STATE OF MICHIGAN

FRANK J. KELLEY, ATTORNEY GENERAL

Opinion No. 5734

July 8, 1980

LAND CONTRACTS:

Interest charges

MORTGAGES:

Interest charges

A loan of $100,000 or more secured by a lien on real property or a land contract on other than a single family residence need not be made by an approved or authorized lender in order for the lender to charge an unlimited rate of interest for the period ending on December 31, 1981.

Hon. Donald E. Bishop

State Senator

The Capitol

Lansing, Michigan

You have requested my opinion as to whether a loan subject to 1966 PA 326, Sec. 1c(9) may be made by a 'non-bank lender or lenders not approved as mortgagees under the National Housing Act or regulated by the state or a federal agency.' 1966 PA 326, Sec. 1c(9), MCLA 438.31c(9); MSA 19.15(1c)(9), provides that:

There is nothing in 1966 PA 326, Sec. 1c(9), supra, which limits the type of lender making loans in the amount of $100,000 or more secured by other than a single family residence. Reference to 'the parties to the note, bond, or other indebtedness' clearly indicates that any person or entity legally able to contract is eligible to take advantage of this exception to the general usury law.

Reference to the type of lenders you suggest is limited to loans under 1966 PA 326, Sec. 1c(5); MCLA 438.31c(5); MSA 19.15(1c)(5), which provides that:

1966 PA 326, Sec. 1c(2), supra, involves loans secured by a first lien on real property, which would either be in an amount of less than $100,000 or secured by single family residential real property. Thus, lenders of less than $100,000 or whose loans are secured by single family residential real property must be approved or authorized lenders regulated by federal or state law. The legislature has not required that only lenders approved or authorized under federal or state law may avail themselves of 1966 PA 326, Sec. 1(c)(9), supra.

It is, therefore, my opinion that, for a period ending December 31, 1981, a lender under 1966 PA 326, Sec. 1c(9), supra, need not be approved or authorized in order to charge an unlimited rate of interest on loans of $100,000 or more secured by lien or land contract on other than a single family residence.

Frank J. Kelley