Another attempt to curb lending of last resort | Legislature | New Mexico Legislative Session
Judith Tichenor says her heart almost stopped the night the lights from a tow truck flashed through the window of her apartment in Albuquerque.
In the parking lot, his Cadillac Escalade 2000 was sitting. It was aspen white with custom chrome rims and a beige leather interior. He had new tires, a new oil change and about 90,000 miles on his V-8 engine. She had bought it for $ 17,000 nearly a decade earlier.
“Oh, she was gorgeous,” Tichenor said.
But the 75-year-old had used the Escalade as collateral to borrow money from New Mexico Securities Lending, and she was behind on payments. So the tow truck took the SUV and cried as she watched it go.
“Now I’m just angry,” she said. “I see these ads, I turn them off. It absolutely pisses me off. “You keep the car and the keys and we keep your title. Oh my God. Just sell your soul to the devil. [That’s] basically what you do.
As New Mexico lawmakers prepare to resume storefront lending activity in the next legislative session, data from 2014 shows how astronomical industry interest rates can devastate borrowers who are often already financially vulnerable. Many of these borrowers, proponents of tighter regulation say, are low-income people of color.
In the year Tichenor began using Albuquerque’s public buses, New Mexico securities lending firms issued more than 41,400 loans at annual interest rates above 175%, according to Division figures. financial institutions from the New Mexico Department of Regulation and Licensing.
But between a third and a half of people who used their auto titles as collateral to get those loans lost their vehicles, according to estimates from an advocacy group led by former state senator Steve Fischmann from Las Cruces.
The average loan that year was $ 763 with an interest rate of 272%, according to state data. The typical loan term was 30 days, but on average, borrowers renewed or refinanced almost 70% of the loans.
Between July 2012 and October 2013, Tichenor took out seven loans at a New Mexico Title Loans store in Roswell, where she was living at the time, according to financial documents. The loans ranged from $ 819.50 to $ 2,461.46 and their annual interest rates were between 300% and 360%, according to the documents.
She said she was borrowing money to help an older friend pay off her credit card debt, but now she feels like a fool. She said her son was upset that she could be so gullible.
In August, she filed a class action lawsuit against the New Mexico securities lending in Santa Fe District Court on behalf of herself and everyone else who had similar experiences with the company. The defendants said the plaintiffs agreed to the terms of the loans. The trial is now in United States District Court.
Industry advocates say companies are giving money to people who can’t get it anywhere else, and some customers say it’s a necessary service.
Arianna Prisk, 26, stepped out of Check ‘n Go on the corner of Maez Road and Cerrillos Road last week with her husband, Derick Prisk, 30. They had not taken out a title loan, but were considering other loans.
Arianna Prisk said banks and storefront lenders had previously turned down her loans because her credit rating was low and she had few other options. “The securities lending companies are there for the people who need them,” she says.
But she wants companies to be more lenient. Her husband said he was two days late in paying off a title loan secured by his Cadillac Eldorado, and the company seized him.
Now he will no longer borrow from lenders who will not give him leeway, but he still needs loans. “We are fighting for the money right now,” he said. “Most of us have kids, families, things that are going on.”
But the two agreed that companies don’t need to charge such high interest rates on loans, which for many are a last resort.
Representative Patricia Roybal Caballero, D-Albuquerque, said she plans to introduce a bill to the legislative session that begins Jan. 19 to cap storefront loan interest rates at 36%. But she was among other lawmakers who tried this unsuccessfully in the 2015 session.
Their efforts have also received massive support. Eleven local governments and two associations that represent them supported a ceiling. The New Mexico Council of Catholic Bishops and more than 120 religious leaders have supported a cap. The state needed the regulation, many officials said, because interest rates were too high.
Lobbyists hired by the storefront lending industry spent more than $ 300,000 from May to December 2014, and most of the money was spent on campaign contributions, according to a February article on New. Mexico In Depth.
Lt. Gov. John Sanchez is the largest recipient of campaign funds from payday lending and securities companies. According to information compiled by the Center for Public Integrity, industry lobbyists donated $ 27,500 to the Republican Lieutenant Governor between 2010 and 2011.
They also donated $ 12,500 to former Governor Bill Richardson in 2006.
They donated $ 10,625 to the New Mexico Republican Party between 2007 and 2010.
They gave Governor Susana Martinez $ 10,200 in 2014.
They gave Attorney General Hector Balderas $ 5,250 between 2006 and 2014.
They gave Speaker of the House Don Tripp, R-Socorro, $ 5,000 in 2015.
They gave former Lieutenant Governor Diane Denish $ 3,250 between 2006 and 2009.
And they gave former Al Park rep, D-Albuquerque, $ 3,200 between 2006 and 2010.
Don Kidd, a former Republican senator from Carlsbad, said he tried to pass bills regulating the industry with Democratic lawmakers when he was elected, but never succeeded. Lobbyists didn’t influence him because he knew the industry – he opened his first loan company in 1957 – and, he said, “I didn’t need their money.”
But they have influenced other lawmakers, he said. They told them that the poor need such loans because they can’t borrow elsewhere and have to pay rent, he said, and lawmakers, because many of them are not experts. industry like him, the lobbyists believed.
“It’s really an industry that makes so much money that it can afford all the lawyers and lobbyists,” Kidd said. “And to stand up for lawmakers, they really want to do the right thing, and they’re afraid to pass a law that might hurt people.”
Steve Terrell contributed to this report.