Amends TCA Title 47.

DEFINITION OF HOME LOAN AND MAXIMUM RATES<br /> <br /> Present law provides that the maximum effective rate of interest per annum for home loans is set at an amount equal to two percentage points above the most recent weighted average yield of the accepted offers of the Federal National Mortgage Association's current free market system auction for commitments to purchase conventional home mortgages as determined pursuant to existing law. However, if the Federal National Mortgage Association discontinues the conduct of the auction, then the maximum effective rate of interest per annum for home loans must be set at an amount equal to four percentage points above the index of market yields of long term government bonds adjusted to a 30 year maturity by the department of the treasury. This bill deletes these provisions.<br /> <br /> Present law prohibits the maximum effective rate of interest per annum for home loans from exceeding 18 percent per annum.<br /> <br /> Present law further authorizes home loan contracts to which the law regarding interest on home loans applies to provide for the payment of a fixed rate of interest, a variable rate of interest, or any combination of fixed and variable rates in any sequence.<br /> <br /> As used in the present law, a "home loan" means a loan which (i) is secured by real estate owned and occupied by the borrower for family residential purposes and which may include not more than three additional residential units and (ii) is amortized over a period greater than 181 months. This bill changes the present law by requiring a home loan to be amortized over a period greater than 241 months, instead of 181 months, and requiring the loan to be a closed-end loan.<br /> <br /> DETERMINATION OF RATES<br /> <br /> Present law requires the maximum effective rate of interest per annum for home loans to be determined by the commissioner of financial institutions ("commissioner") on or before the twentieth day of each month and to be in effect during the following calendar month. The commissioner, upon making such determination, must promptly make an official announcement of such rate and must publish such announcement in such manner as the commissioner may deem appropriate, thereafter causing the same to be published in the Tennessee Administrative Register. Such rate must remain in effect until the next official announcement and publication.<br /> <br /> Present law prohibits the determination by the commissioner as provided in the provisions above from being deemed a "rule" within the meaning of the Uniform Administrative Procedures Act, and such action of the commissioner is exempt from the Uniform Administrative Procedures Act.<br /> <br /> Present law provides that, in contracting for interest pursuant to the maximum effective rate of interest per annum for home loans, any person is entitled to rely upon the formula rate announced or published by the commissioner.<br /> <br /> This bill deletes the above provisions entirely.<br />