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 preemption.

Missouri is under federal preemption 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 preemption 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 preemption, 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.