SANTA FE, N.M. – Marking what is being billed as a legislative compromise on controlling payday loan operations, a Gallup legislator has introduced a payday bill with an unusual debt cancellation clause that appears to have the backing of regulators and financial groups including the Credit Union Association of New Mexico. The “Payday Loan Regulation” bill due for hearings before a House committee and introduced by Democratic Rep. Patricia Lundstrom, is aimed at curbing rollovers with a provision that the aggregate amount of the loan “may not exceed two times the amount of the original principal” and should it reach that threshold, “the payday loan will be terminated and considered paid in full.” Rep. Lundstrom, who has been working on her bill for more than two years and tracks a similar version in 2003, characterized her measure as a compromise between “consumer advocates who want to cap rates” and the payday industry which seeks to avoid rate controls. While noting the growing payday problem in New Mexico with an estimated 700 payday shops, CUANM joined by State Financial Institutions Director William Verant said the Lundstrom bill looks workable. “It’s a good compromise,” said Daniel Weeks, a Santa Fe lobbyist for CUANM, who noted that other payday bills are expected this session. Consumer groups in the state are expected to press for more punitive bills to control the mushrooming payday expansion across the state. Verant who regulates both banks and CUs said Rep. Lundstrom has crafted a bill that “is creative and innovative” in addressing payday problems. Like many states with a thriving payday loan business, New Mexico has seen the number of locations increase from 150 in 1995 to the more than 700 existing today. The state has a small loan act requiring lenders offering credit under $2,500 to register with the state. Rep. Lundstrom, who is executive director of a Gallup-based economic council, said the predatory and exorbitant rollover rates have triggered the need for this kind of legislation which “doesn’t kill the industry” and yet will ensure it is properly regulated and prevented from engaging in further abuse. Payday reps were not immediately available to comment on the Lundstrom bill. [email protected]

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