The Federal National Mortgage Association has ceased its free market auction system for commitments to purchase conventional home mortgages. As a result, Commissioner Gonzales of the Financial Institutions has announced the maximum effective interest rate for home loans for February 2025. This rate, determined by the General Assembly in 1987 through Public Chapter 291, is set at 8.79% per annum.
This rate is calculated by adding four percentage points to the index of market yields of long-term government bonds, which are adjusted to a 30-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 base rate stands at 4.79%.
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Individuals affected by this interest rate should seek legal advice to understand the implications of the Depository Institutions Deregulation and Monetary Control Act of 1980, along with its amendments and the regulations set 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 overridden by this Act.
For further information, individuals can contact Alica Owen, Public Information Officer at the Tennessee Department of Financial Institutions, at (615) 289-4738.
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