Usury: What does it apply to?

Most lenders are exempt from Missouri’s usury law. It applies only to junior mortgages under $2,500, a non-incorporated business loan of less than $5,000 not made pursuant to the Small Loan Act, a loan of less than $5,000 secured by crops, non-processed farm products, farm machinery or equipment and first mortgages made by lenders that don’t qualify for the federal pre-emption.

Missouri is under federal pre-emption on first mortgage loans per Public Law 96-221, so if a lender qualifies, there is no limit on rate or points. Lenders who qualify for federal pre-emption are: any insured bank, savings and loan, or credit union, or any who have made $1 million in real estate loans in the past year. If a lender does not qualify for federal pre-emption, the limit is the usury rate plus 1 point per Sections 408.030 and 408.052 RSMo. The usury is the greater of the market rate or 10%. The interest rate on second mortgages is deregulated (by agreement of the parties, Section 408.232 RSMo) - maximum point is five points per Section 408.233.1(5) RSMo.

The Division of Finance updates the usury rate quarterly.