New law modifies residential mortgage loan fees and penalties

A new law modifies the application of certain residential mortgage loan fees and penalties.

It clarifies that subdivisions 1 and 2 of Section 58.137 of state statutes don’t apply to residential mortgage loans if the loan is for investment purposes only; the borrower, guarantor or cosigner don’t occupy the residential real property; and the seller doesn’t continue to occupy the residential real property after the sale.

It also defines a debt service coverage ratio loan as a mortgage that isn’t a qualified mortgage under federal law, secured by investment property and where the loan is made based on the money the investment property will generate.

The law takes effect Aug. 1, 2026, and applies to residential mortgage loans executed on or after that date.

It’s sponsored by Rep. Keith Allen (R-Kenyon) and Sen. Zach Duckworth (R-Lakeville).

HF3437*/SF4168/CH58

HF3437* / SF4168 / CH58