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New Mexico HB 150: How We Can Help

Mar 09, 2020 MicroBilt News

New Mexico HB 150: How We Can Help

New Mexico's HB 150, which went into effect on January 1, 2020, ensures accountability and transparency among small-dollar lending institutions. The bill amends the New Mexico Bank Installment Loan Act of 1959 and the New Mexico Small Loan Act of 1955. The bill does not apply to federally-insured depository institutions. Governor Michelle Lujan Grisham signed the bill into law on April 3, 2019. Specifically, the bill:

  • expands lender reporting requirements to include identifying secured and unsecured loans, including interest rates and fees, and default rates
  • clarifies the illegality of deceptive lending practices and aligns penalties with those in the Unfair Practices Act
  • allows borrowers 24 hours to rescind high-interest loans 
  • limits interest rates and fees; specifically, interest rates may not exceed the lesser of $200 or 10 percent of the principal
  • clarifies the definition of new loans to protect borrowers who rollover or renew loans
  • provides that if a check or ACH offered in payment of the loan is returned for insufficient funds, then the lender may only try to present it one additional time
  • prohibits lenders from charging more for insurance than the product costs. It also requires that those providing insurance be licensed in New Mexico and not charge more than allowed by the Superintendent of Insurance
  • requires loan agreements that clearly specify the amount of the loan, repayment schedule, name and address of the lender, and annual percentage rate 
  • limits judgments and only allows for the collection of attorneys fees if good-faith collection efforts have been made

The lower rate caps mean that small-dollar lenders, in order to continue to grow and continue to be profitable, must be even more diligent in managing risk. Bank verification and effective alternative credit scoring tools are critical. Microbilt partners with small-dollar and installment lenders to provide access to these risk-management tools at a reasonable price. For example, these tools include:

Despite using good risk management tools, customers sometimes fail to pay. Because the bill limits the size of judgments, small-dollar lenders will need to become more strategic and efficient in collections to maintain current profit levels. Being able to quickly assess which debts can be collected helps prioritize efforts so that valuable resources are not expended when collecting is unlikely or impossible. Gaining information about the debtor's assets such as employment, bank accounts, and property can help speed efforts to collect these unpaid debts. 

Microbilt has partnered with businesses and lenders to help them manage risk and collect debts for more than 40 years. It can continue to help its small-dollar lenders to comply and thrive under this new law.