This document is intended to provide general information regarding state interest rate ceilings and certain loan terms. The information
presented is not legal advice, is not to be acted on as such, may not be current, and is subject to change without notice.
Michigan Department of Insurance and Financial Services
530 W. Allegan Street
Lansing, MI 48933
Updated: May 29, 2019
MICHIGAN STATUTORY INTEREST RATE CEILINGS
References herein are to the Michigan Compiled Laws of 1970 (MCL) available on the Michigan Legislature website, www.legislature.mi.gov.
In addition to the state laws mentioned below, a bank, savings bank, or credit union is authorized by the Depository Institutions Deregulation
and Monetary Control Act of 1980 (DIDMCA), 12 USC 1735f-7a, 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).
DIDMCA 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 DIDMCA, 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 of interest. The states had the authority to
override the federal preemption of the first lien mortgages and mobile home loans but had to act before April 1, 1983. The state of Michigan did
not act before the deadline. Regarding other loans, states may override the preemption at any time. DIDMCA, as amended, also preempted
certain state usury ceilings applicable to business and agricultural loans. The preemption expired on April 1, 1983.
Further, Title VIII of the Garn-St. Germain Depository Institutions Act of 1982, PL 97-320, entitled “Alternative Mortgage Transaction Parity Act of
1982,”(AMPTA), 12 USC 3801 et seq., authorizes state-chartered banks, credit unions, savings banks, and other housing creditors (including
licensees under the Mortgage Brokers, Lenders and Servicers Licensing Act, MCL 445.1651 et seq., and the Secondary Mortgage Loan Act, MCL
493.51 et seq.) 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 act before October 15, 1985. The state of Michigan did
not act before the deadline. Effective July 21, 2011, the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act), 12 USC
5301 et seq., amended AMTPA to narrow the scope of federal preemption.
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), MCL 445.1851, et seq. The two exceptions are: 1) real estate
mortgages and land contracts by all types of lenders and vendors (some not subject to the CRA) and 2) business loans made by all types of
lenders (some not subject to the CRA). 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), MCL 493.101 et seq.
Although the CRA includes licensees under the CCA in the definition of “regulated lenders,” CCA licensees cannot exercise powers under the CRA
because they remain subject to specific and controlling provisions contained in the CCA.