Michigan Compiled Laws

Mich. Comp. Laws § 438.31a (2026)

Payment of reasonable and necessary charges in addition to interest; exceptions.

✓ current as of July 2026

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INTEREST RATES

Act 326 of 1966

438.31a Payment of reasonable and necessary charges in addition to interest; exceptions.

Sec. 1a.

A state or national bank, except as federal law and regulation provide otherwise, insurance company, or lender approved as a mortgagee under the national housing act, 12 U.S.C. 1701 to 1750g, or regulated by a federal agency, may require a borrower to pay reasonable and necessary charges which are the actual expenses incurred by the lender in connection with the making, closing, disbursing, extending, readjusting, or renewing of a loan. The charges shall be in addition to interest authorized by law, and are not a part of the interest collected or agreed to be paid on the loan within the meaning of a law of this state which limits the rate of interest which may be exacted in a transaction. Reasonable and necessary charges shall consist of recording fees; title examination or title insurance; the preparation of a deed, appraisal, or credit report; plus a loan processing fee. The charges shall be paid only once by the borrower to either the seller of the mortgage or the lender. A charge for inspection required by a local unit of government shall be paid by the seller and shall not be charged to the borrower. This section does not apply to a corporation organized under Act No. 156 of the Public Acts of 1964, as amended, being sections 489.501 to 489.920 of the Michigan Compiled Laws, or a federally chartered savings and loan association.

History: Add. 1968, Act 266, Imd. Eff. July 1, 1968 ;-- Am. 1969, Act 255, Imd. Eff. Aug. 11, 1969 ;-- Am. 1978, Act 27, Imd. Eff. Feb. 24, 1978

PopularName Notes:

Usury Act

Notes of Decisions

Cited in 4 cases (1 in the last 5 years), 1984–2021 · leading case: Newton v. Bank West, 686 N.W.2d 491 (Mich. Ct. App. 2004).

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Newton v. Bank West, 686 N.W.2d 491 (Mich. Ct. App. 2004). “In reaching our conclusion, we acknowledge plaintiffs reference to MCL 438.31a when arguing that the mortgage transactions were not specifically authorized.”

Newton v. West, 686 N.W.2d 491 (Mich. Ct. App. 2004). “[5] In reaching our conclusion, we acknowledge plaintiff's reference to MCL 438.31a when arguing that the mortgage transactions were not specifically authorized.”

Butcher v. City of Detroit, 347 N.W.2d 702 (Mich. Ct. App. 1984). “” Plaintiffs arguments are therefore unconvincing. Due Process — Unconstitutional Taking of Property The term "property” as used in the Due Process Clause "includes not only title and possession, but also the rights of acquisition and control, the right to make any legitimate…”

Soaring Pine Capital Real Est. v. Park Street Grp. Realty (Mich. Ct. App. 2021). “MCL 438.31a. Under that statute, “[r]easonable and necessary charges” that “consist of recording fees; title examination or title insurance; the preparation of a deed, appraisal, or credit report; plus a loan processing fee,” are not considered interest.”

Annotations are extracted automatically from the opinions in the Syfert caselaw corpus and ranked by authority, recency, and treatment. Dots show Syfertize treatment of the citing case itself.