HF 2369

3rd Engrossment - 79th Legislature (1995 - 1996) Posted on 12/15/2009 12:00am

  1.1                          A bill for an act 
  1.2             relating to financial institutions; regulating 
  1.3             consumer credit; modifying rates, fees, and other 
  1.4             terms and conditions; providing clarifying and 
  1.5             technical changes; providing opportunities for state 
  1.6             banks to develop their Minnesota markets through 
  1.7             broader intrastate branching; modifying finance charge 
  1.8             provisions and other provisions for certain 
  1.9             cooperatives; providing technical corrections; 
  1.10            amending Minnesota Statutes 1994, sections 9.031, 
  1.11            subdivision 13; 13.71, by adding a subdivision; 
  1.12            46.041, subdivision 1; 46.044, subdivision 1; 47.10, 
  1.13            subdivision 4; 47.101, subdivisions 2 and 3; 47.20, 
  1.14            subdivision 14; 47.201, subdivision 2; 47.51; 47.62, 
  1.15            subdivision 1; 48.09; 48.10; 48.301; 48.34; 48.845, 
  1.16            subdivision 4; 52.131; 53.01; 53.03, subdivision 1; 
  1.17            53.07, subdivision 2; 118.01, subdivision 1; 168.69; 
  1.18            168.705; 168.71; 168.72, by adding a subdivision; 
  1.19            168.73; 256.99; 300.025; 303.02, subdivision 2; 
  1.20            308A.135, subdivision 3; 308A.165, subdivision 2; 
  1.21            332.21; 332.50, subdivision 2; 334.02; and 334.03; 
  1.22            Minnesota Statutes 1995 Supplement, sections 46.048, 
  1.23            subdivision 2b; 47.20, subdivisions 1 and 9; 47.52; 
  1.24            47.59, subdivisions 2, 3, 4, 5, 6, and by adding a 
  1.25            subdivision; 47.60, subdivision 2; 47.61, subdivision 
  1.26            3; 48.153, subdivision 3a; 48.194; 48.65; 50.1485, 
  1.27            subdivision 1; 50.245, subdivisions 1 and 4; 53.04, 
  1.28            subdivision 3a; 53.09, subdivision 2; 55.10, 
  1.29            subdivision 4; 56.131, subdivisions 2, 4, and 6; 
  1.30            56.14; and 62B.04, subdivision 1; Laws 1995, chapter 
  1.31            171, section 70; proposing coding for new law in 
  1.32            Minnesota Statutes, chapters 49; and 334; repealing 
  1.33            Minnesota Statutes 1994, sections 48.94; 51A.01; 
  1.34            51A.02, subdivisions 1, 2, 3, 4, 5, 8, 9, 10, 11, 12, 
  1.35            13, 14, 15, 16, 17, 18, 19, 20, 21, 22, 23, 24, 25, 
  1.36            27, 28, 29, 30, 31, 32, 33, 34, 35, 36, 37, 38, 39, 
  1.37            41, 42, 43, 44, 45, 46, 47, 48, 49, 50, 51, 52, 53, 
  1.38            55, and 56; 51A.03; 51A.04; 51A.041; 51A.05; 51A.06; 
  1.39            51A.065; 51A.07; 51A.08; 51A.09; 51A.10; 51A.11; 
  1.40            51A.12; 51A.13; 51A.131; 51A.14; 51A.15; 51A.16; 
  1.41            51A.17; 51A.19, subdivisions 1, 4, 5, 6, 7, 8, 10, 11, 
  1.42            12, and 13; 51A.20; 51A.21, subdivisions 1, 2, 3, 4, 
  1.43            5, 6a, 6b, 7, 8, 9, 10, 11, 12, 13, 14, 15, 17, 18, 
  1.44            20, 21, 22, 23, 24, 25, 26, and 27; 51A.22; 51A.23, 
  1.45            subdivision 6; 51A.24; 51A.251; 51A.261; 51A.262; 
  1.46            51A.27; 51A.28; 51A.29; 51A.30; 51A.31; 51A.32; 
  2.1             51A.33; 51A.34; 51A.35; 51A.361; 51A.37; 51A.38; 
  2.2             51A.40; 51A.41; 51A.42; 51A.43; 51A.44; 51A.45; 
  2.3             51A.46; 51A.47; 51A.48; 51A.51; 51A.52; 51A.54; 
  2.4             51A.55; 51A.56; 51A.57; and 53.04, subdivision 3b; 
  2.5             Minnesota Statutes 1995 Supplement, sections 47.201, 
  2.6             subdivision 7; 47.27, subdivision 3; 51A.02, 
  2.7             subdivisions 6, 7, 26, 40, and 54; 51A.19, subdivision 
  2.8             9; 51A.21, subdivision 28; 51A.23, subdivisions 1 and 
  2.9             7; 51A.386; 51A.50; 51A.53; 51A.58; and 53.04, 
  2.10            subdivisions 3c and 4a; Minnesota Rules, parts 
  2.11            2655.0100; 2655.0200; 2655.0300; 2655.0400; 2655.0500; 
  2.12            2655.0600; 2655.0700; 2655.0800; 2655.0900; 2655.1000; 
  2.13            2655.1100; 2655.1200; and 2655.1300. 
  2.14  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  2.15                             ARTICLE 1
  2.16            FINANCIAL INSTITUTIONS TECHNICAL CORRECTIONS 
  2.17     Section 1.  Minnesota Statutes 1994, section 9.031, 
  2.18  subdivision 13, is amended to read: 
  2.19     Subd. 13.  [REQUIRED COMMUNITY REINVESTMENT RATING.] Banks 
  2.20  and trust companies designated as depositories must have 
  2.21  received ratings of "outstanding" or "satisfactory" as their 
  2.22  most recent rating under section 47.83 or under United States 
  2.23  Code, title 12, section 2906.  If a state depository receives a 
  2.24  rating that is below "satisfactory," the executive council shall 
  2.25  revoke its designation as a depository.  The executive council 
  2.26  may delay the effective date of the revocation if necessary to 
  2.27  allow a reasonable period of time to arrange for a replacement 
  2.28  depository.  
  2.29     Sec. 2.  Minnesota Statutes 1994, section 13.71, is amended 
  2.30  by adding a subdivision to read: 
  2.31     Subd. 21.  [BANK CHARTER TRADE SECRETS DATA.] Trade secret 
  2.32  data provided in bank charter applications is classified under 
  2.33  section 46.041, subdivision 1. 
  2.34     Sec. 3.  Minnesota Statutes 1994, section 46.041, 
  2.35  subdivision 1, is amended to read: 
  2.36     Subdivision 1.  [FILING; FEE; PUBLIC INSPECTION.] The 
  2.37  incorporators of a bank proposed to be organized under the laws 
  2.38  of this state shall execute and acknowledge a written 
  2.39  application in the form prescribed by the commissioner of 
  2.40  commerce.  The application must be signed by two or more of the 
  2.41  incorporators and request a certificate authorizing the proposed 
  2.42  bank to transact business at the place and in the name stated in 
  3.1   the application.  The applicant shall file the application with 
  3.2   the department with a $1,000 filing fee and a $500 investigation 
  3.3   fee.  The fees must be turned over by the commissioner to the 
  3.4   state treasurer and credited to the general fund.  The 
  3.5   application file must be public, with the exception of financial 
  3.6   data on individuals which is private under the Minnesota 
  3.7   government data practices act and data defined as trade secret 
  3.8   information under section 13.37, subdivision 1, paragraph (b), 
  3.9   which must be given nonpublic classification upon written 
  3.10  request by the applicant. 
  3.11     Sec. 4.  Minnesota Statutes 1994, section 46.044, 
  3.12  subdivision 1, is amended to read: 
  3.13     Subdivision 1.  [CHARTERS ISSUED, CONDITIONS.] An 
  3.14  application for a bank charter must be granted if (1) the 
  3.15  applicants are of good moral character and financial integrity, 
  3.16  (2) there is a reasonable public demand for this bank in this 
  3.17  location, (3) the organization expenses being paid by the bank 
  3.18  do not exceed those allowed by section 46.043, (4) the probable 
  3.19  volume of business in this location is sufficient to insure and 
  3.20  maintain the solvency of the new bank and the solvency of the 
  3.21  then existing bank or banks in the locality without endangering 
  3.22  the safety of any bank in the locality as a place of deposit of 
  3.23  public and private money, (5) the commissioner of commerce is 
  3.24  satisfied that the proposed bank will be properly and safely 
  3.25  managed, and (6) the commissioner is satisfied that the capital 
  3.26  funds required pursuant to section 48.02 are available and the 
  3.27  commissioner may accept any reasonable demonstration including 
  3.28  subscription agreements supported by current financial 
  3.29  statements, and (7) the applicant, if it is an interstate bank 
  3.30  holding company, as defined in section 48.92, has provided 
  3.31  developmental loans as required by section 48.991, and has 
  3.32  complied with the net new funds reporting requirements of 
  3.33  section 48.93, the application must be granted; otherwise.  If 
  3.34  the application does not satisfy the requirements of this 
  3.35  subdivision, it must be denied.  In case of the denial of the 
  3.36  application, the commissioner of commerce shall specify the 
  4.1   grounds for the denial.  A person aggrieved, may obtain judicial 
  4.2   review of the determination in accordance with chapter 14.  
  4.3      Sec. 5.  Minnesota Statutes 1995 Supplement, section 
  4.4   46.048, subdivision 2b, is amended to read: 
  4.5      Subd. 2b.  [NOTICE.] Upon the filing of an application a 
  4.6   notice: 
  4.7      (1) an applicant acquiring party shall publish once in a 
  4.8   newspaper of general circulation notice of the proposed 
  4.9   acquisition in a form acceptable to the commissioner; and 
  4.10     (2) the commissioner shall accept public comment on an 
  4.11  application a notice for a period of not less than 30 days from 
  4.12  the date of the publication required by clause (1). 
  4.13     Sec. 6.  Minnesota Statutes 1994, section 47.10, 
  4.14  subdivision 4, is amended to read: 
  4.15     Subd. 4.  [APPROVAL OF CERTAIN INSIDER AGREEMENTS.] No 
  4.16  bank, trust company, savings bank, or savings association may 
  4.17  purchase or, sell, or lease real property, personal property, 
  4.18  improvements or equipment of a value of $25,000 or more if the 
  4.19  purchaser or, seller, lessor, or lessee other than the bank, 
  4.20  trust company, savings bank, or savings association has an 
  4.21  existing direct or indirect interest in the institution without 
  4.22  prior written approval by the commissioner.  Each bank, trust 
  4.23  company, savings bank, or savings association must maintain 
  4.24  documentation of transactions with interested parties, including 
  4.25  personal property leases and purchases or sales of under 
  4.26  $25,000, which demonstrates the commercial reasonableness and 
  4.27  fair market value of the transaction. 
  4.28     Sec. 7.  Minnesota Statutes 1995 Supplement, section 47.20, 
  4.29  subdivision 1, is amended to read: 
  4.30     Subdivision 1.  Pursuant to rules the commissioner of 
  4.31  commerce finds to be necessary and proper, if any, banks, 
  4.32  savings banks, and savings associations organized under the laws 
  4.33  of this state or the United States, trust companies, trust 
  4.34  companies acting as fiduciaries, and other banking institutions 
  4.35  subject to the supervision of the commissioner of commerce, and 
  4.36  mortgagees or lenders approved or certified by the secretary of 
  5.1   housing and urban development or approved or certified by the 
  5.2   administrator of veterans affairs, or approved or certified by 
  5.3   the administrator of the farmers home administration or any 
  5.4   successor, or approved or certified by the federal home loan 
  5.5   mortgage corporation, or approved or certified by the federal 
  5.6   national mortgage association, are authorized: 
  5.7      (1) To make loans and advances of credit and purchases of 
  5.8   obligations representing loans and advances of credit which are 
  5.9   insured or guaranteed by the secretary of housing and urban 
  5.10  development pursuant to the national housing act, as amended, or 
  5.11  the administrator of veterans affairs pursuant to the 
  5.12  servicemen's readjustment act of 1944, as amended, or the 
  5.13  administrator of the farmers home administration or any 
  5.14  successor pursuant to the consolidated farm and rural 
  5.15  development act, Public Law Number 87-128, as amended, and to 
  5.16  obtain the insurance or guarantees; 
  5.17     (2) To make loans secured by mortgages on real property and 
  5.18  loans secured by a share or shares of stock or a membership 
  5.19  certificate or certificates issued to a stockholder or member by 
  5.20  a cooperative apartment corporation which the secretary of 
  5.21  housing and urban development, the administrator of veterans 
  5.22  affairs, or the administrator of the farmers home administration 
  5.23  or any successor has insured or guaranteed or made a commitment 
  5.24  to insure or guarantee, and to obtain the insurance or 
  5.25  guarantees; 
  5.26     (3) To make, purchase, or participate in such loans and 
  5.27  advances of credit; including reverse mortgage loans, 
  5.28  notwithstanding anything in sections 47.20, subdivision 4b, 
  5.29  47.58, and 334.01 and chapter 56 to the contrary; as would be 
  5.30  eligible for purchase, in whole or in part, by the federal 
  5.31  national mortgage association or the federal home loan mortgage 
  5.32  corporation, but without regard to any limitation placed upon 
  5.33  the maximum principal amount of an eligible loan; 
  5.34     (4) To make, purchase or participate in such loans and 
  5.35  advances of credit secured by mortgages on real property which 
  5.36  are authorized or allowed by the office of thrift supervision or 
  6.1   the office of the comptroller of the currency, or any successor 
  6.2   to these federal agencies.  
  6.3      Sec. 8.  Minnesota Statutes 1995 Supplement, section 47.20, 
  6.4   subdivision 9, is amended to read: 
  6.5      Subd. 9.  (1) For purposes of this subdivision the term 
  6.6   "mortgagee" shall mean all state banks and trust companies, 
  6.7   national banking associations, state and federally chartered 
  6.8   savings associations, mortgage banks, savings banks, insurance 
  6.9   companies, credit unions or assignees of the above. 
  6.10     (a) Each mortgagee requiring funds of a mortgagor to be 
  6.11  paid into an escrow, agency or similar account for the payment 
  6.12  of taxes or insurance premiums with respect to a mortgaged 
  6.13  one-to-four family, owner occupied residence located in this 
  6.14  state, unless the account is required by federal law or 
  6.15  regulation or maintained in connection with a conventional loan 
  6.16  in an original principal amount in excess of 80 percent of the 
  6.17  lender's appraised value of the residential unit at the time the 
  6.18  loan is made or maintained in connection with loans insured or 
  6.19  guaranteed by the secretary of housing and urban development, by 
  6.20  the administrator of veterans affairs, or by the administrator 
  6.21  of the farmers home administration or any successor, shall 
  6.22  calculate interest on such funds at a rate of not less than five 
  6.23  three percent per annum.  Such interest shall be computed on the 
  6.24  average monthly balance in such account on the first of each 
  6.25  month for the immediately preceding 12 months of the calendar 
  6.26  year or such other fiscal year as may be uniformly adopted by 
  6.27  the mortgagee for such purposes and shall be annually credited 
  6.28  to the remaining principal balance on the mortgage, or at the 
  6.29  election of the mortgagee, paid to the mortgagor or credited to 
  6.30  the mortgagor's account.  If the interest exceeds the remaining 
  6.31  balance, the excess shall be paid to the mortgagor or vendee.  
  6.32  The requirement to pay interest shall apply to such accounts 
  6.33  created prior to June 1, 1976, as well as to accounts created 
  6.34  after June 1, 1976 in conjunction with mortgage loans made prior 
  6.35  to July 1, 1996. 
  6.36     (b) Unless the account is exempt from the requirements of 
  7.1   paragraph (a), a mortgagee shall allow a mortgagor to elect to 
  7.2   discontinue the escrow account after the seventh anniversary of 
  7.3   the date of the mortgage, unless the mortgagor has been more 
  7.4   than 30 days delinquent in the previous 12 months.  This 
  7.5   paragraph shall apply to accounts created prior to July 1, 1996, 
  7.6   as well as to accounts created on or after July 1, 1996.  The 
  7.7   mortgagor's election shall be in writing.  If the escrow account 
  7.8   has a negative balance or a shortage at the time the mortgagor 
  7.9   requests discontinuance, the mortgagee is not obligated to allow 
  7.10  discontinuance until the escrow account is balanced or the 
  7.11  shortage has been repaid. 
  7.12     (c) The mortgagee shall notify the mortgagor within 60 days 
  7.13  after the seventh anniversary of the date of the mortgage if the 
  7.14  right to discontinue the escrow account is in accordance with 
  7.15  paragraph (b).  For mortgage loans entered into, on or prior to 
  7.16  July 1, 1989, the notice required by this paragraph shall be 
  7.17  provided to the mortgagor by January 1, 1997. 
  7.18     (d) A mortgagee may require the mortgagor to reestablish 
  7.19  the escrow account if the mortgagor has failed to make timely 
  7.20  payments for two consecutive payment periods at any time during 
  7.21  the remaining term of the mortgage, or if the mortgagor has 
  7.22  failed to pay taxes or insurance premiums when due.  A payment 
  7.23  received during a grace period shall be deemed timely. 
  7.24     (e) The mortgagee shall, subject to paragraph (b), return 
  7.25  any funds remaining in the account to the mortgagor within 60 
  7.26  days after receipt of the mortgagor's written notice of election 
  7.27  to discontinue the escrow account. 
  7.28     (f) The mortgagee shall not charge a direct fee for the 
  7.29  administration of the escrow account, nor shall the mortgagee 
  7.30  charge a fee or other consideration for allowing the mortgagor 
  7.31  to discontinue the escrow account. 
  7.32     (2) A mortgagee offering the following option (c) to a 
  7.33  mortgagor but not requiring maintenance of escrow accounts as 
  7.34  described in clause (1), whether or not the accounts were 
  7.35  required by the mortgagee or were optional with the mortgagor, 
  7.36  shall offer to each of such mortgagors the following options: 
  8.1      (a) the mortgagor may personally manage the payment of 
  8.2   insurance and taxes; 
  8.3      (b) the mortgagor may open with the mortgagee a passbook 
  8.4   savings account carrying the current rate of interest being paid 
  8.5   on such accounts by the mortgagee in which the mortgagor can 
  8.6   deposit the funds previously paid into the escrow account; or 
  8.7      (c) the mortgagor may elect to maintain a noninterest 
  8.8   bearing escrow account as described in clause (1) to be serviced 
  8.9   by the mortgagee at no charge to the mortgagor. 
  8.10     A mortgagee that is not a depository institution offering 
  8.11  passbook savings accounts shall instead of offering option (b) 
  8.12  above notify its mortgagors (1) that they may open such accounts 
  8.13  at a depository institution and (2) of the current maximum legal 
  8.14  interest rate on such accounts. 
  8.15     A mortgagee offering option (c) above to a mortgagor but 
  8.16  not requiring the maintenance of escrow accounts shall notify 
  8.17  its mortgagor of the options under (a), (b) and (c).  The notice 
  8.18  shall state the option and state that an escrow account is not 
  8.19  required by the mortgagee, that the mortgagor is legally 
  8.20  responsible for the payment of taxes and insurance, and that the 
  8.21  notice is being given pursuant to this subdivision. 
  8.22     Notice shall be given within 30 days after the effective 
  8.23  date of the provisions of Laws 1977, chapter 350 amending the 
  8.24  subdivision, as to mortgagees offering option (c) above to 
  8.25  mortgagors but not requiring escrow accounts as of the effective 
  8.26  date, or within 30 days after a mortgagee's decision to 
  8.27  discontinue requiring escrow accounts if the mortgagee continues 
  8.28  to offer option (c) above to mortgagors.  If no reply is 
  8.29  received within 30 days, option (c) shall be selected for the 
  8.30  mortgagor but the mortgagor may, at any time, select another 
  8.31  option. 
  8.32     A mortgagee making a new mortgage and offering option (c) 
  8.33  above to a prospective mortgagor shall, at the time of loan 
  8.34  application, notify the prospective mortgagor of options (a), 
  8.35  (b) and (c) above which must be extended to the prospective 
  8.36  mortgagor.  The mortgagor shall select one of the options at the 
  9.1   time the loan is made. 
  9.2      Any notice required by this clause shall be on forms 
  9.3   approved by the commissioner of commerce and shall provide that 
  9.4   at any time a mortgagor may select a different option.  The form 
  9.5   shall contain a blank where the current passbook rate of 
  9.6   interest shall be entered by the mortgagee.  Any option selected 
  9.7   by the mortgagor shall be binding on the mortgagee. 
  9.8      This clause does not apply to escrow accounts which are 
  9.9   excepted from the interest paying requirements of clause (1). 
  9.10     (3) A mortgagee shall be prohibited from charging a direct 
  9.11  fee for the administration of the escrow account. 
  9.12     Sec. 9.  Minnesota Statutes 1994, section 47.20, 
  9.13  subdivision 14, is amended to read: 
  9.14     Subd. 14.  (a) A lender requiring or offering private 
  9.15  mortgage insurance shall make available to the borrower or other 
  9.16  person paying the insurance premium the same premium payment 
  9.17  plans as are available to the lender in paying the private 
  9.18  mortgage insurance premium.  
  9.19     (b) Any refund or rebate for unearned private mortgage 
  9.20  insurance premiums shall be paid to the borrower or other person 
  9.21  actually providing the funds for payment of the premium.  
  9.22     (c) With regard to first mortgage loans made on or after 
  9.23  January 1, 1997, the mortgagor shall have the right to elect, in 
  9.24  writing, to cancel borrower-purchased private mortgage insurance 
  9.25  if all of the following terms and conditions have been met: 
  9.26     (1) if the current unpaid principal balance of a first 
  9.27  mortgage is 75 percent or less of the current fair market 
  9.28  appraised value of the property.  "Current fair market appraised 
  9.29  value" shall be based upon a current appraisal by a real estate 
  9.30  appraiser licensed or certified by the appropriate state or 
  9.31  federal agency and reasonably acceptable to the lender.  The 
  9.32  lender may require the mortgagor to pay for the appraisal; 
  9.33     (2) the mortgagor's monthly installments of principal, 
  9.34  interest, and escrow obligations have not been more than 30 days 
  9.35  past due over the 24-month period immediately preceding the 
  9.36  request for cancellation and all accrued late charges have been 
 10.1   paid; 
 10.2      (3) the mortgage was made at least 24 months prior to the 
 10.3   receipt of a request for cancellation of private mortgage 
 10.4   insurance; 
 10.5      (4) the property securing the mortgage is owner-occupied; 
 10.6   and 
 10.7      (5) the mortgage has not been pooled with other mortgages 
 10.8   in order to constitute, in whole or in part, collateral for 
 10.9   bonds issued by the state of Minnesota or any political 
 10.10  subdivision of the state of Minnesota or of any agency of any 
 10.11  political subdivision of the state of Minnesota. 
 10.12     (d) Other than the appraisal fee allowed pursuant to 
 10.13  paragraph (c), clause (1), the lender shall not charge the 
 10.14  borrower a fee or other consideration for cancellation of the 
 10.15  private mortgage insurance. 
 10.16     (e) A lender requiring private mortgage insurance shall, 
 10.17  after the payment of the 24th monthly premium installment of 
 10.18  private mortgage insurance, provide an annual written notice to 
 10.19  each mortgagor currently paying premiums for private mortgage 
 10.20  insurance.  The notice may be included in the annual statement 
 10.21  or may be included in other regular mailings to the mortgagor.  
 10.22  The annual notice shall be on its own page, unless included in a 
 10.23  private mortgage insurance notice required under the federal 
 10.24  Real Estate Settlement Procedures Act, and shall appear 
 10.25  substantially as follows: 
 10.26      "NOTICE OF RIGHT TO CANCEL PRIVATE MORTGAGE INSURANCE 
 10.27     If you currently pay private mortgage insurance premiums, 
 10.28  you may have the right to cancel the insurance and cease paying 
 10.29  premiums.  This would permit you to make a lower total monthly 
 10.30  mortgage payment.  In most cases, you have the right to cancel 
 10.31  private mortgage insurance if the principal balance of your loan 
 10.32  is 80 percent or less of the current fair market appraised value 
 10.33  of your home.  If you wish to learn whether you are eligible to 
 10.34  cancel this insurance, please contact us at (address/phone)." 
 10.35     (f) If a mortgage loan governed by paragraph (c) is 
 10.36  serviced in accordance with the guidelines of either the Federal 
 11.1   National Mortgage Association or the Federal Home Loan Mortgage 
 11.2   Corporation, the lender shall cancel private mortgage insurance 
 11.3   in accordance with the cancellation guidelines of the applicable 
 11.4   entity in effect at the time the request for cancellation is 
 11.5   received. 
 11.6      Sec. 10.  Minnesota Statutes 1994, section 47.201, 
 11.7   subdivision 2, is amended to read: 
 11.8      Subd. 2.  [AUTHORIZATION.] Notwithstanding the provisions 
 11.9   of sections section 334.01, subdivision 1, and 51A.37, 
 11.10  subdivision 3, clause (d), any financial institution is 
 11.11  authorized to make graduated payment home loans and purchases 
 11.12  representing graduated payment home loans pursuant to such rules 
 11.13  as the commissioner of commerce finds to be necessary and 
 11.14  proper, if any, at an interest rate not in excess of the maximum 
 11.15  lawful interest rate prescribed in section 47.20, subdivision 4a.
 11.16  Notwithstanding the provisions of section 334.01, subdivision 1, 
 11.17  where initial repayments of a graduated payment home loan are 
 11.18  less than the total accrued outstanding interest, the excess 
 11.19  accrued and unpaid interest may be added to the outstanding loan 
 11.20  balance on which interest accrues at the contracted rate. 
 11.21     Sec. 11.  Minnesota Statutes 1995 Supplement, section 
 11.22  47.61, subdivision 3, is amended to read: 
 11.23     Subd. 3.  (a) "Electronic financial terminal" means an 
 11.24  electronic information processing device that is established to 
 11.25  do either or both of the following: 
 11.26     (1) capture the data necessary to initiate financial 
 11.27  transactions; or 
 11.28     (2) through its attendant support system, store or initiate 
 11.29  the transmission of the information necessary to consummate a 
 11.30  financial transaction. 
 11.31     (b) "Electronic financial terminal" does not include: 
 11.32     (1) a telephone; 
 11.33     (2) an electronic information processing device that is 
 11.34  used internally by a financial institution to conduct the 
 11.35  business activities of the institution; or 
 11.36     (3) an electronic point-of-sale terminal operated by a 
 12.1   retailer that is used to process payments for the purchase of 
 12.2   goods and services by consumers, and which also may be used to 
 12.3   obtain cash advances or cash back not to exceed $25 and only if 
 12.4   incidental to the retail sale transactions, through the use of 
 12.5   credit cards or debit cards, provided that the payment 
 12.6   transactions using debit cards are subject to the federal 
 12.7   Electronic Funds Transfer Act, United States Code, title 12, 
 12.8   sections 1693 et seq., and Regulation E of the Federal Reserve 
 12.9   Board, Code of Federal Regulations, title 12, subpart 205.2; 
 12.10  this clause does not exempt the retailer from liability for 
 12.11  negligent conduct or intentional misconduct of the operator 
 12.12  under section 47.69, subdivision 5.  
 12.13     Sec. 12.  Minnesota Statutes 1994, section 48.09, is 
 12.14  amended to read: 
 12.15     48.09 [DIVIDENDS; SURPLUS.] 
 12.16     Subdivision 1.  [CREATION OF SURPLUS FUND.] At the end of 
 12.17  each dividend period, after deducting all necessary expenses, 
 12.18  losses, amounts receivable more than one year overdue and not 
 12.19  well secured, interest, and taxes due or levied, all of the 
 12.20  remaining net profits for the period shall be set aside as a 
 12.21  surplus fund, if the surplus fund of the banking institution is 
 12.22  not then equal to one-fifth of the capital stock.  If the 
 12.23  surplus fund is more than one-fifth of the capital stock, ten 
 12.24  percent of the remaining net profits for the period shall be set 
 12.25  aside as a surplus fund until it equals 50 percent of the 
 12.26  capital stock.  The directors may then declare a dividend of so 
 12.27  much of the remainder as they may think expedient, subject to 
 12.28  the commissioner's approval.  When in any way impaired the 
 12.29  surplus fund shall be raised to this percentage in like manner.  
 12.30     Subd. 2.  [UNDECLARED NET PROFITS, PRIOR DIVIDEND PERIODS.] 
 12.31  Any amount of remaining net profits qualifying for dividend 
 12.32  declaration in subdivision 1 and not declared at the end of each 
 12.33  annual dividend period may be subject to dividend declaration 
 12.34  under the requirements of subdivision 1 during any of the three 
 12.35  subsequent annual dividend periods. 
 12.36     Sec. 13.  Minnesota Statutes 1994, section 48.10, is 
 13.1   amended to read: 
 13.2      48.10 [ANNUAL AUDIT; REPORT.] 
 13.3      The board of directors of a bank, bank and trust, or trust 
 13.4   company shall annually examine the its books of, a bank, 
 13.5   either in person, or by appointing an examining committee, or an 
 13.6   auditor, who may be an independent auditor or accountant.  The 
 13.7   examining committee or auditor shall be solely responsible to 
 13.8   the directors.  A report shall be made to the directors as to 
 13.9   the scope of the examination or audit, and also to show those 
 13.10  assets, excluding marketable securities and fixed assets, which 
 13.11  are carried on the books for more than actual value.  This 
 13.12  report shall be retained as a permanent record or incorporated 
 13.13  in the minutes of the meeting, and a copy of the report shall be 
 13.14  sent to the commissioner of commerce. 
 13.15     Sec. 14.  Minnesota Statutes 1995 Supplement, section 
 13.16  48.153, subdivision 3a, is amended to read: 
 13.17     Subd. 3a.  A savings bank organized under chapter 50, a 
 13.18  savings association subject to the provisions of sections 51A.01 
 13.19  to 51A.57, or a savings association chartered under the laws of 
 13.20  the United States, that has its principal place of business in 
 13.21  this state, may make a loan for consumer purposes to a natural 
 13.22  person in an amount not exceeding $25,000 repayable in 
 13.23  installments, and may charge a rate of interest upon the unpaid 
 13.24  principal balance of the amount financed of 12 percent a year, 
 13.25  or the rate of interest authorized by section 48.195, whichever 
 13.26  is greater.  If the rate of interest charged is permitted by 
 13.27  section 48.195 at the time the loan is made, the rate does not 
 13.28  later become usurious because of a fluctuation in the federal 
 13.29  discount rate. 
 13.30     Sec. 15.  Minnesota Statutes 1995 Supplement, section 
 13.31  48.194, is amended to read: 
 13.32     48.194 [INSTALLMENT SALES CONTRACTS; LOANS.] 
 13.33     A person may enter into a credit sale or service contract 
 13.34  for sale to a state or national bank doing business in this 
 13.35  state, and a bank may purchase and enforce the contract under 
 13.36  the terms and conditions set forth in sections section 47.59, 
 14.1   subdivisions 2 and 4 to 14; and 51A.386, subdivision 4.  A state 
 14.2   bank or national bank may extend credit pursuant to the terms 
 14.3   and conditions set forth in sections 47.59, and 47.60, and 
 14.4   51A.386, subdivision 4. 
 14.5      Sec. 16.  Minnesota Statutes 1994, section 48.301, is 
 14.6   amended to read: 
 14.7      48.301 [MULTIPARTY ACCOUNTS.] 
 14.8      When any deposit is made in the names of two or more 
 14.9   persons jointly, or by any person payable on death (P.O.D.) to 
 14.10  another, or by any person in trust for another, the rights of 
 14.11  the parties and the financial institution are determined by 
 14.12  chapter 528 524.  
 14.13     Sec. 17.  Minnesota Statutes 1995 Supplement, section 
 14.14  48.65, is amended to read: 
 14.15     48.65 [TRUST COMPANIES TO COMPLY WITH CERTAIN LAWS.] 
 14.16     No trust company of this state shall conduct a banking 
 14.17  business, as defined in section 47.02, exercising deposit taking 
 14.18  powers, without fully complying with the provisions of section 
 14.19  48.221 relating to the reserve requirements of the state banks.  
 14.20     Sec. 18.  Minnesota Statutes 1994, section 48.845, 
 14.21  subdivision 4, is amended to read: 
 14.22     Subd. 4.  "Affiliated bank" with respect to another bank or 
 14.23  a trust company means any bank which is owned or controlled by 
 14.24  the corporation which owns or controls that other bank or trust 
 14.25  company, including a wholly owned subsidiary of the other bank 
 14.26  or trust company.  
 14.27     Sec. 19.  Minnesota Statutes 1995 Supplement, section 
 14.28  50.1485, subdivision 1, is amended to read: 
 14.29     Subdivision 1.  [GENERALLY.] In addition to other 
 14.30  investments authorized by law, a savings bank may make, 
 14.31  purchase, or invest in: 
 14.32     (a) loans secured by the pledge of policies of life 
 14.33  insurance, the assignment of which is properly acknowledged by 
 14.34  the insurer; 
 14.35     (b) consumer loans, which may be unsecured or secured by 
 14.36  personal or real property.  Consumer loans include, but are not 
 15.1   limited to, closed-end installment loans, single payment loans, 
 15.2   nonamortizing loans, open-end revolving line of credit loans, 
 15.3   credit card loans and extensions of credit, and overdraft 
 15.4   protection loans.  For the purpose of this paragraph, "consumer 
 15.5   loan" means a loan made by the savings bank in which:  (1) the 
 15.6   debtor is a person other than an organization; (2) the debt is 
 15.7   incurred primarily for personal, family, or household purpose; 
 15.8   and (3) the debt is payable in installments or a finance charge 
 15.9   is made; 
 15.10     (c) secured and unsecured loans to organizations and 
 15.11  natural persons for business or commercial purposes.  For the 
 15.12  purpose of this paragraph, "organization" means a corporation, 
 15.13  government or governmental subdivision, or agency, trust, 
 15.14  estate, partnership, limited liability partnership, limited 
 15.15  liability company, joint venture, cooperative, or association.  
 15.16  "Business or commercial purpose" means a purpose other than 
 15.17  personal, family, household, or agricultural purpose; 
 15.18     (d) secured and unsecured loans for agricultural purposes.  
 15.19  For the purpose of this paragraph, "agricultural purpose" means 
 15.20  a purpose relating to the production, harvest, exhibition, 
 15.21  marketing, transportation, processing, or manufacture of 
 15.22  agricultural products.  "Agricultural products" includes 
 15.23  agricultural, horticultural, viticultural, and dairy products, 
 15.24  livestock, wildlife, poultry, bees, and forest products, and 
 15.25  products raised or produced on farms, including processed or 
 15.26  manufactured products; 
 15.27     (e) credit sale contracts, which means a sale of goods, 
 15.28  services, or an interest in land in which credit is granted by a 
 15.29  seller who regularly engages as a seller in credit transactions 
 15.30  of the same kind, and the debt is payable in installments or a 
 15.31  finance charge is made; 
 15.32     (f) loans on the security of deposit accounts; 
 15.33     (g) real estate loans, subject to the conditions applicable 
 15.34  to savings associations under section 51A.38 and Minnesota 
 15.35  Statutes 1994, section 51A.385.  "Real estate loans" which 
 15.36  include a loan or other obligation secured by a first lien on 
 16.1   real estate in fee or in a leasehold extending or renewable 
 16.2   automatically for a period of at least ten years beyond the date 
 16.3   scheduled for the final principal payment of the loan or 
 16.4   obligation, or a transaction out of which a first lien or claim 
 16.5   is created against the real estate, including the purchase of 
 16.6   the real estate in fee by a savings bank and the concurrent or 
 16.7   immediate sale of it on installment contract; 
 16.8      (h) secured or unsecured loans for the purpose of repair, 
 16.9   improvement, rehabilitation, or furnishing of real estate; 
 16.10     (i) loans for the purpose of financing or refinancing an 
 16.11  ownership interest in certificates of stock, certificates of 
 16.12  beneficial interest, or other evidence of an ownership interest 
 16.13  in, or a proprietary lease from, a corporation, limited 
 16.14  liability company, trust, limited liability partnership, or 
 16.15  partnership formed for the purpose of the cooperative ownership 
 16.16  of real estate, secured by the assignment or transfer of 
 16.17  certificates or other evidence of ownership of the borrower; 
 16.18     (j) loans guaranteed or insured, in whole or in part, by 
 16.19  the United States or any of its instrumentalities; 
 16.20     (k) issuance of letters of credit or other similar 
 16.21  arrangements; and 
 16.22     (l) any other type of loan authorized by rules adopted by 
 16.23  the commissioner. 
 16.24     Sec. 20.  Minnesota Statutes 1995 Supplement, section 
 16.25  50.245, subdivision 4, is amended to read: 
 16.26     Subd. 4.  [PROCEDURAL REQUIREMENTS.] Procedural 
 16.27  requirements equivalent to those contained in sections 48.90 to 
 16.28  48.991 48.995 apply to reciprocal interstate branching and 
 16.29  acquisitions by savings banks and savings bank holding companies.
 16.30     Sec. 21.  Minnesota Statutes 1994, section 52.131, is 
 16.31  amended to read: 
 16.32     52.131 [MULTIPARTY ACCOUNTS.] 
 16.33     When any deposit is made in the names of two or more 
 16.34  persons jointly, or by any person payable on death (P.O.D.) to 
 16.35  another, or by any person in trust for another, the rights of 
 16.36  the parties and the financial institution are determined by 
 17.1   chapter 528 524.  
 17.2      Sec. 22.  Minnesota Statutes 1994, section 53.01, is 
 17.3   amended to read: 
 17.4      53.01 [ORGANIZATION.] 
 17.5      It is lawful for three or more persons, who desire to form 
 17.6   a corporation for the purpose of carrying on primarily the 
 17.7   business of loaning money to persons within the conditions set 
 17.8   forth in this chapter, to organize, under this chapter, an 
 17.9   industrial loan and thrift company, by filing with the secretary 
 17.10  of state articles of incorporation, and upon paying the fees 
 17.11  prescribed by sections 301.07 and 301.071 or chapter 302A and 
 17.12  upon compliance with the procedure provided for the organization 
 17.13  and government of ordinary corporations under the laws of this 
 17.14  state, and upon compliance with the additional requirements of 
 17.15  this chapter prior to receiving authorization to do business. 
 17.16     Sec. 23.  Minnesota Statutes 1994, section 53.03, 
 17.17  subdivision 1, is amended to read: 
 17.18     Subdivision 1.  [APPLICATION, FEE, NOTICE.] Any corporation 
 17.19  hereafter organized as an industrial loan and thrift company, 
 17.20  shall, after compliance with the requirements set forth in 
 17.21  sections 53.01 and 53.02, file a written application with the 
 17.22  department of commerce for a certificate of authorization.  A 
 17.23  corporation that will not sell or issue thrift certificates for 
 17.24  investment as permitted by this chapter need not comply with 
 17.25  subdivision 2b.  The application must be in the form prescribed 
 17.26  by the department of commerce.  The application must be made in 
 17.27  the name of the corporation, executed and acknowledged by an 
 17.28  officer designated by the board of directors of the corporation, 
 17.29  requesting a certificate authorizing the corporation to transact 
 17.30  business as an industrial loan and thrift company, at the place 
 17.31  and in the name stated in the application.  At the time of 
 17.32  filing the application the applicant shall pay a $1,000 filing 
 17.33  fee and a $500 investigation fee.  The fees must be turned over 
 17.34  by the commissioner to the state treasurer and credited to the 
 17.35  general fund.  The applicant shall also submit a copy of the 
 17.36  bylaws of the corporation, its articles of incorporation and all 
 18.1   amendments thereto at that time.  If the application is 
 18.2   contested, 50 percent of an additional fee equal to the actual 
 18.3   costs incurred by the department of commerce in approving or 
 18.4   disapproving the application, payable to the state treasurer and 
 18.5   credited to the general fund shall be paid by the applicant and 
 18.6   50 percent equally by the intervening parties.  An application 
 18.7   for powers under subdivision 2b must also require that a notice 
 18.8   of the filing of the application must be published once within 
 18.9   30 days of the receipt of the form prescribed by the department 
 18.10  of commerce, at the expense of the applicant, in a qualified 
 18.11  newspaper published in the municipality in which the proposed 
 18.12  industrial loan and thrift company is to be located, or, if 
 18.13  there be none, in a qualified newspaper likely to give notice in 
 18.14  the municipality in which the company is proposed to be 
 18.15  located.  If the department of commerce receives a written 
 18.16  objection to the application from any person within 20 21 days 
 18.17  of the notice having been fully published a contested case 
 18.18  hearing must be conducted on the application.  Notice of a 
 18.19  hearing in connection with this section must be published once 
 18.20  in the form prescribed by the department of commerce, at the 
 18.21  expense of the applicant, in the same manner as a notice of 
 18.22  application, the commissioner shall proceed in the same manner 
 18.23  as required under section 46.041, subdivisions 3 and 4, relating 
 18.24  to state banks. 
 18.25     Sec. 24.  Minnesota Statutes 1994, section 53.07, 
 18.26  subdivision 2, is amended to read: 
 18.27     Subd. 2.  [TEMPORARY RESERVE MINIMUM.] Until an industrial 
 18.28  loan and thrift company obtains a commitment for insurance or 
 18.29  guarantee of accounts acceptable to the commissioner as required 
 18.30  by section 53.10, it shall establish a minimum reserve against 
 18.31  the certificates of indebtedness, savings accounts, and savings 
 18.32  deposits described in section 53.04, subdivision 5, of not less 
 18.33  than ten percent of the amount of indebtedness thus created.  
 18.34  Three percent of this indebtedness shall be in cash in the 
 18.35  actual possession of the industrial loan company or on demand 
 18.36  deposit in approved banks of this state, and seven percent of 
 19.1   the total indebtedness may be in bonds admissible for investment 
 19.2   by mutual savings banks under the laws of this state. 
 19.3      Sec. 25.  Minnesota Statutes 1995 Supplement, section 
 19.4   53.09, subdivision 2, is amended to read: 
 19.5      Subd. 2.  [REPORT TO COMMISSIONER.] (1) Each industrial 
 19.6   loan and thrift company shall annually on or before the first 
 19.7   day of March file a report with the commissioner stating in 
 19.8   detail, under appropriate heads, its assets and liabilities at 
 19.9   the close of business on the last day of the preceding calendar 
 19.10  year.  This report shall be made under oath in the form 
 19.11  prescribed by the commissioner. 
 19.12     (2) Each industrial loan and thrift company which holds 
 19.13  authority to accept accounts pursuant to section 53.04, 
 19.14  subdivision 5, shall in place of the requirement in clause (1) 
 19.15  submit the reports and make the publication required of state 
 19.16  banks pursuant to section 48.48.  
 19.17     (3) Within 30 days following a change in controlling 
 19.18  ownership of the capital stock of an industrial loan and thrift 
 19.19  company, it shall file a written report with the commissioner 
 19.20  stating in detail the nature of such change in ownership.  
 19.21     Sec. 26.  Minnesota Statutes 1995 Supplement, section 
 19.22  55.10, subdivision 4, is amended to read: 
 19.23     Subd. 4.  [WILL SEARCHES, BURIAL DOCUMENTS PROCUREMENT, AND 
 19.24  INVENTORY OF CONTENTS.] (a) Upon being furnished with 
 19.25  satisfactory proof of death of a sole lessee or the last 
 19.26  surviving co-lessee of a safe deposit box, an employee of the 
 19.27  safe deposit company shall open the box and examine the contents 
 19.28  in the presence of an employee of the safe deposit company and 
 19.29  an individual who appears in person and furnishes an affidavit 
 19.30  stating that the individual believes: 
 19.31     (1) the box may contain the will or deed to a burial lot or 
 19.32  a document containing instructions for the burial of the 
 19.33  lessee or that the box may contain property belonging to the 
 19.34  estate of the lessee; and 
 19.35     (2) the individual is an interested person as defined in 
 19.36  this section and wishes to open the box for any one or more of 
 20.1   the following purposes: 
 20.2      (i) to conduct a will search; 
 20.3      (ii) to obtain a document required to facilitate the 
 20.4   lessee's wishes regarding body, funeral, or burial arrangements; 
 20.5   or 
 20.6      (iii) to obtain an inventory of the contents of the box. 
 20.7      (b) The safe deposit company may not open the box under 
 20.8   this section if it has received a copy of letters of office of 
 20.9   the representative of the deceased lessee's estate or other 
 20.10  applicable court order.  
 20.11     (c) The safe deposit company need not open the box if: 
 20.12     (1) the box has previously been opened under this section 
 20.13  for the same purpose; 
 20.14     (2) the safe deposit company has received notice of a 
 20.15  written or oral objection from any person or has reason to 
 20.16  believe that there would be an objection; or 
 20.17     (3) the lessee's key or combination is not available. 
 20.18     (d) For purposes of this section, the term "interested 
 20.19  person" means any of the following: 
 20.20     (1) a person named as personal representative in a 
 20.21  purported will of the lessee; 
 20.22     (2) a person who immediately prior to the death of the 
 20.23  lessee had the right of access to the box as a deputy; 
 20.24     (3) the surviving spouse of the lessee; 
 20.25     (4) a devisee of the lessee; 
 20.26     (5) an heir of the lessee; or 
 20.27     (6) a person designated by the lessee in a writing 
 20.28  acceptable to the safe deposit company which is filed with the 
 20.29  safe deposit company before death. 
 20.30     (e) For purposes of this section, the term "will" includes 
 20.31  a will or a codicil. 
 20.32     (f) If the box is opened for the purpose of conducting a 
 20.33  will search, the safe deposit company shall remove any document 
 20.34  that appears to be a will and make a true and correct machine 
 20.35  copy thereof, replace the copy in the box, and then deliver the 
 20.36  original thereof to the clerk of court for the county in which 
 21.1   the lessee resided immediately before the lessee's death, if 
 21.2   known to the safe deposit company, otherwise to the clerk of the 
 21.3   court for the county in which the safe deposit box is located.  
 21.4   The will must be personally delivered or sent by registered 
 21.5   mail.  If the interested person so requests, any deed to burial 
 21.6   lot or document containing instructions for the burial of the 
 21.7   lessee may be copied by the safe deposit box company and the 
 21.8   copy or copies thereof delivered to the interested person.  
 21.9      (g) If the box is opened for the purpose of obtaining a 
 21.10  document required to facilitate the lessee's wishes regarding 
 21.11  the body, funeral, or burial arrangements, any such document may 
 21.12  be removed from the box and delivered to the interested person 
 21.13  with a true and correct machine copy retained in the box.  If 
 21.14  the safe deposit box company discovers a document that appears 
 21.15  to be a will, the safe deposit company shall act in accordance 
 21.16  with paragraph (f). 
 21.17     (h) If the box is opened for the purpose of obtaining an 
 21.18  inventory of the contents of the box, the employee of the safe 
 21.19  deposit company shall make, or cause to be made, an inventory of 
 21.20  the contents of the box, to which the employee and the 
 21.21  interested person shall attest under penalty of perjury to be 
 21.22  correct and complete.  Within ten days of opening the box 
 21.23  pursuant to this subdivision, the safe deposit company shall 
 21.24  deliver the original inventory of the contents to the court 
 21.25  administrator for the county in which the lessee resided 
 21.26  immediately before the lessee's death, if known to the safe 
 21.27  deposit company, otherwise to the court administrator for the 
 21.28  county in which the safe deposit box is located.  The inventory 
 21.29  must be personally delivered or sent by registered mail.  If the 
 21.30  interested person so requests, the safe deposit company shall 
 21.31  make a true and correct copy of any document in the box and 
 21.32  deliver that copy to the interested person.  If the contents of 
 21.33  the box include a document that appears to be a will, the safe 
 21.34  deposit company shall act in accordance with paragraph (f). 
 21.35     (i) The safe deposit company need not ascertain the truth 
 21.36  of any statement in the affidavit required to be furnished under 
 22.1   this subdivision and when acting in reliance upon an affidavit, 
 22.2   it is discharged as if it dealt with the personal representative 
 22.3   of the lessee.  The safe deposit company is not responsible for 
 22.4   the adequacy of the description of any property included in an 
 22.5   inventory of the contents of a safe deposit box, nor for 
 22.6   conversion of the property in connection with actions performed 
 22.7   under this subdivision, except for conversion by intentional 
 22.8   acts of the company or its employees, directors, officers, or 
 22.9   agents.  If the safe deposit company is not satisfied that the 
 22.10  requirements of this subdivision have been met, it may decline 
 22.11  to open the box.  
 22.12     (j) No contents of a box other than a will and a document 
 22.13  required to facilitate the lessee's wishes regarding body, 
 22.14  funeral, or burial arrangements may be removed pursuant to this 
 22.15  subdivision.  The entire contents of the box, however, may be 
 22.16  removed pursuant to section 524.3-1201. 
 22.17     Sec. 27.  Minnesota Statutes 1995 Supplement, section 
 22.18  56.131, subdivision 4, is amended to read: 
 22.19     Subd. 4.  [ADJUSTMENT OF DOLLAR AMOUNTS.] (a) The dollar 
 22.20  amounts in this section, sections 53.04, subdivision 3a, 
 22.21  paragraph (c), 56.01, 56.12, and 56.125 shall change 
 22.22  periodically, as provided in this section, according to and to 
 22.23  the extent of changes in the implicit price deflator for the 
 22.24  gross domestic product, 1987 = 100, compiled by the United 
 22.25  States Department of Commerce, and hereafter referred to as the 
 22.26  index.  The index for December 1991 is the reference base index 
 22.27  for adjustments of dollar amounts 47.59, subdivision 3.  
 22.28     (b) The designated dollar amounts shall change on July 1 of 
 22.29  each even-numbered year if the percentage of change, calculated 
 22.30  to the nearest whole percentage point, between the index for 
 22.31  December of the preceding year and the reference base index is 
 22.32  ten percent or more, but; 
 22.33     (1) the portion of the percentage change in the index in 
 22.34  excess of a multiple of ten percent shall be disregarded and the 
 22.35  dollar amounts shall change only in multiples of ten percent of 
 22.36  the amounts appearing in Laws 1995, chapter 202, on the date of 
 23.1   enactment; and 
 23.2      (2) the dollar amounts shall not change if the amounts 
 23.3   required by this section are those currently in effect pursuant 
 23.4   to Laws 1995, chapter 202, as a result of earlier application of 
 23.5   this section.  
 23.6      (c) If the index is revised, the percentage of change 
 23.7   pursuant to this section shall be calculated on the basis of the 
 23.8   revised index.  If a revision of the index changes the reference 
 23.9   base index, a revised reference base index shall be determined 
 23.10  by multiplying the reference base index then applicable by the 
 23.11  rebasing factor furnished by the department of commerce.  If the 
 23.12  index is superseded, the index referred to in this section is 
 23.13  the one represented by the department of commerce as reflecting 
 23.14  most accurately changes in the purchasing power of the dollar 
 23.15  for consumers.  
 23.16     (d) The commissioner shall announce and publish:  
 23.17     (1) on or before April 30 of each year in which dollar 
 23.18  amounts are to change, the changes in dollar amounts required by 
 23.19  paragraph (b); and 
 23.20     (2) promptly after the changes occur, changes in the index 
 23.21  required by paragraph (c) including, if applicable, the 
 23.22  numerical equivalent of the reference base index under a revised 
 23.23  reference base index and the designation or title of any index 
 23.24  superseding the index.  
 23.25     (e) A person does not violate this chapter with respect to 
 23.26  a transaction otherwise complying with this chapter if that 
 23.27  person relies on dollar amounts either determined according to 
 23.28  paragraph (b), clause (2) or appearing in the last publication 
 23.29  of the commissioner announcing the then current dollar amounts.  
 23.30     (f) The adjustments provided in this section shall not be 
 23.31  affected unless explicitly provided otherwise by law. 
 23.32     Sec. 28.  Minnesota Statutes 1995 Supplement, section 
 23.33  56.14, is amended to read: 
 23.34     56.14 [DUTIES OF LICENSEE.] 
 23.35     Every licensee shall: 
 23.36     (1) deliver to the borrower (or if there are two or more 
 24.1   borrowers to one of them) at the time any loan is made a 
 24.2   statement making the disclosures and furnishing the information 
 24.3   required by the federal Truth-in-Lending Act, United States 
 24.4   Code, title 15, sections 1601 to 1667e, as amended from time to 
 24.5   time, with respect to the contract of loan.  A copy of the loan 
 24.6   contract may be delivered in lieu of a statement if it discloses 
 24.7   the required information; 
 24.8      (2) deliver or mail to the borrower without request, a 
 24.9   written receipt within 30 days following payment for each 
 24.10  payment by coin or currency made on account of any loan wherein 
 24.11  charges are computed and paid on unpaid principal balances for 
 24.12  the time actually outstanding, specifying the amount applied to 
 24.13  charges and the amount, if any, applied to principal, and 
 24.14  stating the unpaid principal balance, if any, of the loan; and 
 24.15  wherein precomputed charges have been added to the principal of 
 24.16  the loan specifying the amount of the payment applied to 
 24.17  principal and charges combined, the amount applied to default or 
 24.18  extension charges, if any, and stating the unpaid balance, if 
 24.19  any, of the precomputed loan contract.  A periodic statement 
 24.20  showing a payment received by mail complies with this clause; 
 24.21     (3) permit payment to be made in advance in any amount on 
 24.22  any contract of loan at any time, but the licensee may apply the 
 24.23  payment first to all charges in full at the agreed rate up to 
 24.24  the date of the payment; 
 24.25     (4) upon repayment of the loan in full, mark indelibly 
 24.26  every obligation and security, other than a mortgage or security 
 24.27  agreement which secures a new loan to the licensee, signed by 
 24.28  the borrower with the word "Paid" or "Canceled," and release any 
 24.29  mortgage or security agreement which no longer secures a loan to 
 24.30  the licensee, restore any pledge, and cancel and return any 
 24.31  note, and any assignment given to the licensee which does not 
 24.32  secure a new loan to the licensee within 20 days after the 
 24.33  repayment.  For purposes of this requirement, the document 
 24.34  including actual evidence of an obligation or security may be 
 24.35  maintained, stored, and retrieved in a form or format acceptable 
 24.36  to the commissioner under section 46.04, subdivision 3; 
 25.1      (5) display prominently in each licensed place of business 
 25.2   a full and accurate schedule, to be approved by the 
 25.3   commissioner, of the charges to be made and the method of 
 25.4   computing the same; furnish a copy of the contract of loan to 
 25.5   any person obligated on it or who may become obligated on it at 
 25.6   any time upon the request of that person; 
 25.7      (6) show in the loan contract or statement of loan the rate 
 25.8   or rates of charge on which the charge in the contract is based, 
 25.9   expressed in terms of rate or rates per annum.  The rate 
 25.10  expression shall be printed in at least 8-point type on the loan 
 25.11  statement or copy of the loan contract given to the borrower; 
 25.12     (7) if a payment results in the prepayment of three or more 
 25.13  installment payments on a precomputed loan, at the same time the 
 25.14  receipt required by clause (2) is delivered or mailed within 15 
 25.15  days of receipt of the prepayment, deliver or mail to the 
 25.16  borrower a notice in at least eight-point type as part of the 
 25.17  receipt or together with the receipt.  The notice must contain 
 25.18  the following statement:  
 25.19     "You have substantially prepaid the installment payments on 
 25.20     your loan and may experience an interest savings over the 
 25.21     remaining term only if you refinance the balance within the 
 25.22     next 30 days." 
 25.23     Sec. 29.  Minnesota Statutes 1995 Supplement, section 
 25.24  62B.04, subdivision 1, is amended to read: 
 25.25     Subdivision 1.  [CREDIT LIFE INSURANCE.] (1) The initial 
 25.26  amount of credit life insurance shall not exceed the amount of 
 25.27  principal repayable under the contract of indebtedness plus an 
 25.28  amount equal to one monthly payment.  Thereafter, if the 
 25.29  indebtedness is repayable in substantially equal installments 
 25.30  according to a predetermined schedule, the amount of insurance 
 25.31  on which the premium is calculated shall not exceed be equal to 
 25.32  the scheduled indebtedness plus one monthly payment or actual 
 25.33  amount of indebtedness, whichever is greater. If the contract of 
 25.34  indebtedness provides for a variable rate of finance charge or 
 25.35  interest, the initial rate or the scheduled rates based on the 
 25.36  initial index must be used in determining the scheduled amount 
 26.1   of indebtedness and subsequent changes to the rate must be 
 26.2   disregarded in determining whether the contract is repayable in 
 26.3   substantially equal installments according to a predetermined 
 26.4   schedule. 
 26.5      (2) Notwithstanding clause (1), the amount of credit life 
 26.6   insurance written in connection with credit transactions 
 26.7   repayable over a specified term exceeding 63 months shall not 
 26.8   exceed the greater of:  (i) the actual amount of unpaid 
 26.9   indebtedness as it exists from time to time; or (ii) where an 
 26.10  indebtedness is repayable in substantially equal installments 
 26.11  according to a predetermined schedule, the scheduled amount of 
 26.12  unpaid indebtedness, less any unearned interest or finance 
 26.13  charges, plus an amount equal to two monthly payments.  If the 
 26.14  credit transaction provides for a variable rate of finance 
 26.15  charge or interest, the initial rate or the scheduled rates 
 26.16  based on the initial index must be used in determining the 
 26.17  scheduled amount of unpaid indebtedness and subsequent changes 
 26.18  in the rate must be disregarded in determining whether the 
 26.19  contract is repayable in substantially equal installments 
 26.20  according to a predetermined schedule. 
 26.21     (3) Notwithstanding clauses (1) and (2), insurance on 
 26.22  educational, agricultural, and horticultural credit transaction 
 26.23  commitments may be written on a nondecreasing or level term plan 
 26.24  for the amount of the loan commitment. 
 26.25     (4) If the contract of indebtedness provides for a variable 
 26.26  rate of finance charge or interest, the initial rate or the 
 26.27  scheduled rates based on the initial index shall be used in 
 26.28  determining the scheduled amount of indebtedness, and subsequent 
 26.29  changes to the rate shall be disregarded in determining whether 
 26.30  the contract is repayable in substantially equal installments 
 26.31  according to a predetermined schedule. 
 26.32     Sec. 30.  Minnesota Statutes 1994, section 118.01, 
 26.33  subdivision 1, is amended to read: 
 26.34     Subdivision 1.  Any bank, trust company or thrift 
 26.35  institution authorized to do business in this state may, in lieu 
 26.36  of the corporate or personal surety bond required to be 
 27.1   furnished to secure deposited funds, deposit with the custodian 
 27.2   of the funds as collateral security:  (1) certificates of 
 27.3   deposit that are fully insured by the Federal Deposit Insurance 
 27.4   Corporation or the Federal Savings and Loan Insurance 
 27.5   Corporation; (2) notes secured by first mortgages of future 
 27.6   maturity, upon which interest is not past due, on improved real 
 27.7   estate free from delinquent taxes, within the county wherein the 
 27.8   depository is located, or within counties immediately adjoining 
 27.9   the county in the state of Minnesota; (3) obligations which are 
 27.10  legally authorized investments for debt service funds under 
 27.11  section 475.66, subdivision 3; and (4) qualified state or local 
 27.12  government obligations acceptable to the treasurer or chief 
 27.13  financial officer; and (5) irrevocable standby letters of credit 
 27.14  issued by Federal Home Loan Banks to a municipality accompanied 
 27.15  by written evidence of the bank's public debt rating 
 27.16  contemplated by this subdivision.  Qualified obligations under 
 27.17  clause (4) must be general obligations rated "A" or better by 
 27.18  Moody's Investors Service, Inc. or Standard & Poor's 
 27.19  Corporation; and Federal Home Loan Banks issuing letters of 
 27.20  credit under clause (5) must have a rating of "AA" or better by 
 27.21  Moody's Investors Service, Inc., or Standard & Poor's 
 27.22  Corporation. 
 27.23     Sec. 31.  Minnesota Statutes 1994, section 168.69, is 
 27.24  amended to read: 
 27.25     168.69 [COMPLAINT ALLEGING VIOLATION.] 
 27.26     Any retail buyer having reason to believe that sections 
 27.27  168.66 to 168.77 relating to the buyer's retail installment 
 27.28  contract has been violated may file with the administrator a 
 27.29  written complaint setting forth the details of such alleged 
 27.30  violation and the administrator, upon receipt of such complaint, 
 27.31  may inspect the pertinent books, records, letters and contracts 
 27.32  of the licensee, assignee of the licensee or retail seller, and 
 27.33  of the retail seller involved, relating to such specific written 
 27.34  complaint.  
 27.35     Sec. 32.  Minnesota Statutes 1994, section 168.705, is 
 27.36  amended to read: 
 28.1      168.705 [EXAMINATIONS, SPECIAL INVESTIGATIONS, COSTS.] 
 28.2      For the purpose of discovering violations of sections 
 28.3   168.66 to 168.77 or securing information lawfully required by 
 28.4   the administrator hereunder, the administrator may, at any time, 
 28.5   either personally or by a person or persons duly designated by 
 28.6   the administrator, investigate the conditional sales contracts 
 28.7   and business related to the conditional sales contracts and 
 28.8   examine the books, accounts, records, and files used therein, of 
 28.9   every licensee, assignee of the licensee, and of every person 
 28.10  who shall be engaged in the business of a sales finance company, 
 28.11  including the retail seller and assignee of the retail seller, 
 28.12  whether the person shall act as principal or agent, or under or 
 28.13  without the authority of sections 168.66 to 168.77.  For that 
 28.14  purpose, the administrator and the administrator's duly 
 28.15  designated representative shall have free access to the offices 
 28.16  and places of business, books, accounts, papers, records, files, 
 28.17  safes, and vaults of all these persons.  The administrator and 
 28.18  all persons duly designated by the administrator shall have 
 28.19  authority to require the attendance of and to examine, under 
 28.20  oath, all persons whomsoever whose testimony the administrator 
 28.21  may require relative to the conditional sales contract or the 
 28.22  business or to the subject matter of any examination, 
 28.23  investigation, or hearing. 
 28.24     The administrator may make an examination of the affairs, 
 28.25  business, office, and records of licensees, and of other persons 
 28.26  subject to examination under this section, as often as 
 28.27  considered necessary.  The administrator may assess a fee 
 28.28  covering the necessary costs of an examination or special 
 28.29  investigation under this section, section 168.69, or reports 
 28.30  filed under section 168.706.  The fee is payable to the 
 28.31  administrator on the administrator's request for payment.  The 
 28.32  administrator may maintain an action for the recovery of the 
 28.33  costs in any court of competent jurisdiction. 
 28.34     Sec. 33.  Minnesota Statutes 1994, section 168.71, is 
 28.35  amended to read: 
 28.36     168.71 [RETAIL INSTALLMENT CONTRACTS.] 
 29.1      (a)(1) Every retail installment contract shall be in 
 29.2   writing, shall contain all the agreements of the parties, shall 
 29.3   be signed by the retail buyer and seller, and a copy thereof 
 29.4   signed by the retail buyer shall be furnished to such retail 
 29.5   buyer at the time of the execution of retail buyer executes the 
 29.6   contract.  The copy signed by both the retail buyer and retail 
 29.7   seller shall be provided to the retail buyer within seven days 
 29.8   after delivery of the vehicle.  With respect to any contract 
 29.9   executed prior to August 1, 1996, which has not been paid in 
 29.10  full by the retail buyer, the retail seller shall provide such 
 29.11  retail buyer a copy signed by both the retail buyer and retail 
 29.12  seller within 120 days after August 1, 1996. 
 29.13     (2) No provisions for confession of judgment or power of 
 29.14  attorney therefor contained in any retail installment contract 
 29.15  or contained in a separate agreement relating thereto, shall be 
 29.16  valid or enforceable.  
 29.17     (3) The holder of a precomputed retail installment contract 
 29.18  may, if the contract so provides, collect a delinquency and 
 29.19  collection charge on each installment in arrears for a period 
 29.20  not less than ten days in an amount not in excess of five 
 29.21  percent of each installment or $5, whichever is greater.  In 
 29.22  addition to such delinquency and collection charge, the retail 
 29.23  installment contract, whether interest-bearing or precomputed, 
 29.24  may provide for the payment of attorneys' fees not exceeding 15 
 29.25  percent of the amount due and payable under such contract where 
 29.26  such contract is referred to an attorney not a salaried employee 
 29.27  of the holder of the contract for collection plus the court 
 29.28  costs.  
 29.29     (4) Unless written notice has been given to the retail 
 29.30  buyer of actual or intended assignment of a retail installment 
 29.31  contract, payment thereunder or tender thereof made by the 
 29.32  retail buyer to the last known holder of such contract shall be 
 29.33  binding upon all subsequent holders or assignees.  
 29.34     (5) Upon written request from the retail buyer, the holder 
 29.35  of the retail installment contract shall give or forward to the 
 29.36  retail buyer a written statement of the dates and amounts of 
 30.1   payments and the total amount unpaid under such contract.  A 
 30.2   retail buyer shall be given a written receipt for any payment 
 30.3   when made in cash.  
 30.4      (b) The retail installment contract shall contain the 
 30.5   following items: 
 30.6      (1) The cash sale price of the motor vehicle which is the 
 30.7   subject matter of the retail installment contract; 
 30.8      (2) The total amount of the retail buyer's down payment, 
 30.9   whether made in money or goods, or partly in money or partly in 
 30.10  goods; 
 30.11     (3) The difference between items one and two; 
 30.12     (4) The charge, if any, included in the transaction for any 
 30.13  insurance and other benefits not included in clause (1), 
 30.14  specifying the types of coverage and taxes, fees, and charges 
 30.15  that actually are or will be paid to public officials or 
 30.16  government agencies, including those for perfecting, releasing, 
 30.17  or satisfying a security interest if such taxes, fees, or 
 30.18  charges are not included in clause (1); 
 30.19     (5) Principal balance, which is the sum of items three and 
 30.20  four; 
 30.21     (6) The amount of the finance charge; 
 30.22     (7) The total of payments payable by the retail buyer to 
 30.23  the retail seller and the number of installment payments 
 30.24  required and the amount of each installment expressed in dollars 
 30.25  or percentages, and date of each payment necessary finally to 
 30.26  pay the total of payments which is the sum of item five and item 
 30.27  six.  
 30.28     Provided, however, that said items one to seven inclusive 
 30.29  need not be stated in the terms, sequence or order set forth 
 30.30  above.  Provided further, that clauses (6) and (7) may be 
 30.31  disclosed on the assumption that all scheduled payments under 
 30.32  the contract will be made when due. 
 30.33     In lieu of the above clauses, the retail seller may give 
 30.34  the retail buyer disclosures which satisfy the requirements of 
 30.35  the Federal Truth-In-Lending Act in effect as of the time of the 
 30.36  contract, notwithstanding whether or not that act applies to the 
 31.1   transaction. 
 31.2      (c) Every retail seller or sales finance company, if a 
 31.3   charge for insurance on the motor vehicle is included in a 
 31.4   retail installment contract shall within 30 days after execution 
 31.5   of the retail installment contract send or cause to be sent to 
 31.6   the retail buyer a policy or policies or certificate of 
 31.7   insurance, which insurance shall be written by a company 
 31.8   authorized to do business in this state, clearly setting forth 
 31.9   the amount of the premium, the kind or kinds of insurance and 
 31.10  the scope of the coverage and all the terms, exceptions, 
 31.11  limitations, restrictions and conditions of the contract or 
 31.12  contracts of the insurance.  The buyer of a motor vehicle under 
 31.13  a retail installment contract shall have the privilege of 
 31.14  purchasing such insurance from an agent or broker of the buyer's 
 31.15  own selection and selecting an insurance company mutually 
 31.16  acceptable to the seller and the buyer; provided, however, that 
 31.17  the inclusion of the cost of the insurance premium in the retail 
 31.18  installment contract when the buyer selects the agent, broker or 
 31.19  company, shall be optional with the seller. 
 31.20     (d) Any sales finance company hereunder may purchase or 
 31.21  acquire from any retail seller any retail installment contract 
 31.22  on such terms and conditions as may be mutually agreed upon 
 31.23  between them.  
 31.24     (e) An acknowledgment by the retail buyer of the delivery 
 31.25  of any such copy or notice as required in subsection (a) 
 31.26  contained in the body of the statement or contract shall be 
 31.27  conclusive proof of delivery in any action or proceeding by or 
 31.28  against any assignee of a retail installment contract.  
 31.29     Sec. 34.  Minnesota Statutes 1994, section 168.73, is 
 31.30  amended to read: 
 31.31     168.73 [PREPAYMENT IN FULL, REFUND CREDITS, ALLOWANCE.] 
 31.32     Subdivision 1.  [PREPAYMENT IN FULL.] Notwithstanding the 
 31.33  provisions of any retail installment contract to the contrary, 
 31.34  any retail buyer may pay in full at any time before maturity the 
 31.35  debt of any retail installment contract without penalty.  In 
 31.36  paying a precomputed retail installment contract in full, the 
 32.1   retail buyer shall receive a refund credit thereon for such 
 32.2   anticipation of payments.  For contracts with substantially 
 32.3   equal scheduled monthly payments remaining after the date of 
 32.4   prepayment in full, the refund must be calculated for all fully 
 32.5   unexpired monthly payment periods following the date of payment 
 32.6   in full.  For all other contracts, the refund must be calculated 
 32.7   as of the date in the month following prepayment which 
 32.8   corresponds to the original contract date.  The refund shall be 
 32.9   calculated according to the actuarial method, less an 
 32.10  acquisition cost of $15 which may be deducted from the refund so 
 32.11  calculated.  
 32.12     Where the amount of the credit for anticipation of payment 
 32.13  is less than $1, no refund need be made.  
 32.14     The actuarial method means the method of allocating 
 32.15  payments on a contract between the principal amount and finance 
 32.16  charge at the contract rate charged under section 168.72, 
 32.17  whereby a payment is applied first to the accumulated finance 
 32.18  charge and then to the unpaid principal balance based on the 
 32.19  original terms of the contract and based on the assumption that 
 32.20  all payments are made on the due date as originally scheduled or 
 32.21  deferred. 
 32.22     Subd. 2.  [PARTIAL PREPAYMENT; NOTICE.] If a payment 
 32.23  results in the prepayment of three or more installment payments 
 32.24  on a precomputed contract, the retail seller or assignee of the 
 32.25  retail seller shall within 15 days of receipt of the prepayment, 
 32.26  deliver or mail to the retail buyer a notice in a least 
 32.27  eight-point type.  The notice must contain the following 
 32.28  statement: 
 32.29     "You have substantially prepaid the installment payments on 
 32.30     your contract and may experience an interest savings over 
 32.31     the remaining term only if you refinance the balance within 
 32.32     the next 30 days." 
 32.33     Sec. 35.  Minnesota Statutes 1994, section 256.99, is 
 32.34  amended to read: 
 32.35     256.99 [REVERSE MORTGAGE PROCEEDS DISREGARDED.] 
 32.36     All reverse mortgage loan proceeds received pursuant to 
 33.1   section 47.58, including interest or earnings thereon, shall be 
 33.2   disregarded and shall not be considered available to the 
 33.3   borrower for purposes of determining initial or continuing 
 33.4   eligibility for, or amount of, medical assistance, Minnesota 
 33.5   supplemental assistance, general assistance, general assistance 
 33.6   medical care, or a federal or state low interest loan or grant.  
 33.7   This section applies regardless of the time elapsed since the 
 33.8   loan was made or the disposition of the proceeds. 
 33.9      For purposes of medical assistance eligibility provided 
 33.10  under sections 256B.055, 256B.056, and 256B.06, proceeds from a 
 33.11  reverse mortgage must be disregarded as income in the month of 
 33.12  receipt but are a resource if retained after the month of 
 33.13  receipt.  
 33.14     Sec. 36.  Minnesota Statutes 1994, section 300.025, is 
 33.15  amended to read: 
 33.16     300.025 [ORGANIZATION OF FINANCIAL CORPORATIONS.] 
 33.17     (a) Three or more persons may form a corporation for any of 
 33.18  the purposes specified in section 47.12 by applying to the 
 33.19  department of commerce and complying with all applicable 
 33.20  organizational requirements and the conditions set out in 
 33.21  clauses (1) to (7).  However, no corporation may be formed under 
 33.22  this section if it may be formed under the Minnesota business 
 33.23  corporation act.  The incorporators must subscribe a certificate 
 33.24  specifying: 
 33.25     (1) the corporation's name, which must distinguish it from 
 33.26  all other corporations authorized to do business in this state, 
 33.27  and must contain the word "company," "corporation," "bank," 
 33.28  "association," or "incorporated"; 
 33.29     (2) the general nature of the corporation's business and 
 33.30  its principal place of business; 
 33.31     (3) the period of its duration, if limited; 
 33.32     (4) the names and places of residence of the incorporators; 
 33.33     (5) the board in which the management of the corporation 
 33.34  will be vested, the date of the annual meeting at which it will 
 33.35  be elected, and the names and addresses of the board members 
 33.36  until the first election, a majority of whom must always be 
 34.1   residents of this state; 
 34.2      (6) the amount of capital stock, if any, how the capital 
 34.3   stock is to be paid in, the number of shares into which it is to 
 34.4   be divided, and the par value of each share; and, if there is to 
 34.5   be more than one class, a description and the terms of issue of 
 34.6   each class, and the method of voting on each class; and 
 34.7      (7) the highest amount of indebtedness or liability to 
 34.8   which the corporation will at any time be subject. 
 34.9      The certificate may contain any other lawful provision 
 34.10  defining and regulating the powers and business of the 
 34.11  corporation, its officers, directors, trustees, members, and 
 34.12  stockholders.  However, a corporation subject to sections 
 34.13  section 48.27 and 51A.22, subdivision 2, may show its highest 
 34.14  amount of indebtedness to be 30 times the amount of its capital 
 34.15  and actual surplus.  
 34.16     (b) A person doing business in this state may contest the 
 34.17  subsequent registration of a name with the office of the 
 34.18  secretary of state as provided in section 5.22. 
 34.19     Sec. 37.  Minnesota Statutes 1994, section 303.02, 
 34.20  subdivision 2, is amended to read: 
 34.21     Subd. 2.  [CORPORATION.] In addition to the meaning set 
 34.22  forth in section 300.02, subdivision 2, "corporation" means a 
 34.23  corporation formed for profit and includes a cooperative.  
 34.24     Sec. 38.  Minnesota Statutes 1994, section 308A.135, 
 34.25  subdivision 3, is amended to read: 
 34.26     Subd. 3.  [CERTIFICATE.] (a) A certificate must be prepared 
 34.27  stating:  
 34.28     (1) the vote and meeting of the board adopting a resolution 
 34.29  of the proposed amendment; 
 34.30     (2) the notice given to members of the meeting that at 
 34.31  which the amendment was adopted; 
 34.32     (3) the quorum registered at the meeting; and 
 34.33     (4) the vote cast adopting the amendment.  
 34.34     (b) The certificate must be signed by the chair, 
 34.35  vice-chair, president, vice-president, secretary, or assistant 
 34.36  secretary and filed with the records of the cooperative.  
 35.1      Sec. 39.  Minnesota Statutes 1994, section 308A.165, 
 35.2   subdivision 2, is amended to read: 
 35.3      Subd. 2.  [ADOPTION AND AMENDMENT.] (a) Except as provided 
 35.4   in paragraph (b), the bylaws of a cooperative may be adopted or 
 35.5   amended at a regular or special members' meeting if:  
 35.6      (1) the notice of the meeting contains a summary statement 
 35.7   of the proposed bylaws or amendment; 
 35.8      (2) a quorum is registered as being present or represented 
 35.9   by mail vote if authorized by the board; and 
 35.10     (3) the bylaws or amendment is approved by a majority of 
 35.11  the votes cast, or for a cooperative with articles or bylaws 
 35.12  requiring more than majority approval or other conditions for 
 35.13  approval, the bylaws or amendment is approved by a proportion of 
 35.14  the votes cast or a number of the total members as required by 
 35.15  the articles or bylaws and the conditions for approval in the 
 35.16  articles or bylaws have been satisfied. 
 35.17     (b) Until the first annual members meeting, the majority of 
 35.18  directors may adopt and amend bylaws for the cooperative that 
 35.19  are consistent with subdivision 3 if the cooperative does not 
 35.20  have any members or stockholders with voting rights. 
 35.21     Sec. 40.  Minnesota Statutes 1994, section 332.21, is 
 35.22  amended to read: 
 35.23     332.21 [CONTRACTS.] 
 35.24     Each contract entered into by the licensee and the debtor 
 35.25  shall be in writing and signed by both parties.  The licensee 
 35.26  shall furnish the debtor with a copy of the signed contract.  
 35.27  Each such contract shall set forth (1) the dollar charges agreed 
 35.28  upon for the services of the licensee, clearly disclosing to 
 35.29  such debtor the total amount which may be retained by licensee 
 35.30  for services if the contract is fully performed, which maximum 
 35.31  amount would be the origination fee together with 15 percent of 
 35.32  the amount scheduled to be liquidated by such contract, (2) the 
 35.33  terms upon which the debtor may cancel the contract as set out 
 35.34  in section 332.23, (3) all debts which are to be managed by the 
 35.35  licensee, including the name of the creditor and the amount of 
 35.36  the debt, and (4) such other matter as the commissioner may 
 36.1   require by rule.  A contract shall not be effective until a 
 36.2   payment has been made to the licensee for distribution to 
 36.3   creditors or until three business days after the signing 
 36.4   thereof, whichever is later.  Within such period an individual 
 36.5   may disaffirm said contract and upon such disaffirmance said 
 36.6   contract shall be null and void.  Total fees contained in the 
 36.7   contract may be exceeded in relation to creditors under open-end 
 36.8   agreements if it is agreed to in the contract and the additional 
 36.9   debts so contracted to be prorated do not exceed ten percent of 
 36.10  the original debts in the contract or written revisions to the 
 36.11  original contract. 
 36.12     Sec. 41.  Minnesota Statutes 1994, section 332.50, 
 36.13  subdivision 2, is amended to read: 
 36.14     Subd. 2.  [ACTS CONSTITUTING.] (a) Whoever issues any check 
 36.15  that is dishonored and is not paid within 30 days after mailing 
 36.16  a notice of dishonor that includes a citation to this section 
 36.17  and section 609.535, and a description of the penalties 
 36.18  contained in these sections, in compliance with subdivision 3, 
 36.19  is liable to the payee, holder, or agent of the holder for:  (1) 
 36.20  the amount of the check plus a civil penalty of up to $100 or up 
 36.21  to 100 percent of the value of the check, whichever is greater; 
 36.22  (2) interest at the rate payable on judgments pursuant to 
 36.23  section 549.09 on the face amount of the check from the date of 
 36.24  dishonor; and (3) reasonable attorney fees if the aggregate 
 36.25  amount of dishonored checks issued by the issuer to all payees 
 36.26  within a six-month period is over $1,250. 
 36.27     (b) If the amount of the dishonored check plus any service 
 36.28  charges that have been incurred under paragraph (d) or (e) have 
 36.29  not been paid within 30 days after having mailed a notice of 
 36.30  dishonor in compliance with subdivision 3 but before bringing an 
 36.31  action, a payee, holder, or agent of the holder may make a 
 36.32  written demand for payment for the liability imposed by 
 36.33  paragraph (a) by sending a copy of this section and a 
 36.34  description of the liability contained in this section to the 
 36.35  issuer's last known address. 
 36.36     (c) After notice has been sent but before an action under 
 37.1   this section is heard by the court, the plaintiff shall settle 
 37.2   the claim if the defendant gives the plaintiff the amount of the 
 37.3   check plus court costs, any service charge owed under paragraph 
 37.4   (d), and reasonable attorney fees if provided for under 
 37.5   paragraph (a), clause (3).  
 37.6      (d) A service charge may be imposed immediately on any 
 37.7   dishonored check, regardless of mailing a notice of dishonor, if 
 37.8   written notice of the service charge was conspicuously displayed 
 37.9   on the premises when the check was issued.  The service charge 
 37.10  may not exceed $20, except that if the payee uses the services 
 37.11  of a law enforcement agency to obtain payment of a dishonored 
 37.12  check, a service charge of up to $25 may be imposed if the 
 37.13  service charge is used to reimburse the law enforcement agency 
 37.14  for its expenses.  A payee may impose only one service charge 
 37.15  under this paragraph for each dishonored check.  
 37.16     (e) This subdivision prevails over any provision of law 
 37.17  limiting, prohibiting, or otherwise regulating service charges 
 37.18  authorized by this subdivision, but does not nullify charges for 
 37.19  dishonored checks, which do not exceed the charges in paragraph 
 37.20  (d) or the actual cost of collection, but in no case more than 
 37.21  $30, or terms or conditions for imposing the charges which have 
 37.22  been agreed to by the parties to an express contract. 
 37.23     Sec. 42.  Laws 1995, chapter 171, section 70, is amended to 
 37.24  read: 
 37.25     Sec. 70.  [REPEALER.] 
 37.26     Minnesota Statutes 1994, sections 47.095; 47.30, 
 37.27  subdivisions 4 and 6; 48.67; 50.02; 50.07; 50.08; 50.09; 50.10; 
 37.28  50.12; 50.15; 50.16; 50.21; and 50.22, are repealed. 
 37.29     Sec. 43.  [CAPITAL REQUIREMENTS FOR TRUST COMPANIES; 
 37.30  REENACTMENT OF REPEALED SECTION.] 
 37.31     Notwithstanding Minnesota Statutes, section 645.36, 
 37.32  Minnesota Statutes, section 48.67, inadvertently repealed in 
 37.33  Laws 1995, chapter 171, section 70, is reenacted as of the 
 37.34  effective date of Laws 1995, chapter 171, section 70. 
 37.35     Sec. 44.  [REPEALER.] 
 37.36     (a) Minnesota Statutes 1994, sections 51A.01; 51A.02, 
 38.1   subdivisions 1, 2, 3, 4, 5, 8, 9, 10, 11, 12, 13, 14, 15, 16, 
 38.2   17, 18, 19, 20, 21, 22, 23, 24, 25, 27, 28, 29, 30, 31, 32, 33, 
 38.3   34, 35, 36, 37, 38, 39, 41, 42, 43, 44, 45, 46, 47, 48, 49, 50, 
 38.4   51, 52, 53, 55, and 56; 51A.03; 51A.04; 51A.041; 51A.05; 51A.06; 
 38.5   51A.065; 51A.07; 51A.08; 51A.09; 51A.10; 51A.11; 51A.12; 51A.13; 
 38.6   51A.131; 51A.14; 51A.15; 51A.16; 51A.17; 51A.19, subdivisions 1, 
 38.7   4, 5, 6, 7, 8, 10, 11, 12, and 13; 51A.20; 51A.21, subdivisions 
 38.8   1, 2, 3, 4, 5, 6a, 6b, 7, 8, 9, 10, 11, 12, 13, 14, 15, 17, 18, 
 38.9   20, 21, 22, 23, 24, 25, 26, and 27; 51A.22; 51A.23, subdivision 
 38.10  6; 51A.24; 51A.251; 51A.261; 51A.262; 51A.27; 51A.28; 51A.29; 
 38.11  51A.30; 51A.31; 51A.32; 51A.33; 51A.34; 51A.35; 51A.361; 51A.37; 
 38.12  51A.38; 51A.40; 51A.41; 51A.42; 51A.43; 51A.44; 51A.45; 51A.46; 
 38.13  51A.47; 51A.48; 51A.51; 51A.52; 51A.54; 51A.55; 51A.56; and 
 38.14  51A.57; Minnesota Statutes 1995 Supplement, sections 47.201, 
 38.15  subdivision 7; 47.27, subdivision 3; 51A.02, subdivisions 6, 7, 
 38.16  26, 40, and 54; 51A.19, subdivision 9; 51A.21, subdivision 28; 
 38.17  51A.23, subdivisions 1 and 7; 51A.386; 51A.50; 51A.53; and 
 38.18  51A.58, are repealed. 
 38.19     (b) Minnesota Statutes 1994, section 48.94, is repealed. 
 38.20     (c) Minnesota Rules, parts 2655.0100; 2655.0200; 2655.0300; 
 38.21  2655.0400; 2655.0500; 2655.0600; 2655.0700; 2655.0800; 
 38.22  2655.0900; 2655.1000; 2655.1100; 2655.1200; and 2655.1300, are 
 38.23  repealed. 
 38.24     Sec. 45.  [EFFECTIVE DATE.] 
 38.25     Sections 1 to 5, 7 to 9, 11, 12, 16, 20 to 27, 30, 33, 35, 
 38.26  42, 43, and 44, paragraphs (b) and (c), are effective the day 
 38.27  following final enactment.  Section 44, paragraph (a), is 
 38.28  effective July 1, 1998. 
 38.29     Sections 10, 14, 15, 19, and 36 are effective on the 
 38.30  effective date of the repeals in section 44, paragraph (a). 
 38.31                             ARTICLE 2
 38.32                    CONSUMER CREDIT UNIFORM CODE
 38.33                 CLARIFICATION AND DEVELOPMENT ACT
 38.34     Section 1.  Minnesota Statutes 1995 Supplement, section 
 38.35  47.59, subdivision 2, is amended to read: 
 38.36     Subd. 2.  [APPLICATION.] This section does not apply to 
 39.1   loans and other Extensions of credit or purchases of extensions 
 39.2   of credit by financial institutions under sections 47.20, 47.21, 
 39.3   47.201, 47.204, 47.58, 47.60, 48.153, 48.185, 48.195, 59A.01 to 
 39.4   59A.15, 168.66 to 168.77, 334.01, 334.011, 334.012, 334.021, 
 39.5   334.06, and 334.061 to 334.19. may, but need not, be made 
 39.6   according to those sections in lieu of the authority set forth 
 39.7   in this section to the extent those sections authorize the 
 39.8   financial institution to make extensions of credit or purchase 
 39.9   extensions of credit under those sections.  If a financial 
 39.10  institution elects to make an extension of credit or to purchase 
 39.11  an extension of credit under those other sections, the extension 
 39.12  of credit or the purchase of an extension of credit is subject 
 39.13  to those sections and not this section, except this subdivision, 
 39.14  and except as expressly provided in those sections.  A financial 
 39.15  institution may also charge an organization a rate of interest 
 39.16  and any charges agreed to by the organization and may calculate 
 39.17  and collect finance and other charges in any manner agreed to by 
 39.18  that organization.  Except for extensions of credit a financial 
 39.19  institution elects to make under section 334.01, 334.011, 
 39.20  334.012, 334.021, 334.06, or 334.061 to 334.19, chapter 334 does 
 39.21  not apply to extensions of credit made according to this section 
 39.22  or the sections listed in this subdivision.  This subdivision 
 39.23  does not authorize a financial institution to extend credit or 
 39.24  purchase an extension of credit under any of the sections listed 
 39.25  in this subdivision if the financial institution is not 
 39.26  authorized to do so under those sections.  A financial 
 39.27  institution extending credit under any of the sections listed in 
 39.28  this subdivision shall specify in the promissory note, contract, 
 39.29  or other loan document the section under which the extension of 
 39.30  credit is made. 
 39.31     Sec. 2.  Minnesota Statutes 1995 Supplement, section 47.59, 
 39.32  subdivision 3, is amended to read: 
 39.33     Subd. 3.  [FINANCE CHARGE FOR LOANS.] (a) With respect to a 
 39.34  loan, including a loan pursuant to open-end credit but excluding 
 39.35  open-end credit pursuant to a credit card, a financial 
 39.36  institution may contract for and receive a finance charge on the 
 40.1   unpaid balance of the principal amount not to exceed the greater 
 40.2   of:  
 40.3      (1) an annual percentage rate not exceeding 21.75 percent; 
 40.4   or 
 40.5      (2) the total of: 
 40.6      (i) 33 percent per year on that part of the unpaid balance 
 40.7   of the principal amount not exceeding $750; and 
 40.8      (ii) 19 percent per year on that part of the unpaid balance 
 40.9   of the principal amount exceeding $750.  
 40.10     With respect to open-end credit pursuant to a credit card, 
 40.11  the financial institution may contract for and receive a finance 
 40.12  charge on the unpaid balance of the principal amount at an 
 40.13  annual percentage rate not exceeding 18 percent per year. 
 40.14     (b) On a loan where the finance charge is calculated 
 40.15  according to the method provided for in paragraph (a), clause 
 40.16  (2), the finance charge must be contracted for and earned as 
 40.17  provided in that provision or at the single annual percentage 
 40.18  rate computed to the nearest .001 one-tenth of one percent that 
 40.19  would earn the same total finance charge at maturity of the 
 40.20  contract as would be earned by the application of the graduated 
 40.21  rates provided in paragraph (a), clause (2), when the debt is 
 40.22  paid according to the agreed terms and the calculations are made 
 40.23  according to the actuarial method. 
 40.24     (c) With respect to a loan, the finance charge must be 
 40.25  considered not to exceed the maximum annual percentage rate 
 40.26  permitted under this section if the finance charge contracted 
 40.27  for and received does not exceed the equivalent of the maximum 
 40.28  annual percentage rate calculated in accordance with Code of 
 40.29  Federal Regulations, title 12, part 226, but using the 
 40.30  definition of finance charge provided in this section.  
 40.31     (d) This subdivision does not limit or restrict the manner 
 40.32  of calculating the finance charge, whether by way of add-on, 
 40.33  discount, discount points, precomputed charges, single annual 
 40.34  percentage rate, variable rate, interest in advance, 
 40.35  compounding, average daily balance method, or otherwise, if the 
 40.36  annual percentage rate does not exceed that permitted by this 
 41.1   section.  Discount points permitted by this paragraph and not 
 41.2   collected but included in the principal amount must not be 
 41.3   included in the amount on which credit insurance premiums are 
 41.4   calculated and charged. 
 41.5      (e) With respect to a loan secured by real estate, if a 
 41.6   finance charge is calculated or collected in advance, or 
 41.7   included in the principal amount of the loan, and the borrower 
 41.8   prepays the loan in full, the financial institution shall credit 
 41.9   the borrower with a refund of the charge to the extent that the 
 41.10  annual percentage rate yield on the loan would exceed the 
 41.11  maximum rate permitted under paragraph (a), taking into account 
 41.12  the prepayment.  The refund need not be made if it would be less 
 41.13  than $5.  
 41.14     (f) With respect to all other loans, if the finance charge 
 41.15  is calculated or collected in advance, or included in the 
 41.16  principal amount of the loan, and the borrower prepays the loan 
 41.17  in full, the financial institution shall credit the borrower 
 41.18  with a refund of the charge to the extent the annual percentage 
 41.19  rate yield on the loan would exceed the annual percentage rate 
 41.20  on the loan as originally determined under paragraph (a) and 
 41.21  taking into account the prepayment.  The refund need not be made 
 41.22  if it would be less than $5.  
 41.23     (g) For the purpose of calculating the refund under this 
 41.24  subdivision, the financial institution may assume that the 
 41.25  contract was paid before the date of prepayment according to the 
 41.26  schedule of payments under the loan and that all payments were 
 41.27  paid on their due dates. 
 41.28     (h) For loans repayable in substantially equal successive 
 41.29  monthly installments, the financial institution may calculate 
 41.30  the refund under paragraph (f) as the portion of the finance 
 41.31  charge allocable on an actuarial basis to all wholly unexpired 
 41.32  payment periods following the date of prepayment, based on the 
 41.33  annual percentage rate on the loan as originally determined 
 41.34  under paragraph (a), and for the purpose of calculating the 
 41.35  refund may assume that all payments are made on the due date. 
 41.36     (i) The dollar amounts in this subdivision and subdivision 
 42.1   6, paragraph (a), clause (4), shall change periodically, as 
 42.2   provided in this section, according to and to the extent of 
 42.3   changes in the implicit price deflator for the gross domestic 
 42.4   product, 1987 = 100, compiled by the United States Department of 
 42.5   Commerce, and hereafter referred to as the index.  The index for 
 42.6   December 1991 is the reference base index for adjustments of 
 42.7   dollar amounts. 
 42.8      (j) The designated dollar amounts shall change on July 1 of 
 42.9   each even-numbered year if the percentage of change, calculated 
 42.10  to the nearest whole percentage point, between the index for 
 42.11  December of the preceding year and the reference base index is 
 42.12  ten percent or more; but 
 42.13     (1) the portion of the percentage change in the index in 
 42.14  excess of a multiple of ten percent shall be disregarded and the 
 42.15  dollar amounts shall change only in multiples of ten percent of 
 42.16  the amounts appearing in Laws 1995, chapter 202, on May 24, 
 42.17  1995; and 
 42.18     (2) the dollar amounts shall not change if the amounts 
 42.19  required by this section are those currently in effect pursuant 
 42.20  to Laws 1995, chapter 202, as a result of earlier application of 
 42.21  this section. 
 42.22     (k) If the index is revised, the percentage of change 
 42.23  pursuant to this section shall be calculated on the basis of the 
 42.24  revised index.  If a revision of the index changes the reference 
 42.25  base index, a revised reference base index shall be determined 
 42.26  by multiplying the reference base index then applicable by the 
 42.27  rebasing factor furnished by the department of commerce.  If the 
 42.28  index is superseded, the index referred to in this section is 
 42.29  the one represented by the department of commerce as reflecting 
 42.30  most accurately changes in the purchasing power of the dollar 
 42.31  for consumers. 
 42.32     (l) The commissioner shall announce and publish: 
 42.33     (1) on or before April 30 of each year in which dollar 
 42.34  amounts are to change, the changes in dollar amounts required by 
 42.35  paragraph (j); and 
 42.36     (2) promptly after the changes occur, changes in the index 
 43.1   required by paragraph (k) including, if applicable, the 
 43.2   numerical equivalent of the reference base index under a revised 
 43.3   reference base index and the designation or title of any index 
 43.4   superseding the index. 
 43.5      (m) A person does not violate this chapter with respect to 
 43.6   a transaction otherwise complying with this chapter if that 
 43.7   person relies on dollar amounts either determined according to 
 43.8   paragraph (j), clause (2), or appearing in the last publication 
 43.9   of the commissioner announcing the then current dollar amounts. 
 43.10     (n) The adjustments provided in this section shall not be 
 43.11  affected unless explicitly provided otherwise by law. 
 43.12     Sec. 3.  Minnesota Statutes 1995 Supplement, section 47.59, 
 43.13  subdivision 4, is amended to read: 
 43.14     Subd. 4.  [FINANCE CHARGE FOR CREDIT SALES MADE BY A THIRD 
 43.15  PARTY.] (a) A person may enter into a credit sale contract for 
 43.16  sale to a financial institution and a financial institution may 
 43.17  purchase and enforce the contract, if the annual percentage rate 
 43.18  provided for in the contract does not exceed that permitted in 
 43.19  this section, or, in the case of contracts governed by sections 
 43.20  168.66 to 168.77, the rates permitted by those 
 43.21  sections subdivision 4a. 
 43.22     (b) The annual percentage rate may not exceed the 
 43.23  equivalent of the greater of either of the following:  
 43.24     (1) the total of:  
 43.25     (i) 36 percent per year on that part of the unpaid balances 
 43.26  of the amount financed that is $300 or less; 
 43.27     (ii) 21 percent per year on that part of the unpaid 
 43.28  balances of the amount financed which exceeds $300 but does not 
 43.29  exceed $1,000; and 
 43.30     (iii) 15 percent per year on that part of the unpaid 
 43.31  balances of the amount financed which exceeds $1,000; or 
 43.32     (2) 19 percent per year on the unpaid balances of the 
 43.33  amount financed.  
 43.34     (c) This subdivision does not limit or restrict the manner 
 43.35  of calculating the finance charge whether by way of add-on, 
 43.36  discount, discount points, single annual percentage rate, 
 44.1   precomputed charges, variable rate, interest in advance, 
 44.2   compounding, or otherwise, if the annual percentage rate 
 44.3   calculated under paragraph (d) does not exceed that permitted by 
 44.4   this section.  The finance charge may be contracted for and 
 44.5   earned at the single annual percentage rate that would earn the 
 44.6   same finance charge as the graduated rates when the debt is paid 
 44.7   according to the agreed terms and the finance charge is 
 44.8   calculated under paragraph (d).  If the finance charge is 
 44.9   calculated and collected in advance, or included in the 
 44.10  principal amount of the contract, and the borrower prepays the 
 44.11  contract in full, the financial institution shall credit the 
 44.12  borrower with a refund of the charge to the extent the annual 
 44.13  percentage rate yield on the contract would exceed the annual 
 44.14  percentage rate on the contract as originally determined under 
 44.15  paragraph (d) and taking into account the prepayment.  For the 
 44.16  purpose of calculating the refund under this subdivision, the 
 44.17  financial institution may assume that the contract was paid 
 44.18  before the date of prepayment according to the schedule of 
 44.19  payments under the contract and that all payments were paid on 
 44.20  their due dates.  For contracts repayable in substantially equal 
 44.21  successive monthly installments, the financial institution may 
 44.22  calculate the refund as the portion of the finance charge 
 44.23  allocable on an actuarial basis to all wholly unexpired payment 
 44.24  periods following the date of prepayment, based on the annual 
 44.25  percentage rate on the contract as originally determined under 
 44.26  paragraph (d), and for the purpose of calculating the refund may 
 44.27  assume that all payments are made on the due date.  
 44.28     (d) The annual percentage rate must be calculated in 
 44.29  accordance with Code of Federal Regulations, title 12, part 226, 
 44.30  except that the following will not in any event be considered a 
 44.31  finance charge:  
 44.32     (1) a charge as a result of delinquency or default under 
 44.33  subdivision 6 if made for actual unanticipated late payment, 
 44.34  delinquency, default, or other similar occurrence, and a charge 
 44.35  made for an extension or deferment under subdivision 5, unless 
 44.36  the parties agree that these charges are finance charges; 
 45.1      (2) an additional charge under subdivision 6; or 
 45.2      (3) a discount, if a financial institution purchases a 
 45.3   contract evidencing a credit sale at less than the face amount 
 45.4   of the obligation or purchases or satisfies obligations of a 
 45.5   cardholder according to a credit card and the purchase or 
 45.6   satisfaction is made at less than the face amount of the 
 45.7   obligation.  
 45.8      Sec. 4.  Minnesota Statutes 1995 Supplement, section 47.59, 
 45.9   is amended by adding a subdivision to read: 
 45.10     Subd. 4a.  [FINANCE CHARGE FOR MOTOR VEHICLE RETAIL 
 45.11  INSTALLMENT SALES.] A retail installment contract evidencing the 
 45.12  retail installment sale of a motor vehicle as defined in section 
 45.13  168.66 is subject to the finance charge limitations in 
 45.14  paragraphs (a) and (b). 
 45.15     (a) The finance charge authorized by this subdivision in a 
 45.16  retail installment sale may not exceed the following annual 
 45.17  percentage rates: 
 45.18     (1) Class 1.  A motor vehicle designated by the 
 45.19  manufacturer by a year model of the same or not more than one 
 45.20  year before the year in which the sale is made, 18 percent per 
 45.21  year. 
 45.22     (2) Class 2.  A motor vehicle designated by the 
 45.23  manufacturer by a year model of two to three years before the 
 45.24  year in which the sale is made, 19.75 percent per year. 
 45.25     (3) Class 3.  Any motor vehicle not in Class 1 or Class 2, 
 45.26  23.25 percent per year. 
 45.27     (b) A sale of a manufactured home made after July 31, 1983, 
 45.28  is governed by this subdivision for purposes of determining the 
 45.29  lawful finance charge rate, except that the maximum finance 
 45.30  charge for a Class 1 manufactured home may not exceed 14.5 
 45.31  percent per year.  A retail installment sale of a manufactured 
 45.32  home that imposes a finance charge that is greater than the rate 
 45.33  permitted by this subdivision is lawful and enforceable in 
 45.34  accordance with its terms until the indebtedness is fully 
 45.35  satisfied if the rate was lawful when the sale was made. 
 45.36     Sec. 5.  Minnesota Statutes 1995 Supplement, section 47.59, 
 46.1   subdivision 5, is amended to read: 
 46.2      Subd. 5.  [EXTENSIONS AND, DEFERMENTS, AND CONVERSION TO 
 46.3   INTEREST BEARING.] (a) The parties may agree in writing, either 
 46.4   in the loan contract or credit sale contract or in a subsequent 
 46.5   agreement, to a deferment of wholly unpaid installments.  For 
 46.6   precomputed loans and credit sale contracts, the manner of 
 46.7   deferment charge shall be determined as provided for in this 
 46.8   section.  A deferment postpones the scheduled due date of the 
 46.9   earliest unpaid installment and all subsequent installments as 
 46.10  originally scheduled, or as previously deferred, for a period 
 46.11  equal to the deferment period.  The deferment period is that 
 46.12  period during which no installment is scheduled to be paid by 
 46.13  reason of the deferment.  The deferment charge for a one-month 
 46.14  period may not exceed the applicable charge for the installment 
 46.15  period immediately following the due date of the last undeferred 
 46.16  payment.  A proportionate charge may be made for deferment 
 46.17  periods of more or less than one month.  A deferment charge is 
 46.18  earned pro rata during the deferment period and is fully earned 
 46.19  on the last day of the deferment period.  If a loan or credit 
 46.20  sale is prepaid in full during a deferment period, the financial 
 46.21  institution shall make or credit to the borrower a refund of the 
 46.22  unearned deferment charge in addition to any other refund or 
 46.23  credit made for prepayment of the loan or credit sale in full.  
 46.24     For the purpose of this subdivision, "applicable charge" 
 46.25  means the amount of finance charge attributable to each monthly 
 46.26  installment period for the loan or credit sale contract.  The 
 46.27  applicable charge is computed as if each installment period were 
 46.28  one month and any charge for extending the first installment 
 46.29  period beyond the one month, or reduction in charge for a first 
 46.30  installment less than one month, is ignored.  The applicable 
 46.31  charge for any installment period is that which would have been 
 46.32  made for the period had the loan been made on an 
 46.33  interest-bearing basis at the single annual percentage rate 
 46.34  provided for in the contract based upon the assumption that all 
 46.35  payments were made according to schedule.  For convenience in 
 46.36  computation, the financial institution may round the single 
 47.1   annual rate to the nearest one quarter of one percent. 
 47.2      (b) Subject to a refund of unearned finance or deferment 
 47.3   charge required by this section, a financial institution may 
 47.4   convert a loan or credit sale contract to an interest bearing 
 47.5   balance, if: 
 47.6      (1) the loan contract or credit sale contract so provides 
 47.7   and is subject to a change of the terms of the written agreement 
 47.8   between the parties; or 
 47.9      (2) the loan contract so provides and two or more 
 47.10  installments are delinquent one full month or more on any due 
 47.11  date. 
 47.12     Thereafter, and in lieu of any other default, extension, or 
 47.13  deferment charges, the single annual percentage rate must be 
 47.14  determined under the applicable charge provisions of this 
 47.15  subdivision. 
 47.16     Sec. 6.  Minnesota Statutes 1995 Supplement, section 47.59, 
 47.17  subdivision 6, is amended to read: 
 47.18     Subd. 6.  [ADDITIONAL CHARGES.] (a) In addition to the 
 47.19  finance charges permitted by this section, a financial 
 47.20  institution may contract for and receive the following 
 47.21  additional charges that may be included in the principal amount 
 47.22  financed of the loan or credit sale unpaid balances:  
 47.23     (1) official fees and taxes; 
 47.24     (2) charges for insurance as described in paragraph (b); 
 47.25     (3) with respect to a loan or credit sale contract secured 
 47.26  by real estate, the following "closing costs," if they are bona 
 47.27  fide, reasonable in amount, and not for the purpose of 
 47.28  circumvention or evasion of this section: 
 47.29     (i) fees or premiums for title examination, abstract of 
 47.30  title, title insurance, surveys, or similar purposes; 
 47.31     (ii) fees for preparation of a deed, mortgage, settlement 
 47.32  statement, or other documents, if not paid to the financial 
 47.33  institution; 
 47.34     (iii) escrows for future payments of taxes, including 
 47.35  assessments for improvements, insurance, and water, sewer, and 
 47.36  land rents; 
 48.1      (iv) fees for notarizing deeds and other documents; 
 48.2      (v) appraisal and credit report fees; and 
 48.3      (vi) fees for determining whether any portion of the 
 48.4   property is located in a flood zone and fees for ongoing 
 48.5   monitoring of the property to determine changes, if any, in 
 48.6   flood zone status; 
 48.7      (4) a delinquency charge on a payment, including the 
 48.8   minimum payment due in connection with the open-end credit, not 
 48.9   paid in full on or before the tenth day after its due date in an 
 48.10  amount not to exceed five percent of the amount of the payment 
 48.11  or $5.20, whichever is greater; 
 48.12     (5) for a returned check or returned automatic payment 
 48.13  withdrawal request, an amount not in excess of the service 
 48.14  charge limitation in section 332.50; and 
 48.15     (6) charges for other benefits, including insurance, 
 48.16  conferred on the borrower that are of a type that is not for 
 48.17  credit. 
 48.18     (b) An additional charge may be made for insurance written 
 48.19  in connection with the loan or credit sale contract, which may 
 48.20  be included in the principal amount financed of the loan or 
 48.21  credit sale unpaid balances:  
 48.22     (1) with respect to insurance against loss of or damage to 
 48.23  property, or against liability arising out of the ownership or 
 48.24  use of property, if the financial institution furnishes a clear, 
 48.25  conspicuous, and specific statement in writing to the borrower 
 48.26  setting forth the cost of the insurance if obtained from or 
 48.27  through the financial institution and stating that the borrower 
 48.28  may choose the person through whom the insurance is to be 
 48.29  obtained; 
 48.30     (2) with respect to credit insurance or mortgage insurance 
 48.31  providing life, accident, health, or unemployment coverage, if 
 48.32  the insurance coverage is not required by the financial 
 48.33  institution, and this fact is clearly and conspicuously 
 48.34  disclosed in writing to the borrower, and the borrower gives 
 48.35  specific, dated, and separately signed affirmative written 
 48.36  indication of the borrower's desire to do so after written 
 49.1   disclosure to the borrower of the cost of the insurance; and 
 49.2      (3) with respect to the vendor's single interest insurance, 
 49.3   but only (i) to the extent that the insurer has no right of 
 49.4   subrogation against the borrower; and (ii) to the extent that 
 49.5   the insurance does not duplicate the coverage of other insurance 
 49.6   under which loss is payable to the financial institution as its 
 49.7   interest may appear, against loss of or damage to property for 
 49.8   which a separate charge is made to the borrower according to 
 49.9   clause (1); and (iii) if a clear, conspicuous, and specific 
 49.10  statement in writing is furnished by the financial institution 
 49.11  to the borrower setting forth the cost of the insurance if 
 49.12  obtained from or through the financial institution and stating 
 49.13  that the borrower may choose the person through whom the 
 49.14  insurance is to be obtained. 
 49.15     (c) In addition to the finance charges and other additional 
 49.16  charges permitted by this section, a financial institution may 
 49.17  contract for and receive the following additional charges in 
 49.18  connection with open-end credit, which may be included in the 
 49.19  principal amount financed of the loan or balance upon which the 
 49.20  finance charge is computed:  
 49.21     (1) annual charges, not to exceed $50 per annum, payable in 
 49.22  advance, for the privilege of opening and maintaining open-end 
 49.23  credit; 
 49.24     (2) charges for the use of an automated teller machine; 
 49.25     (3) charges for any monthly or other periodic payment 
 49.26  period in which the borrower has exceeded or, except for the 
 49.27  financial institution's dishonor would have exceeded, the 
 49.28  maximum approved credit limit, in an amount not in excess of the 
 49.29  service charge permitted in section 332.50; 
 49.30     (4) charges for obtaining a cash advance in an amount not 
 49.31  to exceed the service charge permitted in section 332.50; and 
 49.32     (5) charges for check and draft copies and for the 
 49.33  replacement of lost or stolen credit cards.  
 49.34     (d) In addition to the finance charges and other additional 
 49.35  charges permitted by this section, a financial institution may 
 49.36  contract for and receive a one-time loan administrative fee not 
 50.1   exceeding $25 in connection with closed-end credit, which may be 
 50.2   included in the amount financed or principal balance upon which 
 50.3   the finance charge is computed.  This paragraph applies only to 
 50.4   closed-end credit in an original principal amount of $4,320 or 
 50.5   less.  The determination of an original principal amount must 
 50.6   exclude the administrative fee contracted for and received 
 50.7   according to this paragraph. 
 50.8      Sec. 7.  Minnesota Statutes 1995 Supplement, section 47.60, 
 50.9   subdivision 2, is amended to read: 
 50.10     Subd. 2.  [AUTHORIZATION, TERMS, CONDITIONS, AND 
 50.11  PROHIBITIONS.] (a) In lieu of the interest, finance charges, or 
 50.12  fees in any other law, a consumer small loan lender may charge 
 50.13  the following:  
 50.14     (i) (1) on any amount up to and including $50, a charge of 
 50.15  $5.50 may be added; 
 50.16     (ii) (2) on amounts in excess of $50, but not more than 
 50.17  $100, a charge may be added equal to ten percent of the loan 
 50.18  proceeds plus a $5 administrative fee; 
 50.19     (iii) (3) on amounts in excess of $100, but not more than 
 50.20  $250, a charge may be added equal to seven percent of the loan 
 50.21  proceeds with a minimum of $10 plus a $5 administrative fee; 
 50.22     (iv) (4) for amounts in excess of $250 and not greater than 
 50.23  the maximum in subdivision 1, paragraph (a), a charge may be 
 50.24  added equal to six percent of the loan proceeds with a minimum 
 50.25  of $17.50 plus a $5 administrative fee.  
 50.26     (b) The term of a loan made under this section shall be for 
 50.27  no more than 30 calendar days.  
 50.28     (c) After maturity, the contract rate must not exceed 2.75 
 50.29  percent per month of the remaining loan proceeds after the 
 50.30  maturity date calculated at a rate of 1/30 of the monthly rate 
 50.31  in the contract for each calendar day the balance is outstanding.
 50.32     (d) No insurance charges or other charges must be permitted 
 50.33  to be charged, collected, or imposed on a consumer small loan 
 50.34  except as authorized in this section.  
 50.35     (e) On a loan transaction in which cash is advanced in 
 50.36  exchange for a personal check, a return check charge may be 
 51.1   charged as authorized by section 332.50, subdivision 2, 
 51.2   paragraph (d).  
 51.3      (f) A loan made under this section must not be repaid by 
 51.4   the proceeds of another loan made under this section by the same 
 51.5   lender or related interest.  The proceeds from a loan made under 
 51.6   this section must not be applied to another loan from the same 
 51.7   lender or related interest.  No loan to a single borrower made 
 51.8   pursuant to this section shall be split or divided and no single 
 51.9   borrower shall have outstanding more than one loan with the 
 51.10  result of collecting a higher charge than permitted by this 
 51.11  section or in an aggregate amount of principal exceed at any one 
 51.12  time the maximum of $350.  
 51.13     Sec. 8.  Minnesota Statutes 1995 Supplement, section 53.04, 
 51.14  subdivision 3a, is amended to read: 
 51.15     Subd. 3a.  (a) The right to make loans, secured or 
 51.16  unsecured, at the rates and on the terms and other conditions 
 51.17  permitted in section 47.59 under chapters 47 and 334.  Loans 
 51.18  made under this authority must be in amounts in compliance with 
 51.19  section 53.05, clause (7). The right to extend credit or lend 
 51.20  money and to collect and receive charges therefor as provided by 
 51.21  chapter 334.  The provisions of sections 47.20 and 47.21 do not 
 51.22  apply to loans made under this subdivision, except as 
 51.23  specifically provided in this subdivision.  Nothing in this 
 51.24  subdivision is deemed to supersede, repeal, or amend any 
 51.25  provision of section 53.05.  A licensee making a loan under this 
 51.26  chapter secured by a lien on real estate shall comply with the 
 51.27  requirements of section 47.20, subdivision 8.  
 51.28     (b) Loans made under this subdivision at a rate of interest 
 51.29  not in excess of that provided for in paragraph (a) may be 
 51.30  secured by real or personal property, or both.  If the proceeds 
 51.31  of a loan secured by a first lien on the borrower's primary 
 51.32  residence are used to finance the purchase of the borrower's 
 51.33  primary residence, the loan must comply with the provisions of 
 51.34  section 47.20.  
 51.35     (c) A loan made under this subdivision that is secured by 
 51.36  real estate and that is in a principal amount of $12,000 or more 
 52.1   and a maturity of 60 months or more may contain a provision 
 52.2   permitting discount points, if the loan does not provide a loan 
 52.3   yield in excess of the maximum rate of interest permitted by 
 52.4   this subdivision.  
 52.5      (d) An agency or instrumentality of the United States 
 52.6   government or a corporation otherwise created by an act of the 
 52.7   United States Congress or a lender approved or certified by the 
 52.8   secretary of housing and urban development, or approved or 
 52.9   certified by the administrator of veterans affairs, or approved 
 52.10  or certified by the administrator of the farmers home 
 52.11  administration, or approved or certified by the federal home 
 52.12  loan mortgage corporation, or approved or certified by the 
 52.13  federal national mortgage association, that engages in the 
 52.14  business of purchasing or taking assignments of mortgage loans 
 52.15  and undertakes direct collection of payments from or enforcement 
 52.16  of rights against borrowers arising from mortgage loans, is not 
 52.17  required to obtain a certificate of authorization under this 
 52.18  chapter in order to purchase or take assignments of mortgage 
 52.19  loans from persons holding a certificate of authorization under 
 52.20  this chapter. 
 52.21     (d) This subdivision does not authorize an industrial loan 
 52.22  and thrift company to make loans under an overdraft checking 
 52.23  plan. 
 52.24     Sec. 9.  Minnesota Statutes 1995 Supplement, section 
 52.25  56.131, subdivision 2, is amended to read: 
 52.26     Subd. 2.  [ADDITIONAL CHARGES.] In addition to the charges 
 52.27  provided for by this section and section 56.155, and 
 52.28  notwithstanding section 47.59, subdivision 5 6, to the contrary, 
 52.29  no further or other amount whatsoever, shall be directly or 
 52.30  indirectly charged, contracted for, or received for the loan 
 52.31  made, except actual out of pocket expenses of the licensee to 
 52.32  realize on a security after default, and except for the 
 52.33  following additional charges which may be included in the 
 52.34  principal amount of the loan:  
 52.35     (a) lawful fees and taxes paid to any public officer to 
 52.36  record, file, or release security; 
 53.1      (b) with respect to a loan secured by an interest in real 
 53.2   estate, the following closing costs, if they are bona fide, 
 53.3   reasonable in amount, and not for the purpose of circumvention 
 53.4   or evasion of this section; provided the costs do not exceed one 
 53.5   percent of the principal amount or $400, whichever is greater: 
 53.6      (1) fees or premiums for title examination, abstract of 
 53.7   title, title insurance, surveys, or similar purposes; 
 53.8      (2) fees, if not paid to the licensee, an employee of the 
 53.9   licensee, or a person related to the licensee, for preparation 
 53.10  of a mortgage, settlement statement, or other documents, fees 
 53.11  for notarizing mortgages and other documents, and appraisal 
 53.12  fees; 
 53.13     (c) the premium for insurance in lieu of perfecting and 
 53.14  releasing a security interest to the extent that the premium 
 53.15  does not exceed the fees described in paragraph (a); 
 53.16     (d) discount points and appraisal fees may not be included 
 53.17  in the principal amount of a loan secured by an interest in real 
 53.18  estate when the loan is a refinancing for the purpose of 
 53.19  bringing the refinanced loan current and is made within 24 
 53.20  months of the original date of the refinanced loan.  For 
 53.21  purposes of this paragraph, a refinancing is not considered to 
 53.22  be for the purpose of bringing the refinanced loan current if 
 53.23  new funds advanced to the customer, not including closing costs 
 53.24  or delinquent installments, exceed $1,000; 
 53.25     (e) the one-time loan administrative fee in section 47.59, 
 53.26  subdivision 6, paragraph (d). 
 53.27     Sec. 10.  Minnesota Statutes 1995 Supplement, section 
 53.28  56.131, subdivision 6, is amended to read: 
 53.29     Subd. 6.  [DISCOUNT POINTS.] A loan made under this section 
 53.30  that is secured by real estate and that is in a principal amount 
 53.31  of $12,000 or more and has a maturity of 60 months or more may 
 53.32  contain a provision permitting discount points, if the loan does 
 53.33  not provide a loan yield in excess of the maximum rate of 
 53.34  interest permitted by this section.  Loan yield means the annual 
 53.35  rate of return obtained by a licensee computed as the annual 
 53.36  percentage rate is computed under Federal Regulation Z.  If the 
 54.1   loan is prepaid in full, the licensee must make a refund to the 
 54.2   borrower to the extent that the loan yield will exceed the 
 54.3   maximum rate of interest provided by this section when the 
 54.4   prepayment is taken into account.  Discount points permitted by 
 54.5   this subdivision and not collected but included in the principal 
 54.6   amount must not be included in the amount on which credit 
 54.7   insurance premiums are calculated and charged. 
 54.8      Sec. 11.  Minnesota Statutes 1994, section 168.72, is 
 54.9   amended by adding a subdivision to read: 
 54.10     Subd. 5.  In lieu of this section and sections 168.66, 
 54.11  subdivisions 9, 10, and 11; 168.71; 168.73; and 168.74, a retail 
 54.12  seller may proceed under section 47.59 relating to credit sales 
 54.13  made by a third party.  In cases where the retail seller 
 54.14  proceeds under section 47.59, the remaining provisions of 
 54.15  sections 168.66 to 168.77 apply notwithstanding section 47.59. 
 54.16     Sec. 12.  Minnesota Statutes 1994, section 334.02, is 
 54.17  amended to read: 
 54.18     334.02 [USURIOUS INTEREST; RECOVERY.] 
 54.19     Every person who for any such loan or forbearance shall 
 54.20  have paid or delivered any greater sum or value than in section 
 54.21  334.01 allowed to be received may, personally or through 
 54.22  personal representatives, recover in an action against the 
 54.23  person who shall have received the same, or the receiver's 
 54.24  personal representatives, the full amount of interest or premium 
 54.25  so paid, with costs, if action is brought within two years after 
 54.26  such payment or delivery.  This section does not apply when the 
 54.27  loan or forbearance is made by a lender and the lender is liable 
 54.28  for the penalty provided in subject to section 47.59 or 48.196 
 54.29  or chapter 56 in connection with the loan or forbearance.  For 
 54.30  purposes of this section, the term "lender" means a bank or 
 54.31  savings bank organized under the laws of this state, a federally 
 54.32  chartered savings and loan association or savings bank, a 
 54.33  savings association organized under chapter 51A, a federally 
 54.34  chartered credit union, a credit union organized under chapter 
 54.35  52, an industrial loan and thrift company organized under 
 54.36  chapter 53, a licensed lender under chapter 56, or a mortgagee 
 55.1   or lender approved or certified by the secretary of housing and 
 55.2   urban development or approved or certified by the administrator 
 55.3   of veterans affairs.  
 55.4      Sec. 13.  Minnesota Statutes 1994, section 334.03, is 
 55.5   amended to read: 
 55.6      334.03 [USURIOUS CONTRACTS INVALID; EXCEPTIONS.] 
 55.7      All bonds, bills, notes, mortgages, and all other contracts 
 55.8   and securities, and all deposits of goods, or any other thing, 
 55.9   whereupon or whereby there shall be reserved, secured, or taken 
 55.10  any greater sum or value for the loan or forbearance of any 
 55.11  money, goods, or things in action than prescribed, except such 
 55.12  instruments which are taken or received in accordance with and 
 55.13  in reliance upon the provisions of any statute, shall be void 
 55.14  except as to a holder in due course.  No merely clerical error 
 55.15  in the computation of interest, made without intent to avoid the 
 55.16  provisions of this chapter, shall constitute usury.  Interest at 
 55.17  the rate of 1/12 of eight percent for every 30 days shall not be 
 55.18  construed to exceed eight percent per annum; nor shall the 
 55.19  payment of interest in advance of one year, or any less time, at 
 55.20  a rate not exceeding eight percent per annum constitute usury; 
 55.21  and nothing herein shall prevent the purchase of negotiable 
 55.22  mercantile paper, usurious or otherwise, for a valuable 
 55.23  consideration, by a purchaser without notice, at any price 
 55.24  before the maturity of the same, when there has been no intent 
 55.25  to evade the provisions of this chapter, or where such purchase 
 55.26  has not been a part of the original usurious transactions; but 
 55.27  where the original holder of a usurious note sells the same to 
 55.28  an innocent purchaser, the maker thereof, or the maker's 
 55.29  representatives, may recover back from the original holder the 
 55.30  amount of principal and interest paid on the note.  This section 
 55.31  does not apply when the loan or forbearance is made by a lender 
 55.32  and the lender is liable for the penalty provided in subject to 
 55.33  section 47.59 or 48.196 or chapter 56 in connection with the 
 55.34  loan or forbearance.  For purposes of this section, the term 
 55.35  "lender" means a bank or savings bank organized under the laws 
 55.36  of this state, a federally chartered savings and loan 
 56.1   association or savings bank, a savings association organized 
 56.2   under chapter 51A, a federally chartered credit union, a credit 
 56.3   union organized under chapter 52, an industrial loan and thrift 
 56.4   company organized under chapter 53, a licensed lender under 
 56.5   chapter 56, or a mortgagee or lender approved or certified by 
 56.6   the secretary of housing and urban development or approved or 
 56.7   certified by the administrator of veterans affairs. 
 56.8      Sec. 14.  [334.062] [AGRICULTURAL COOPERATIVES AND FARM 
 56.9   SUPPLY.] 
 56.10     Notwithstanding sections 334.01 and 334.011, a cooperative 
 56.11  organized for agricultural purposes under chapter 308A, or a 
 56.12  similar statute of another state and registered to conduct 
 56.13  business in this state, and other persons or entities engaged in 
 56.14  an agricultural retail or farm supply business, may impose, 
 56.15  charge, and collect a finance charge on goods, products, and 
 56.16  services, including sales and open- and closed-end credit 
 56.17  transactions that do not exceed a monthly rate of 1-1/2 percent 
 56.18  or an annual rate of 18 percent, and the delinquency and 
 56.19  collection charge authorized under section 334.171, provided, 
 56.20  however, for a cooperative, the finance, delinquency, and 
 56.21  collection charge is the same for member and nonmember patrons. 
 56.22     Sec. 15.  [REPEALER.] 
 56.23     Minnesota Statutes 1994, section 53.04, subdivision 3b; and 
 56.24  Minnesota Statutes 1995 Supplement, section 53.04, subdivisions 
 56.25  3c and 4a, are repealed. 
 56.26     Sec. 16.  [EFFECTIVE DATE.] 
 56.27     Sections 1, 3 to 9, 11 to 13, and 15 are effective the day 
 56.28  following final enactment. 
 56.29                             ARTICLE 3
 56.30                  BANKING SERVICES DEVELOPMENT ACT
 56.31     Section 1.  Minnesota Statutes 1994, section 47.101, 
 56.32  subdivision 2, is amended to read: 
 56.33     Subd. 2.  [BANKING INSTITUTIONS; CERTAIN RELOCATIONS, 
 56.34  APPLICATIONS, NOTICE, APPROVAL.] A banking institution defined 
 56.35  in section 48.01, subdivision 2, desiring to relocate its main 
 56.36  office within the lesser of a radius of three miles measured in 
 57.1   a straight line or the municipality, as defined in section 
 57.2   47.51, in which it is located shall submit an application notify 
 57.3   the commissioner of commerce in a form prescribed by the 
 57.4   commissioner of commerce., an investigation fee of $500 and 
 57.5   additional fees as prescribed in section 46.041 if subsequently 
 57.6   processed under subdivision 3.  After the application is deemed 
 57.7   to be complete and accepted by the commissioner of commerce, The 
 57.8   applicant shall publish once in a form prescribed by the 
 57.9   commissioner a notice of the filing of the 
 57.10  application relocation in a qualified newspaper published in the 
 57.11  municipalities municipality where the banking institution is 
 57.12  located and relocating if different.  If there are no such 
 57.13  newspapers, then notice of the filing shall be published in 
 57.14  qualified newspapers likely to give notice in the existing and 
 57.15  proposed municipalities municipality.  The applicant shall cause 
 57.16  the notice to be publicly displayed in its lobby and sent by 
 57.17  certified mail to all banking institutions within three miles of 
 57.18  the proposed location measured in a straight line.  Upon 
 57.19  expiration of a period of 21 days for comment, the commissioner, 
 57.20  after considering the applicable conditions for issuance of the 
 57.21  bank charter defined in section 46.044, shall within 60 days 
 57.22  approve or disapprove the application.  
 57.23     Sec. 2.  Minnesota Statutes 1994, section 47.101, 
 57.24  subdivision 3, is amended to read: 
 57.25     Subd. 3.  [APPLICATIONS TO DEPARTMENT OF COMMERCE.] An 
 57.26  application by a banking institution to relocate its main office 
 57.27  outside a radius of three miles measured in a straight line 
 57.28  other than those provided for in subdivision 2 shall be approved 
 57.29  or disapproved by the commissioner of commerce as provided for 
 57.30  in sections 46.041 and 46.044. 
 57.31     Sec. 3.  Minnesota Statutes 1994, section 47.51, is amended 
 57.32  to read: 
 57.33     47.51 [DETACHED BANKING FACILITIES; DEFINITIONS.] 
 57.34     As used in sections 47.51 to 47.57: 
 57.35     "Extension of the main banking house" means any structure 
 57.36  or stationary mechanical device serving as a drive-in or walk-up 
 58.1   facility, or both, which is located within 150 1,500 feet of the 
 58.2   main banking house or detached facility, the distance to be 
 58.3   measured in a straight line from the closest points of the 
 58.4   closest structures involved and which performs one or more of 
 58.5   the functions described in section 47.53. 
 58.6      "Detached facility" means any permanent structure, office 
 58.7   accommodation located within the premises of any existing 
 58.8   commercial or business establishment, stationary automated 
 58.9   remote controlled teller facility, stationary unstaffed cash 
 58.10  dispensing or receiving device, located separate and apart from 
 58.11  the main banking house which is not an "extension of the main 
 58.12  banking house" as above defined, that serves as a drive-in or 
 58.13  walk-up facility, or both, with one or more tellers windows, or 
 58.14  as a remote controlled teller facility or a cash dispensing or 
 58.15  receiving device, and which performs one or more of those 
 58.16  functions described in section 47.53. 
 58.17     "Bank" means a bank as defined in section 46.046 and any 
 58.18  banking office established prior to the effective date of Laws 
 58.19  1923, chapter 170, section 1. 
 58.20     "Commissioner" means the commissioner of commerce. 
 58.21     "Municipality" means the geographical area encompassing the 
 58.22  boundaries of any home rule charter or statutory city located in 
 58.23  this state, and any detached area, pursuant to section 473.625, 
 58.24  operated as a major airport by the metropolitan airports 
 58.25  commission pursuant to sections 473.601 to 473.679.  When a bank 
 58.26  is located in a township, the term municipality is expanded to 
 58.27  mean the geographical area encompassing the boundaries of the 
 58.28  township.  
 58.29     Sec. 4.  Minnesota Statutes 1995 Supplement, section 47.52, 
 58.30  is amended to read: 
 58.31     47.52 [AUTHORIZATION.] 
 58.32     (a) With the prior approval of the commissioner, any bank 
 58.33  doing business in this state may establish and maintain not more 
 58.34  than five detached facilities provided the facilities are 
 58.35  located within:  (1) the municipality in which the principal 
 58.36  office of the applicant bank is located; or within (2) 5,000 
 59.1   feet of its principal office measured in a straight line from 
 59.2   the closest points of the closest structures involved; or within 
 59.3   100 miles of its principal office measured in a straight line 
 59.4   from the closest points of the closest structures involved, if 
 59.5   the detached facility is within any (3) a municipality in which 
 59.6   no bank is located at the time of application; or if the 
 59.7   detached facility is in (4) a municipality having a population 
 59.8   of more than 10,000,; or if the detached facility is located in 
 59.9   (5) a municipality having a population of 10,000 or less, as 
 59.10  determined by the commissioner from the latest available data 
 59.11  from the state demographer, or for municipalities located in the 
 59.12  seven-county metropolitan area from the metropolitan council, 
 59.13  and all the banks having a principal office in the municipality 
 59.14  have consented in writing to the establishment of the facility. 
 59.15     (b) A detached facility shall not be closer than 50 feet to 
 59.16  a detached facility operated by any other bank and shall not be 
 59.17  closer than 100 feet to the principal office of any other bank, 
 59.18  the measurement to be made in the same manner as provided 
 59.19  above.  This paragraph shall not be applicable if the proximity 
 59.20  to the facility or the bank is waived in writing by the other 
 59.21  bank and filed with the application to establish a detached 
 59.22  facility. 
 59.23     (c) Any bank is allowed, in addition to other facilities, 
 59.24  one drive-in or walk-up facility located between 150 to 1,500 
 59.25  feet of the main banking house or within 1,500 feet from a 
 59.26  detached facility.  The drive-in or walk-up facility permitted 
 59.27  by this clause is subject to paragraph (b) and section 47.53. 
 59.28     (d) A bank is allowed, in addition to other facilities, 
 59.29  part-time deposit-taking locations at elementary and secondary 
 59.30  schools located within the municipality in which the main 
 59.31  banking house or a detached facility is located if they are 
 59.32  established in connection with student education programs 
 59.33  approved by the school administration and consistent with safe, 
 59.34  sound banking practices. 
 59.35     (e) (d) A bank whose home state is Minnesota as defined in 
 59.36  section 48.92 is allowed, in addition to facilities otherwise 
 60.1   permitted, to establish and operate a de novo detached facility 
 60.2   in a location in the host states of Iowa, North Dakota, South 
 60.3   Dakota, and Wisconsin not more than 30 miles from its principal 
 60.4   office measured in a straight line from the closest points of 
 60.5   the closest structures involved and subject to requirements of 
 60.6   sections 47.54 and 47.561 and the following additional 
 60.7   requirements and conditions: 
 60.8      (1) there is in effect in the host state a law, rule, or 
 60.9   ruling that permits Minnesota home state banks to establish de 
 60.10  novo branches in the host state under conditions substantially 
 60.11  similar to those imposed by the laws of Minnesota as determined 
 60.12  by the commissioner; and 
 60.13     (2) there is in effect a cooperative agreement between the 
 60.14  home and host state banking regulators to facilitate their 
 60.15  respective regulation and supervision of the bank including the 
 60.16  coordination of examinations. 
 60.17     For purposes of this paragraph, "host state" means a state 
 60.18  other than the home state, as defined in section 48.92. 
 60.19     Sec. 5.  Minnesota Statutes 1994, section 47.62, 
 60.20  subdivision 1, is amended to read: 
 60.21     Subdivision 1.  Any person may establish and maintain one 
 60.22  or more electronic financial terminals.  Any financial 
 60.23  institution may provide for its customers the use of an 
 60.24  electronic financial terminal by entering into an agreement with 
 60.25  any person who has established and maintains one or more 
 60.26  electronic financial terminals if that person authorizes use of 
 60.27  the electronic financial terminal to all financial institutions 
 60.28  on a nondiscriminatory basis pursuant to section 
 60.29  47.64.  Electronic financial terminals to be established and 
 60.30  maintained in this state by financial institutions located in 
 60.31  states other than Minnesota must file a notification to the 
 60.32  commissioner as required in this section.  The notification may 
 60.33  be in the form lawfully required by the state regulator 
 60.34  responsible for the examination and supervision of that 
 60.35  financial institution.  If there is no such requirement, then 
 60.36  notification must be in the form required by this section for 
 61.1   Minnesota financial institutions. 
 61.2      Sec. 6.  Minnesota Statutes 1994, section 48.34, is amended 
 61.3   to read: 
 61.4      48.34 [BRANCH BANKS PROHIBITED.] 
 61.5      No bank or trust company organized under the laws of this 
 61.6   state shall maintain a branch bank or receive deposits or pay 
 61.7   checks within this state, except at its own banking house, and 
 61.8   except as authorized by sections 47.51 to 47.57 and, 47.61 to 
 61.9   47.74, and 49.411.  The commissioner shall take possession of 
 61.10  and liquidate the business and affairs of any state bank or 
 61.11  trust company violating the provisions of this section, in the 
 61.12  manner prescribed by law for the liquidation of insolvent state 
 61.13  banks and trust companies. 
 61.14     Sec. 7.  [49.411] [INTERSTATE BANK MERGERS AFFECTING 
 61.15  INTERSTATE BRANCHING.] 
 61.16     Subdivision 1.  [PURPOSE.] It is the express intent of this 
 61.17  section to permit interstate branching by mergers under section 
 61.18  102 of the Riegle-Neal Interstate Banking and Branching 
 61.19  Efficiency Act of 1994, Public Law Number 103-328, according to 
 61.20  this section. 
 61.21     Subd. 2.  [DEFINITIONS.] As used in this section, unless 
 61.22  the context clearly indicates otherwise, the following terms 
 61.23  have the meanings given them. 
 61.24     (a) "Bank" has the meaning given in United States Code, 
 61.25  title 12, section 1813(h) with the following exceptions:  (1) 
 61.26  the term does not include a foreign bank as defined in United 
 61.27  States Code, title 12, section 3101(7); and (2) the term 
 61.28  includes a foreign bank organized under the laws of a territory 
 61.29  of the United States, Puerto Rico, Guam, American Samoa, or the 
 61.30  Virgin Islands, the deposits of which are insured by the Federal 
 61.31  Deposit Insurance Corporation. 
 61.32     (b) "Bank holding company" has the meaning given in United 
 61.33  States Code, title 12, section 1841(a)(1). 
 61.34     (c) "Bank supervisory agency" means: 
 61.35     (1) an agency of another state with the primary 
 61.36  responsibility for chartering and supervising banks; and 
 62.1      (2) the Office of the Comptroller of the Currency, the 
 62.2   Federal Deposit Insurance Corporation, the Board of Governors of 
 62.3   the Federal Reserve System, and any successor to these agencies. 
 62.4      (d) "Branch" has the meaning given in United States Code, 
 62.5   title 12, section 1813(o). 
 62.6      (e) "Commissioner" means the commissioner of commerce. 
 62.7      (f) "Control" has the meaning given in section 46.048, 
 62.8   subdivision 1. 
 62.9      (g) "Home state" has the meaning given in section 48.92, 
 62.10  subdivision 6, except in relation to foreign banks, for which 
 62.11  home state means the state determined to be the home state of 
 62.12  the foreign bank under United States Code, title 12, section 
 62.13  3103(c). 
 62.14     (h) "Home state regulator" means, with respect to an 
 62.15  out-of-state state bank, the bank supervisory agency of the 
 62.16  state in which the bank is chartered. 
 62.17     (i) "Host state" means a state other than the home state of 
 62.18  a bank in which the bank maintains or seeks to establish and 
 62.19  maintain a branch. 
 62.20     (j) "Interstate merger transaction" means: 
 62.21     (1) the merger or consolidation of banks with different 
 62.22  home states, and the conversion of branches of any bank involved 
 62.23  in the merger or consolidation into branches of the resulting 
 62.24  bank; or 
 62.25     (2) the purchase of all or substantially all of the assets 
 62.26  including all or substantially all of the branches of a bank 
 62.27  whose home state is different from the home state of the 
 62.28  acquiring bank. 
 62.29     (k) "Out-of-state bank" has the meaning given in section 
 62.30  48.92, subdivision 11. 
 62.31     (l) "Out-of-state state bank" means a bank chartered under 
 62.32  the laws of any state other than Minnesota. 
 62.33     (m) "Resulting bank" means a bank that has resulted from an 
 62.34  interstate merger transaction under this section. 
 62.35     (n) "State" means any state of the United States, the 
 62.36  District of Columbia, or any territory of the United States, 
 63.1   Puerto Rico, Guam, American Samoa, the Trust Territory of the 
 63.2   Pacific Islands, the Virgin Islands, and the Northern Mariana 
 63.3   Islands. 
 63.4      (o) "Minnesota bank" means a bank whose home state is 
 63.5   Minnesota. 
 63.6      (p) "Minnesota state bank" means a bank chartered under the 
 63.7   laws of Minnesota. 
 63.8      Subd. 3.  [AUTHORITY OF STATE BANKS TO ESTABLISH INTERSTATE 
 63.9   BRANCHES BY MERGER.] With the prior approval of the 
 63.10  commissioner, a Minnesota state bank may establish, maintain, 
 63.11  and operate one or more branches in a state other than Minnesota 
 63.12  as a result of an interstate merger transaction in which the 
 63.13  Minnesota state bank is the resulting bank.  Not later than the 
 63.14  date on which the required application for the interstate merger 
 63.15  transaction is filed with the responsible federal bank 
 63.16  supervisory agency, the applicant Minnesota state bank shall 
 63.17  file with the commissioner an application on a form prescribed 
 63.18  by the commissioner and pay the fee prescribed by section 
 63.19  49.36.  The applicant shall also comply with the applicable 
 63.20  provisions of sections 49.33 to 49.41.  After considering the 
 63.21  criteria in section 49.36, subdivision 3, the commissioner may 
 63.22  approve the interstate merger transaction and the operation of 
 63.23  branches outside of Minnesota by the Minnesota state bank.  Such 
 63.24  an interstate merger transaction may be consummated only after 
 63.25  the applicant has received the commissioner's written approval. 
 63.26     Subd. 4.  [INTERSTATE MERGER TRANSACTIONS AND BRANCHING 
 63.27  PERMITTED.] (a) One or more Minnesota banks may enter into an 
 63.28  interstate merger transaction with one or more out-of-state 
 63.29  banks under this section, and an out-of-state bank resulting 
 63.30  from the transaction may maintain and operate the branches in 
 63.31  Minnesota of a Minnesota bank that participated in the 
 63.32  transaction if the conditions and filing requirements of this 
 63.33  section are met. 
 63.34     (b) An interstate merger transaction resulting in the 
 63.35  acquisition by an out-of-state bank of a Minnesota state bank, 
 63.36  or all or substantially all of the branches of a Minnesota state 
 64.1   bank, shall not be permitted under this section unless the 
 64.2   Minnesota state bank has been in continuous operation, on the 
 64.3   date of the acquisition, for at least five years.  For purposes 
 64.4   of this paragraph, a bank that has been chartered solely for the 
 64.5   purpose of, and does not open for business before, acquiring 
 64.6   control of, or acquiring all or substantially all of the assets 
 64.7   of, an existing bank is considered to have been in existence for 
 64.8   the same period of time as the bank to be acquired.  For 
 64.9   determining the time period of existence of a bank, the time 
 64.10  period begins after the issuance of a certificate of 
 64.11  authorization and from the date the approved bank actually opens 
 64.12  for business. 
 64.13     Subd. 5.  [NOTICE AND FILING REQUIREMENT.] An out-of-state 
 64.14  bank that will be the resulting bank under an interstate merger 
 64.15  transaction involving a Minnesota state bank shall notify the 
 64.16  commissioner of the proposed merger not later than the date on 
 64.17  which it files an application for an interstate merger 
 64.18  transaction with the responsible federal bank supervisory 
 64.19  agency, and shall submit a copy of that application to the 
 64.20  commissioner and pay the filing fee, if any, required by the 
 64.21  commissioner.  A Minnesota state bank that is a party to an 
 64.22  interstate merger transaction shall comply with sections 49.33 
 64.23  to 49.41 and with other applicable state and federal laws.  An 
 64.24  out-of-state bank that is the resulting bank in such an 
 64.25  interstate merger transaction shall provide satisfactory 
 64.26  evidence to the commissioner of compliance with applicable 
 64.27  requirements of the bank's home state. 
 64.28     Subd. 6.  [POWERS; ADDITIONAL BRANCHES.] (a) An 
 64.29  out-of-state state bank that establishes and maintains one or 
 64.30  more branches in Minnesota under this section may conduct any 
 64.31  activities at the branch or branches that are authorized under 
 64.32  the laws of this state for Minnesota state banks. 
 64.33     (b) A Minnesota state bank may conduct any activities at or 
 64.34  in connection with a branch outside Minnesota that are 
 64.35  permissible for a bank chartered by the host state where the 
 64.36  branch is located, except to the extent that the activities are 
 65.1   expressly prohibited by the laws of this state or by any rule or 
 65.2   order of the commissioner applicable to the Minnesota state 
 65.3   bank.  The commissioner may waive the prohibition if the 
 65.4   commissioner determines, by rule or order, that the involvement 
 65.5   of out-of-state branches of Minnesota state banks in particular 
 65.6   activities would not threaten the safety or soundness of the 
 65.7   banks. 
 65.8      (c) An out-of-state bank that has established or acquired a 
 65.9   branch in Minnesota under this section may establish or acquire 
 65.10  additional branches in Minnesota to the same extent that a 
 65.11  Minnesota bank may establish or acquire a branch in Minnesota 
 65.12  under applicable federal and state law where a bank involved in 
 65.13  the transaction could have established, acquired, or operated 
 65.14  the additional branches if the bank had not been a party to the 
 65.15  merger transaction. 
 65.16     Subd. 7.  [EXAMINATIONS; PERIODIC REPORTS; COOPERATIVE 
 65.17  AGREEMENTS; ASSESSMENT OF FEES.] (a) To the extent consistent 
 65.18  with paragraph (c), the commissioner may make examinations of a 
 65.19  branch established and maintained in this state under this 
 65.20  section by an out-of-state state bank as the commissioner 
 65.21  considers necessary to determine whether the branch is being 
 65.22  operated in compliance with the laws of this state and according 
 65.23  to safe and sound banking practices.  Section 46.04 applies to 
 65.24  the examinations. 
 65.25     (b) The commissioner may prescribe requirements for 
 65.26  periodic reports regarding an out-of-state bank that operates a 
 65.27  branch in Minnesota under this section.  The required reports 
 65.28  must be provided by the bank or by the bank supervisory agency 
 65.29  having primary responsibility for the bank.  Reporting 
 65.30  requirements prescribed by the commissioner under this paragraph 
 65.31  must be:  (1) consistent with the reporting requirements 
 65.32  applicable to Minnesota state banks; and (2) appropriate for the 
 65.33  purpose of enabling the commissioner to carry out 
 65.34  responsibilities under this section. 
 65.35     (c) The commissioner may enter into cooperative, 
 65.36  coordinating, and information-sharing agreements with any other 
 66.1   bank supervisory agencies or any organization affiliated with or 
 66.2   representing one or more bank supervisory agencies with respect 
 66.3   to the periodic examination or other supervision of a branch in 
 66.4   Minnesota of an out-of-state state bank, or a branch of a 
 66.5   Minnesota state bank in a host state.  The commissioner may 
 66.6   accept the parties' reports of examination and reports of 
 66.7   investigation in lieu of conducting the commissioner's own 
 66.8   examinations or investigations. 
 66.9      (d) The commissioner may enter into contracts with a bank 
 66.10  supervisory agency that has concurrent jurisdiction over a 
 66.11  Minnesota state bank or an out-of-state state bank operating a 
 66.12  branch in this state under this section to engage the services 
 66.13  of the agency's examiners at a reasonable rate of compensation, 
 66.14  or to provide the services of the commissioner's examiners to 
 66.15  the agency at a reasonable rate of compensation. 
 66.16     (e) The commissioner may enter into joint examinations or 
 66.17  joint enforcement actions with other bank supervisory agencies 
 66.18  having concurrent jurisdiction over a branch in Minnesota of an 
 66.19  out-of-state state bank or a branch of a Minnesota state bank in 
 66.20  a host state.  However, the commissioner may at any time take 
 66.21  the actions independently if the commissioner considers the 
 66.22  actions to be necessary or appropriate to carry out 
 66.23  responsibilities under this section or to ensure compliance with 
 66.24  the laws of this state.  In the case of an out-of-state state 
 66.25  bank, the commissioner shall recognize the exclusive authority 
 66.26  of the home state regulator over corporate governance matters 
 66.27  and the primary responsibility of the home state regulator with 
 66.28  respect to safety and soundness matters. 
 66.29     (f) Each out-of-state state bank that maintains one or more 
 66.30  branches in this state may be assessed and charged according to 
 66.31  section 46.131 as if it were a Minnesota state bank and, if 
 66.32  assessed, shall pay supervisory and examination fees according 
 66.33  to the laws of this state and rules of the commissioner.  The 
 66.34  fees may be shared with other bank supervisory agencies or an 
 66.35  organization affiliated with or representing one or more bank 
 66.36  supervisory agencies according to agreements between the parties 
 67.1   and the commissioner. 
 67.2      Subd. 8.  [ENFORCEMENT.] If the commissioner determines 
 67.3   that a branch maintained by an out-of-state state bank in this 
 67.4   state is being operated in violation of the laws of this state, 
 67.5   or that the branch is being operated in an unsafe and unsound 
 67.6   manner, the commissioner has the authority to take all 
 67.7   enforcement actions the commissioner would be empowered to take 
 67.8   if the branch were a Minnesota state bank.  The commissioner 
 67.9   shall promptly give notice to the home state regulator of each 
 67.10  enforcement action taken against an out-of-state state bank and, 
 67.11  to the extent practicable, shall consult and cooperate with the 
 67.12  home state regulator in pursuing and resolving enforcement 
 67.13  action. 
 67.14     Subd. 9.  [NOTICE OF SUBSEQUENT MERGER.] Each out-of-state 
 67.15  state bank that has established and maintains a branch in this 
 67.16  state under this section shall give at least 60 days' prior 
 67.17  written notice or, in the case of an emergency transaction, 
 67.18  shorter notice as is consistent with applicable state or federal 
 67.19  law to the commissioner of any merger, consolidation, or other 
 67.20  transaction that would cause a change of control with respect to 
 67.21  the bank or any bank holding company that controls the bank, 
 67.22  with the result that an application would be required to be 
 67.23  filed under United States Code, title 12, section 1817(j), or 
 67.24  the federal Bank Holding Company Act of 1956, as amended, United 
 67.25  States Code, title 12, section 1841, et seq. 
 67.26     Subd. 10.  [SEVERABILITY.] If a provision of this section, 
 67.27  or the application of the provision, is found by any court of 
 67.28  competent jurisdiction in the United States to be invalid as to 
 67.29  a bank, bank holding company, foreign bank, or other person or 
 67.30  circumstances, or to be superseded by federal law, the remaining 
 67.31  provisions of this section shall not be affected and shall 
 67.32  continue to apply to a bank, bank holding company, foreign bank, 
 67.33  or other person or circumstance. 
 67.34     Sec. 8.  Minnesota Statutes 1995 Supplement, section 
 67.35  50.245, subdivision 1, is amended to read: 
 67.36     Subdivision 1.  [AUTHORITY FOR BRANCH OFFICES.] A savings 
 68.1   bank may establish five any number of detached facilities as may 
 68.2   be approved by the commissioner of commerce pursuant to sections 
 68.3   47.51 to 47.57 in the territories of Hennepin and Anoka 
 68.4   counties.  The savings bank shall not change the location of a 
 68.5   detached facility without prior written approval of the 
 68.6   commissioner of commerce.  A savings bank may establish a loan 
 68.7   production office, without restriction as to geographical 
 68.8   location, upon written notice to the commissioner of commerce. 
 68.9      Sec. 9.  [EFFECTIVE DATE.] 
 68.10     Sections 1 to 5 and 8 are effective the day following final 
 68.11  enactment.  Sections 6 and 7 are effective June 1, 1997.