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Bill > SB0749

TN SB0749

TN SB0749
AN ACT to amend Tennessee Code Annotated, Title 45 and Title 47, relative to interest on home loans.

summary

Introduced
02/04/2025
In Committee
Crossed Over
Passed
04/28/2025
Dead
Signed/Enacted/Adopted
04/28/2025

Introduced Session

114th General Assembly

Bill Summary

As enacted, removes the weighted average yield of the accepted offers of the Federal National Mortgage Association's current free market system auction and the 30-year treasury yield as the two bases upon which the maximum effective rate of interest on home loans may be set by the commissioner of financial institutions, and replaces them with the average prime offer rate. - Amends TCA Title 45 and Title 47.

AI Summary

This bill amends Tennessee's law regarding the maximum interest rate for home loans by replacing the previous method of calculating the maximum rate with a new approach. Specifically, the bill establishes that the maximum effective interest rate for home loans will be set at four percentage points above the "average prime offer rate" (APOR), which is a standardized rate defined by federal regulation (12 CFR 1026.35) and published by the federal financial institutions examination council. The bill also maintains an absolute cap on home loan interest rates at 18% per annum, ensuring that even if the calculation method would result in a higher rate, the rate cannot exceed this maximum. The new method of calculating the maximum interest rate will provide more flexibility and potentially more responsive pricing compared to the previous system, which relied on specific yield measures. The changes will take effect on July 1, 2025, giving financial institutions and consumers ample time to prepare for the new regulation.

Committee Categories

Business and Industry

Sponsors (1)

Last Action

Comp. became Pub. Ch. 290 (on 04/28/2025)
(1 Companion Bills)

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