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HF3437 • 2026

Application of certain residential mortgage loan fees and penalties modified.

Application of certain residential mortgage loan fees and penalties modified.

Passed Legislature

This bill passed both chambers and reached final enrollment, even if later executive action is not shown here.

Sponsor
Allen
Last action
Final Acti
Official status
Presentment date 04/28/26
Effective date
Not listed

Plain English Breakdown

Checked against official source text during the last sync.

Changes to Mortgage Loan Fees and Penalties

The bill modifies how certain fees and penalties apply to specific types of mortgage loans in Minnesota.

What This Bill Does

  • Adds an exception for residential mortgage loan fees and penalties when the loan is made for investment purposes only, with no intention for personal occupancy by borrowers or sellers.
  • Defines a new type of loan called a 'DSCR loan' which stands for Debt Service Coverage Ratio loan. This loan is not based on the borrower's income but rather on the expected cash flow from an investment property.
  • Amends Minnesota Statutes to include these changes in sections 58.137 and 58.20.

Who It Names or Affects

  • People who take out mortgage loans for investment purposes without personal occupancy intentions.
  • Lenders who make DSCR loans based on expected cash flow from an investment property rather than the borrower's income.

Terms To Know

DSCR loan
A type of mortgage loan that is not a qualified mortgage and is made based on the expected cash flow from an investment property, not the borrower’s personal income.

Limits and Unknowns

  • The bill only applies to residential mortgage loans executed on or after August 1, 2026.
  • It does not specify how existing loans will be affected by these changes.

Bill History

  1. Final Acti House

    Presented to Governor 04/28/2026

  2. Final Acti Senate

    Presentment date 04/28/26

  3. 2026-04-23 House

    Returned from Senate with amendment

  4. 2026-04-22 House

    House rule 1.15 (c), message requesting concurrence received

  5. 2026-04-20 Senate

    Special Order: Rule 45 amendment stricken

  6. 2026-04-15 Senate

    Comm report: Rule 45-amend, subst. General Orders SF4168

  7. 2026-04-14 Senate

    Received from House

  8. 2026-04-13 House

    Third reading

  9. 2026-04-09 House

    House rule 1.21, placed on Calendar for the Day Monday, April 13, 2026

  10. 2026-04-07 House

    Committee report, to adopt as amended

  11. 2026-02-17 House

    Introduction and first reading, referred to Commerce Finance and Policy

Official Summary Text

Application of certain residential mortgage loan fees and penalties modified.

Current Bill Text

Read the full stored bill text 
A bill for an act

relating to commerce; modifying the application of residential mortgage loan fees

and penalties in certain instances; amending Minnesota Statutes 2024, sections

58.137, by adding a subdivision; 58.20, by adding a subdivision.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1.

Minnesota Statutes 2024, section 58.137, is amended by adding a subdivision

to read:

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Subd. 4.

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Exception.

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Subdivisions 1 and 2 do not apply to a residential mortgage loan

that is a purchase money, first lien, or DSCR loan, as defined in section 58.20, subdivision

5a, if:

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(1) the loan is made for investment purposes only;

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(2) no borrower, guarantor, or cosigner intend to or do occupy the residential real property

securing the loan; and

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(3) the seller does not continue to occupy the residential real property after the sale.

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Sec. 2.

Minnesota Statutes 2024, section 58.20, is amended by adding a subdivision to

read:

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Subd. 5a.

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Debt service coverage ratio loan or DSCR loan.

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"Debt service coverage

ratio loan" or "DSCR loan" means a mortgage:

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(1) that is not a qualified mortgage, as defined in United States Code, title 15, section

1639c;

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(2) secured by investment property; and

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(3) where the lender's decision to make the loan is based on the expected cash flow to

be generated from the investment property instead of the borrower's personal income.

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EFFECTIVE DATE.

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This section is effective August 1, 2026, and applies to residential

mortgage loans executed on or after that date.

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