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New Mexico caps interest rates on small-dollar loans at 36%
On March 1, the New Mexico governor signed HB 132, which amends certain provisions related to the state’s small dollar lending requirements. Among other things, the bill makes several amendments to the New Mexico Bank Installment Loan Act of 1959 (BILA) and the New Mexico Small Loan Act of 1955 (SLA) by raising the maximum installment loan amount to $10,000 and providing the following: (i) “no lender shall make a loan pursuant to the [BILA] to a borrower who is also indebted to that lender pursuant to the [SLA] unless the loan made pursuant to the [SLA] is paid and released at the time the loan is made”; (ii) only federally insured depository institutions may make a loan under the BILA with an initial stated maturity of less than one hundred twenty days; (iii) a lender that is not a federally insured depository institution may not make a loan under the BILA “unless the loan is repayable in a minimum of four substantially equal installment payments of principal and interest”; and (iv) lenders, aside from federally insured depository institutions, may not make a loan with an annual percentage rate (APR) greater than 36 percent (a specified APR increase is permitted if the prime rate of interest exceeds 10 percent for three consecutive months). When calculating the APR, a lender must include finance charges as defined in Regulation Z “for any ancillary product or service sold or any fee charged in connection or concurrent with the extension of credit, any credit insurance premium or fee and any charge for single premium credit insurance or any fee related to insurance.” Excluded from the calculation are fees paid to public officials in connection with the extension of credit, including fees to record liens, and fees on a loan of $500 or less, provided the fee does not exceed five percent of the loan’s total principal and is not imposed on a borrower more than once in a twelve-month period.
The act also expands the SLA’s scope on existing anti-evasion provisions to specify that a person may not make small dollar loans in amounts of $10,000 or less without first having obtained a license from the director. The amendments also expand the scope of the anti-evasion provisions to include (i) the “making, offering, assisting or arranging a debtor to obtain a loan with a greater rate of interest . . . through any method, including mail, telephone, internet or any electronic means, regardless of whether the person has a physical location in the state”; and (ii) “a person purporting to act as an agent, service provider or in another capacity for another entity that is exempt from the [SLA]” provided the person meets certain specified criteria, such as “the person holds, acquires or maintains, directly or indirectly, the predominate economic interest in the loan” or “the totality of the circumstances indicate that the person and the transaction is structured to evade the requirements of the [SLA].” Under the act, a violation of a provision of the SLA that constitutes either an unfair or deceptive trade practice or an unconscionable trade practice is actionable under the Unfair Practices Act.
The act also makes various amendments to a licensees’ books and records requirements to facilitate the examinations and investigations conducted by the Director of the Financial Institutions Division of the Regulation and Licensing Department. Failure to comply may result in the suspension of a license. Additionally, the act provides numerous amended licensing reporting requirements concerning the loan products offered by a licensee, average repayment times, and “the number of borrowers who extended, renewed, refinanced or rolled over their loans prior to or at the same time as paying their loan balance in full, or took out a new loan within thirty days of repaying that loan,” among other things. The act also outlines credit reporting requirements, advertising restrictions, and requirements for the making and paying of small dollar loans, including specific limitations on charges after judgment and interest.
The act takes effect January 1, 2023.
New Mexico settles with technology company over COPPA violations
On December 13, the New Mexico attorney general announced a settlement in two federal court cases filed against a multinational technology company both of which resolve allegations against the company under the federal Children’s Online Privacy Protection Act (COPPA) and other state consumer protection laws. According to one complaint, the company allegedly violated COPPA and the New Mexico Unfair Practice Act by collecting the personal information of minors and the mining of student emails in connection with the use of the company’s educational tools. In a separate complaint, among other things, the company’s mobile ad platform permitted a third-party game developer to collect the personal data of minors without “verifiable parental consent.” According to the AG, under the terms of the settlement, the company must, among other things: (i) fund a new initiative to promote education, privacy, and safety for children across New Mexico and work with the AG to identify recipients of these funds; (ii) “provide school administrators with tools to protect minor students from improper collection of their personal data, including age-based access settings to ensure that minor children’s data is protected from unauthorized collection and disclosure”; (iii) monitor app developers that mislabel their child-directed apps; and (iv) require apps to implement age screening measures which ensure that these apps do not collect information from children.
New Mexico renews Covid-19 Health Emergency and impacted executive orders through November 13
On October 16, the New Mexico governor issued an executive order renewing and extending the public health emergency until November 13, 2020. The executive order also extends the duration of Executive Order 2020-039 (previously covered here and here) to continue to permit notarial acts conducted through audio-visual technology, provided certain requirements are met.
New Mexico extends authorization for remote notarization
On June 11, the New Mexico governor issued Executive Order 2020-039, which extends Executive Order 2020-015, previously covered here, to continue to permit notarial acts conducted through audio-visual technology, provided certain requirements are met.
New Mexico issues order prohibiting writs of garnishment or writs of execution of consumer debt
On June 5, the New Mexico Supreme Court issued an order prohibiting writs of garnishment or writs of execution as they pertain to consumer debt collection cases. The order does not affect writs of garnishment and writs of execution issued prior to June 8, 2020. Other rules pertaining to consumer debt collection cases are also unaffected. The order does not apply to domestic support obligations, including support and spousal maintenance obligation. The order will remain in effect until amended or withdrawn by a future order.
New Mexico regulator extends permission to work from home
On May 28, the New Mexico Financial Institutions Division extended its guidance allowing mortgage licensees and their staff to work from home until August 31, 2020 (previously covered here). The guidance permits licensees and their staff to work from their home residences, which may not be licensed as a branch, if various conditions regarding data and information security, worker and customer health, and advertising are met.
New Mexico issues public health order
On May 15, the New Mexico Department of Health issued an order directing that essential businesses must operate in accordance with the applicable Covid-Safe Practices section of the All Together New Mexico: Covid-Safe Practices for Individuals and Employers. Essential businesses include banks, credit unions, insurance providers, brokerage services, and investment management firms, among others.
New Mexico regulator halts repossessions during pandemic
On April 14, the New Mexico Public Regulation Commission provided notice that towing services for purpose of automobile repossessions are deemed non-essential by the governor. The notice effectively bans repossession for the duration of the Covid-19 emergency.
New Mexico Director of Financial Institutions Division calls on MSBs to cease standalone operations
On April 9, New Mexico Director of Financial Institutions Division Christopher Moya issued an order calling on all standalone money services businesses (MSB) to temporarily close and suspend operations. MSBs are not designated as essential businesses in New Mexico, and as such, were instructed to cease all standalone storefront operations to further combat the spread of Covid-19. Branches located physically within a business deemed essential were permitted to stay in operation, as well as MSBs with telephonic or online services.
New Mexico regulator declares that licensed small loan companies are non-essential
On April 6, New Mexico’s Financial Institutions Division issued notice that businesses operated by companies licensed under the New Mexico Small Loan Act of 1955 are not “essential businesses” for purposes of the state’s stay at home order and must remain closed through April 30.