Minnesota passed a bill amending the maximum interest rate for conventional junior lien loans and amending the delivery for the Notice of Default. Under the bill, in connection with a junior lien mortgage loan that is a conventional loan, the interest rate may not exceed an amount equal to the Average Prime Offer Rate that applies to a comparable transaction, as most recently published by the Consumer Financial Protection Bureau on the last date the discounted interest rate for the transaction is set before consummation, plus 4 percentage points. Previously, the interest rate could not exceed an amount equal to the Federal National Mortgage Association posted yields on 30-year mortgage commitments for delivery within 60 days on standard conventional fixed-rate mortgages published in the Wall Street Journal for the last business day of the second preceding month average prime offer rate, that applies to a comparable transaction, as most recently published by the United States Consumer Financial Protection Bureau on the last date the discounted interest rate for the transaction is set before consummation, plus 4 percentage points. “Conventional loan” means a loan less than or equal to the conforming loan limit established by the Federal Housing Finance Agency that is secured by a mortgage upon real property containing 1 or more residential units and which:
- Is not insured or guaranteed by FHA, VA, or the Farmers Home Administration; and
- Is not eligible for purchase, in whole or in part, by Fannie Mae or Freddie Mac.
In addition, the bill amended the delivery method for the Notice of Default that is a conventional loan under a nonjudicial foreclosure. If mailed, the Notice of Default must now be sent by first-class mail (previously, the Notice of Default had to be sent by certified mail.) or the Notice of Default can now be sent by email or other electronic communication, if agreed to by the lender and the borrower in writing.
The bill becomes effective August 1, 2025.
Click to view the Minnesota House Bill 4: https://www.tenaco.com/wp-content/uploads/2025/07/MN-HB-4-06-19-25.pdf
