HF 2062

as introduced - 90th Legislature (2017 - 2018) Posted on 03/02/2017 01:30pm

A bill for an act
relating to commerce; regulating applicants and licensees; amending Minnesota
Statutes 2016, sections 47.54, subdivision 1; 52.07; 53B.10, subdivision 1; 53B.13;
58.02, subdivision 18; 58.04, subdivision 1; 58.11, subdivision 2; 58A.02,
subdivision 8; 58A.03, subdivision 2; 58A.04, by adding a subdivision; 58A.05;
58A.13; 58A.16, subdivision 1; 332.54; 332.55; 332.57, subdivision 1; proposing
coding for new law in Minnesota Statutes, chapter 45; repealing Minnesota Statutes
2016, section 332.57, subdivision 2.

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

Section 1.

new text begin [45.18] LICENSEE REGISTRATION WITH NMLS.
new text end

new text begin A licensee under sections 47.60; 47.62, subdivision 3; 53.03; 53C.02; 56.02; 59A.03;
332.30; 332.54; 332A.04; 332B.04; and chapters 53A; 53B; 58; and 58A, must also register
with and maintain a valid identifier with the Nationwide Multistate Licensing System and
Registry.
new text end

Sec. 2.

Minnesota Statutes 2016, section 47.54, subdivision 1, is amended to read:

Subdivision 1.

Application.

new text begin (a) new text end Any bank desiring to establish a detached facility shall
execute and acknowledge a written application in the form prescribed by the commissioner
and shall file the application in the commissioner's office with a fee of $500. new text begin Unless the
publication requirements of this paragraph do not apply pursuant to paragraph (b), new text end the
applicant shall within 30 days of the receipt of the form prescribed by the commissioner
publish a notice of the filing of the application in a qualified newspaper published in the
municipality in which the proposed detached facility is to be located, and if there is no such
newspaper, then in a qualified newspaper likely to give notice in the municipality in which
the proposed detached facility is to be located.

new text begin (b) The publication requirements in paragraph (a) do not apply to an applicant whose
application is to establish a detached facility in the same or a similar market as the main
banking house with the same business plan in effect if the applicant has received a composite
rating of 1 or 2 under the Uniform Financial Institutions Rating System as a result of its
most recent federal or state examination.
new text end

Sec. 3.

Minnesota Statutes 2016, section 52.07, is amended to read:

52.07 FISCAL YEAR; MEETINGS; VOTING.

The fiscal year of all credit unions shall end December 31. General and special meetings
may be held in the manner and for the purposes indicated in the bylaws. At least ten days
before any regular meeting, and at least seven days before any special meeting, written
notice shall be mailed or handed to each member, and in the case of a special meeting, the
notice shall clearly state the purpose of the meeting and what matters will be considered
thereat. No member shall be eligible to vote at any meeting or to hold any office unless the
member owns at least one share of the credit union which is fully paid. At all meetings a
member shall have but a single vote, whatever the member's share holdings. Upon resolution
of the board of directors, credit union members shall be authorized to vote by mail new text begin or by
electronic means new text end for election of directors, credit committee and supervisory members and
amendments to bylaws at annual and special meetings. There shall be no voting by proxy.
Any firm, society or corporation having a membership in the credit union and entitled to
vote may cast its vote by one person upon presentation of written authority of the firm,
society or corporation.

Sec. 4.

Minnesota Statutes 2016, section 53B.10, subdivision 1, is amended to read:

Subdivision 1.

Investigation.

Upon the filing of a complete application, the commissioner
shall investigate the financial condition and responsibility, financial and business experience,
character, and general fitness of the applicant. The commissioner may conduct an on-site
investigation of the applicant, the reasonable cost of which must be borne by the applicant.
If the commissioner finds that the requirements imposed by this chapter have been met and
that the required license fee has been paid, the commissioner shall issue a license to the
applicant authorizing the applicant to engage in the licensed activities in this state for deleted text begin a deleted text end new text begin an
annually renewable new text end term of one year new text begin , ending on December 31 of the calendar year the license
is issued new text end . If these requirements have not been met, the commissioner shall deny the
application in writing, setting forth the reasons for the denial.

Sec. 5.

Minnesota Statutes 2016, section 53B.13, is amended to read:

53B.13 CHANGES IN CONTROL OF A LICENSEE.

Any purchaser of ten percent or more of an ownership interest in a licensee must notify
the commissioner at least 30 days in advance of the purchase and submit a completed license
application new text begin on a new text end form new text begin prescribed by the commissioner new text end . The commissioner may revoke the
license if the new ownership would have resulted in a denial of the initial license under this
chapter. The commissioner may waive this notification requirement if, in the commissioner's
discretion, the change in control does not pose any risk to the interests of the public.

Sec. 6.

Minnesota Statutes 2016, section 58.02, subdivision 18, is amended to read:

Subd. 18.

Residential mortgage loan.

"Residential mortgage loan" means a loan deleted text begin secured
primarily by either: (1) a mortgage on residential real property; or (2) certificates of stock
or other evidence of ownership interest in and proprietary lease from corporations,
partnerships, or other forms of business organizations formed for the purpose of cooperative
ownership of residential real property deleted text end new text begin primarily for personal, family, or household use that
is secured by a mortgage, deed of trust, or other equivalent consensual security interest on
a dwelling, as defined in United States Code, title 15, section 1602(v), or residential real
estate upon which a dwelling is constructed or intended to be constructed new text end .

Sec. 7.

Minnesota Statutes 2016, section 58.04, subdivision 1, is amended to read:

Subdivision 1.

Residential mortgage originator licensing requirements.

(a) No person
shall act as a residential mortgage originator, or make residential mortgage loans without
first obtaining a license from the commissioner according to the licensing procedures
provided in this chapter.

(b) A licensee must be either a partnership, limited liability partnership, association,
limited liability company, corporation, or other form of business organization, and must
have and maintain a surety bond in the amounts prescribed under section 58.08.

(c) The following persons are exempt from the residential mortgage originator licensing
requirements:

(1) a person who is not in the business of making residential mortgage loans and who
makes no more than three such loans, with its own funds, during any 12-month period;

(2) a financial institution as defined in section 58.02, subdivision 10;

(3) an agency of the federal government, or of a state or municipal government;

(4) an employee or employer pension plan making loans only to its participants;

(5) a person acting in a fiduciary capacity, such as a trustee or receiver, as a result of a
specific order issued by a court of competent jurisdiction; deleted text begin or
deleted text end

new text begin (6) a company that is sponsoring independent loan processors or underwriters; or
new text end

deleted text begin (6) deleted text end new text begin (7) new text end a person exempted by order of the commissioner.

Sec. 8.

Minnesota Statutes 2016, section 58.11, subdivision 2, is amended to read:

Subd. 2.

Timely renewal.

(a) A person whose application is properly and timely filed
who has not received notice of denial of renewal is considered approved for renewal and
the person may continue to transact business as a residential mortgage originator or servicer
whether or not the renewed license has been received on or before January 1 of the renewal
year. Application for renewal of a license is considered timely filed if received by the
commissioner by, or mailed with proper postage and postmarked by, December 15 of the
renewal year. An application for renewal is considered properly filed if made upon forms
duly executed and sworn to, accompanied by fees prescribed by this chapter, and containing
any information that the commissioner requires.

(b) A person who fails to make a timely application for renewal of a license and who
has not received the renewal license as of January 1 of the renewal year is unlicensed until
the renewal license has been deleted text begin issued deleted text end new text begin approved new text end by the commissioner deleted text begin and is received by the
person deleted text end .

Sec. 9.

Minnesota Statutes 2016, section 58A.02, subdivision 8, is amended to read:

Subd. 8.

Nationwide deleted text begin Mortgage deleted text end new text begin Multistate new text end Licensing System and Registry.

"Nationwide deleted text begin Mortgage deleted text end new text begin Multistate new text end Licensing System and Registry" means a mortgage
licensing system developed and maintained by the Conference of State Bank Supervisors
and the American Association of Residential Mortgage Regulators for the licensing and
registration of licensed mortgage loan originators.

Sec. 10.

Minnesota Statutes 2016, section 58A.03, subdivision 2, is amended to read:

Subd. 2.

Exemptions.

The following are exempt from this chapter:

(1) a registered mortgage loan originator, when acting for an entity described in section
58A.02, subdivision 12, clause (1);

(2) an individual who offers or negotiates terms of a residential mortgage loan with or
on behalf of an immediate family member of the individual;

(3) an individual who offers or negotiates terms of a residential mortgage loan secured
by a dwelling that served as the individual's residence;

(4) a licensed attorney who negotiates the terms of a residential mortgage loan on behalf
of a client as an ancillary matter to the attorney's representation of the client, unless the
attorney is compensated by a lender, a mortgage broker, or other mortgage loan originator
or by any agent of the lender, mortgage broker, or other mortgage loan originator; and

(5) deleted text begin an employee of a nonprofit organization exempt from taxation under section 501(c)(3)
of the Internal Revenue Code of 1986, or a local unit of government, that is not otherwise
engaged in the mortgage loan business, engaged in the financing of housing for low- and
moderate-income households or housing counseling under programs designed specifically
for those purposes, to the extent exempted by the commissioner by rule, advisory ruling,
or interpretation, after taking into consideration any law, rule, advisory ruling, or
interpretation by the United States Department of Housing and Urban Development deleted text end new text begin an
individual exempt from licensing by the states pursuant to United States Code, title 12,
section 1008.103 new text end .

Sec. 11.

Minnesota Statutes 2016, section 58A.04, is amended by adding a subdivision to
read:

new text begin Subd. 1a. new text end

new text begin Change of circumstances. new text end

new text begin An applicant for a license shall notify the
commissioner of every material change in the facts or in the documents on which its
application is based within ten days of the change.
new text end

Sec. 12.

Minnesota Statutes 2016, section 58A.05, is amended to read:

58A.05 ISSUANCE OF LICENSE.

The commissioner shall not issue a mortgage loan originator license unless the
commissioner finds at a minimum, that:

(1) the applicant has never had a mortgage loan originator license revoked in a
governmental jurisdiction, except that a subsequent formal vacation of a revocation shall
not be deemed a revocation;

(2) the applicant has not been convicted of, or pled guilty or nolo contendere to, a felony
in a domestic, foreign, or military court:

(i) during the seven-year period preceding the date of the application for licensing and
registration;

(ii) at any time preceding the date of application, if the felony involved an act of fraud,
dishonesty, or a breach of trust, or money laundering; or

(iii) provided that a pardon of a conviction new text begin or an expungement of a conviction new text end is not a
conviction for purposes of this clause;

(3) the applicant has demonstrated financial responsibility, character, and general fitness
such as to command the confidence of the community and to warrant a determination that
the mortgage loan originator will operate honestly, fairly, and efficiently within the purposes
of this chapter. For purposes of this chapter, a person has shown that the person is not
financially responsible when the person has shown a disregard in the management of the
person's own financial condition. A determination that an individual has not shown financial
responsibility may include, but is not limited to:

(i) current outstanding judgments, except judgments solely as a result of medical
expenses;

(ii) current outstanding tax liens or other government liens and filings;

(iii) foreclosures within the past three years; and

(iv) a pattern of seriously delinquent accounts within the past three years;

(4) the applicant has completed the prelicensing education requirement described in
section 58A.06;

(5) the applicant has passed a written test that meets the test requirement described in
section 58A.07; and

(6) the applicant has met the surety bond requirement as required under section 58A.13.

Sec. 13.

Minnesota Statutes 2016, section 58A.13, is amended to read:

58A.13 SURETY BOND REQUIRED.

Subdivision 1.

Coverage, form, and rules.

(a) Each mortgage loan originator must be
covered by a surety bond meeting the requirements of deleted text begin this deleted text end section new text begin 58.08 new text end . In the event that
the mortgage loan originator is an employee or exclusive agent of a person subject to this
chapter, the surety bond of the person subject to this chapter can be used in lieu of the
mortgage loan originator's surety bond requirement.

(b) The surety bond shall provide coverage for each mortgage loan originator in an
amount as prescribed in subdivision 2.

(c) The surety bond must be in a form as prescribed by the commissioner.

Subd. 2.

Penal sum of surety bond.

The penal sum of the surety bond must be maintained
in an amount deleted text begin that reflects the dollar amount of loans originated as determined by the
commissioner deleted text end new text begin required by section 58.08, subdivision 1a, paragraph (c) new text end .

Subd. 3.

Action on bond.

When an action is commenced on a deleted text begin licensee's deleted text end new text begin residential
mortgage originator new text end bond the commissioner may require the filing of a new bond.

Subd. 4.

New bond.

Immediately upon recovery upon any action on the bond the licensee
shall file a new bond.

Sec. 14.

Minnesota Statutes 2016, section 58A.16, subdivision 1, is amended to read:

Subdivision 1.

Generally.

It is a violation of this chapter for a person or individual
subject to this chapter to:

(1) directly or indirectly employ any scheme, device, or artifice to defraud or mislead
borrowers or lenders or to defraud any person;

(2) engage in any unfair or deceptive practice toward any person;

(3) obtain property by fraud or misrepresentation;

(4) solicit or enter into a contract with a borrower that provides in substance that the
person or individual subject to this chapter may earn a fee or commission through "best
efforts" to obtain a loan even though no loan is actually obtained for the borrower;

(5) solicit, advertise, or enter into a contract for specific interest rates, points, or other
financing terms unless the terms are actually available at the time of soliciting, advertising,
or contracting;

(6) conduct any business covered by this chapter without holding a valid license as
required under this chapter, or assist or aide and abet any person in the conduct of business
under this chapter without a valid license as required under this chapter;

(7) fail to make disclosures as required by this chapter and any other applicable state or
federal law or regulations;

(8) fail to comply with this chapter or rules adopted under this chapter or fail to comply
with any other state or federal law or regulations applicable to any business authorized or
conducted under this chapter;

(9) make, in any manner, any false or deceptive statement or representation including,
with regard to the rates, points, or other financing terms or conditions for a residential
mortgage loan; or engage in bait-and-switch advertising;

(10) negligently make a false statement or knowingly and willfully make an omission
of material fact in connection with any information or reports filed with a governmental
agency or the Nationwide Mortgage Licensing System and Registry or in connection with
an investigation conducted by the commissioner or another governmental agency;

(11) make a payment, threat, or promise, directly or indirectly, to a person for the purposes
of influencing the independent judgment of the person in connection with a residential
mortgage loan, or make a payment threat or promise, directly or indirectly, to an appraiser
of a property, for the purposes of influencing the independent judgment of the appraiser
with respect to the value of the property;

(12) collect, charge, attempt to collect or charge, or use or propose an agreement
purporting to collect or charge a fee prohibited by this chapter;

(13) cause or require a borrower to obtain property insurance coverage in an amount
that exceeds the replacement cost of the improvements as established by the property insurer;
deleted text begin or
deleted text end

(14) fail to truthfully account for money belonging to a party to a residential mortgage
loan transaction deleted text begin . deleted text end new text begin ; or
new text end

new text begin (15) fail to include the valid unique identifier issued by the NMLS on all documents and
communications including, but not limited to, forms, solicitations, advertisements, business
cards, and Web sites.
new text end

Sec. 15.

Minnesota Statutes 2016, section 332.54, is amended to read:

332.54 deleted text begin REGISTRATION deleted text end new text begin LICENSING new text end .

Subdivision 1.

Filing.

It is unlawful for any credit services organization to offer, advertise,
or execute or cause to be executed by a consumer any contract in this state unless the credit
services organization at the time of the offer, advertisement, sale, or execution of a contract
has been properly deleted text begin registered deleted text end new text begin licensed new text end with the commissioner.

Subd. 2.

Disclosure.

The deleted text begin registration deleted text end new text begin license application new text end must contain the following
information:

(1) the name and address of the credit services organization;

(2) the name and address of the registered agent authorized to accept service of process
on behalf of the credit services organization;

(3) the name and address of any person who directly or indirectly owns or controls a ten
percent or greater interest in the credit services organization;

(4) the name and address of the surety company that issued the bond required under
section 332.55; and

(5) full disclosure of any litigation or unresolved complaint filed within the preceding
five years with the state, any other state, or the United States relating to the operation of the
credit services organization, or a notarized statement that there has been no litigation or
unresolved complaint filed within the preceding five years with the state, any other state,
or the United States relating to the operation of the credit services organization.

Subd. 3.

Additional information.

The credit services organization must attach to the
deleted text begin registration statement deleted text end new text begin license application new text end a copy of the contract which the credit services
organization intends to execute with its consumers and evidence of the required bond.

Subd. 4.

Update of information.

The credit services organization must update the
deleted text begin registration statement deleted text end new text begin information in the license application new text end required under this section not
later than deleted text begin 90 deleted text end new text begin 30 new text end days after the date from which a change in the information required in the
deleted text begin statement deleted text end new text begin application new text end occurs.

Subd. 5.

Buyer inspection.

Each credit services organization registering under this
section must maintain a copy of the deleted text begin registration statement deleted text end new text begin license application new text end in its files.
The credit services organization must allow a buyer to inspect the deleted text begin registration statement deleted text end new text begin
license application new text end on request.

Subd. 6.

Term.

deleted text begin Registration deleted text end new text begin A license new text end issued or renewed by the commissioner of
commerce under sections 332.52 to 332.60 expires on June 30 of each year.

Subd. 7.

Fees.

The fee for a credit services organization's deleted text begin registration deleted text end new text begin license new text end is $1,000
for issuance or renewal for each location of business.

Sec. 16.

Minnesota Statutes 2016, section 332.55, is amended to read:

332.55 BOND.

A credit services organization must submit to the commissioner at the time of deleted text begin registration deleted text end new text begin
licensing new text end , an annual surety bond of $10,000, expiring on June 30 of each year, by an
insurance company which is authorized by the state of Minnesota to transact the business
of fidelity and surety insurance. The credit services organization must be the obligor. The
bond must benefit the state of Minnesota and any person who may have a cause of action
against the obligor arising out of the obligor's activities as a credit services organization.
deleted text begin The commissioner may accept a deposit in cash, or securities that may be legally purchased
by savings banks or for trust funds of an aggregate market value equal to the bond
requirement, in lieu of the surety bond. The cash or securities must be deposited with the
commissioner of management and budget.
deleted text end

Sec. 17.

Minnesota Statutes 2016, section 332.57, subdivision 1, is amended to read:

Subdivision 1.

Requirement.

Before the execution of a contract or agreement between
the buyer and a credit services organization or before the receipt by the credit services
organization of any money or other valuable consideration, whichever occurs first, the credit
services organization shall provide the buyer with a statement in writing containing all of
the information required deleted text begin by subdivision 2 deleted text end new text begin in the disclosure required under United States
Code, title 15, section 1679c new text end . The credit services organization shall maintain on file for a
period of two years an exact copy of the statement, personally signed by the buyer,
acknowledging receipt of a copy of the statement.

Sec. 18. new text begin REVISOR'S INSTRUCTION.
new text end

new text begin The revisor of statutes shall change the term "Nationwide Mortgage Licensing System
and Registry" or similar term to "Nationwide Multistate Licensing System and Registry"
wherever the term appears in Minnesota Statutes, chapter 58A.
new text end

Sec. 19. new text begin REPEALER.
new text end

new text begin Minnesota Statutes 2016, section 332.57, subdivision 2, new text end new text begin is repealed.
new text end

APPENDIX

Repealed Minnesota Statutes: 17-0092

332.57 DISCLOSURE STATEMENT.

Subd. 2.

Contents.

The disclosure statement required under subdivision 1 must be printed in boldface and in at least 10-point type and must include the following statement:

"CONSUMER CREDIT FILE RIGHTS UNDER MINNESOTA AND FEDERAL LAW

You have a right to obtain a copy of your credit report from a credit bureau. You may be charged a reasonable fee. There is no fee, however, if you have been turned down for credit, employment, insurance, or a rental dwelling because of information in your credit report within the preceding 30 days. The credit bureau must provide someone to help you interpret the information in your credit file.

You have a right to dispute inaccurate information by contacting the credit bureau directly. However, neither you nor any "credit repair" company or credit services organization has the right to have accurate, current, and verifiable information removed from your credit bureau report. Under the federal Fair Credit Reporting Act, the credit bureau must remove accurate, negative information from your report only if it is over seven years old. Bankruptcy can be reported for ten years.

You have a right to sue a credit repair company that violates Minnesota's Credit Services Organization Act. This law prohibits deceptive practices by credit repair companies and gives you a right to cancel your contract for any reason within five working days from the date you signed it.

Credit bureaus are required to follow reasonable procedures to ensure that creditors report information accurately. However, mistakes may occur.

You may, on your own, notify a credit bureau in writing that you dispute the accuracy of information in your credit file. The credit bureau must then reinvestigate and modify or remove inaccurate information. The credit bureau may not charge any fee for this service. Any pertinent information and copies of any documents you have concerning an error should be given to the credit bureau.

If reinvestigation does not resolve the dispute to your satisfaction, you may send a brief statement to the credit bureau to keep in your file, explaining why you think the record is inaccurate. The credit bureau must include your statement about disputed information with any reports it issues about you."