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Committee hears amendment to raise single‑service charge cap on subordinate loans to federal QM level
Summary
Senate File 2296 would exempt qualified‑mortgage subordinate liens from Minnesota's 1% single‑service‑charge cap and align state law with the federal qualified mortgage standard; the committee laid the bill over for further consideration.
Senate Commerce and Consumer Protection Committee members heard Senate File 2296 on March 20, 2025, a bill to modify the state cap on single service charges for certain subordinate (second‑lien) mortgages.
Senator Howell presented an A1 author's amendment to align Minnesota’s single‑service‑charge cap with the federal qualified mortgage (QM) standard, which effectively would permit fees up to the QM tolerances for loans that meet QM requirements while leaving the 1% cap in place for loans that do not meet federal QM criteria. Michael Stidham of Rocket Mortgage testified the change would help lenders economically originate low‑balance subordinate lien products that are currently difficult to underwrite under a 1% cap.
Testimony emphasized the consumer‑protection intent of the federal QM standard and the challenges created by current market conditions, including higher first‑lien interest rates and low housing supply that leave homeowners seeking subordinate financing to modify or stay in their homes. Rocket Mortgage said the amendment is technical and intended to narrow the scope of the change to federally defined QM loans; Taft Advisors and the Minnesota Mortgage Association provided support according to the record.
Senator Klein and other committee members accepted the amendment; the committee laid Senate File 2296 as amended over for further consideration.
