The Federal National Mortgage Association has recently discontinued its free market auction system for commitments to purchase conventional home mortgages. In light of this change, the Commissioner of Financial Institutions has announced that the maximum effective rate of interest per annum for home loans, as established by the General Assembly in 1987 under Public Chapter 291, is set at 8.31 percent for the month of September 2024.
This rate is calculated as four percentage points above the index of market yields of long-term government bonds, adjusted to a thirty-year maturity by the U.S. Department of the Treasury. Based on the most recent weekly average statistical data available prior to this announcement, the calculated rate is 4.31 percent.
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Individuals affected by this maximum effective rate of interest for home loans should seek legal advice regarding the impact of the Depository Institutions Deregulation and Monetary Control Act of 1980 (P.L. 96-221 as amended by P.L. 96-399) and the related regulations issued by the Federal Home Loan Bank Board. It is important to note that state usury laws concerning certain loans made after March 31, 1980, may be preempted by this Act.
For further information, please contact Alica Owen, the Public Information Officer at the Tennessee Department of Financial Institutions, at (615) 289-4738.
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