(PRNewswire) Large numbers of New Mexico residents could lose access to mortgage loans after January 1 when the state's Home Loan Protection Act goes in effect, the New Mexico Financial Services Association (NMFSA) said today.

The NMFSA said future credit availability remains a concern, despite a ratings agency's recent announcement that it will continue to rate finance transactions backed by mortgage loans falling under the new law. "While the Act seeks to protect consumers from abusive lending practices, it will have the adverse effect of drying up access to home loans, particularly those in the manufactured housing sector, because of ill-defined language it contains," said Phil Hitz, president of the NMFSA.

On November 27, Standard & Poor's Rating Services announced that it will rate structured finance transactions that include New Mexico loans governed by the Act in accordance with certain criteria. Still, lenders continue to have concerns about a number of areas within the law, including the fact that some of the clauses of the Act apply to all mortgage loans, not just those defined as "high cost," said Hitz.

"In addition, lenders face the risk of harsh penalties if they unintentionally break the law, due to very confusing language and undefined terms," added Hitz. "These issues will almost certainly cause some lenders to think twice about doing business in New Mexico, effectively eliminating access to loans for many borrowers."

"To avoid these unintended consequences, we urge New Mexico state legislators to revisit the law when they convene in January," said Hitz.

The New Mexico Financial Services Association (NMFSA) believes the best way to protect borrowers from unscrupulous lenders is through financial literacy education -- for adults as well as young people. The NMSFA wholeheartedly rejects abusive and deceptive lending practices and believes that consumers are better served through financial education rather than restrictive legislation. More information about the NMFSA can be found on its Web site (http://www.newmexicofsa.org/).