The Idaho House Monday narrowly passed a measure intended to expand regulations on the state’s payday lenders. Senate Bill 1314, which was approved in the Senate earlier this, passed by a vote of 35 to 34.

Should it become law, the bill would hold lenders more responsible for the amount of money that their customers seek to borrow. It would also force lenders to offer on an annual basis easier repayment terms to borrowers if and when borrowers request them. It would also prohibit lenders from charging additional interest or administrative fees for the new terms.

“This bill will provide significant enhancements to our state’s payday loan system,” said Rep. Julie VanOrden, R-Pingree, in presenting the bill to the House. “With this bill borrowers will be permitted, once each year, to enter into an adjusted repayment plan with lenders.”

The bill also places on payday lenders the burden of knowing a borrower’s monthly income at the time of loan generation and requires lenders to ensure that a prospective customer is not borrowing more than 25 percent of his income. Additionally, the bill requires that lenders provide to prospective borrowers specific sets of warnings and instructions about the nature of payday loans and that those warnings be provided in writing. It dictates the size and appearance of the font with which the warnings are printed (“12 point bold type”).

“I don’t see anywhere in this bill where it says that a borrower actually has to repay their debt to a lender,” commented Rep. Vito Barbieri, R-Dalton Gardens. “Am I missing something here?”

“I am not able to answer that at this time,” VanOrden replied.

“We had a lot of opposition to this bill in committee,” Rep. Phylis King, D-Boise, stated. “We received no less than three letters from three separate city mayors all urging us to vote against this bill. I believe there was consensus that, for one thing, if we want people to get out of debt, then we should prohibit them from borrowing more than 5 percent of their monthly income. Also, it was suggested that people should be given six months on a repayment plan, but this bill only provides 90 days.”

“There is another aspect of this bill that is largely being overlooked,” said Rep. Lynn Luker, R-Boise. Noting that “whether any of us like payday loans or not, we do know this much,” saying that the bill would increase electronic surveillance and monitoring of private bank accounts.

“I know we heard a lot of opposition, a lot of negative things, in committee about this bill,” said VanOrden. “But I think that was mainly negativity about payday loans themselves and not so much against this bill specifically.”

The bill now heads to Gov. Butch Otter’s office for signing into law or for a veto.