Michigan Amends Loan Referral Fee Requirements under the Regulatory Loan Act

The Michigan legislature recently enacted Senate Bill (SB) 238, which revises loan referral fee requirements under the Regulatory Loan Act. SB 238 becomes effective on February 19, 2018.

The Regulatory Loan Act applies to consumer loans made to Michigan consumers at interest rates in excess of otherwise allowable rates.  SB 238 amends the Regulatory Loan Act to allow a licensee to pay a fee to a person who locates a potential borrower for, or introduces or refers a potential borrower to, the licensee, as long as both of the following conditions are met: (1) the potential borrower is not directly or indirectly charged for the fee, in whole or in part, if he or she enters into a loan with the licensee; and (2) the fee does not exceed $500.

Currently, R 493.20 of the Michigan Administrative Code prohibits licensees from paying for loan applications or recommendations.  SB 238 supersedes that rule and allows licensees to pay referral fees under the conditions and limitations described above.

The full text of SB 238 is available here.