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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 purpose of this bill is to amend the maximum interest rates for certain types of loans and contracts for deed in Minnesota. It seeks to align these interest rates with indexes published by federal financial authorities and make specific adjustments to existing statutes regarding financial agreements.

Main Provisions

  • Maximum Interest Rate Changes:

    • The bill sets the maximum interest rate for conventional and cooperative apartment loans, as well as contracts for deed. These rates are tied to the Federal National Mortgage Association's posted yields and other federal indexes.
    • It specifies that the interest rate cannot exceed four percentage points above the average prime offer rate published by the United States Consumer Financial Protection Bureau.

  • Duration-Based Interest Rate Cap:

    • For loans or contracts for deed with a duration of ten years or less, the maximum interest rate is limited to either three percentage points above the aforementioned rate or 15.75% per annum, whichever is lower.

  • Commitment Rate Consistency:

    • Existing loans or contracts executed under a previously issued commitment can remain at the agreed-upon interest rate, even if the legal maximum has since decreased, as long as the initial rate was within the former legal limits.

  • Exemptions for Large Contracts:

    • Contracts involving amounts of $100,000 or more are exempt from these maximum rate regulations, allowing freedom in setting interest terms on larger financial agreements.

Significant Changes to Existing Law

  • The bill modifies how maximum lawful interest rates are calculated and specifies applicable rates for different types of real estate-related financial transactions.
  • It alters the conditions under which refinancing and renegotiation of loans or contracts are considered new for the purpose of determining interest rates.
  • Introduces exemptions for large contracts above $100,000, removing rate and fee limitations for these larger transactions.

Relevant Terms

  • Maximum interest rate
  • Conventional loan
  • Cooperative apartment loan
  • Contract for deed
  • Federal National Mortgage Association (Fannie Mae)
  • Average prime offer rate
  • Consumer Financial Protection Bureau (CFPB)

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 02, 2025SenateFloorActionAuthor added

Citations

 
[
  {
    "analysis": {
      "added": [
        "Introduction of different interest rate caps based on Federal National Mortgage Association posted yields, prime offer rates, and additional flexibility with substitute index adoption."
      ],
      "removed": [],
      "summary": "This section sets the maximum interest rates for conventional or cooperative apartment loans and contracts for deeds.",
      "modified": [
        "Adjustments to the calculation method for determining maximum lawful interest rates.",
        "Clarification of terms under which existing rates and commitments can be upheld."
      ]
    },
    "citation": "47.20 subdivision 4a"
  },
  {
    "analysis": {
      "added": [
        "Exemption for large loans and contracts from provisions of chapter, aligning with limits outlined in section 47.20, subdivision 4a."
      ],
      "removed": [],
      "summary": "This section outlines exceptions to interest and charge limitations for contracts of $100,000 or more.",
      "modified": []
    },
    "citation": "334.01 subdivision 2"
  }
]

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