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HB-5552, As Passed House, May 21, 2026
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HOUSE BILL NO. 5552
A bill to amend 1966 PA 326, entitled
"An act to regulate the rate of interest of money; to provide
exceptions; to prescribe the rights of parties; and to repeal
certain acts and parts of acts,"
by amending section 1c (MCL 438.31c), as amended by 1990 PA 94.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 1c. (1) Interest charged by a broker or dealer registered 1
under title I of the securities exchange act of 1934, chapter 404, 2
48 Stat. 881, 15 U.S.C. USC 78a to 78o, 78o-3 to 78dd-1, 78ee to 3
78hh, and 78ll 78rr, for carrying a debit balance in an account for 4
February 19, 2026, Introduced by Reps. Tisdel, T. Carter, Kuhn and B. Carter and referred to
Committee on Finance.
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a customer is not subject to the limitations of this act if the 1
debit balance is payable on demand and secured by stocks or bonds. 2
(2) The parties to a note, bond, or other evidence of 3
indebtedness, executed after August 11, 1969, the bona fide primary 4
security for which is a first lien against real property, or a land 5
lease if the tenant owns a majority interest in the improvements, 6
or the parties to a land contract, may agree in writing for the 7
payment of any rate of interest, but the note, mortgage, contract, 8
or other evidence of indebtedness shall must not provide that the 9
rate of interest initially effective may be increased for any 10
reason. In connection with the transaction, except a loan , insured 11
or guaranteed by the federal government or any agency of the 12
federal government, if the security is a single family dwelling 13
unit, the lender shall not do any of the following: 14
(a) Directly or indirectly require, as a condition of the 15
making of the loan, a deposit to be maintained by the borrower, 16
other than an escrow account or a deposit account which that is 17
established pursuant to under subsection (13). 18
(b) Directly or indirectly impose or collect, as a condition 19
of the making of the loan, a payment from a seller or borrower in 20
the nature of a discount, point, or similar system, except that a 21
lender may impose and collect, as a condition of making a loan, all 22
fees, discounts, points, or other charges that lenders are 23
permitted or required to impose, collect, or pay in order to 24
qualify the loan for sale, in whole or in part, or in order to 25
obtain a purchase commitment, under any program authorized by 26
federal statute or regulation. 27
(c) Charge If the loan is made primarily for a personal, 28
family, or household purpose, charge a prepayment fee or penalty in 29
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excess of 1% of the amount of any prepayment made within 3 years of 1
after the date of the loan, or any prepayment fee or penalty at all 2
thereafter. , or prohibit 3
(d) Prohibit prepayment of the loan at any time. 4
(3) Subsection (2) shall does not impair the validity of a 5
transaction or rate of interest lawful without regard to subsection 6
(2). 7
(4) Subsection (2) shall does not authorize or permit a rate 8
of interest in excess of the rate set forth in Act No. 259 of the 9
Public Acts of 1968, being sections 1968 PA 259, MCL 438.41 to 10
438.42. of the Michigan Compiled Laws. 11
(5) The provisions of subsection Subsection (2) shall apply 12
applies only to loans made by lenders approved as a mortgagee under 13
the national housing act, chapter 847, 48 Stat. 1246, 12 USC 1701 14
to 1750g, or regulated by the this state or by a federal agency, 15
who that are authorized by state or federal law to make such loans. 16
(6) Notwithstanding subsection (5), lenders or vendors that 17
are not qualified to make loans under subsection (5) may make, or 18
may have made, mortgage loans and land contracts specified in 19
subsection (2) on or after August 16, 1971, which mortgage loans 20
and land contracts provide for a rate of interest not to exceed 11% 21
per annum, which interest shall must be inclusive of all amounts 22
defined as the "finance charge" finance charge in section 106 of 23
the truth in lending act, title I of Public Law 90-321, 15 U.S.C. 24
USC 1605, and the regulations promulgated under that act, 12 C.F.R. 25
CFR part 226. 26
(7) The parties to a purchase money mortgage or a second 27
mortgage may agree in writing for the payment of a rate of interest 28
not to exceed 11% per annum. A second mortgage made pursuant to 29
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under this subsection shall must be made in compliance with Act No. 1
125 of the Public Acts of 1981, being sections the secondary 2
mortgage loan act, 1981 PA 125, MCL 493.51 to 493.81, of the 3
Michigan Compiled Laws, except for section 2 of that act. the 4
secondary mortgage loan act, 1981 PA 125, MCL 493.52. As used in 5
this subsection: 6
(a) "Purchase money mortgage" means a mortgage secured by a 7
first lien or junior lien taken or retained by the seller of real 8
property to secure all or part of the purchase price of the 9
property. 10
(b) "Second mortgage" means a mortgage from which the proceeds 11
of a loan or other extension of credit made by a third person are 12
secured by a mortgage on the real property for which the mortgagor 13
has used the proceeds of the loan or other extension of credit to 14
pay all or part of the purchase price of the property. 15
(c) "Third person" means either of the following: 16
(i) A salesperson acting as an agent for a residential builder, 17
or a residential builder, licensed under article 24 of the 18
occupational code, Act No. 299 of the Public Acts of 1980, as 19
amended, being sections 1980 PA 299, MCL 339.2401 to 339.2412, of 20
the Michigan Compiled Laws, when made or negotiated in connection 21
with the sale of a residential structure constructed by that 22
residential builder. 23
(ii) A real estate broker or real estate salesperson licensed 24
under article 25 of the occupational code, Act No. 299 of the 25
Public Acts of 1980, as amended, being sections 1980 PA 299, MCL 26
339.2501 to 339.2515 of the Michigan Compiled Laws, 339.2518, and 27
engaged in the sale of real estate as a principal vocation, when 28
made or negotiated in connection with a real estate sale where the 29
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real estate broker or salesperson affiliated with the real estate 1
broker represents either the buyer or seller. 2
(8) Subject to the title transfer provisions of sections 30c 3
and 30d of the mobile home commission act, Act No. 96 of the Public 4
Acts of 1987, being sections 1987 PA 96, MCL 125.2330c and 5
125.2330d, of the Michigan Compiled Laws, the parties to an 6
extension of credit which that is secured by a lien on a mobile 7
home taken or retained by the seller of a mobile home to secure all 8
or part of the purchase price of the mobile home and which that is 9
not a retail installment transaction may agree in writing to a rate 10
of interest not to exceed 11% per annum, which interest shall must 11
be inclusive of all amounts defined as the "finance charge" finance 12
charge in section 106 of the truth in lending act, 15 U.S.C. USC 13
1605, and the regulations promulgated under that act, 12 C.F.R. CFR 14
part 226. This subsection shall does not prohibit an extension of 15
credit secured by a lien on a mobile home and made on terms and at 16
a rate of interest specifically authorized by another law of this 17
state or the United States. As used in this subsection: 18
(a) "Mobile home" means mobile home that term as defined in 19
section 2 of the mobile home commission act, Act No. 96 of the 20
Public Acts of 1987, being section 1987 PA 96, MCL 125.2302. of the 21
Michigan Compiled Laws. 22
(b) "Retail installment transaction" means retail installment 23
transaction that term as defined in section 2 of the retail 24
installment sales act, Act No. 224 of the Public Acts of 1966, 25
being section 1966 PA 224, MCL 445.852. of the Michigan Compiled 26
Laws. 27
(9) A mortgage loan or land contract made under this act shall 28
must not provide for a rate of interest added or deducted in 29
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advance and interest on the mortgage loan or land contract shall 1
must be computed from time to time only on the basis of unpaid 2
balances. 3
(10) A party to a transaction subject to this act shall be is 4
entitled to have his or her the party's rights under this act 5
enforced or protected by injunctive order of a court. 6
(11) The parties to a note, bond, or other indebtedness of 7
$100,000.00 or more, the bona fide primary security for which is a 8
lien against real property other than a single family residence, or 9
the parties to a land contract of such amount and nature, may agree 10
in writing for the payment of any rate of interest. 11
(12) Interest charged by a trust created or organized in the 12
United States forming a part of a stock bonus, pension, or profit 13
sharing plan which that satisfies the requirements of section 14
401(a) of the internal revenue code of 1986, 26 USC 401, on a loan 15
to a participating employee or beneficiary of the trust is not 16
subject to the limitations of this act. 17
(13) In the case of a mortgage or land contract, an interest 18
bearing deposit account held in a depository financial institution 19
may be established as a condition of the making of the mortgage or 20
land contract, subject to the conditions specified in this 21
subsection. The deposit account shall must be pledged to the lender 22
or seller as additional security for the mortgage or land contract. 23
The lender or seller shall withdraw from the deposit account agreed 24
upon specified amounts at agreed upon periodic times and the 25
withdrawals shall must be applied against the periodic payments 26
otherwise due from the borrower or buyer pursuant to in accordance 27
with the terms of the mortgage or land contract. All interest 28
earned on the pledged deposit account shall must be credited to the 29
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deposit account. This subsection shall only apply applies only to a 1
loan the primary security for which is a dwelling to be occupied by 2
the owner, or a land contract given as consideration for the sale 3
of a dwelling which that is to be occupied by the owner. The 4
mortgage or land contract shall must specifically state the amounts 5
by which the payments are supplemented by withdrawals from the 6
pledged deposit account, the amounts required from the borrower or 7
buyer to make up the difference, and the period of time during 8
which withdrawals from the pledge deposit account shall must be 9
utilized. 10
(14) A lender or seller who that offers 5 or more mortgages or 11
land contracts in any 1 calendar year may not require a deposit 12
account established pursuant to under subsection (13) as a 13
condition of making a mortgage or land contract on more than 20% of 14
the mortgages or land contracts made by the lender or seller in any 15
1 calendar year. 16
(15) Notwithstanding subsections (2), (2)(a), (13), and (14), 17
in the case of a mortgage loan or land contract providing for 18
biweekly payments, a regulated depository financial institution or 19
its service corporations, subsidiaries, or affiliates may require, 20
or may have required, as a condition of the making of the mortgage 21
loan or land contract, that the borrower maintain an interest 22
bearing account with any depository institution for the purpose of 23
making the biweekly payments by automatic withdrawals from the 24
account, electronically or otherwise. If an institution does not 25
offer interest bearing transaction accounts, or if an institution 26
does not generally offer automatic withdrawals from interest 27
bearing accounts, a noninterest bearing checking account may be 28
maintained for the purpose of making the biweekly payments. 29
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However, the borrower shall must not be required to maintain funds 1
in the account in excess of an amount sufficient to meet the 2
required biweekly loan payments, including required escrow payments 3
for taxes and insurance, if any, as they become due. As used in 4
this subsection: , "regulated 5
(a) "Affiliate" means a person other than an individual that 6
directly or indirectly through 1 or more intermediaries is 7
controlled by or is under common control with a regulated 8
depository financial institution. 9
(b) "Regulated depository financial institution" means a state 10
or nationally chartered bank, or a state or federally chartered 11
savings and loan association or savings bank, or a state or 12
federally chartered credit union. "Affiliate" means a person other 13
than a natural person that directly or indirectly through 1 or more 14
intermediaries is controlled by or is under common control of a 15
regulated depository financial institution. 16