Brownsville, Texas is getting close to joining 18 other cities in Texas in passing a law regulating payday and auto title lenders, city officials report.

City Commissioner John Villarreal has pushed for an ordinance, which stalled in part because of lawsuits popping up as other municipalities regulated the industry.

“Even though we’re a pretty good sized city, we don’t have the resources to go and defend litigation against something like this,” Villarreal told The Brownsville Herald. "But ... more and more cities are winning these cases, kind of setting a precedent to where it’s less risky for us to propose an ordinance like that. That’s where we’re at right now.”

Villarreal said the city’s legal department is about ready to sign off on the ordinance, at which point it likely will become an agenda item. The main parts of the planned ordinance include the requirement that auto title and payday lenders register with the city and that payday loans be limited to 20% of a borrower’s monthly gross income. Auto title loans must be limited to 3% of gross annual income or 70% of the vehicle’s value, whichever is less.

Loans can’t have more than four payments (either four installments or three rollovers or renewals), while the proceeds from each installment or renewal must reduce the loan principal by 25%. The ordinance defines "rollover or renewal" as an extension of consumer credit made within seven days of a previous extension of credit.

Midland was the latest Texas city to pass an identical "unified ordinance," aimed at reining in predatory practices of auto title and payday loan firms. Midland adopted the ordinance last month. Dallas, Austin, San Antonio and El Paso already have passed payday loan legislation.

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