NM Financial Institutions Division releases small loans law regulations

ALBUQUERQUE, NM – This week, the New Mexico Financial Institutions Division (FID) released highly anticipated regulations on a law which imposed a 175% interest rate cap on small loans. In addition to capping small-dollar loan APR, the law (HB 347) which passed during the 2017 New Mexico legislative session, ensures that borrowers have the right to clear information about loan total costs, allows borrowers to develop credit history via payments made on small-dollar loans, and stipulates that all such loans have an initial maturity of 120 days and cannot be subject to a repayment plan smaller than four payments of loan principal and interest.

HB 347 and the proposed regulations signal progress for fair loan terms and a more inclusive economy for all New Mexicans by eliminating short term payday loans and enacting the first statutory rate cap on installment loans. But, while HB 347 is progress towards ensuring that all New Mexicans have access to fair credit, regardless of income level, the 175% APR cap required by HB 347 remains unfair, unnecessarily high, and will result in serious financial hardship to countless New Mexicans.

“The proposed regulations are a first step in giving all New Mexicans access to fair credit, but we still have a long way to go. In the past, storefront lending in the state was largely unregulated, and hardworking people were forced to borrow at interest rates as high as 1500% APR, forcing them into in a never-ending cycle of high-cost debt,” said Christopher Sanchez, supervising attorney for Fair Lending at the New Mexico Center on Law and Poverty. “All New Mexicans deserve a chance to more fully participate in our state’s economy. We hope to see additional regulations that would improve disclosures and language regarding loan renewals so that all borrowers can understand the terms of their loans.”

Storefront loans have aggressively targeted low-income families and individuals, with sometimes quadruple-digit interest rates or arbitrary fees and no regard for a family or individual’s ability to repay.

“Coupled with high interest rates and unaffordable payments, predatory loans prevent New Mexican families from building assets and saving for a strong financial future. These kind of unscrupulous lending practices only serve to trap people, rather than liberate them from cycles of poverty and debt,” said Ona Porter, President & CEO of Prosperity Works. “Enforcing regulation and compliance is a critical step in protecting our families.”

The implementation and enforcement of HB 347, via regulation and compliance examinations by the FID, aims to finally allow all New Mexicans to more fully and fairly participate in New Mexico’s economy. The momentum surrounding this issue was recently accelerated when New Mexico Senators Tom Udall and Martin Heinrich cosponsored the Stopping Abuse and Fraud in Electronic (SAFE) Lending Act to crack down on some of the worst abuses of the payday lending industry and protect consumers from deceptive and predatory lending practices.

The regulations released early this week are the first round of proposed regulations. Before FID releases the second round, the department will be accepting public comment, including at a public rule hearing on April 3 in Santa Fe.

Families & School Districts Seek Court Action Against State of New Mexico

Landmark Education Suit Claims Students’ Constitutional Rights Are Being Violated

SANTA FE, NM—A state-court trial will start Monday in a landmark education lawsuit that alleges New Mexico is violating the state constitutional rights of students placed at risk.

The trial will focus on legal claims filed by the New Mexico Center on Law and Poverty (the Center) and MALDEF (Mexican American Legal Defense and Educational Fund) challenging the state’s failure to provide economically disadvantaged students, English-language learners (ELL), Native Americans, and students with disabilities with a “sufficient” education, as guaranteed by New Mexico’s constitution.

“The children of New Mexico are intelligent and capable, and have just as much potential as other students across the country. Unfortunately, the State has done little to invest in our children’s future,” said Preston Sanchez, an attorney at the New Mexico Center on Law and Poverty. “It’s time that the State be held accountable to its constitutional duty to meet the educational needs of our students so that they may achieve not only academic success but success in other areas of their lives. Our kids’ and our state’s future are at stake.”

While the state’s constitution mandates a “sufficient” and “uniform” education for all students in New Mexico, a majority of public school students are unable to read, write, or do math at grade level. The consolidated lawsuit calls for the court to order the State to provide the programming and resources necessary for all public school students to succeed, as well as ensure that funds are distributed equitably, including for economically disadvantaged and ELL students.

“For far too long, New Mexico has left its most vulnerable students behind, disregarding its constitutional duty to fully support their education for all students,” said Marisa Bono,

MALDEF Southwest regional counsel. “Every New Mexico child should have the opportunity to graduate ready to pursue their dreams and meet their full potential—this lawsuit will ensure that opportunity.”

The Center’s lawsuit, Yazzie v. State of New Mexico, was filed in March 2014 on behalf of a group of families and school districts including Gallup, Rio Rancho, Santa Fe, Cuba, Moriarty/Edgewood, and Lake Arthur. The families represented have children who are ELL, Native American or economically disadvantaged and have been negatively impacted by the lack of resources provided to New Mexico public schools.

“All I want is for my child to receive the best education possible, but my son and other Navajo students aren’t given the educational resources they need,” said Wilhelmina Yazzie, the named plaintiff in the Yazzie lawsuit whose son attends middle school in Gallup. “My son is a smart and dedicated student, but I worry that he’s not getting the academic support relevant to his native culture and language that will prepare him for college and help him succeed.”

MALDEF’s lawsuit, Martinez v. State of New Mexico, was filed in April 2014 on behalf of parents and public schools in Española, Santa Fe, Albuquerque, Zuni, Magdalena, Las Cruces and Gadsden. The suit alleges that the state’s inadequate funding for ELL and economically disadvantaged students, the lack of quality pre-K programs and other problems violate state constitution. State attorneys sought to dismiss the lawsuit, but the court denied the request and ruled for the first time in New Mexico’s history that education is a fundamental right.

“I simply want my children to have an equal opportunity to get a good education,” said

Roberto Sanchez, a plaintiff in the Martinez case whose children attend school in Santa Fe. “I see that my three children don’t have access to what they need to get ahead. Sometimes they have substitutes for a long time. We are simply asking that our children have a chance to get the education they need.”

The Center’s legal counsel on the case include Gail Evans, Preston Sanchez, Christopher Sanchez, and Lauren Winkler of the Center along with co-counsel Daniel Yohalem and Mark D. Fine. MALDEF’s lead counsel is Marisa Bono, Southwest regional counsel, and legal counsel include staff attorneys Ernest Herrera and Jack Salmon; E. Martin Estrada, Nick Sidney and Jessica Baril with Munger, Tolles & Olson; and David Garcia. The trial is expected to last nine weeks.

For more information on the Yazzie lawsuit, including plaintiff profiles, please visit: http://nmpovertylaw.org/our-work/education-2/.

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 The mission of the New Mexico Center on Law and Poverty is to advance economic and social justice through education, advocacy, and litigation. The Center works with low-income New Mexicans to improve living conditions, increase opportunities, and protect the rights of people living in poverty. Underlying its mission is a vision of New Mexico without poverty, where all peoples’ basic human rights are met. For media inquiries, please contact Maria Archuleta at (505) 255-2840 or Maria.A@nmpovertylaw.org.

 Founded in 1968, MALDEF is the nation’s leading Latino legal civil rights organization. Often described as the “Latino Legal Voice for Civil Rights in America,” MALDEF promotes social change through advocacy, communications, community education and litigation in the areas of education, employment, immigrant rights and political access. For more information on MALDEF, please visit: www.maldef.org. For media inquiries, please contact Sandra Hernandez at (213) 629-2512 ext. 129 or shernandez@maldef.org