consumer and the licensee shall not charge or impose on the consumer a fee for exercising the right of rescission pursuant to this subsection. If this subsection is applicable, any fee collected by a licensee shall be returned in full to the consumer.

D. A consumer shall be permitted to make payments in any amount on a payday loan product at any time before maturity without additional fees. A payment received by a licensee shall first be applied to administrative fees owed with any remaining amount to be applied to principal.

E. After each payment is made, in full or in part, on a payday loan product, the licensee shall give to the person making the payment a signed, dated receipt showing the amount paid; the amount credited toward administrative fees and principal; and the balance due on the loan.

F. A check written by a consumer for a payday loan product shall be payable to the order of the licensee.

G. Prior to the consummation of a payday loan, the licensee shall provide the consumer, or each consumer if there is more than one, with copies of the payday loan product agreement in English, Spanish or other language as determined by the director. Consumers shall have the option to decide which language version of the agreement they wish to receive.

H. Licensees making payday loans shall provide the consumer with an information brochure in English, Spanish or other language as determined by the director. Consumers shall have the option to decide which language version of the brochure they wish to receive.

I. The disclosure of the credit terms of a payday loan product shall be according to and governed by the requirements of 12 CFR 226, known as "Regulation Z". The definitions and requirements of that regulation and commentary shall apply to payday loan products as if those provisions are fully set out in this section.

J. A licensee shall collect on payday loan products in default in a professional, fair and lawful manner. A licensee that complies with the requirements and prohibitions set forth in 15 U.S.C. 1692c-1692f of the federal Fair Debt Collection Practices Act shall be deemed to have operated in a professional, fair and lawful manner.

Section 58-15-33. Payday loan products; permitted charges.

The following provisions apply only to payday loan products:

A. a licensee shall not charge or receive from a consumer, directly or indirectly, fees or charges except as provided in this section;

B. upon the execution of a new payday loan, the licensee may impose an administrative fee of not more than fifteen dollars fifty cents ($15.50) per one hundred dollars ($100) of principal, which fee is fully earned and nonrefundable at the time a payday loan agreement is executed and payable in full at the end of the term of the payday loan or upon prepayment of the payday loan unless a payday loan is rescinded pursuant to Subsection C of Section 58-15-32 NMSA 1978;

C. upon the execution of a new payday loan agreement, the licensee may impose an additional administrative fee of not more than fifty cents ($.50) per executed new payday loan agreement as necessary to cover the cost to the licensee of verification pursuant to Section 58-15-37 NMSA 1978, which fee is fully earned and nonrefundable at the time a payday loan agreement is executed and payable in full at the end of the term of the payday loan or upon prepayment of the payday loan unless a payday loan is rescinded pursuant to Subsection C of Section 58-15-32 NMSA 1978;

D. a licensee shall not charge a consumer interest on the outstanding principal owed on a payday loan product; and

E. if there are insufficient funds to pay a check or other type of debit on the date of presentment by the licensee, a licensee may charge a consumer a fee not to exceed fifteen dollars ($15.00). Only one fee may be collected by a licensee on a check or debit authorization. A check or debit authorization request shall not be presented to a financial institution by a licensee for payment more than one time unless the consumer agrees in writing, after a check or other type of debit has been dishonored, to one additional presentment or deposit.

Section 58-15-34. Payday loan products; prohibited acts.

A licensee shall not:

A. enter into an agreement for a renewed payday loan or otherwise refinance or extend the term of a payday loan;

B. enter into an agreement for a payday loan with a consumer who is participating in a payment plan pursuant to Section 58-15-35 NMSA 1978;

C. threaten or intimidate a consumer or threaten to use or request the use of criminal process in this or another state to collect on a payday loan product;

D. use a device or agreement that would have the effect of charging or collecting more fees, charges or interest than that allowed by law by entering into a different type of transaction with the consumer that has that effect;

E. require a consumer to enter into a new payday loan to pay an existing payday loan in whole or in part when the existing loan is eligible for a payment plan pursuant to Section 58-15-35 NMSA 1978;

F. charge a fee to cash a check representing the proceeds of a payday loan product;

G. charge a late fee or delinquency charge if a consumer fails to repay a payday loan product on time;

H. assign or attempt to assign a consumer's personal check to a third party unless for collection purposes;

I. use or attempt to use the check written by the consumer for a payday loan product as collateral for purposes other than repaying that payday loan product;

J. require a consumer to provide multiple checks or multiple debt authorizations;

K. accept collateral for a payday loan product other than the consumer's check or debit authorization or require a consumer to provide a guaranty from another person for a payday loan product;

L. include any of the following provisions in a payday loan product agreement:

(1) a hold harmless clause;
(2) a confession of judgment clause or power of attorney;
(3) an assignment of or order for payment of wages or other compensation for services;
(4) a waiver of claims for punitive damages;
(5) a provision in which the consumer agrees not to assert a claim or defense arising out of the contract;
(6) a waiver of a provision of the New Mexico Small Loan Act of 1955;
(7) a waiver of the right to enter into a payment plan pursuant to Section 58-15-35 NMSA 1978; or
(8) a waiver of any rights secured by New Mexico law;

M. make a payday loan product contingent on the purchase of insurance or other goods or services;

N. take a check, instrument or form in which blanks are left to be filled in after execution of the check, instrument or form;

O. offer, arrange, act as an agent for or assist a third party in any way in the making of a payday loan product unless the third party complies with all applicable federal and state laws and regulations;

P. knowingly enter into a payday loan product with a consumer who lacks the capacity to consent; or

Q. use an agency agreement or partnership agreement as a scheme or contrivance to circumvent the application of the provisions of the New Mexico Small Loan Act of 1955 to a consumer's payday loan product. For the purposes of this subsection:

(1) "agency agreement" means any agreement between in-state entities and a banking corporation, savings and loan association or credit union operating under the laws of the United States or of any state whereby the in-state agent holds a predominant economic interest in the revenues generated by a payday loan made to New Mexico residents; and
(2) "partnership agreement" means any agreement between in-state entities and a banking corporation, savings and loan association or credit union operating under the laws of the United States or of any state whereby the in-state partner holds a predominant economic interest in the revenues generated by a payday loan made to New Mexico residents.

Section 58-15-35. Payday loans; payment plans.

A. At the time a consumer enters into a payday loan agreement, the licensee shall offer the consumer the opportunity to enter into an unsecured payment plan for any unpaid administrative fees and principal balance of the payday loan. The consumer may elect, and a licensee shall permit, entry into a payment plan for any unpaid administrative fees and principal balance of the payday loan.

B. No fees, charges or interest may be charged for a payment plan.

C. A payment plan shall provide for:

(1) a minimum of one hundred thirty days for the repayment of the unpaid principal balance of a payday loan; and
(2) relatively equal installment payments based upon the consumer's schedule of pay periods.

D. A payment plan entered into pursuant to the provisions of this section shall not be considered an installment loan.

E. A licensee that fails to offer a consumer the opportunity to enter into a payment plan for a payday loan pursuant to Subsection A of this section shall not commence a legal proceeding against a consumer to collect on that payday loan if it has not been fully repaid.

Section 58-15-36. Payday loans; waiting period.

A licensee shall not make a payday loan to a consumer who has entered into a payment plan pursuant to Section 58-15-35 NMSA 1978 until at least ten calendar days have passed since the consumer completed all payment obligations pursuant to all of the consumer's outstanding payday loan products, including that payment plan.

Section 58-15-37. Payday loans; verification.

A. Before entering into a payday loan agreement with a consumer, a licensee shall use a commercially reasonable method of verification to verify that the proposed loan agreement is permissible under the provisions of the New Mexico Small Loan Act of 1955 [58-15-31 NMSA 1978].

B. No later than November 1, 2007, the director shall certify that one or more consumer reporting service databases are commercially reasonable methods of verification. The list of consumer reporting services that the director has certified as providing commercially reasonable methods of verification shall be posted on the division's web site and shall be mailed to each licensee by first class mail at the address of record as shown on the division's licensing files.

C. Each licensee who provides payday loan products shall comply with Subsection A of this section no later than November 30, 2007.

D. A consumer seeking a payday loan may make a direct inquiry to the consumer reporting service to request a more detailed explanation of the basis for a consumer reporting service's determination that the consumer is ineligible for a new payday loan, and the consumer reporting service shall provide a reasonable response to the consumer.

E. In certifying a commercially reasonable method of verification, the director shall ensure the certified database:

(1) provides real-time access through an internet connection or, if real-time access through an internet connection becomes unavailable due to technical problems incurred by the consumer reporting service, through alternative verification mechanisms, including verification by telephone;
(2) is accessible to the division and to licensees in real time in order to ensure compliance with the New Mexico Small Loan Act of 1955 regardless of where the consumer requests a payday loan in New Mexico and in order to provide any other information the director deems necessary;
(3) requires licensees to input whatever information is required by the New Mexico Small Loan Act of 1955;
(4) contains a real-time regulator interface that allows the division access to the consumer reporting service database for the required monitoring and reporting function, including the ability to determine consumer eligibility and to generate reports for licensee examinations, regulatory reporting and program monitoring;
(5) provides licensees with no more than a statement that a consumer is eligible or ineligible for a new payday loan and the reason for the determination;
(6) provides adequate safeguards to ensure that consumer information contained in the database is kept strictly confidential;
(7) provides sufficient information to enable a licensee to determine whether a proposed payday loan would meet the requirements for payday loans set forth in the New Mexico Small Loan Act of 1955;
(8) ensures that information submitted to the certified database is kept confidential and shall not be released or otherwise made available to the public;
(9) demonstrates a working system to the division prior to the certification of the database; and
(10) is generated by a registered consumer reporting service that is subject to the applicable rules and regulations applied by the federal trade commission under the Fair Credit Reporting Act.

F. A licensee shall update the certified database by inputting all information required under Paragraph (3) of Subsection E of this section at the time that:

(1) a payday loan is made;
(2) a consumer elects to enter into a payment plan;
(3) a consumer's payday loan is paid in full; or
(4) a licensee determines a payday loan is in default.

G. A licensee may rely on the information contained in the certified database as accurate and is not subject to any penalty or liability as a result of relying on inaccurate information contained in the database.

H. In determining whether a consumer reporting service should be certified as a commercially reasonable method of verification, the director shall consider whether such consumer reporting service is adequately capitalized, demonstrates the resources and the ability to perform the services required pursuant to this section and has appropriate surety to ensure performance of its obligations pursuant to this section and to reasonably protect claimants in the event that actions or inactions on the part of the consumer reporting service results in damages to licensees or consumers.

I. The provisions of Section 14-7-1 NMSA 1978 shall not apply to access by the division to information for purposes of compliance monitoring or preparation of reports contained in a certified database established pursuant to this section.

Section 58-15-38. Required disclosures when making payday loans; required signage.

A. A licensee making payday loans shall provide a notice immediately above the consumer's signature on each payday loan agreement in at least twelve-point bold type using the following language:

(1) A payday loan is not intended to meet long-term financial needs.
(2) You should use a payday loan only to meet short-term cash needs.
(3) A payday loan is a high-cost loan. You should consider what other lower-cost loans are available to you.
(4) If you cannot fully repay a payday loan when due, you have a right to enter into a payment plan requiring payment within a minimum of one hundred thirty days, in relatively equal installments, based upon your scheduled pay periods. If you enter into a payment plan, you will not have to pay an additional administrative fee or interest on the outstanding principal balance or any unpaid administrative fees.
(5) If you have had payment obligations under a payment plan pursuant to Section 58-15-35 NMSA 1978, you may not enter into a new payday loan until at least ten calendar days have passed since you have completed all payment obligations pursuant to all of your outstanding payday loan products, including that payment plan.

B. Each licensee shall display in each licensed place of business in a place where it will be readily legible by consumers, a sign containing the following notice in both English and Spanish: "If you cannot fully repay a payday loan when due, you have a right to enter into a payment plan requiring payment within a minimum of one hundred thirty days, in relatively equal installments, based upon your scheduled pay periods. If you enter into a payment plan, you will not have to pay an additional administrative fee or interest on the outstanding principal balance or any unpaid administrative fees.

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