Usury

Criminal usury is committed when interest greater than 20% per year is charged on a loan. Excludes certain loans whose rate of interest is regulated by certain other provisions. M.G.L. c. 271, §49

"The statute has been interpreted as including most loan-related charges and fees within the 20 percent interest limitation. See Begelfer v. Najarian, 381 Mass. 177, 409 N.E.2d 167 (1980) (late charges and attorney fees); Allegheny Int'l Credit Corp. v. Bio Energy of Lincoln, Inc., 21 Mass.App.Ct. 155, 162--63, 485 N.E.2d 965, 969--70 (1985) (consulting costs for a loan may be included); Beach Assocs. v. Fauser, 9 Mass.App.Ct. 386, 401 N.E.2d 858 (1980) (finding twenty percent was legal limit allowed on loan, where Attorney General was not advised of transaction and interest rate was not otherwise statutorily regulated). The statute provides an exception to the twenty percent cap on interest rates where the lender notifies the Attorney General of his intent to charge a higher interest rate and the lender maintains records of the transaction. See Begelfer v. Najarian, 381 Mass. 177, 409 N.E.2d 167 (1980) (permitting parties to contract for amount of interest greater than 20 percent so long as lender complies with statutory registration and record-keeping requirements).

This statute trumps the provisions of G.L. c. 107, ' 3, which provides that the parties may agree to pay any rate of interest. Begelfer v. Najarian, 381 Mass. 177, 409 N.E.2d 167 (1980). Violation of the criminal usury law may result in the obligation being unenforceable, G.L. c. 271, ' 49(c), although the courts have equitable powers to reduce the rate of interest to an amount that would comply with the law--i.e., 20 percent per annum or less--and in some instances have done so. See, e.g., Beach Assocs. v. Fauser, 9 Mass.App.Ct. 386, 401 N.E.2d 858 (1980)."