HF2601 (Legislative Session 94 (2025-2026))
Maximum interest rate for certain loans and contracts for deed modified.
Related bill: SF2794
AI Generated Summary
Purpose
The bill aims to modify the financial regulations for financial institutions and insurers in Minnesota. It introduces changes to the maximum interest rate for certain loans and contracts for deed and requires insurers to adopt specific financial assessments, such as the NAIC liquidity stress test.
Main Provisions
Interest Rate Modifications: The bill adjusts the maximum lawful interest rate for conventional or cooperative apartment loans and contracts for deed. It links the maximum rate to the Federal National Mortgage Association yields plus four percentage points.
Insurance Regulations: Insurers are required to:
- Complete group capital calculations based on instructions from the National Association of Insurance Commissioners (NAIC).
- Conduct liquidity stress tests as per the NAIC framework.
- File results from these assessments with the state's insurance commissioner.
Supervision of Insurance Groups: The bill empowers the Minnesota insurance commissioner to act as a groupwide supervisor for internationally active insurance groups, coordinating with other state, federal, and international regulatory agencies.
Confidentiality and Information Sharing: The bill enhances confidentiality provisions for information obtained under the new requirements but allows for necessary information sharing with other regulatory bodies and the NAIC, provided confidentiality is upheld.
Significant Changes to Existing Law
- Interest Rates: The previous limitations on interest rates for certain loans are adjusted to align with federal guidelines, potentially allowing for higher interest rates than previously permitted.
- Capital Calculations and Stress Tests: New requirements for group capital calculations and liquidity stress tests for insurers have been introduced, which were not previously mandatory.
- Enhanced Regulatory Powers: The Minnesota insurance commissioner is granted broader supervisory powers over international insurance operations, enhancing regulatory oversight capabilities.
Relevant Terms
- Interest rates, loans, contracts for deed, insurers, NAIC, group capital calculation, liquidity stress test, financial institutions, regulatory supervision, confidentiality, insurance groups.
Actions
| Date | Chamber | Where | Type | Name | Committee Name |
|---|---|---|---|---|---|
| March 19, 2025 | House | Floor | Action | Introduction and first reading, referred to | Commerce Finance and Policy |
| March 31, 2025 | House | Floor | Action | Committee report, to adopt as amended and re-refer to | Judiciary Finance and Civil Law |
Citations
[
{
"analysis": {
"added": [
"Clarifies the index used for determining the maximum interest rate when certain indices are unavailable."
],
"removed": [],
"summary": "This section sets the maximum lawful interest rate for conventional and cooperative apartment loans and contracts for deed in Minnesota.",
"modified": [
"Updates the calculation method for maximum interest rates to comply with federal regulations."
]
},
"citation": "47.20",
"subdivision": "subdivision 4a"
},
{
"analysis": {
"added": [],
"removed": [],
"summary": "This section addresses limitations on interest rates and related fees for loans and contracts of $100,000 or more.",
"modified": [
"Acknowledges exceptions related to section 47.20 subdivision 4a for contracts involving significant extensions of credit."
]
},
"citation": "334.01",
"subdivision": "subdivision 2"
},
{
"analysis": {
"added": [
"Added a new subdivision addressing violations related to understanding enterprise risks."
],
"removed": [],
"summary": "This section relates to the regulatory framework for insurers, particularly concerning enterprise risk management.",
"modified": []
},
"citation": "60D.09",
"subdivision": ""
},
{
"analysis": {
"added": [],
"removed": [],
"summary": "This section discusses the definition and criteria for 'control' within the insurance holding company systems.",
"modified": [
"Refined the definition of control and provided clarity on presumptive control scenarios."
]
},
"citation": "60D.15",
"subdivision": "subdivision 4"
},
{
"analysis": {
"added": [],
"removed": [],
"summary": "This section defines the term 'person' in the context of insurance regulations.",
"modified": [
"Provides a detailed definition to align with regulatory requirements."
]
},
"citation": "60D.15",
"subdivision": "subdivision 7"
},
{
"analysis": {
"added": [],
"removed": [],
"summary": "This section describes additional investment authorities permissible for domestic insurers.",
"modified": [
"Adjustments to investment authority limits and conditions."
]
},
"citation": "60D.16",
"subdivision": "subdivision 2"
},
{
"analysis": {
"added": [],
"removed": [],
"summary": "This section lays out the filing requirements for individuals or entities making significant acquisitions in the insurance sector.",
"modified": [
"Expanded language to cover more comprehensive acquisition scenarios and disclosures."
]
},
"citation": "60D.17",
"subdivision": "subdivision 1"
},
{
"analysis": {
"added": [],
"removed": [],
"summary": "Detailing preacquisition notification requirements and waiting periods for acquisitions.",
"modified": [
"Specified additional information and conditions for extensions and triggers of waiting periods."
]
},
"citation": "60D.18",
"subdivision": "subdivision 3"
}
]