HF 2095

1st Engrossment - 83rd Legislature (2003 - 2004) Posted on 12/15/2009 12:00am

  1.1                          A bill for an act 
  1.2             relating to mortgage foreclosure; providing for 
  1.3             rescission of foreclosure consultant contracts; 
  1.4             regulating foreclosure consultant contracts; providing 
  1.5             remedies for foreclosure violations; requiring 
  1.6             foreclosure purchasers to enter foreclosure 
  1.7             reconveyances in the form of written contracts; 
  1.8             regulating foreclosure contracts; prohibiting certain 
  1.9             foreclosure purchaser practices; providing enforcement 
  1.10            remedies; requiring certain foreclosure notices; 
  1.11            imposing criminal penalties; amending Minnesota 
  1.12            Statutes 2002, section 580.03; proposing coding for 
  1.13            new law in Minnesota Statutes, chapter 580; proposing 
  1.14            coding for new law as Minnesota Statutes, chapter 325N.
  1.15  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.16                      FORECLOSURE CONSULTANTS 
  1.17     Section 1.  [325N.01] [INTENT AND PURPOSE.] 
  1.18     (a) The legislature finds and declares that homeowners 
  1.19  whose residences are in foreclosure are subject to fraud, 
  1.20  deception, harassment, and unfair dealing by foreclosure 
  1.21  consultants from the time of the beginning of foreclosure 
  1.22  proceedings until the time of the foreclosure sale.  Foreclosure 
  1.23  consultants represent that they can assist homeowners who have 
  1.24  defaulted on obligations secured by their residences.  These 
  1.25  foreclosure consultants, however, often charge high fees, the 
  1.26  payment of which is often secured by a mortgage on the residence 
  1.27  to be saved, and perform no service or essentially a worthless 
  1.28  service.  Homeowners, relying on the foreclosure consultants' 
  1.29  promises of help, take no other action, are diverted from lawful 
  1.30  businesses which could render beneficial services, and often 
  2.1   lose their homes, sometimes to the foreclosure consultants who 
  2.2   purchase homes at a fraction of their value before the sale. 
  2.3      (b) The legislature further finds and declares that 
  2.4   foreclosure consultants have a significant impact on the economy 
  2.5   of this state and on the welfare of its citizens. 
  2.6      (c) The intent and purposes of sections 325N.01 to 325N.10 
  2.7   are to require that foreclosure consultant service agreements be 
  2.8   expressed in writing, to safeguard the public against deceit and 
  2.9   financial hardship, to permit rescission of foreclosure 
  2.10  consultation contracts, to prohibit representations that tend to 
  2.11  mislead, and to encourage fair dealing in the rendition of 
  2.12  foreclosure services. 
  2.13     (d) Sections 325N.01 to 325N.10 must be liberally construed 
  2.14  to effectuate this intent and to achieve these purposes. 
  2.15     Sec. 2.  [325N.02] [DEFINITIONS.] 
  2.16     The definitions in paragraphs (a) to (h) apply to sections 
  2.17  325N.01 to 325N.10. 
  2.18     (a) "Foreclosure consultant" means any person who, directly 
  2.19  or indirectly, makes any solicitation, representation, or offer 
  2.20  to any owner to perform for compensation or who, for 
  2.21  compensation, performs any service which the person in any 
  2.22  manner represents will in any manner do any of the following: 
  2.23     (1) stop or postpone the foreclosure sale; 
  2.24     (2) obtain any forbearance from any beneficiary or 
  2.25  mortgagee; 
  2.26     (3) assist the owner to exercise the right or reinstatement 
  2.27  provided in section 580.30; 
  2.28     (4) obtain any extension of the period within which the 
  2.29  owner may reinstate the owner's obligation; 
  2.30     (5) obtain any waiver of an acceleration clause contained 
  2.31  in any promissory note or contract secured by a mortgage on a 
  2.32  residence in foreclosure or contained in the mortgage; 
  2.33     (6) assist the owner in foreclosure or loan default to 
  2.34  obtain a loan or advance of funds; 
  2.35     (7) avoid or ameliorate the impairment of the owner's 
  2.36  credit resulting from the recording of a notice of default or 
  3.1   the conduct of a foreclosure sale; or 
  3.2      (8) save the owner's residence from foreclosure. 
  3.3      (b) A foreclosure consultant does not include any of the 
  3.4   following: 
  3.5      (1) a person licensed to practice law in this state when 
  3.6   the person renders service in the course of his or her practice 
  3.7   as an attorney-at-law; 
  3.8      (2) a person licensed as a debt prorater under sections 
  3.9   332.12 to 332.29, when the person is acting as a debt prorater 
  3.10  as defined in these sections; 
  3.11     (3) a person licensed as a real estate broker or 
  3.12  salesperson under chapter 82 when the person engages in acts 
  3.13  whose performance requires licensure under that chapter unless 
  3.14  the person is engaged in offering services designed to, or 
  3.15  purportedly designed to, enable the owner to retain possession 
  3.16  of the residence in foreclosure; 
  3.17     (4) a person licensed as an accountant under chapter 326A 
  3.18  when the person is acting in any capacity for which the person 
  3.19  is licensed under those provisions; 
  3.20     (5) a person or the person's authorized agent acting under 
  3.21  the express authority or written approval of the Department of 
  3.22  Housing and Urban Development or other department or agency of 
  3.23  the United States or this state to provide services; 
  3.24     (6) a person who holds or is owed an obligation secured by 
  3.25  a lien on any residence in foreclosure when the person performs 
  3.26  services in connection with this obligation or lien if the 
  3.27  obligation or lien did not arise as the result of or as part of 
  3.28  a proposed foreclosure reconveyance; 
  3.29     (7) any person or entity doing business under any law of 
  3.30  this state, or of the United States relating to banks, trust 
  3.31  companies, savings and loan associations, industrial loan and 
  3.32  thrift companies, regulated lenders, credit unions, insurance 
  3.33  companies, or a mortgagee which is a United States Department of 
  3.34  Housing and Urban Development approved mortgagee and any 
  3.35  subsidiary or affiliate of these persons or entities, and any 
  3.36  agent or employee of these persons or entities while engaged in 
  4.1   the business of these persons or entities; 
  4.2      (8) a person licensed as a residential mortgage originator 
  4.3   or servicer pursuant to chapter 58, when acting under the 
  4.4   authority of that license or a foreclosure purchaser as defined 
  4.5   in section 325N.12; and 
  4.6      (9) a nonprofit agency or organization that offers 
  4.7   counseling or advice to an owner of a home in foreclosure or 
  4.8   loan default if they do not contract for services with 
  4.9   for-profit lenders or foreclosure purchasers. 
  4.10     (c) "Foreclosure reconveyance" means a transaction 
  4.11  involving: 
  4.12     (1) the transfer of title to real property by a foreclosed 
  4.13  homeowner during a foreclosure proceeding, either by transfer of 
  4.14  interest from the foreclosed homeowner or by creation of a 
  4.15  mortgage or other lien or encumbrance during the foreclosure 
  4.16  process that allows the acquirer to obtain title to the property 
  4.17  by redeeming the property as a junior lienholder; and 
  4.18     (2) the subsequent conveyance, or promise of a subsequent 
  4.19  conveyance, of an interest back to the foreclosed homeowner by 
  4.20  the acquirer or a person acting in participation with the 
  4.21  acquirer that allows the foreclosed homeowner to possess the 
  4.22  real property following the completion of the foreclosure 
  4.23  proceeding, which interest includes, but is not limited to, an 
  4.24  interest in a contract for deed, purchase agreement, option to 
  4.25  purchase, or lease. 
  4.26     (d) "Person" means any individual, partnership, 
  4.27  corporation, limited liability company, association, or other 
  4.28  group, however organized. 
  4.29     (e) "Service" means and includes, but is not limited to, 
  4.30  any of the following: 
  4.31     (1) debt, budget, or financial counseling of any type; 
  4.32     (2) receiving money for the purpose of distributing it to 
  4.33  creditors in payment or partial payment of any obligation 
  4.34  secured by a lien on a residence in foreclosure; 
  4.35     (3) contacting creditors on behalf of an owner of a 
  4.36  residence in foreclosure; 
  5.1      (4) arranging or attempting to arrange for an extension of 
  5.2   the period within which the owner of a residence in foreclosure 
  5.3   may cure the owner's default and reinstate his or her obligation 
  5.4   pursuant to section 580.30; 
  5.5      (5) arranging or attempting to arrange for any delay or 
  5.6   postponement of the time of sale of the residence in 
  5.7   foreclosure; 
  5.8      (6) advising the filing of any document or assisting in any 
  5.9   manner in the preparation of any document for filing with any 
  5.10  bankruptcy court; or 
  5.11     (7) giving any advice, explanation, or instruction to an 
  5.12  owner of a residence in foreclosure, which in any manner relates 
  5.13  to the cure of a default in or the reinstatement of an 
  5.14  obligation secured by a lien on the residence in foreclosure, 
  5.15  the full satisfaction of that obligation, or the postponement or 
  5.16  avoidance of a sale of a residence in foreclosure, pursuant to a 
  5.17  power of sale contained in any mortgage. 
  5.18     (f) "Residence in foreclosure" means residential real 
  5.19  property consisting of one to four family dwelling units, one of 
  5.20  which the owner occupies as his or her principal place of 
  5.21  residence, and against which there is an outstanding notice of 
  5.22  pendency of foreclosure, recorded pursuant to section 580.032, 
  5.23  or against which a summons and complaint has been served under 
  5.24  chapter 581. 
  5.25     (g) "Owner" means the record owner of the residential real 
  5.26  property in foreclosure at the time the notice of pendency was 
  5.27  recorded, or the summons and complaint served. 
  5.28     (h) "Contract" means any agreement, or any term in any 
  5.29  agreement, between a foreclosure consultant and an owner for the 
  5.30  rendition of any service as defined in paragraph (d). 
  5.31     Sec. 3.  [325N.03] [RESCISSION OF FORECLOSURE CONSULTANT 
  5.32  CONTRACT.] 
  5.33     (a) In addition to any other right under law to rescind a 
  5.34  contract, an owner has the right to cancel such a contract until 
  5.35  midnight of the third business day after the day on which the 
  5.36  owner signs a contract which complies with section 325N.04. 
  6.1      (b) Cancellation occurs when the owner gives written notice 
  6.2   of cancellation to the foreclosure consultant at the address 
  6.3   specified in the contract. 
  6.4      (c) Notice of cancellation, if given by mail, is effective 
  6.5   when deposited in the mail properly addressed with postage 
  6.6   prepaid. 
  6.7      (d) Notice of cancellation given by the owner need not take 
  6.8   the particular form as provided with the contract and, however 
  6.9   expressed, is effective if it indicates the intention of the 
  6.10  owner not to be bound by the contract. 
  6.11     Sec. 4.  [325N.04] [CONTRACT.] 
  6.12     (a) Every contract must be in writing and must fully 
  6.13  disclose the exact nature of the foreclosure consultant's 
  6.14  services and the total amount and terms of compensation. 
  6.15     (b) The following notice, printed in at least 14-point 
  6.16  boldface type and completed with the name of the foreclosure 
  6.17  consultant, must be printed immediately above the statement 
  6.18  required by paragraph (c): 
  6.19                "NOTICE REQUIRED BY MINNESOTA LAW 
  6.20                    .............. (Name) or anyone working
  6.21                    for him or her CANNOT:
  6.22                    (1) Take any money from you or ask you 
  6.23                    for money until ................ (Name)
  6.24                    has completely finished doing everything
  6.25                    he or she said he or she would do; and
  6.26                    (2) Ask you to sign or have you sign any  
  6.27                    lien, mortgage, or deed."
  6.28     (c) The contract must be written in the same language as 
  6.29  principally used by the foreclosure consultant to describe his 
  6.30  or her services or to negotiate the contract, must be dated and 
  6.31  signed by the owner, and must contain in immediate proximity to 
  6.32  the space reserved for the owner's signature a conspicuous 
  6.33  statement in a size equal to at least 10-point bold type, as 
  6.34  follows: 
  6.35     "You, the owner, may cancel this transaction at any time 
  6.36     prior to midnight of the third business day after the date 
  7.1      of this transaction.  See the attached notice of 
  7.2      cancellation form for an explanation of this right." 
  7.3      (d) The contract must contain on the first page, in a type 
  7.4   size no smaller than that generally used in the body of the 
  7.5   document, each of the following: 
  7.6      (1) the name and address of the foreclosure consultant to 
  7.7   which the notice of cancellation is to be mailed; and 
  7.8      (2) the date the owner signed the contract. 
  7.9      (e) The contract must be accompanied by a completed form in 
  7.10  duplicate, captioned "notice of cancellation," which must be 
  7.11  attached to the contract, must be easily detachable, and must 
  7.12  contain in at least ten-point type the following statement 
  7.13  written in the same language as used in the contract: 
  7.14                     "NOTICE OF CANCELLATION 
  7.15                ....................................
  7.16                 (Enter date of transaction) (Date)
  7.17               You may cancel this transaction, without
  7.18            any penalty or obligation, within three 
  7.19            business days from the above date.
  7.20                To cancel this transaction, mail or deliver
  7.21            a signed and dated copy of this cancellation
  7.22            notice, or any other written notice
  7.23            to ...................................... 
  7.24                 (Name of foreclosure consultant)
  7.25            at .................................................. 
  7.26           (Address of foreclosure consultant's place of business)
  7.27            NOT LATER THAN MIDNIGHT OF ..........................
  7.28                                                   (Date)
  7.29            I hereby cancel this transaction .................. 
  7.30                                                   (Date)
  7.31                      ............................. 
  7.32                           (Owner's signature)"
  7.33     (f) The foreclosure consultant shall provide the owner with 
  7.34  a copy of the contract and the attached notice of cancellation 
  7.35  immediately upon execution of the contract. 
  7.36     (g) The three business days during which the owner may 
  8.1   cancel the contract shall not begin to run until the foreclosure 
  8.2   consultant has complied with this section. 
  8.3      Sec. 5.  [325N.05] [VIOLATIONS.] 
  8.4      It is a violation for a foreclosure consultant to: 
  8.5      (1) claim, demand, charge, collect, or receive any 
  8.6   compensation until after the foreclosure consultant has fully 
  8.7   performed each and every service the foreclosure consultant 
  8.8   contracted to perform or represented he or she would perform; 
  8.9      (2) claim, demand, charge, collect, or receive any fee, 
  8.10  interest, or any other compensation for any reason which exceeds 
  8.11  eight percent per annum of the amount of any loan which the 
  8.12  foreclosure consultant may make to the owner; 
  8.13     (3) take any wage assignment, any lien of any type on real 
  8.14  or personal property, or other security to secure the payment of 
  8.15  compensation.  Any such security is void and unenforceable; 
  8.16     (4) receive any consideration from any third party in 
  8.17  connection with services rendered to an owner unless the 
  8.18  consideration is first fully disclosed to the owner; 
  8.19     (5) acquire any interest, directly or indirectly, or by 
  8.20  means of a subsidiary or affiliate in a residence in foreclosure 
  8.21  from an owner with whom the foreclosure consultant has 
  8.22  contracted; 
  8.23     (6) take any power of attorney from an owner for any 
  8.24  purpose, except to inspect documents as provided by law; or 
  8.25     (7) induce or attempt to induce any owner to enter a 
  8.26  contract which does not comply in all respects with sections 
  8.27  325N.03 and 325N.04. 
  8.28     Sec. 6.  [325N.06] [WAIVER NOT ALLOWED.] 
  8.29     Any waiver by an owner of the provisions of sections 
  8.30  325N.01 to 325N.10 is void and unenforceable as contrary to 
  8.31  public policy.  Any attempt by a foreclosure consultant to 
  8.32  induce an owner to waive the owner's rights is a violation of 
  8.33  sections 325N.01 to 325N.10. 
  8.34     Sec. 7.  [325N.07] [REMEDIES.] 
  8.35     (a) A violation of sections 325N.01 to 325N.10 is 
  8.36  considered to be a violation of section 325F.69, and all 
  9.1   remedies of section 8.31 are available for such an action.  A 
  9.2   private cause of action under section 8.31 by a foreclosed 
  9.3   homeowner is in the public interest.  An owner may bring an 
  9.4   action against a foreclosure consultant for any violation of 
  9.5   sections 325N.01 to 325N.10.  Judgment must be entered for 
  9.6   actual damages, reasonable attorney fees and costs, and 
  9.7   appropriate equitable relief.  The court also may, in its 
  9.8   discretion, award exemplary damages and if the court determines 
  9.9   that exemplary damages are appropriate it shall award exemplary 
  9.10  damages equivalent to at least 1-1/2 times the compensation 
  9.11  charged by the foreclosure consultant in violation of section 
  9.12  325N.05, paragraph (1), (2), or (4). 
  9.13     (b) The rights and remedies provided in paragraph (a) are 
  9.14  cumulative to, and not a limitation of, any other rights and 
  9.15  remedies provided by law.  Any action brought pursuant to this 
  9.16  section must be commenced within four years from the date of the 
  9.17  alleged violation. 
  9.18     Sec. 8.  [325N.08] [PENALTY.] 
  9.19     Any person who commits any violation described in section 
  9.20  325N.05 may, upon conviction, be fined not more than $10,000 or 
  9.21  imprisoned not more than one year or both.  Prosecution or 
  9.22  conviction for any violation described in section 325N.05 will 
  9.23  not bar prosecution or conviction for any other offenses.  These 
  9.24  penalties are cumulative to any other remedies or penalties 
  9.25  provided by law. 
  9.26     Sec. 9.  [325N.09] [PROVISIONS SEVERABLE.] 
  9.27     If any provision of sections 325N.01 to 325N.10 or the 
  9.28  application of any of these provisions to any person or 
  9.29  circumstance is held to be unconstitutional and void, the 
  9.30  remainder of sections 325N.01 to 325N.10 remains valid. 
  9.31     Sec. 10.  [325N.10] [LIABILITY.] 
  9.32     (a) Any provision in a contract which attempts or purports 
  9.33  to require arbitration of any dispute arising under sections 
  9.34  325N.01 to 325N.10 is void at the option of the owner. 
  9.35     (b) This section applies to any contract entered into on or 
  9.36  after August 1, 2004. 
 10.1                        FORECLOSURE PURCHASERS 
 10.2      Sec. 11.  [325N.11] [INTENT AND PURPOSE.] 
 10.3      (a) The legislature finds and declares that homeowners 
 10.4   whose residences are in foreclosure have been subjected to 
 10.5   fraud, deception, and unfair dealing by people selling 
 10.6   foreclosure reconveyance transactions.  The recent rapid 
 10.7   escalation of home values, particularly in the metropolitan 
 10.8   areas, has resulted in a significant increase in home equities 
 10.9   which are usually the greatest financial asset held by the 
 10.10  homeowners of this state.  During the foreclosure process, 
 10.11  homeowners in financial distress are vulnerable to unfair 
 10.12  practices by people who induce homeowners who possess equity in 
 10.13  their homes to sell their homes for less than fair market value 
 10.14  through the use of schemes that involve oral and written 
 10.15  misrepresentations, deceit, and other unreasonable commercial 
 10.16  practices. 
 10.17     (b) The legislature declares that it is the express policy 
 10.18  of the state to preserve and guard the precious asset of home 
 10.19  equity, as well as the social and economic value of 
 10.20  homeownership. 
 10.21     (c) The legislature further finds that foreclosure 
 10.22  purchasers have a significant impact upon the economy and 
 10.23  well-being of this state and its local communities, and the 
 10.24  provisions of sections 325N.11 to 325N.19 are necessary to 
 10.25  promote the public welfare. 
 10.26     (d) The intent and purposes of sections 325N.11 to 325N.19 
 10.27  are to provide each homeowner with information necessary to make 
 10.28  an informed and intelligent decision regarding the sale of his 
 10.29  or her home to a foreclosure purchaser; to require that the 
 10.30  sales agreement be expressed in writing; to safeguard the public 
 10.31  against deceit and financial hardship; to insure, foster, and 
 10.32  encourage fair dealing in the sale and purchase of homes in 
 10.33  foreclosure; to prohibit representations that tend to mislead; 
 10.34  to prohibit or restrict unfair contract terms; to afford 
 10.35  homeowners a reasonable and meaningful opportunity to rescind 
 10.36  sales to foreclosure purchasers; and to preserve and protect 
 11.1   home equities for the homeowners of this state. 
 11.2      (e) Sections 325N.11 to 325N.19 must be liberally construed 
 11.3   effectuate this intent and to achieve these purposes. 
 11.4      Sec. 12.  [325N.12] [DEFINITIONS.] 
 11.5      Subdivision 1.  [SCOPE.] For the purposes of sections 
 11.6   325N.12 to 325N.19, the terms defined in this section have the 
 11.7   meanings given them. 
 11.8      Subd. 2.  [FORECLOSED HOMEOWNER.] "Foreclosed homeowner" 
 11.9   means an owner of residential real property, including a 
 11.10  condominium, that is the primary residence of the owner and 
 11.11  whose mortgage on the real property is or was in foreclosure. 
 11.12     Subd. 3.  [FORECLOSURE RECONVEYANCE.] "Foreclosure 
 11.13  reconveyance" means a transaction involving: 
 11.14     (1) the transfer of title to real property by a foreclosed 
 11.15  homeowner during a foreclosure proceeding, either by transfer of 
 11.16  interest from the foreclosed homeowner or by creation of a 
 11.17  mortgage or other lien or encumbrance during the foreclosure 
 11.18  process that allows the acquirer to obtain title to the property 
 11.19  by redeeming the property as a junior lienholder; and 
 11.20     (2) the subsequent conveyance, or promise of a subsequent 
 11.21  conveyance, of an interest back to the foreclosed homeowner by 
 11.22  the acquirer or a person acting in participation with the 
 11.23  acquirer that allows the foreclosed homeowner to possess the 
 11.24  real property following the completion of the foreclosure 
 11.25  proceeding, which interest includes, but is not limited to, an 
 11.26  interest in a contract for deed, purchase agreement, option to 
 11.27  purchase, or lease. 
 11.28     Subd. 4.  [FORECLOSURE PURCHASER.] "Foreclosure purchaser" 
 11.29  means a person that has acted as the acquirer in more than one 
 11.30  foreclosure reconveyance during any 24-month period.  
 11.31  Foreclosure purchaser also includes a person that has acted in 
 11.32  joint venture or joint enterprise with one or more acquirers in 
 11.33  more than one foreclosure reconveyance during any 24-month 
 11.34  period.  A federal or state chartered bank, savings bank, 
 11.35  thrift, or credit union is not a foreclosure purchaser. 
 11.36     Sec. 13.  [325N.13] [CONTRACT REQUIREMENT; FORM AND 
 12.1   LANGUAGE.] 
 12.2      A foreclosure purchaser shall enter into every foreclosure 
 12.3   reconveyance in the form of a written contract.  Every contract 
 12.4   must be written in letters of a size equal to at least 12-point 
 12.5   boldface type, in the same language principally used by the 
 12.6   foreclosure purchaser and foreclosed homeowner to negotiate the 
 12.7   sale of the residence in foreclosure and must be fully completed 
 12.8   and signed and dated by the foreclosed homeowner and foreclosure 
 12.9   purchaser before the execution of any instrument of conveyance 
 12.10  of the residence in foreclosure. 
 12.11     Sec. 14.  [325N.14] [CONTRACT TERMS.] 
 12.12     Every contract required by section 325N.13 must contain the 
 12.13  entire agreement of the parties and must include the following 
 12.14  terms: 
 12.15     (1) the name, business address, and the telephone number of 
 12.16  the foreclosure purchaser; 
 12.17     (2) the address of the residence in foreclosure; 
 12.18     (3) the total consideration to be given by the foreclosure 
 12.19  purchaser in connection with or incident to the sale; 
 12.20     (4) a complete description of the terms of payment or other 
 12.21  consideration including, but not limited to, any services of any 
 12.22  nature that the foreclosure purchaser represents he or she will 
 12.23  perform for the foreclosed homeowner before or after the sale; 
 12.24     (5) the time at which possession is to be transferred to 
 12.25  the foreclosure purchaser; 
 12.26     (6) a complete description of the terms of any related 
 12.27  agreement designed to allow the foreclosed homeowner to remain 
 12.28  in the home, such as a rental agreement, repurchase agreement, 
 12.29  contract for deed, or lease with option to buy; 
 12.30     (7) a notice of cancellation as provided in section 
 12.31  325N.16, paragraph (b); and 
 12.32     (8) the following notice in at least 14-point boldface 
 12.33  type, if the contract is printed or in capital letters if the 
 12.34  contract is typed, and completed with the name of the 
 12.35  foreclosure purchaser, immediately above the statement required 
 12.36  by section 325N.16, paragraph (a): 
 13.1                 "NOTICE REQUIRED BY MINNESOTA LAW 
 13.2      Until your right to cancel this contract has ended, ....... 
 13.3      (Name) or anyone working for ....... (Name) CANNOT ask you 
 13.4      to sign or have you sign any deed or any other document." 
 13.5      The contract required by this section survives delivery of 
 13.6   any instrument of conveyance of the residence in foreclosure, 
 13.7   and has no effect on persons other than the parties to the 
 13.8   contract. 
 13.9      Sec. 15.  [325N.15] [CONTRACT CANCELLATION.] 
 13.10     (a) In addition to any other right of rescission, the 
 13.11  foreclosed homeowner has the right to cancel any contract with a 
 13.12  foreclosure purchaser until midnight of the fifth business day 
 13.13  following the day on which the foreclosed homeowner signs a 
 13.14  contract that complies with sections 325N.11 to 325N.17 or until 
 13.15  8:00 a.m. on the last day of the period during which the 
 13.16  foreclosed homeowner has a right of redemption, whichever occurs 
 13.17  first. 
 13.18     (b) Cancellation occurs when the foreclosed homeowner 
 13.19  delivers, by any means, written notice of cancellation to the 
 13.20  address specified in the contract. 
 13.21     (c) A notice of cancellation given by the foreclosed 
 13.22  homeowner need not take the particular form as provided with the 
 13.23  contract and, however express, is effective if it indicates the 
 13.24  intention of the foreclosed homeowner not to be bound by the 
 13.25  contract. 
 13.26     (d) Within ten days following receipt of a notice of 
 13.27  cancellation given in accordance with this section, the 
 13.28  foreclosure purchaser shall return without condition any 
 13.29  original contract and any other documents signed by the 
 13.30  foreclosed homeowner. 
 13.31     Sec. 16.  [325N.16] [NOTICE OF CANCELLATION.] 
 13.32     (a) The contract must contain in immediate proximity to the 
 13.33  space reserved for the foreclosed homeowner's signature a 
 13.34  conspicuous statement in a size equal to at least 14-point 
 13.35  boldface type, if the contract is printed, or in capital 
 13.36  letters, if the contract is typed, as follows: 
 14.1                "You may cancel this contract for the sale
 14.2             of your house without any penalty or obligation
 14.3             at any time before
 14.4             ..............................................
 14.5                       (Date and time of day)
 14.6             See the attached notice of cancellation form
 14.7             for an explanation of this right."
 14.8   The foreclosure purchaser shall accurately enter the date and 
 14.9   time of day on which the cancellation right ends. 
 14.10     (b) The contract must be accompanied by a completed form in 
 14.11  duplicate, captioned "notice of cancellation" in a size equal to 
 14.12  a 12-point boldface type if the contract is printed, or in 
 14.13  capital letters, if the contract is typed, followed by a space 
 14.14  in which the foreclosure purchaser shall enter the date on which 
 14.15  the foreclosed homeowner executes any contract.  This form must 
 14.16  be attached to the contract, must be easily detachable, and must 
 14.17  contain in type of at least 10 points, if the contract is 
 14.18  printed or in capital letters if the contract is typed, the 
 14.19  following statement written in the same language as used in the 
 14.20  contract: 
 14.21                     "NOTICE OF CANCELLATION 
 14.22                ....................................
 14.23                     (Enter date contract signed)
 14.24               You may cancel this contract for the sale
 14.25            of your house, without any penalty or
 14.26            obligation, at any time before
 14.27            ...........................................
 14.28                   (Enter date and time of day)
 14.29                To cancel this transaction, personally
 14.30            deliver a signed and dated copy of this
 14.31            cancellation notice to
 14.32            ......................................... 
 14.33                       (Name of purchaser)
 14.34            at ............................................... 
 14.35             (Street address of purchaser's place of business)
 14.36            NOT LATER THAN ............................
 15.1                            (Enter date and time of day)
 15.2             I hereby cancel this transaction .................... 
 15.3                                                    (Date)
 15.4                         ............................. 
 15.5                             (Seller's signature)"
 15.6      (c) The foreclosure purchaser shall provide the foreclosed 
 15.7   homeowner with a copy of the contract and the attached notice of 
 15.8   cancellation at the time the contract is executed by all parties.
 15.9      (d) The five business days during which the foreclosed 
 15.10  homeowner may cancel the contract must not begin to run until 
 15.11  all parties to the contract have executed the contract and the 
 15.12  foreclosure purchaser has complied with this section. 
 15.13     Sec. 17.  [325N.17] [WAIVER.] 
 15.14     Any waiver of the provisions of sections 325N.11 to 315N.19 
 15.15  is void and unenforceable as contrary to public policy except a 
 15.16  consumer may waive the five-day right to cancel provided in 
 15.17  section 325N.15 if the property is subject to a foreclosure sale 
 15.18  within the five business days, and the foreclosed homeowner 
 15.19  agrees to waive his or her right to cancel in a handwritten 
 15.20  statement signed by all parties holding title to the foreclosed 
 15.21  property. 
 15.22     Sec. 18.  [325N.175] [LIABILITY.] 
 15.23     (a) Any provision in a contract which attempts or purports 
 15.24  to require arbitration of any dispute arising under sections 
 15.25  325N.11 to 325N.19 is void at the option of the owner. 
 15.26     (b) This section applies to any contract entered into on or 
 15.27  after August 1, 2004. 
 15.28     Sec. 19.  [325N.18] [PROHIBITED PRACTICES.] 
 15.29     A foreclosure purchaser shall not: 
 15.30     (a) enter into, or attempt to enter into, a foreclosure 
 15.31  reconveyance with a foreclosed homeowner unless: 
 15.32     (1) the foreclosure purchaser verifies and can demonstrate 
 15.33  that the foreclosed homeowner has a reasonable ability to pay 
 15.34  for the subsequent conveyance of an interest back to the 
 15.35  foreclosed homeowner.  In the case of a lease with an option to 
 15.36  purchase, payment ability also includes the reasonable ability 
 16.1   to make the lease payments and purchase the property within the 
 16.2   term of the option to purchase.  There is a rebuttable 
 16.3   presumption that the foreclosure purchaser has not verified 
 16.4   reasonable payment ability if the foreclosure purchaser has not 
 16.5   obtained documents other than a statement by the foreclosed 
 16.6   homeowner of assets, liabilities, and income; 
 16.7      (2) the foreclosure purchaser and the foreclosed homeowner 
 16.8   complete a closing for any foreclosure reconveyance in which the 
 16.9   foreclosure purchaser obtains a deed or mortgage from a 
 16.10  foreclosed homeowner.  For purposes of this section, "closing" 
 16.11  means an in-person meeting to complete final documents incident 
 16.12  to the sale of the real property or creation of a mortgage on 
 16.13  the real property conducted by a closing agent, as defined in 
 16.14  section 82.17, who is not employed by or an affiliate of the 
 16.15  foreclosure purchaser; 
 16.16     (3) the foreclosure purchaser obtains the written consent 
 16.17  of the foreclosed homeowner to a grant by the foreclosure 
 16.18  purchaser of any interest in the property during such times as 
 16.19  the foreclosed homeowner maintains any interest in the property; 
 16.20  and 
 16.21     (4) the foreclosure purchaser complies with the 
 16.22  requirements of the federal Home Ownership Equity Protection 
 16.23  Act, United States Code, title 15, section 1639, or its 
 16.24  implementing regulation, Code of Federal Regulations, title 12, 
 16.25  sections 226.31 to 226.34, for any foreclosure reconveyance in 
 16.26  which the foreclosed homeowner obtains a vendee interest in a 
 16.27  contract for deed; 
 16.28     (b) fail to either: 
 16.29     (1) ensure that title to the subject dwelling has been 
 16.30  reconveyed to the foreclosed homeowner; or 
 16.31     (2) make a payment to the foreclosed homeowner such that 
 16.32  the foreclosed homeowner has received consideration in an amount 
 16.33  of at least 85 percent of the fair market value of the property 
 16.34  within 120 days of either the eviction or voluntary 
 16.35  relinquishment of possession of the dwelling by the foreclosed 
 16.36  homeowner.  For purposes of this provision, the following 
 17.1   applies: 
 17.2      (i) there is a rebuttable presumption that an appraisal by 
 17.3   a person licensed or certified by an agency of the federal 
 17.4   government or this state to appraise real estate constitutes the 
 17.5   fair market value of the property; 
 17.6      (ii) the fair market value amount shall be determined at 
 17.7   the time of the execution of the foreclosure reconveyance 
 17.8   contract; and 
 17.9      (iii) "consideration" shall mean any payment or thing of 
 17.10  value provided to the foreclosed homeowner, including unpaid 
 17.11  rent or contract for deed payments owed by the foreclosed 
 17.12  homeowner, reasonable costs paid to third parties necessary to 
 17.13  complete the foreclosure reconveyance transaction, payment of 
 17.14  money to satisfy a debt or legal obligation of the foreclosed 
 17.15  homeowner, or the reasonable cost of repairs for damage to the 
 17.16  dwelling caused by the foreclosed homeowner; but 
 17.17     (iv) "consideration" shall not include amounts imputed as a 
 17.18  downpayment or fee to the foreclosure purchaser, or a person 
 17.19  acting in participation with the foreclosure purchaser, incident 
 17.20  to a contract for deed, lease, or option to purchase entered 
 17.21  into as part of the foreclosure reconveyance, except for 
 17.22  reasonable costs paid to third parties necessary to complete the 
 17.23  foreclosure reconveyance; 
 17.24     (c) enter into repurchase or lease terms as part of the 
 17.25  subsequent conveyance that are unfair or commercially 
 17.26  unreasonable, or engages in any other unfair conduct; 
 17.27     (d) represent, directly or indirectly, that: 
 17.28     (1) the foreclosure purchaser is acting as an advisor or a 
 17.29  consultant, or in any other manner represents that the 
 17.30  foreclosure purchaser is acting on behalf of the homeowner; 
 17.31     (2) the foreclosure purchaser has certification or 
 17.32  licensure that the foreclosure purchaser does not have, or that 
 17.33  the foreclosure purchaser is not a member of a licensed 
 17.34  profession if that is untrue; 
 17.35     (3) the foreclosure purchaser is assisting the foreclosed 
 17.36  homeowner to "save the house" or substantially similar phrase; 
 18.1   or 
 18.2      (4) the foreclosure purchaser is assisting the foreclosed 
 18.3   homeowner in preventing a completed foreclosure if the result of 
 18.4   the transaction is that the foreclosed homeowner will not 
 18.5   complete a redemption of the property; 
 18.6      (e) make any other statements, directly or by implication, 
 18.7   or engage in any other conduct that is false, deceptive, or 
 18.8   misleading, or that has the likelihood to cause confusion or 
 18.9   misunderstanding, including, but not limited to, statements 
 18.10  regarding the value of the residence in foreclosure, the amount 
 18.11  of proceeds the foreclosed homeowner will receive after a 
 18.12  foreclosure sale, any contract term, or the foreclosed 
 18.13  homeowner's rights or obligations incident to or arising out of 
 18.14  the foreclosure reconveyance; or 
 18.15     (f) do any of the following until the time during which the 
 18.16  foreclosed homeowner may cancel the transaction has fully 
 18.17  elapsed: 
 18.18     (1) accept from any foreclosed homeowner an execution of, 
 18.19  or induce any foreclosed homeowner to execute, any instrument of 
 18.20  conveyance of any interest in the residence in foreclosure; 
 18.21     (2) record with the county recorder or file with the 
 18.22  registrar of titles any document, including but not limited to, 
 18.23  any instrument of conveyance, signed by the foreclosed 
 18.24  homeowner; 
 18.25     (3) transfer or encumber or purport to transfer or encumber 
 18.26  any interest in the residence in foreclosure to any third party, 
 18.27  provided no grant of any interest or encumbrance is defeated or 
 18.28  affected as against a bona fide purchaser or encumbrance for 
 18.29  value and without notice of a violation of sections 325N.11 to 
 18.30  325N.19, and knowledge on the part of any such person or entity 
 18.31  that the property was "residential real property in foreclosure" 
 18.32  does not constitute notice of a violation of sections 325N.11 to 
 18.33  325N.19.  This section does not abrogate any duty of inquiry 
 18.34  which exists as to rights or interests of persons in possession 
 18.35  of the residential real property in foreclosure; or 
 18.36     (4) pay the foreclosed homeowner any consideration. 
 19.1      Sec. 20.  [325N.19] [ENFORCEMENT.] 
 19.2      Subdivision 1.  [REMEDIES.] A violation of sections 325N.12 
 19.3   to 325N.18 is considered to be a violation of section 325F.69, 
 19.4   and all the remedies of section 8.31 are available for such an 
 19.5   action.  A private right of action under section 8.31 by a 
 19.6   foreclosed homeowner is in the public interest.  
 19.7      Subd. 2.  [EXEMPLARY DAMAGES.] In a private right of action 
 19.8   under section 8.31 for a violation of section 325N.18, the court 
 19.9   may award exemplary damages of any amount.  In the event the 
 19.10  court determines that an award of exemplary damages is 
 19.11  appropriate, the amount of exemplary damages awarded shall not 
 19.12  be less than 1-1/2 times the foreclosed homeowner's actual 
 19.13  damages.  Any claim for exemplary damages brought pursuant to 
 19.14  this section must be commenced within four years after the date 
 19.15  of the alleged violation. 
 19.16     Subd. 3.  [REMEDIES CUMULATIVE.] The remedies provided in 
 19.17  this section are cumulative and do not restrict any remedy that 
 19.18  is otherwise available.  The provisions of sections 325N.11 to 
 19.19  325N.19 are not exclusive and are in addition to any other 
 19.20  requirements, rights, remedies, and penalties provided by law.  
 19.21  No action under this section shall affect the rights in the 
 19.22  foreclosed property held by a good faith purchaser for value 
 19.23  under sections 507.34, 508.48, 508A.48, or other applicable law. 
 19.24     Subd. 4.  [CRIMINAL PENALTY.] Any foreclosure purchaser who 
 19.25  violates any provision of section 325N.18, or who engages in any 
 19.26  practice which would operate as a fraud or deceit upon a 
 19.27  foreclosed homeowner may, upon conviction, be fined not more 
 19.28  than $100,000 or imprisoned not more than one year, or both.  
 19.29  Prosecution or conviction for any one of the violations does not 
 19.30  bar prosecution or conviction for any other offenses. 
 19.31     Sec. 21.  Minnesota Statutes 2002, section 580.03, is 
 19.32  amended to read: 
 19.33     580.03 [NOTICE OF SALE; SERVICE ON OCCUPANT.] 
 19.34     Six weeks' published notice shall be given that such 
 19.35  mortgage will be foreclosed by sale of the mortgaged premises or 
 19.36  some part thereof, and at least four weeks before the appointed 
 20.1   time of sale a copy of such notice shall be served in like 
 20.2   manner as a summons in a civil action in the district court upon 
 20.3   the person in possession of the mortgaged premises, if the same 
 20.4   are actually occupied.  If there be a building on such premises 
 20.5   used by a church or religious corporation, for its usual 
 20.6   meetings, service upon any officer or trustee of such 
 20.7   corporation shall be a sufficient service upon it.  The notice 
 20.8   required by section 580.041 must be served simultaneously with 
 20.9   the notice of foreclosure required by this section. 
 20.10     Sec. 22.  [580.041] [FORECLOSURE ADVICE NOTICE.] 
 20.11     Subdivision 1.  [FORM AND DELIVERY OF NOTICE.] The notice 
 20.12  required by this section must be in 14-point boldface type and 
 20.13  must be printed on colored paper that is other than the color of 
 20.14  the notice of foreclosure and that does not obscure or 
 20.15  overshadow the content of the notice.  The title of the notice 
 20.16  must be in 20-point boldface type.  The notice must be on its 
 20.17  own page.  The notice required by this section must be delivered 
 20.18  with the notice of foreclosure required by sections 580.03 and 
 20.19  580.04.  The notice required by this section also must be 
 20.20  delivered with each subsequent written communication regarding 
 20.21  the foreclosure mailed to the mortgagor by the foreclosing party 
 20.22  up to the day of redemption.  A foreclosing mortgagee will be 
 20.23  deemed to have complied with this section if it sends the notice 
 20.24  required by this section at least once every 60 days during the 
 20.25  period of the foreclosure process.  The notice required by this 
 20.26  section must not be published. 
 20.27     Subd. 2.  [CONTENT OF NOTICE.] The notice required by this 
 20.28  section must appear substantially as follows: 
 20.29               "Help For Homeowners in Foreclosure 
 20.30       Minnesota law requires that we send you this notice 
 20.31     about the foreclosure process.  Please read it carefully. 
 20.32       Mortgage foreclosure is a complex process.  Some 
 20.33     people may approach you about "saving" your home.  You 
 20.34     should be careful about any such promises. 
 20.35       The state encourages you to become informed about your 
 20.36     options in foreclosure before entering into any agreements 
 21.1      with anyone in connection with the foreclosure of your 
 21.2      home.  There are government agencies and nonprofit 
 21.3      organizations that you may contact for helpful information 
 21.4      about the foreclosure process.  For the name and telephone 
 21.5      number of an organization near you please call the 
 21.6      Minnesota Home Finance Agency (MHFA) at (insert telephone 
 21.7      number).  The state does not guarantee the advice of these 
 21.8      agencies. 
 21.9        Do not delay dealing with the foreclosure because your 
 21.10     options may become more limited as time passes." 
 21.11     Sec. 23.  [PROVISIONS SEVERABLE.] 
 21.12     If any provision of this act, or if any application of this 
 21.13  act to any person or circumstances is held unconstitutional and 
 21.14  void, the remainder of this act remains valid.