SENATE BILL NO. 640


   June 9, 1999, Introduced by Senator MC MANUS and referred to the
        Committee on Financial Services.



        A bill to amend 1966 PA 326, entitled

   "An act to regulate the rate of interest of money; to provide
   exceptions; to prescribe the rights of parties; and to repeal
   certain acts and parts of acts,"

   by amending section 1 (MCL 438.31).

               THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

 1         Sec. 1.  (1)  The interest of money shall be at the
             rate of

 2     $5.00 upon $100.00 for a year, and at the same rate for a
                       greater

 3     or less sum, and for a longer or shorter time, except that
                       in all

 4     cases it shall be lawful for the parties to stipulate in
                       writing

 5     for the payment of any rate of interest, not exceeding 7%
                       per

 6     annum.  This act shall not apply to the rate of interest on
                       any

 7     note, bond or other evidence of indebtedness issued by any
                       corpo-

 8     ration, association or person, the issue and rate of
                       interest of

 9     which have been expressly authorized by the public service

10     commission or the securities bureau of the department of


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 1    commerce, or is regulated by any other law of this state, or
             of

 2     the United States, nor shall it apply to any time price
                       differen-

 3     tial which may be charged upon sales of goods or services on

 4     credit.  This act shall not be construed to repeal section
                       78 of

 5     Act No.  327 of the Public Acts of 1931, as amended, being
                       sec-

 6     tion 450.78 of the Compiled Laws of 1948.  EXCEPT
                       AS OTHERWISE

 7    PROVIDED BY LAW, THE RATE OF INTEREST ALLOWED TO BE CHARGED ON A

 8    NOTE, BOND, OR ANY OTHER FORM OF INDEBTEDNESS SHALL NOT EXCEED 1

 9    PERCENTAGE POINT OVER THE PRIME RATE DURING THE CONTRACTUAL

10    PERIOD OF THE INDEBTEDNESS.

11         (2) This act  shall  DOES not render unlawful
              ,  the pur-

12    chase of  any  A note, bond, or other evidence of
             indebtedness

13     theretofore  issued by any borrower  not
             then  WHO WAS NOT domi-

14    ciled in this state,  which bear any  ON THE DATE
             THE INDEBTED-

15    NESS WAS ISSUED IF THE rate of interest  which is 
             WAS lawful

16    under the  law  LAWS of the domicile of the
             borrower  at  ON the

17    date  of issue thereof, and in such case any such 
             THAT THE

18    INDEBTEDNESS WAS ISSUED.  THE rate of interest ALLOWED UNDER THE

19    INDEBTEDNESS may be charged and received by  any person,
             firm,

20     corporation or association in this state  THE
                       PURCHASER OF THE

21    INDEBTEDNESS.















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