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HOUSE BILL NO. 6186
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
July 03, 2026, Introduced by Reps. Schuette and Tisdel 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 a prepayment fee or penalty in excess of 1% of the 28
amount of any prepayment made within 3 years of the date of the 29
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loan, or any prepayment fee or penalty at all thereafter, or 1
prohibit prepayment at any time. 2
(3) Subsection (2) shall does not impair the validity of a 3
transaction or rate of interest lawful without regard to subsection 4
(2). 5
(4) Subsection (2) shall does not authorize or permit a rate 6
of interest in excess of the rate set forth in Act No. 259 of the 7
Public Acts of 1968, being sections 1968 PA 259, MCL 438.41 to 8
438.42. of the Michigan Compiled Laws. 9
(5) The provisions of subsection Subsection (2) shall apply 10
applies only to loans made by lenders approved as a mortgagee under 11
the national housing act, chapter 847, 48 Stat. 1246, 12 USC 1701 12
to 1750g, or regulated by the this state or by a federal agency, 13
who that are authorized by state or federal law to make such loans. 14
(6) Notwithstanding subsection (5), lenders or vendors that 15
are not qualified to make loans under subsection (5) may make, or 16
may have made, mortgage loans and land contracts specified in 17
subsection (2) on or after August 16, 1971, which mortgage loans 18
and land contracts provide for a rate of interest not to exceed 11% 19
per annum, which interest shall must be inclusive of all amounts 20
defined as the "finance charge" finance charge in section 106 of 21
the truth in lending act, title I of Public Law 90-321, 15 U.S.C. 22
USC 1605, and the regulations promulgated under that act, 12 C.F.R. 23
CFR part 226. 24
(7) The parties to a purchase money mortgage or a second 25
mortgage may agree in writing for the payment of a rate of interest 26
not to exceed 11% per annum. A second mortgage made pursuant to 27
under this subsection shall must be made in compliance with Act No. 28
125 of the Public Acts of 1981, being sections the secondary 29
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mortgage loan act, 1981 PA 125, MCL 493.51 to 493.81, of the 1
Michigan Compiled Laws, except for section 2 of that act. the 2
secondary mortgage loan act, 1981 PA 125, MCL 493.52, for 6 months 3
after the effective date of the residential mortgage licensing and 4
supervision act, and beginning on the effective date of the 5
residential mortgage licensing and supervision act, the residential 6
mortgage licensing and supervision act, except for section 49 of 7
the residential mortgage licensing and supervision act. As used in 8
this subsection: 9
(a) "Purchase money mortgage" means a mortgage secured by a 10
first lien or junior lien taken or retained by the seller of real 11
property to secure all or part of the purchase price of the 12
property. 13
(b) "Second mortgage" means a mortgage from which the proceeds 14
of a loan or other extension of credit made by a third person are 15
secured by a mortgage on the real property for which the mortgagor 16
has used the proceeds of the loan or other extension of credit to 17
pay all or part of the purchase price of the property. 18
(c) "Third person" means either of the following: 19
(i) A salesperson acting as an agent for a residential builder, 20
or a residential builder, licensed under article 24 of the 21
occupational code, Act No. 299 of the Public Acts of 1980, as 22
amended, being sections 1980 PA 299, MCL 339.2401 to 339.2412, of 23
the Michigan Compiled Laws, when made or negotiated in connection 24
with the sale of a residential structure constructed by that 25
residential builder. 26
(ii) A real estate broker or real estate salesperson licensed 27
under article 25 of the occupational code, Act No. 299 of the 28
Public Acts of 1980, as amended, being sections 1980 PA 299, MCL 29
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339.2501 to 339.2515 of the Michigan Compiled Laws, 339.2518, and 1
engaged in the sale of real estate as a principal vocation, when 2
made or negotiated in connection with a real estate sale where the 3
real estate broker or salesperson affiliated with the real estate 4
broker represents either the buyer or seller. 5
(8) Subject to the title transfer provisions of sections 30c 6
and 30d of the mobile home commission act, Act No. 96 of the Public 7
Acts of 1987, being sections 1987 PA 96, MCL 125.2330c and 8
125.2330d, of the Michigan Compiled Laws, the parties to an 9
extension of credit which that is secured by a lien on a mobile 10
home taken or retained by the seller of a mobile home to secure all 11
or part of the purchase price of the mobile home and which that is 12
not a retail installment transaction may agree in writing to a rate 13
of interest not to exceed 11% per annum, which interest shall must 14
be inclusive of all amounts defined as the "finance charge" finance 15
charge in section 106 of the truth in lending act, 15 U.S.C. USC 16
1605, and the regulations promulgated under that act, 12 C.F.R. CFR 17
part 226. This subsection shall does not prohibit an extension of 18
credit secured by a lien on a mobile home and made on terms and at 19
a rate of interest specifically authorized by another law of this 20
state or the United States. As used in this subsection: 21
(a) "Mobile home" means mobile home that term as defined in 22
section 2 of the mobile home commission act, Act No. 96 of the 23
Public Acts of 1987, being section 1987 PA 96, MCL 125.2302. of the 24
Michigan Compiled Laws. 25
(b) "Retail installment transaction" means retail installment 26
transaction that term as defined in section 2 of the retail 27
installment sales act, Act No. 224 of the Public Acts of 1966, 28
being section 1966 PA 224, MCL 445.852. of the Michigan Compiled 29
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Laws. 1
(9) A mortgage loan or land contract made under this act shall 2
must not provide for a rate of interest added or deducted in 3
advance and interest on the mortgage loan or land contract shall 4
must be computed from time to time only on the basis of unpaid 5
balances. 6
(10) A party to a transaction subject to this act shall be is 7
entitled to have his or her the party's rights under this act 8
enforced or protected by injunctive order of a court. 9
(11) The parties to a note, bond, or other indebtedness of 10
$100,000.00 or more, the bona fide primary security for which is a 11
lien against real property other than a single family residence, or 12
the parties to a land contract of such amount and nature, may agree 13
in writing for the payment of any rate of interest. 14
(12) Interest charged by a trust created or organized in the 15
United States forming a part of a stock bonus, pension, or profit 16
sharing plan which that satisfies the requirements of section 17
401(a) of the internal revenue code of 1986, 26 USC 401, on a loan 18
to a participating employee or beneficiary of the trust is not 19
subject to the limitations of this act. 20
(13) In the case of a mortgage or land contract, an interest 21
bearing deposit account held in a depository financial institution 22
may be established as a condition of the making of the mortgage or 23
land contract, subject to the conditions specified in this 24
subsection. The deposit account shall must be pledged to the lender 25
or seller as additional security for the mortgage or land contract. 26
The lender or seller shall withdraw from the deposit account agreed 27
upon specified amounts at agreed upon periodic times and the 28
withdrawals shall must be applied against the periodic payments 29
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otherwise due from the borrower or buyer pursuant to in accordance 1
with the terms of the mortgage or land contract. All interest 2
earned on the pledged deposit account shall must be credited to the 3
deposit account. This subsection shall only apply applies only to a 4
loan the primary security for which is a dwelling to be occupied by 5
the owner, or a land contract given as consideration for the sale 6
of a dwelling which that is to be occupied by the owner. The 7
mortgage or land contract shall must specifically state the amounts 8
by which the payments are supplemented by withdrawals from the 9
pledged deposit account, the amounts required from the borrower or 10
buyer to make up the difference, and the period of time during 11
which withdrawals from the pledge deposit account shall must be 12
utilized. 13
(14) A lender or seller who that offers 5 or more mortgages or 14
land contracts in any 1 calendar year may not require a deposit 15
account established pursuant to under subsection (13) as a 16
condition of making a mortgage or land contract on more than 20% of 17
the mortgages or land contracts made by the lender or seller in any 18
1 calendar year. 19
(15) Notwithstanding subsections (2), (2)(a), (13), and (14), 20
in the case of a mortgage loan or land contract providing for 21
biweekly payments, a regulated depository financial institution or 22
its service corporations, subsidiaries or affiliates may require, 23
or may have required, as a condition of the making of the mortgage 24
loan or land contract, that the borrower maintain an interest 25
bearing account with any depository institution for the purpose of 26
making the biweekly payments by automatic withdrawals from the 27
account, electronically or otherwise. If an institution does not 28
offer interest bearing transaction accounts, or if an institution 29
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does not generally offer automatic withdrawals from interest 1
bearing accounts, a noninterest bearing checking account may be 2
maintained for the purpose of making the biweekly payments. 3
However, the borrower shall must not be required to maintain funds 4
in the account in excess of an amount sufficient to meet the 5
required biweekly loan payments, including required escrow payments 6
for taxes and insurance, if any, as they become due. As used in 7
this subsection: , "regulated 8
(a) "Affiliate" means a person other than an individual that 9
directly or indirectly through 1 or more intermediaries is 10
controlled by or is under common control with a regulated 11
depository financial institution. 12
(b) "Regulated depository financial institution" means a state 13
or nationally chartered bank, or a state or federally chartered 14
savings and loan association or savings bank, or a state or 15
federally chartered credit union. "Affiliate" means a person other 16
than a natural person that directly or indirectly through 1 or more 17
intermediaries is controlled by or is under common control of a 18
regulated depository financial institution. 19
Enacting section 1. This amendatory act does not take effect 20
unless House Bill No. 6177 (request no. H05171'25) of the 103rd 21
Legislature is enacted into law. 22