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SF2794 (Legislative Session 94 (2025-2026))

Certain loans and contract for deed maximum interest rate modification provision, group capital calculations for insurers establishments, Insurers completion of NAIC liquidity stress test requirement provision, and insurers filing group capital calculations and results from the NAIC liquidity stress test requirement provision, and insurers securing a deposit or bond requirement provision

Related bill: HF2601

AI Generated Summary

Purpose of the Bill

The bill aims to change the laws about the maximum interest rates that can be charged on specific kinds of loans and real estate contracts in Minnesota. This includes updating how these rates are determined and possibly lowering them.

Main Provisions

  1. Interest Rate Calculation:

    • The bill modifies how the maximum lawful interest rate is determined for conventional and cooperative apartment loans, as well as contracts for deed. It ties the rate to a formula based on Federal guidelines plus four percentage points.

  2. Existing Loans and Contracts:

    • Loans or contracts can continue to use interest rates agreed upon in previous commitments, even if those rates are above the new lawful maximum, as long as the rates were lawful at the time the commitment was made.

  3. Refinancing and Renegotiation:

    • Any refinancing or renegotiation of loans or contracts is treated as a new transaction for the purposes of determining the applicable interest rate.

  4. Large Contracts Exemption:

    • Contracts or loans of $100,000 or more are exempt from limitations on the rate or amount of interest and fees, though they must still comply with certain exceptions.

Significant Changes to Existing Law

  • The bill updates the formula for calculating the maximum interest rates and includes renaming some regulatory references to stay consistent with federal regulations.
  • It provides clarity on how past agreements and commitments can maintain their interest rates moving forward, creating predictability for lenders and borrowers involved in long-term commitments.

Relevant Terms

  • Maximum interest rate
  • Conventional loan
  • Cooperative apartment loan
  • Contract for deed
  • Federal National Mortgage Association
  • Consumer Financial Protection Bureau
  • Refinancing
  • Forward commitment

Bill text versions

Actions

DateChamberWhereTypeNameCommittee Name
March 19, 2025SenateFloorActionIntroduction and first reading
March 19, 2025SenateFloorActionReferred toCommerce and Consumer Protection
March 26, 2025SenateFloorActionComm report: To pass as amended and re-refer toJudiciary and Public Safety
April 02, 2025SenateFloorActionAuthor added
April 06, 2025SenateFloorActionComm report: To pass and re-referred toCommerce and Consumer Protection

Citations

 
[
  {
    "analysis": {
      "added": [
        "Clarification on how substitute index may be adopted if Federal National Mortgage Association index is not available."
      ],
      "removed": [],
      "summary": "This bill modifies the maximum interest rate for certain loans and contracts for deed under section 47.20 subdivision 4a.",
      "modified": [
        "Specifies the use of the average prime offer rate as defined in Code of Federal Regulations title 12 part 1026.35a2."
      ]
    },
    "citation": "47.20",
    "subdivision": "subdivision 4a"
  },
  {
    "analysis": {
      "added": [],
      "removed": [],
      "summary": "The bill makes changes related to contracts involving credit of $100,000 or more under section 334.01 subdivision 2.",
      "modified": [
        "Clarifies exceptions to interest rate limitations specifically referencing section 47.20 subdivision 4a for large credit amounts."
      ]
    },
    "citation": "334.01",
    "subdivision": "subdivision 2"
  }
]

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