HF 1195

1st Engrossment - 87th Legislature (2011 - 2012) Posted on 04/06/2011 10:44am

A bill for an act
relating to commerce; authorizing the imposition of certain fees and charges in
connection with certain loan transactions; amending Minnesota Statutes 2010,
section 47.59, subdivision 6.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1.

Minnesota Statutes 2010, section 47.59, subdivision 6, is amended to read:

Subd. 6.

Additional charges.

(a) For purposes of this subdivision, "financial
institution" includes a person described in subdivision 4, paragraph (a). In addition to the
finance charges permitted by this section, a financial institution may contract for and
receive the following additional charges that may be included in the principal amount
of the loan or credit sale unpaid balances:

(1) official fees and taxes;

(2) charges for insurance as described in paragraph (b);

(3) with respect to a loan or credit sale contract secured by real estate, the following
"closing costs," if they are bona fide, reasonable in amount, and not for the purpose of
circumvention or evasion of this section:

(i) fees or premiums for title examination, abstract of title, title insurance, surveys,
or similar purposes;

(ii) fees for preparation of a deed, mortgage, settlement statement, or other
documents, if not paid to the financial institution;

(iii) escrows for future payments of taxes, including assessments for improvements,
insurance, and water, sewer, and land rents;

(iv) fees for notarizing deeds and other documents;

(v) appraisal and credit report fees; and

(vi) fees for determining whether any portion of the property is located in a flood
zone and fees for ongoing monitoring of the property to determine changes, if any,
in flood zone status;

(4) a delinquency charge on a payment, including the minimum payment due in
connection with open-end credit, not paid in full on or before the tenth day after its due
date in an amount not to exceed five percent of the amount of the payment or $5.20,
whichever is greater;

(5) for a returned check or returned automatic payment withdrawal request, an
amount not in excess of the service charge limitation in section 604.113, except that, on
a loan transaction that is a consumer small loan as defined in section 47.60, subdivision
1, paragraph (a), in which cash is advanced in exchange for a personal check, the civil
penalty provisions of section 604.113, subdivision 2, paragraph (b), may not be demanded
or assessed against the borrower; deleted text begin and
deleted text end

(6) charges for other benefits, including insurance, conferred on the borrower that
are of a type that is not for credit new text begin ; and
new text end

new text begin (7) except on an unsecured loan transaction that is either a "consumer small loan"
as defined in section 47.60, subdivision 1, paragraph (a), or a loan transaction that is a
"consumer short-term loan" as defined in section 47.601, subdivision 1, paragraph (d),
such other fees and charges as may be contracted for between a licensee and a borrower,
including without limitation, application fees, underwriting fees, processing fees, service
fees, and storage fees new text end .

(b) An additional charge may be made for insurance written in connection with the
loan or credit sale contract, which may be included in the principal amount of the loan or
credit sale unpaid balances:

(1) with respect to insurance against loss of or damage to property, or against
liability arising out of the ownership or use of property, if the financial institution furnishes
a clear, conspicuous, and specific statement in writing to the borrower setting forth the
cost of the insurance if obtained from or through the financial institution and stating that
the borrower may choose the person through whom the insurance is to be obtained;

(2) with respect to credit insurance or mortgage insurance providing life, accident,
health, or unemployment coverage, if the insurance coverage is not required by the
financial institution, and this fact is clearly and conspicuously disclosed in writing to
the borrower, and the borrower gives specific, dated, and separately signed affirmative
written indication of the borrower's desire to do so after written disclosure to the borrower
of the cost of the insurance; and

(3) with respect to the vendor's single interest insurance, but only (i) to the extent
that the insurer has no right of subrogation against the borrower; and (ii) to the extent that
the insurance does not duplicate the coverage of other insurance under which loss is
payable to the financial institution as its interest may appear, against loss of or damage
to property for which a separate charge is made to the borrower according to clause (1);
and (iii) if a clear, conspicuous, and specific statement in writing is furnished by the
financial institution to the borrower setting forth the cost of the insurance if obtained from
or through the financial institution and stating that the borrower may choose the person
through whom the insurance is to be obtained.

(c) In addition to the finance charges and other additional charges permitted by
this section, a financial institution may contract for and receive the following additional
charges in connection with open-end credit, which may be included in the principal
amount of the loan or balance upon which the finance charge is computed:

(1) annual charges, not to exceed $50 per annum, payable in advance, for the
privilege of opening and maintaining open-end credit;

(2) charges for the use of an automated teller machine;

(3) charges for any monthly or other periodic payment period in which the borrower
has exceeded or, except for the financial institution's dishonor would have exceeded,
the maximum approved credit limit, in an amount not in excess of the service charge
permitted in section 604.113;

(4) charges for obtaining a cash advance in an amount not to exceed the service
charge permitted in section 604.113; and

(5) charges for check and draft copies and for the replacement of lost or stolen
credit cards.

(d) In addition to the finance charges and other additional charges permitted by this
section, a financial institution may contract for and receive a onetime loan administrative
fee not exceeding $25 in connection with closed-end credit, which may be included in the
principal balance upon which the finance charge is computed. This paragraph applies only
to closed-end credit in an original principal amount of $4,320 or less. The determination
of an original principal amount must exclude the administrative fee contracted for and
received according to this paragraph.