What is the Land contract interest rate in Michigan?

Answer 1

MICHIGAN STATUTORY INTEREST RATE CEILINGS In addition to the state laws mentioned below, a bank, savings bank or credit union is authorized by a federal law (PL 96-221) to charge the greater of 1 percentage point in excess of the Federal Reserve discount rate or the highest rate permitted by state law to any lender on the type of loan in question (the most favored lender authority). PL 96-221 also preempts state usury ceilings by allowing any rate of interest for virtually all first lien mortgages and mobile home loans as well as first lien mobile home installment contracts. Moreover, under PL 96-221, an individual selling his or her home and taking a first lien on the title or a land contract given in exchange for the sale of unencumbered property could be at any rate ofinterest. The states had the authority to override the federal preemption of the first lien mortgages and mobile home loans but had to take action before April 1, 1983. The state of Michigan did not take action before the deadline. With regard to other loans, states can override the preemption at any time. PL 96-221 as amended, also preempted certain state usury ceilings applicable to business and agricultural loans. The preemption expired on April 1, 1983. Also, Title VIII of the Garn-St. Germain Depository Institutions Act of 1982, PL 97-320, entitled "Alternative Mortgage Transaction Parity Act of 1982," authorizes state-chartered banks, credit unions, savings banks and other housing creditors (including licensees under the Mortgage Brokers, Lenders and Servicers Licensing Act and the Secondary Mortgage Loan Act) to make alternative mortgage transactions notwithstanding any provisions of state law which restrict or prohibit the making of such transactions. States had the authority to override the federal preemption but had to take action before October 15, 1985. The state of Michigan did not take action before the deadline. The following table is divided into two parts. The first part primarily applies to extensions of credit which, with two exceptions, are made exclusively by, "regulated lenders," as defined under the Credit Reform Act (CRA). The two exceptions are real estate mortgages and land contracts by all types of lenders and vendors (some not subject to the Credit Reform Act) and business loans made by all types of lenders (some not subject to the Credit Reform Act). The second part of the table covers extensions of credit by lenders which are not permitted to extend credit under the CRA. Among the lenders appearing in this part of the table, are licensees under the Credit Card Act (CCA). Although the CRA includes licensees under the CCA in the definition of "regulated lenders," CCA licensees cannot exercise powers under the CRA since they remain subject to specific and controlling provisions contained in the CCA. Business loans as used in this schedule includes agricultural loans. Variable interest rate loans are allowed unless otherwise indicated. References are to the Michigan Compiled Laws of 1970 (MCL) and the Michigan Statutes Annotated (MSA). Prepared by: Michigan Department of Consumer and Industry Services Office of Financial and Insurance Services Division of Financial Institutions P.O. Box 30224 Lansing, Michigan 48909 MICHIGAN STATUTORY INTEREST RATE CEILINGS In addition to the state laws mentioned below, a bank, savings bank or credit union is authorized by a federal law (PL 96-221) to charge the greater of 1 percentage point in excess of the Federal Reserve discount rate or the highest rate permitted by state law to any lender on the type of loan in question (the most favored lender authority). PL 96-221 also preempts state usury ceilings by allowing any rate of interest for virtually all first lien mortgages and mobile home loans as well as first lien mobile home installment contracts. Moreover, under PL 96-221, an individual selling his or her home and taking a first lien on the title or a land contract given in exchange for the sale of unencumbered property could be at any rate ofinterest. The states had the authority to override the federal preemption of the first lien mortgages and mobile home loans but had to take action before April 1, 1983. The state of Michigan did not take action before the deadline. With regard to other loans, states can override the preemption at any time. PL 96-221 as amended, also preempted certain state usury ceilings applicable to business and agricultural loans. The preemption expired on April 1, 1983. Also, Title VIII of the Garn-St. Germain Depository Institutions Act of 1982, PL 97-320, entitled "Alternative Mortgage Transaction Parity Act of 1982," authorizes state-chartered banks, credit unions, savings banks and other housing creditors (including licensees under the Mortgage Brokers, Lenders and Servicers Licensing Act and the Secondary Mortgage Loan Act) to make alternative mortgage transactions notwithstanding any provisions of state law which restrict or prohibit the making of such transactions. States had the authority to override the federal preemption but had to take action before October 15, 1985. The state of Michigan did not take action before the deadline. The following table is divided into two parts. The first part primarily applies to extensions of credit which, with two exceptions, are made exclusively by, "regulated lenders," as defined under the Credit Reform Act (CRA). The two exceptions are real estate mortgages and land contracts by all types of lenders and vendors (some not subject to the Credit Reform Act) and business loans made by all types of lenders (some not subject to the Credit Reform Act). The second part of the table covers extensions of credit by lenders which are not permitted to extend credit under the CRA. Among the lenders appearing in this part of the table, are licensees under the Credit Card Act (CCA). Although the CRA includes licensees under the CCA in the definition of "regulated lenders," CCA licensees cannot exercise powers under the CRA since they remain subject to specific and controlling provisions contained in the CCA. Business loans as used in this schedule includes agricultural loans. Variable interest rate loans are allowed unless otherwise indicated. References are to the Michigan Compiled Laws of 1970 (MCL) and the Michigan Statutes Annotated (MSA). Prepared by: Michigan Department of Consumer and Industry Services Office of Financial and Insurance Services Division of Financial Institutions P.O. Box 30224 Lansing, Michigan 48909