3rd Engrossment - 80th Legislature (1997 - 1998) Posted on 12/15/2009 12:00am
1.1 A bill for an act 1.2 relating to financial institutions; authorizing 1.3 facsimile or electronic filings and certifications; 1.4 regulating the powers and structure of certain 1.5 institutions; regulating consumer credit; modifying 1.6 lending authority; regulating fees and charges; making 1.7 technical and conforming changes; amending Minnesota 1.8 Statutes 1996, sections 46.04, by adding a 1.9 subdivision; 46.044, by adding a subdivision; 46.046, 1.10 by adding a subdivision; 46.047, subdivision 2; 46.07, 1.11 subdivision 2; 46.131, subdivision 2; 47.20, 1.12 subdivisions 9 and 14; 47.206, subdivision 6; 47.55, 1.13 subdivision 1; 47.56; 47.59, subdivisions 1, 4, 5, 6, 1.14 and 12; 47.61, subdivision 3; 47.64, by adding a 1.15 subdivision; 47.75, subdivision 1; 48.01, subdivision 1.16 2; 48.09, by adding a subdivision; 48.15, subdivisions 1.17 2 and 4; 48.24, subdivision 2, and by adding a 1.18 subdivision; 48.512, by adding a subdivision; 48.61, 1.19 subdivision 7, and by adding a subdivision; 49.215, 1.20 subdivision 3; 49.33; 49.36, subdivision 4; 49.42; 1.21 50.245; 51A.38, subdivision 1; 52.04, subdivision 2a, 1.22 and by adding a subdivision; 52.062, subdivision 1, 1.23 and by adding a subdivision; 52.063; 52.064, by adding 1.24 a subdivision; 52.13; 52.201; 53.04, by adding a 1.25 subdivision; 53.05; 53.09, subdivision 2a; 55.06, 1.26 subdivision 1; 56.07; 56.10, subdivision 1; 56.131, 1.27 subdivisions 1 and 4; 59A.08, subdivision 3, and by 1.28 adding a subdivision; 59A.11, subdivisions 2 and 3; 1.29 62B.04, subdivision 1; 300.20, subdivision 2; 303.02, 1.30 subdivision 4; 303.25, subdivision 5; 325F.68, 1.31 subdivision 2; 332.21; 332.23, subdivisions 1, 2, and 1.32 5; and 332.50, subdivisions 1 and 2; Laws 1996, 1.33 chapter 414, article 1, section 45; proposing coding 1.34 for new law in Minnesota Statutes, chapter 48; 1.35 repealing Minnesota Statutes 1996, sections 13.99, 1.36 subdivision 13; 47.29; 47.31; 47.32; 49.47; 49.48; 1.37 50.03; 50.23; and 59A.14. 1.38 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 1.39 Section 1. Minnesota Statutes 1996, section 46.04, is 1.40 amended by adding a subdivision to read: 1.41 Subd. 4. [APPLICATIONS, FACSIMILE OR ELECTRONIC MEDIA.] (a) 2.1 The commissioner when providing forms and procedural guidance to 2.2 persons governed by or seeking approval to operate under the 2.3 chapters referred to in this section may prescribe alternatives 2.4 to paper forms and delivery in person or by mail. In 2.5 considering accepting filings by facsimile or electronic media, 2.6 the commissioner may accept fees and reimbursement for costs 2.7 associated with the applications and notices by wire transfer 2.8 and debit card. 2.9 (b) Certifications required to authenticate, officiate, or 2.10 establish standing of the application or notice as a matter of 2.11 law, rule, or sound business practice may be authenticated in an 2.12 alternative to paper-based original signatures or notarial seals 2.13 on facsimile or electronic media submissions in a technically 2.14 competent means at the discretion of the commissioner, including 2.15 but not limited to, document imaging meeting the standard in 2.16 subdivision 3, bar coding, personal identification numbers, or 2.17 other reliable communicated verification technique. 2.18 Sec. 2. Minnesota Statutes 1996, section 46.044, is 2.19 amended by adding a subdivision to read: 2.20 Subd. 3. [SPECIAL PURPOSE BANKS, EXCEPTIONS.] For purposes 2.21 of applications to organize and operate special purpose banks as 2.22 defined in section 46.046, subdivision 5, the conditions in 2.23 subdivision 1, clauses (2) and (4), do not apply. 2.24 Sec. 3. Minnesota Statutes 1996, section 46.046, is 2.25 amended by adding a subdivision to read: 2.26 Subd. 5. [SPECIAL PURPOSE BANK.] Special purpose bank 2.27 means a bank as defined in subdivision 2 that: 2.28 (1) engages only in credit card operations as authorized in 2.29 section 47.59; 2.30 (2) does not accept demand deposits or deposits that the 2.31 depositor may withdraw by check or similar means for payment to 2.32 third parties or others; 2.33 (3) does not accept savings or time deposits of less than 2.34 $100,000; 2.35 (4) maintains only one office that accepts deposits; and 2.36 (5) does not engage in the business of making commercial 3.1 loans. 3.2 Sec. 4. Minnesota Statutes 1996, section 46.047, 3.3 subdivision 2, is amended to read: 3.4 Subd. 2. [BANKING INSTITUTION.] The term "banking 3.5 institution" means a bank, trust company, bank and trust 3.6 company, savings bank, or industrial loan and thrift
institution3.7 operating under section 53.04, subdivision 5, that is organized 3.8 under the laws of this state, or a holding company which owns or 3.9 otherwise controls the banking institution. 3.10 Sec. 5. Minnesota Statutes 1996, section 46.07, 3.11 subdivision 2, is amended to read: 3.12 Subd. 2. [CONFIDENTIAL RECORDS.] The commissioner shall 3.13 divulge facts and information obtained in the course of 3.14 examining financial institutions under the commissioner's 3.15 supervision only when and to the extent required or permitted by 3.16 law to report upon or take special action regarding the affairs 3.17 of an institution, or ordered by a court of law to testify or 3.18 produce evidence in a civil or criminal proceeding, except that 3.19 the commissioner may furnish information as to matters of mutual 3.20 interest to an official or examiner of the federal reserve 3.21 system, the Federal Deposit Insurance Corporation, the Federal 3.22 Office of Thrift Supervision, the Federal Home Loan Bank System, 3.23 the National Credit Union Administration, comptroller of the 3.24 currency, a legally constituted state credit union share3.25 insurance corporation approved under section 52.24other state 3.26 bank supervisory agencies subject to cooperative agreements 3.27 authorized by section 49.411, subdivision 7, the United States 3.28 Small Business Administration, for purposes of sections 53.09, 3.29 subdivision 2a, and 56.10, subdivision 1, or state and federal 3.30 law enforcement agencies. The commissioner shall not be 3.31 required to disclose the name of a debtor of a financial 3.32 institution under the commissioner's supervision, or anything 3.33 relative to the private accounts, ownership, or transactions of 3.34 an institution, or any fact obtained in the course of an 3.35 examination thereof, except as herein provided. For purposes of 3.36 this subdivision, a subpoena is not an order of a court of law. 4.1 These records are classified confidential or protected nonpublic 4.2 for purposes of the Minnesota government data practices act and 4.3 their destruction, as prescribed in section 46.21, is exempt 4.4 from the provisions of chapter 138 and Laws 1971, chapter 529, 4.5 so far as their deposit with the state archives. 4.6 Sec. 6. Minnesota Statutes 1996, section 46.131, 4.7 subdivision 2, is amended to read: 4.8 Subd. 2. Each bank, trust company, savings bank, savings 4.9 association, small loan companyregulated lender, industrial 4.10 loan and thrift company, credit union, motor vehicle sales 4.11 finance company, debt prorating agency and insurance premium 4.12 finance company organized under the laws of this state or 4.13 required to be administered by the commissioner of commerce 4.14 shall pay into the state treasury its proportionate share of the 4.15 cost of maintaining the department of commerce. 4.16 Sec. 7. Minnesota Statutes 1996, section 47.20, 4.17 subdivision 9, is amended to read: 4.18 Subd. 9. For purposes of this subdivision the term 4.19 "mortgagee" shall mean all state banks and trust companies, 4.20 national banking associations, state and federally chartered 4.21 savings associations, mortgage banks, savings banks, insurance 4.22 companies, credit unions or assignees of the above. 4.23 (a) Each mortgagee requiring funds of a mortgagor to be 4.24 paid into an escrow, agency or similar account for the payment 4.25 of taxes or homeowner's insurance premiums with respect to a 4.26 mortgaged one-to-four family, owner occupied residence located 4.27 in this state, unless the account is required by federal law or 4.28 regulation or maintained in connection with a conventional loan 4.29 in an original principal amount in excess of 80 percent of the 4.30 lender's appraised value of the residential unit at the time the 4.31 loan is made or maintained in connection with loans insured or 4.32 guaranteed by the secretary of housing and urban development, by 4.33 the administrator of veterans affairs, or by the administrator 4.34 of the farmers home administration or any successor, shall 4.35 calculate interest on such funds at a rate of not less than 4.36 three percent per annum. Such interest shall be computed on the 5.1 average monthly balance in such account on the first of each 5.2 month for the immediately preceding 12 months of the calendar 5.3 year or such other fiscal year as may be uniformly adopted by 5.4 the mortgagee for such purposes and shall be annually credited 5.5 to the remaining principal balance on the mortgage, or at the 5.6 election of the mortgagee, paid to the mortgagor or credited to 5.7 the mortgagor's account. If the interest exceeds the remaining 5.8 balance, the excess shall be paid to the mortgagor or vendee. 5.9 The requirement to pay interest shall apply to such accounts 5.10 created in conjunction with mortgage loans made prior to July 1, 5.11 1996. 5.12 (b) Unless the account is exempt from the requirements of 5.13 paragraph (a), a mortgagee shall allow a mortgagor to elect to 5.14 discontinue the escrow accountescrowing for taxes and 5.15 homeowner's insurance after the seventh anniversary of the date 5.16 of the mortgage, unless the mortgagor has been more than 30 days 5.17 delinquent in the previous 12 months. This paragraph shall 5.18 apply to accounts created prior to July 1, 1996, as well as to 5.19 accounts created on or after July 1, 1996. The mortgagor's 5.20 election shall be in writing. The lender or mortgage broker 5.21 shall, with respect to mortgages made on or after August 1, 5.22 1997, notify an applicant for a mortgage of the applicant's 5.23 rights under this paragraph. This notice shall be given at or 5.24 prior to the closing of the mortgage loan and shall read 5.25 substantially as follows: 5.26 "NOTICE OF RIGHT TO DISCONTINUE ESCROW 5.27 If your mortgage loan involves an escrow account for taxes 5.28 and homeowner's insurance, you may have the right in five years 5.29 to discontinue the account and pay your own taxes and homeowners 5.30 insurance. If you are eligible to discontinue the escrow 5.31 account, you will be notified in five years." 5.32 If the escrow account has a negative balance or a shortage 5.33 at the time the mortgagor requests discontinuance, the mortgagee 5.34 is not obligated to allow discontinuance until the escrow 5.35 account is balanced or the shortage has been repaid. 5.36 (c) The mortgagee shall notify the mortgagor within 60 days 6.1 after the seventh anniversary of the date of the mortgage if the 6.2 right to discontinue the escrow account is in accordance with 6.3 paragraph (b). For mortgage loans entered into, on or prior to 6.4 July 1, 1989, the notice required by this paragraph shall be 6.5 provided to the mortgagor by January 1, 1997. 6.6 (d) Effective January 1, 1998, the requirements of 6.7 paragraph (b), regarding the mortgagor's election to discontinue 6.8 the escrow account, and paragraph (c), regarding notification to 6.9 mortgagor, shall apply when the fifth anniversary of the date of 6.10 the mortgage has been reached. 6.11 (d)(e) A mortgagee may require the mortgagor to 6.12 reestablish the escrow account if the mortgagor has failed to 6.13 make timely payments for two consecutive payment periods at any 6.14 time during the remaining term of the mortgage, or if the 6.15 mortgagor has failed to pay taxes or insurance premiums when 6.16 due. A payment received during a grace period shall be deemed 6.17 timely. 6.18 (e)(f) The mortgagee shall, subject to paragraph (b), 6.19 return any funds remaining in the account to the mortgagor 6.20 within 60 days after receipt of the mortgagor's written notice 6.21 of election to discontinue the escrow account. 6.22 (f)(g) The mortgagee shall not charge a direct fee for the 6.23 administration of the escrow account, nor shall the mortgagee 6.24 charge a fee or other consideration for allowing the mortgagor 6.25 to discontinue the escrow account. 6.26 Sec. 8. Minnesota Statutes 1996, section 47.20, 6.27 subdivision 14, is amended to read: 6.28 Subd. 14. (a) A lender requiring or offering private 6.29 mortgage insurance shall make available to the borrower or other 6.30 person paying the insurance premium the same premium payment 6.31 plans as are available to the lender in paying the private 6.32 mortgage insurance premium. 6.33 (b) Any refund or rebate for unearned private mortgage 6.34 insurance premiums shall be paid to the borrower or other person 6.35 actually providing the funds for payment of the premium. 6.36 (c) With regard to first mortgage loans made before, on, or 7.1 after January 1, 1997, the mortgagor shall have the right to 7.2 elect, in writing, to cancel borrower-purchased private mortgage 7.3 insurance if all of the following terms and conditions have been 7.4 met: 7.5 (1) if the current unpaid principal balance of a first 7.6 mortgage is 75 percent or less of the current fair market 7.7 appraised value of the property. "Current fair market appraised 7.8 value" shall be based upon a current appraisal by a real estate 7.9 appraiser licensed or certified by the appropriate state or 7.10 federal agency and reasonably acceptable to the lender. The 7.11 lender may require the mortgagor to pay for the appraisal; 7.12 (2) the mortgagor's monthly installments of principal, 7.13 interest, and escrow obligations have not been more than 30 days 7.14 past due over the 24-month period immediately preceding the 7.15 request for cancellation and all accrued late charges have been 7.16 paid; 7.17 (3) the mortgage was made at least 24 months prior to the 7.18 receipt of a request for cancellation of private mortgage 7.19 insurance; 7.20 (4) the property securing the mortgage is owner-occupied; 7.21 and 7.22 (5) the mortgage has not been pooled with other mortgages 7.23 in order to constitute, in whole or in part, collateral for 7.24 bonds issued by the state of Minnesota or any political 7.25 subdivision of the state of Minnesota or of any agency of any 7.26 political subdivision of the state of Minnesota. 7.27 (d) Other than the appraisal fee allowed pursuant to 7.28 paragraph (c), clause (1), the lender shall not charge the 7.29 borrower a fee or other consideration for cancellation of the 7.30 private mortgage insurance. 7.31 (e) With respect to all existing or future first mortgage 7.32 loans, a lender requiring private mortgage insurance shall, 7.33 after the payment of the 24th monthly premium installment of 7.34 private mortgage insurance, provide an annual written notice to 7.35 each mortgagor currently paying premiums for private mortgage 7.36 insurance. The notice may be included in the annual statement 8.1 or may be included in other regular mailings to the mortgagor. 8.2 For mortgage loans made prior to January 1, 1996, the first 8.3 required annual notice must be provided no later than January 8.4 31, 1998. The annual notice shall be on its own page, unless 8.5 included in a private mortgage insurance notice required under 8.6 the federal Real Estate Settlement Procedures Act, and shall 8.7 appear substantially as follows: 8.8 "NOTICE OF RIGHT TO CANCEL PRIVATE MORTGAGE INSURANCE 8.9 If you currently pay private mortgage insurance premiums, 8.10 you may have the right to cancel the insurance and cease paying 8.11 premiums. This would permit you to make a lower total monthly 8.12 mortgage payment. In most cases, you have the right to cancel 8.13 private mortgage insurance if the principal balance of your loan 8.14 is 80 percent or less of the current fair market appraised value 8.15 of your home. If you wish to learn whether you are eligible to 8.16 cancel this insurance, please contact us at (address/phone)." 8.17 (f) If a mortgage loan governed by paragraph (c) is 8.18 serviced in accordance with the guidelines of either the Federal 8.19 National Mortgage Association or the Federal Home Loan Mortgage 8.20 Corporation, the lender shall cancel private mortgage insurance 8.21 in accordance with the cancellation guidelines of the applicable 8.22 entity in effect at the time the request for cancellation is 8.23 received. 8.24 Sec. 9. Minnesota Statutes 1996, section 47.206, 8.25 subdivision 6, is amended to read: 8.26 Subd. 6. [PROHIBITED ACTS.] A person, including a lender, 8.27 may not advise, encourage, or induce a borrower or third party 8.28 to misrepresent information that is the subject of a loan 8.29 application or to violate the terms of the agreement. Neither a 8.30 mortgage lender nor a mortgage broker shall advertise mortgage 8.31 terms, including interest rate and discount points, which were 8.32 not available from the lender or broker on the date or dates 8.33 specified in the advertisement. For purposes of this section, 8.34 "advertisement" shall include a list or sampler of mortgage 8.35 terms compiled from information provided by the lender or 8.36 broker, with or without charge to the lender or broker, by a 9.1 newspaper, and shall also include advertising on the Internet. 9.2 Sec. 10. Minnesota Statutes 1996, section 47.55, 9.3 subdivision 1, is amended to read: 9.4 Subdivision 1. [BANKING FACILITIES IN OPERATION PRIOR TO 9.5 MAY 1, 1971.] A bank may retain and operate one detached 9.6 facility as it may have had in operation prior to May 1, 1971 9.7 without requirement of approval hereunder , provided that its9.8 function is limited as provided in section 47.53 and its9.9 location conforms with the provisions of section 47.52. A bank9.10 having such a retained detached facility shall be limited to9.11 operating five additional detached facilities. 9.12 Sec. 11. Minnesota Statutes 1996, section 47.56, is 9.13 amended to read: 9.14 47.56 [TRANSFER OF LOCATION.] 9.15 The location of a detached facility transferred to another 9.16 location outside of a radius of three miles measured in a 9.17 straight line is subject to the same procedures and approval as 9.18 required hereunder for establishing a new detached facility ,9.19 except that. The location of a detached facility transferred to 9.20 another location within the lesser of a radius of three miles 9.21 measured in a straight line from the existing location or the 9.22 municipality, as defined in section 47.51, in which it is 9.23 located is subject to the same procedures and approval as are 9.24 required in section 47.101, subdivision 2. The relocation of a 9.25 detached facility within a municipality of 10,000 or less 9.26 population shall not require consent of other banks required in 9.27 section 47.52. 9.28 Sec. 12. Minnesota Statutes 1996, section 47.59, 9.29 subdivision 1, is amended to read: 9.30 Subdivision 1. [DEFINITIONS.] For purposes of this 9.31 section, the following definitions shall apply. 9.32 (a) "Actuarial method" has the meaning given the term in 9.33 the Code of Federal Regulations, title 12, part 226, and 9.34 appendix J thereto. 9.35 (b) "Annual percentage rate" has the meaning given the term 9.36 in the Code of Federal Regulations, title 12, part 226, but 10.1 using the definition of "finance charge" used in this section. 10.2 (c) "Borrower" means a debtor under a loan or a purchaser 10.3 or debtor under a credit sale contract. 10.4 (d) "Business purpose" means a purpose other than a 10.5 personal, family, household, or agricultural purpose. 10.6 (e) "Cardholder" means a person to whom a credit card is 10.7 issued or who has agreed with the financial institution to pay 10.8 obligations arising from the issuance to or use of the card by 10.9 another person. 10.10 (f) "Consumer loan" means a loan made by a financial 10.11 institution in which: 10.12 (1) the debtor is a person other than an organization; 10.13 (2) the debt is incurred primarily for a personal, family, 10.14 or household purpose; and 10.15 (3) the debt is payable in installments or a finance charge 10.16 is made. 10.17 (g) "Credit" means the right granted by a financial 10.18 institution to a borrower to defer payment of a debt, to incur 10.19 debt and defer its payment, or to purchase property or services 10.20 and defer payment. 10.21 (h) "Credit card" means a card or device issued under an 10.22 arrangement pursuant to which a financial institution gives to a 10.23 cardholder the privilege of obtaining credit from the financial 10.24 institution or other person in purchasing or leasing property or 10.25 services, obtaining loans, or otherwise. A transaction is 10.26 "pursuant to a credit card" only if credit is obtained according 10.27 to the terms of the arrangement by transmitting information 10.28 contained on the card or device orally, in writing, by 10.29 mechanical or electronic methods, or in any other manner. A 10.30 transaction is not "pursuant to a credit card" if the card or 10.31 device is used solely in that transaction to: 10.32 (1) identify the cardholder or evidence the cardholder's 10.33 creditworthiness and credit is not obtained according to the 10.34 terms of the arrangement; 10.35 (2) obtain a guarantee of payment from the cardholder's 10.36 deposit account, whether or not the payment results in a credit 11.1 extension to the cardholder by the financial institution; or 11.2 (3) effect an immediate transfer of funds from the 11.3 cardholder's deposit account by electronic or other means, 11.4 whether or not the transfer results in a credit extension to the 11.5 cardholder by the financial institution. 11.6 (i) "Credit sale contract" means a contract evidencing a 11.7 credit sale. "Credit sale" means a sale of goods or services, 11.8 or an interest in land, in which: 11.9 (1) credit is granted by a seller who regularly engages as 11.10 a seller in credit transactions of the same kind; and 11.11 (2) the debt is payable in installments or a finance charge 11.12 is made. 11.13 (j) "Finance charge" has the meaning given in the Code of 11.14 Federal Regulations, title 12, part 226, except that the 11.15 following will not in any event be considered a finance charge: 11.16 (1) a charge as a result of default or delinquency under 11.17 subdivision 6 if made for actual unanticipated late payment, 11.18 delinquency, default, or other similar occurrence, and a charge 11.19 made for an extension or deferment under subdivision 5, unless 11.20 the parties agree that these charges are finance charges; 11.21 (2) an additional charge under subdivision 6; or11.22 (3) a discount, if a financial institution purchases a loan 11.23 at less than the face amount of the obligation or purchases or 11.24 satisfies obligations of a cardholder pursuant to a credit card 11.25 and the purchase or satisfaction is made at less than the face 11.26 amount of the obligation .; 11.27 (4) fees paid by a borrower to a broker, provided the 11.28 financial institution or a person described in subdivision 4 11.29 does not require use of the broker to obtain credit; or 11.30 (5) a commission, expense reimbursement, or other sum 11.31 received by a financial institution or a person described in 11.32 subdivision 4 in connection with insurance described in 11.33 subdivision 6. 11.34 (k) "Financial institution" means a state or federally 11.35 chartered bank, a state or federally chartered bank and trust, a 11.36 trust company with banking powers, a state or federally 12.1 chartered saving bank, a state or federally chartered savings 12.2 association, an industrial loan and thrift company, or a 12.3 regulated lender. 12.4 (l) "Loan" means: 12.5 (1) the creation of debt by the financial institution's 12.6 payment of money to the borrower or a third person for the 12.7 account of the borrower; 12.8 (2) the creation of debt pursuant to a credit card in any 12.9 manner, including a cash advance or the financial institution's 12.10 honoring a draft or similar order for the payment of money drawn 12.11 or accepted by the borrower, paying or agreeing to pay the 12.12 borrower's obligation, or purchasing or otherwise acquiring the 12.13 borrower's obligation from the obligee or the borrower's 12.14 assignee; 12.15 (3) the creation of debt by a cash advance to a borrower 12.16 pursuant to an overdraft line of credit arrangement; 12.17 (4) the creation of debt by a credit to an account with the 12.18 financial institution upon which the borrower is entitled to 12.19 draw immediately; 12.20 (5) the forbearance of debt arising from a loan; and 12.21 (6) the creation of debt pursuant to open-end credit. 12.22 "Loan" does not include the forbearance of debt arising 12.23 from a sale or lease, a credit sale contract, or an overdraft 12.24 from a person's deposit account with a financial institution 12.25 which is not pursuant to a written agreement to pay overdrafts 12.26 with the right to defer repayment thereof. 12.27 (m) "Official fees" means: 12.28 (1) fees and charges which actually are or will be paid to 12.29 public officials for determining the existence of or for 12.30 perfecting, releasing, terminating, or satisfying a security 12.31 interest or mortgage relating to a loan or credit sale, and any 12.32 separate fees or charges which actually are or will be paid to 12.33 public officials for recording a notice described in section 12.34 580.032, subdivision 1; and 12.35 (2) premiums payable for insurance in lieu of perfecting a 12.36 security interest or mortgage otherwise required by a financial 13.1 institution in connection with a loan or credit sale, if the 13.2 premium does not exceed the fees and charges described in clause 13.3 (1), which would otherwise be payable. 13.4 (n) "Organization" means a corporation, government, 13.5 government subdivision or agency, trust, estate, partnership, 13.6 joint venture, cooperative, limited liability company, limited 13.7 liability partnership, or association. 13.8 (o) "Person" means a natural person or an organization. 13.9 (p) "Principal" means the total of: 13.10 (1) the amount paid to, received by, or paid or repayable 13.11 for the account of, the borrower; and 13.12 (2) to the extent that payment is deferred: 13.13 (i) the amount actually paid or to be paid by the financial 13.14 institution for additional charges permitted under this section; 13.15 and 13.16 (ii) prepaid finance charges. 13.17 Sec. 13. Minnesota Statutes 1996, section 47.59, 13.18 subdivision 4, is amended to read: 13.19 Subd. 4. [FINANCE CHARGE FOR CREDIT SALES MADE BY A THIRD 13.20 PARTY.] (a) A person may enter into a credit sale contract for 13.21 sale to a financial institution and a financial institution may 13.22 purchase and enforce the contract, if the annual percentage rate 13.23 provided for in the contract does not exceed that permitted in 13.24 this section, or, in the case of contracts governed by sections13.25 168.66 to 168.77a retail installment sale of a motor vehicle as 13.26 defined in section 168.66, the annual percentage rates permitted 13.27 by subdivision 4a. 13.28 (b) The annual percentage rate may not exceed the 13.29 equivalent of the greater of either of the following: 13.30 (1) the total of: 13.31 (i) 36 percent per year on that part of the unpaid balances 13.32 of the amount financed that is $300 or less; 13.33 (ii) 21 percent per year on that part of the unpaid 13.34 balances of the amount financed which exceeds $300 but does not 13.35 exceed $1,000; and 13.36 (iii) 15 percent per year on that part of the unpaid 14.1 balances of the amount financed which exceeds $1,000; or 14.2 (2) 19 percent per year on the unpaid balances of the 14.3 amount financed. 14.4 (c) This subdivision does not limit or restrict the manner 14.5 of calculating the finance charge whether by way of add-on, 14.6 discount, discount points, single annual percentage rate, 14.7 precomputed charges, variable rate, interest in advance, 14.8 compounding, or otherwise, if the annual percentage rate 14.9 calculated under paragraph (d) does not exceed that permitted by 14.10 this section. The finance charge may be contracted for and 14.11 earned at the single annual percentage rate that would earn the 14.12 same finance charge as the graduated rates when the debt is paid 14.13 according to the agreed terms and the finance charge is 14.14 calculated under paragraph (d). If the finance charge is 14.15 calculated and collected in advance, or included in the 14.16 principal amount of the contract, and the borrower prepays the 14.17 contract in full, the financial institution shall credit the 14.18 borrower with a refund of the charge to the extent the annual 14.19 percentage rate yield on the contract would exceed the annual 14.20 percentage rate on the contract as originally determined under 14.21 paragraph (d) and taking into account the prepayment. For the 14.22 purpose of calculating the refund under this subdivision, the 14.23 financial institution may assume that the contract was paid 14.24 before the date of prepayment according to the schedule of 14.25 payments under the contract and that all payments were paid on 14.26 their due dates. For contracts repayable in substantially equal 14.27 successive monthly installments, the financial institution may 14.28 calculate the refund as the portion of the finance charge 14.29 allocable on an actuarial basis to all wholly unexpired payment 14.30 periods following the date of prepayment, based on the annual 14.31 percentage rate on the contract as originally determined under 14.32 paragraph (d), and for the purpose of calculating the refund may 14.33 assume that all payments are made on the due date. 14.34 (d) The annual percentage rate must be calculated in 14.35 accordance with Code of Federal Regulations, title 12, part 226, 14.36 except that the following will not in any event be considered a 15.1 finance charge: 15.2 (1) a charge as a result of delinquency or default under 15.3 subdivision 6 if made for actual unanticipated late payment, 15.4 delinquency, default, or other similar occurrence, and a charge 15.5 made for an extension or deferment under subdivision 5, unless 15.6 the parties agree that these charges are finance charges; 15.7 (2) an additional charge under subdivision 6; or 15.8 (3) a discount, if a financial institution purchases a 15.9 contract evidencing a credit sale at less than the face amount 15.10 of the obligation or purchases or satisfies obligations of a 15.11 cardholder according to a credit card and the purchase or 15.12 satisfaction is made at less than the face amount of the 15.13 obligation. 15.14 Sec. 14. Minnesota Statutes 1996, section 47.59, 15.15 subdivision 5, is amended to read: 15.16 Subd. 5. [EXTENSIONS, DEFERMENTS, AND CONVERSION TO 15.17 INTEREST BEARING.] (a) The parties may agree in writing, either 15.18 in the loan contract or credit sale contract or in a subsequent 15.19 agreement, to a deferment of wholly unpaid installments. For 15.20 precomputed loans and credit sale contracts, the manner of 15.21 deferment charge shall be determined as provided for in this 15.22 section. A deferment postpones the scheduled due date of the 15.23 earliest unpaid installment and all subsequent installments as 15.24 originally scheduled, or as previously deferred, for a period 15.25 equal to the deferment period. The deferment period is that 15.26 period during which no installment is scheduled to be paid by 15.27 reason of the deferment. The deferment charge for a one-month 15.28 period may not exceed the applicable charge for the installment 15.29 period immediately following the due date of the last undeferred 15.30 payment. A proportionate charge may be made for deferment 15.31 periods of more or less than one month. A deferment charge is 15.32 earned pro rata during the deferment period and is fully earned 15.33 on the last day of the deferment period. If a loan or credit 15.34 sale is prepaid in full during a deferment period, the financial 15.35 institution shall make or credit to the borrower a refund of the 15.36 unearned deferment charge in addition to any other refund or 16.1 credit made for prepayment of the loan or credit sale in full. 16.2 For the purpose of this subdivision, "applicable charge" 16.3 means the amount of finance charge attributable to each monthly 16.4 installment period for the loan or credit sale contract. The 16.5 applicable charge is computed as if each installment period were 16.6 one month and any charge for extending the first installment 16.7 period beyond the one month, or reduction in charge for a first 16.8 installment less than one month, is ignored. The applicable 16.9 charge for any installment period is that which would have been 16.10 made for the period had the loan been made on an 16.11 interest-bearing basis at the single annual percentage rate 16.12 provided for in the contract based upon the assumption that all 16.13 payments were made according to schedule. For convenience in 16.14 computation, the financial institution may round the single 16.15 annual rate to the nearest one quarter of one percent. 16.16 (b) Subject to a refund of unearned finance or deferment 16.17 charge required by this section, a financial institution may 16.18 convert a loan or credit sale contract to an interest bearing 16.19 balance, if: 16.20 (1) the loan contract or credit sale contract so provides 16.21 and is subject to a change of the terms of the written agreement 16.22 between the parties; or 16.23 (2) the loan contract so provides and two or more 16.24 installments are delinquent one full month or more on any due 16.25 date. 16.26 Thereafter, and in lieu of any other default, extension, or16.27 deferment charges, the single annual percentage rate must be16.28 determined under the applicable charge provisions of this16.29 subdivisionthe single annual percentage rate and other charges 16.30 must be determined as provided under this section for 16.31 interest-bearing transactions. 16.32 Sec. 15. Minnesota Statutes 1996, section 47.59, 16.33 subdivision 6, is amended to read: 16.34 Subd. 6. [ADDITIONAL CHARGES.] (a) For purposes of this 16.35 subdivision, "financial institution" includes a person described 16.36 in subdivision 4, paragraph (a). In addition to the finance 17.1 charges permitted by this section, a financial institution may 17.2 contract for and receive the following additional charges that 17.3 may be included in the principal amount of the loan or credit 17.4 sale unpaid balances: 17.5 (1) official fees and taxes; 17.6 (2) charges for insurance as described in paragraph (b); 17.7 (3) with respect to a loan or credit sale contract secured 17.8 by real estate, the following "closing costs," if they are bona 17.9 fide, reasonable in amount, and not for the purpose of 17.10 circumvention or evasion of this section: 17.11 (i) fees or premiums for title examination, abstract of 17.12 title, title insurance, surveys, or similar purposes; 17.13 (ii) fees for preparation of a deed, mortgage, settlement 17.14 statement, or other documents, if not paid to the financial 17.15 institution; 17.16 (iii) escrows for future payments of taxes, including 17.17 assessments for improvements, insurance, and water, sewer, and 17.18 land rents; 17.19 (iv) fees for notarizing deeds and other documents; 17.20 (v) appraisal and credit report fees; and 17.21 (vi) fees for determining whether any portion of the 17.22 property is located in a flood zone and fees for ongoing 17.23 monitoring of the property to determine changes, if any, in 17.24 flood zone status; 17.25 (4) a delinquency charge on a payment, including the 17.26 minimum payment due in connection with theopen-end credit, not 17.27 paid in full on or before the tenth day after its due date in an 17.28 amount not to exceed five percent of the amount of the payment 17.29 or $5.20, whichever is greater; 17.30 (5) for a returned check or returned automatic payment 17.31 withdrawal request, an amount not in excess of the service 17.32 charge limitation in section 332.50; and 17.33 (6) charges for other benefits, including insurance, 17.34 conferred on the borrower that are of a type that is not for 17.35 credit. 17.36 (b) An additional charge may be made for insurance written 18.1 in connection with the loan or credit sale contract, which may 18.2 be included in the principal amount of the loan or credit sale 18.3 unpaid balances: 18.4 (1) with respect to insurance against loss of or damage to 18.5 property, or against liability arising out of the ownership or 18.6 use of property, if the financial institution furnishes a clear, 18.7 conspicuous, and specific statement in writing to the borrower 18.8 setting forth the cost of the insurance if obtained from or 18.9 through the financial institution and stating that the borrower 18.10 may choose the person through whom the insurance is to be 18.11 obtained; 18.12 (2) with respect to credit insurance or mortgage insurance 18.13 providing life, accident, health, or unemployment coverage, if 18.14 the insurance coverage is not required by the financial 18.15 institution, and this fact is clearly and conspicuously 18.16 disclosed in writing to the borrower, and the borrower gives 18.17 specific, dated, and separately signed affirmative written 18.18 indication of the borrower's desire to do so after written 18.19 disclosure to the borrower of the cost of the insurance; and 18.20 (3) with respect to the vendor's single interest insurance, 18.21 but only (i) to the extent that the insurer has no right of 18.22 subrogation against the borrower; and (ii) to the extent that 18.23 the insurance does not duplicate the coverage of other insurance 18.24 under which loss is payable to the financial institution as its 18.25 interest may appear, against loss of or damage to property for 18.26 which a separate charge is made to the borrower according to 18.27 clause (1); and (iii) if a clear, conspicuous, and specific 18.28 statement in writing is furnished by the financial institution 18.29 to the borrower setting forth the cost of the insurance if 18.30 obtained from or through the financial institution and stating 18.31 that the borrower may choose the person through whom the 18.32 insurance is to be obtained. 18.33 (c) In addition to the finance charges and other additional 18.34 charges permitted by this section, a financial institution may 18.35 contract for and receive the following additional charges in 18.36 connection with open-end credit, which may be included in the 19.1 principal amount of the loan or balance upon which the finance 19.2 charge is computed: 19.3 (1) annual charges, not to exceed $50 per annum, payable in 19.4 advance, for the privilege of opening and maintaining open-end 19.5 credit; 19.6 (2) charges for the use of an automated teller machine; 19.7 (3) charges for any monthly or other periodic payment 19.8 period in which the borrower has exceeded or, except for the 19.9 financial institution's dishonor would have exceeded, the 19.10 maximum approved credit limit, in an amount not in excess of the 19.11 service charge permitted in section 332.50; 19.12 (4) charges for obtaining a cash advance in an amount not 19.13 to exceed the service charge permitted in section 332.50; and 19.14 (5) charges for check and draft copies and for the 19.15 replacement of lost or stolen credit cards. 19.16 (d) In addition to the finance charges and other additional 19.17 charges permitted by this section, a financial institution may 19.18 contract for and receive a one-time loan administrative fee not 19.19 exceeding $25 in connection with closed-end credit, which may be 19.20 included in the principal balance upon which the finance charge 19.21 is computed. This paragraph applies only to closed-end credit 19.22 in an original principal amount of $4,320 or less. The 19.23 determination of an original principal amount must exclude the 19.24 administrative fee contracted for and received according to this 19.25 paragraph. 19.26 Sec. 16. Minnesota Statutes 1996, section 47.59, 19.27 subdivision 12, is amended to read: 19.28 Subd. 12. [CONSUMER PROTECTIONS.] (a) Financial 19.29 institutions shall comply with the requirements of the federal 19.30 Truth in Lending Act, United States Code, title 15, sections 19.31 1601 to 1693, in connection with a consumer loan or credit sale 19.32 for a consumer purpose where the federal Truth in Lending Act is 19.33 applicable. A financial institution shall give the following 19.34 disclosure to the borrower in writing at the time an open-end 19.35 credit account is established if the financial institution 19.36 imposes a loan fee, points, or similar charge that relates to 20.1 the opening of the account which is not included in the annual 20.2 percentage rate given pursuant to the federal Truth in Lending 20.3 Act: "YOU HAVE BEEN ASSESSED FINANCE CHARGES, OR POINTS, WHICH 20.4 ARE NOT INCLUDED IN THE ANNUAL PERCENTAGE RATE. THESE CHARGES 20.5 MAY BE REFUNDED, IN WHOLE OR IN PART, IF YOU DO NOT USE YOUR 20.6 LINE OF CREDIT OR IF YOU REPAY YOUR LINE OF CREDIT EARLY. THESE 20.7 CHARGES INCREASE THE COST OF YOUR CREDIT." 20.8 (b) Financial institutions shall comply with the following 20.9 consumer protection provisions in connection with a consumer 20.10 loan or credit sale for a consumer purpose: sections 325G.02 to 20.11 325G.05; 325G.06 to 325G.11; 325G.15 to 325G.22; and 325G.29 to 20.12 325G.36, and Code of Federal Regulations, title 12, part 535, 20.13 where those statutes or regulations are applicable. 20.14 (c) An assignment of a consumer's earnings by the consumer 20.15 to a financial institution as payment or as security for payment 20.16 of a debt arising out of a consumer loan or consumer credit sale 20.17 is unenforceable by the financial institution and revocable by20.18 the consumerexcept where the assignment: (1) by its terms is 20.19 revocable at the will of the consumer; (2) is a payroll 20.20 deduction plan or preauthorized payment plan, beginning at the 20.21 time of the transaction, in which the consumer authorizes a 20.22 series of wage deductions as a method of making each payment; or 20.23 (3) applies only to wages or other earnings already earned at 20.24 the time of the assignment. 20.25 Sec. 17. Minnesota Statutes 1996, section 47.61, 20.26 subdivision 3, is amended to read: 20.27 Subd. 3. (a) "Electronic financial terminal" means an 20.28 electronic information processing device that is established to 20.29 do either or both of the following: 20.30 (1) capture the data necessary to initiate financial 20.31 transactions; or 20.32 (2) through its attendant support system, store or initiate 20.33 the transmission of the information necessary to consummate a 20.34 financial transaction. 20.35 (b) "Electronic financial terminal" does not include: 20.36 (1) a telephone; 21.1 (2) an electronic information processing device that is 21.2 used internally by a financial institution to conduct the 21.3 business activities of the institution; or21.4 (3) an electronic point-of-sale terminal operated by a 21.5 retailer that is used to process payments for the purchase of 21.6 goods and services by consumers, and which also may be used to 21.7 obtain cash advances or cash back not to exceed $25 and only if 21.8 incidental to the retail sale transactions, through the use of 21.9 credit cards or debit cards, provided that the payment 21.10 transactions using debit cards are subject to the federal 21.11 Electronic Funds Transfer Act, United States Code, title 12, 21.12 sections 1693 et seq., and Regulation E of the Federal Reserve 21.13 Board, Code of Federal Regulations, title 12, subpart 205.2; 21.14 this clause does not exempt the retailer from liability for 21.15 negligent conduct or intentional misconduct of the operator 21.16 under section 47.69, subdivision 5; 21.17 (4) stored-value cards to only process transactions other 21.18 than those authorized by this section. Stored-value cards are 21.19 transaction cards having magnetic stripes or computer chips that 21.20 enable electronic value to be added or deducted as needed; or 21.21 (5) a personal computer possessed by and operated 21.22 exclusively by the account holder. 21.23 Sec. 18. Minnesota Statutes 1996, section 47.64, is 21.24 amended by adding a subdivision to read: 21.25 Subd. 7. [PROHIBITION.] An agreement to share electronic 21.26 financial terminals may not contain provisions distinguishing 21.27 between cards issued by United States financial institutions and 21.28 cards issued by Canadian financial institutions relative to a 21.29 fee that may be charged to a card holder by the owner or 21.30 operator of an electronic financial terminal, if the terminal is 21.31 located within 50 miles of the Canadian border, and the 21.32 enforcement of any such provision is prohibited. 21.33 Sec. 19. Minnesota Statutes 1996, section 47.75, 21.34 subdivision 1, is amended to read: 21.35 Subdivision 1. [RETIREMENT AND MEDICAL SAVINGS ACCOUNTS.] 21.36 A commercial bank, savings bank, savings association, credit 22.1 union, or industrial loan and thrift company may act as trustee 22.2 or custodian under the Federal Self-Employed Individual Tax 22.3 Retirement Act of 1962, as amended, of a medical savings account 22.4 under the Federal Health Insurance Portability and 22.5 Accountability Act of 1996, as amended, and also under the 22.6 Federal Employee Retirement Income Security Act of 1974, as 22.7 amended. The trustee or custodian may accept the trust funds if 22.8 the funds are invested only in savings accounts or time deposits 22.9 in the commercial bank, savings bank, savings association, 22.10 credit union, or industrial loan and thrift company. All funds 22.11 held in the fiduciary capacity may be commingled by the 22.12 financial institution in the conduct of its business, but 22.13 individual records shall be maintained by the fiduciary for each 22.14 participant and shall show in detail all transactions engaged 22.15 under authority of this subdivision. 22.16 Sec. 20. Minnesota Statutes 1996, section 48.01, 22.17 subdivision 2, is amended to read: 22.18 Subd. 2. [BANKING INSTITUTION.] The term "banking 22.19 institution" means any bank, trust company, bank and trust 22.20 company, or savings bank which is now or may hereafter be 22.21 organized under the laws of this state. For purposes of 22.22 sections 48.38, 48.84, and 501B.10501B.151, subdivision 611, 22.23 and to the extent permitted by federal law, "banking 22.24 institution" includes any national banking association or 22.25 affiliate exercising trust powers in this state. 22.26 Sec. 21. Minnesota Statutes 1996, section 48.09, is 22.27 amended by adding a subdivision to read: 22.28 Subd. 3. [QUALIFIED SUBCHAPTER S SUBSIDIARY.] A bank that 22.29 has met the eligibility requirements under title I, subtitle C 22.30 of the Small Business Job Protection Act of 1996 or related 22.31 state of Minnesota tax law may apply to the commissioner for 22.32 approval of a plan and agreement for a distribution of earnings 22.33 to the shareholder(s) of the bank on a basis other than a 22.34 dividend under subdivisions 1 and 2. Approval of a plan of 22.35 distribution under this subdivision may be rescinded by the 22.36 commissioner upon 90-day prior notice to the bank. Failure to 23.1 comply with this notice or qualification of a distribution under 23.2 subdivisions 1 and 2 is considered a violation subject to the 23.3 commissioner's action under section 45.027 or 46.24. 23.4 Sec. 22. Minnesota Statutes 1996, section 48.15, 23.5 subdivision 2, is amended to read: 23.6 Subd. 2. The commissioner of commerce may authorize banks, 23.7 bank and trust companies, or trust companies organized under the 23.8 laws of this state to engage in any banking or trust activity in 23.9 which banks subject to the jurisdiction of the federal 23.10 government may hereafter be authorized to engage by federal 23.11 legislation, ruling, or regulation and those activities 23.12 authorized in section 48.61, subdivision 7, paragraph (a), 23.13 clause (3). The commissioner may not authorize state banks as 23.14 defined by section 48.01, to engage in any bankingactivity 23.15 prohibited by the laws of this state. 23.16 Sec. 23. Minnesota Statutes 1996, section 48.15, 23.17 subdivision 4, is amended to read: 23.18 Subd. 4. [RETIREMENT AND MEDICAL SAVINGS ACCOUNTS.] A 23.19 state bank may act as trustee or custodian of a self-employed 23.20 retirement plan under the Federal Self-Employed Individual Tax 23.21 Retirement Act of 1962, as amended, of a medical savings account 23.22 under the Federal Health Insurance Portability and 23.23 Accountability Act of 1996, as amended, and of an individual 23.24 retirement account under the Federal Employee Retirement Income 23.25 Security Act of 1974, as amended, if the bank's duties as 23.26 trustee or custodian are essentially ministerial or custodial in 23.27 nature and the funds are invested only (1) in the bank's own 23.28 savings or time deposits; or (2) in any other assets at the 23.29 direction of the customer if the bank does not exercise any 23.30 investment discretion, invest the funds in collective investment 23.31 funds administered by it, or provide any investment advice with 23.32 respect to those account assets. 23.33 Affiliated discount brokers may be utilized by the bank 23.34 acting as trustee or custodian for self-directed IRAs, if 23.35 specifically authorized and directed in appropriate documents. 23.36 The relationship between the affiliated broker and the bank must 24.1 be fully disclosed. Brokerage commissions to be charged to the 24.2 IRA by the affiliated broker should be accurately disclosed. 24.3 Provisions should be made for disclosure of any changes in 24.4 commission rates prior to their becoming effective. The 24.5 affiliated broker may not provide investment advice to the 24.6 customer. All funds held in the fiduciary capacity may be 24.7 commingled by the financial institution in the conduct of its 24.8 business, but individual records shall be maintained by the 24.9 fiduciary for each participant and shall show in detail all 24.10 transactions engaged under authority of this subdivision. The 24.11 authority granted by this section is in addition to, and not 24.12 limited by, section 47.75. 24.13 Sec. 24. Minnesota Statutes 1996, section 48.24, 24.14 subdivision 2, is amended to read: 24.15 Subd. 2. Loans not exceeding 25 percent of such capital 24.16 and surplus made upon first mortgage security on improved real 24.17 estate in theany state in which the bank or a branch 24.18 established under section 49.411 is located, or in an adjoining24.19 any state within 20 miles of the place where the bankadjoining 24.20 a state in which the bank or a branch established under section 24.21 49.411 is located, shall not constitute a liability of the maker 24.22 of the notes secured by such mortgages within the meaning of the 24.23 foregoing provision limiting liability, but shall be an actual 24.24 liability of the maker. These mortgage loans shall be limited 24.25 to, and in no case exceed, 50 percent of the cash value of the 24.26 security covered by the mortgage, except mortgage loans 24.27 guaranteed as provided by the servicemen's readjustment act of 24.28 1944, as now or hereafter amended, or for which there is a 24.29 commitment to so guarantee or for which a conditional guarantee 24.30 has been issued, which loans shall in no case exceed 60 percent 24.31 of the cash value of the security covered by such mortgage. For 24.32 the purposes of this subdivision, real estate is improved when 24.33 substantial and permanent development or construction has 24.34 contributed substantially to its value, and agricultural land is 24.35 improved when farm crops are regularly raised on such land 24.36 without further substantial improvements. 25.1 Sec. 25. Minnesota Statutes 1996, section 48.24, is 25.2 amended by adding a subdivision to read: 25.3 Subd. 9. [RIGHT TO ACT TO AVOID LOSS.] This section does 25.4 not prohibit the bank from advancing funds that may be 25.5 reasonably necessary to avoid loss on a loan or investment made 25.6 subject to this section or an obligation created in good faith. 25.7 The rights under this subdivision are in addition to and not 25.8 inconsistent with section 48.21. 25.9 Sec. 26. [48.476] [REPRESENTATIVE TRUST OFFICE.] 25.10 Subdivision 1. [DEFINITIONS.] For purposes of this 25.11 section, the terms in this subdivision have the meanings given. 25.12 (a) "Representative trust office" means an office at which 25.13 a trust company or bank with trust powers has been authorized by 25.14 the commissioner to engage in a trust business other than acting 25.15 as a fiduciary. 25.16 (b) "Acting as a fiduciary" means to: 25.17 (1) accept or execute trusts, including to: 25.18 (i) act as trustee under a written agreement; 25.19 (ii) receive money or other property in its capacity as a 25.20 trustee for investment in real or personal property; 25.21 (iii) act as trustee and perform the fiduciary duties 25.22 committed or transferred to it by order of court of competent 25.23 jurisdiction; 25.24 (iv) act as trustee of the estate of a deceased person; or 25.25 (v) act as trustee for a minor or incapacitated person; 25.26 (2) administer in any other fiduciary capacity real or 25.27 personal property; or 25.28 (3) act according to order of court of competent 25.29 jurisdiction as executor or administrator of the estate of a 25.30 deceased person or as a guardian or conservator for a minor or 25.31 incapacitated person. 25.32 Subd. 2. [AUTHORITY FOR REPRESENTATIVE TRUST OFFICES; 25.33 PRIOR WRITTEN NOTICE.] (a) A state trust institution may 25.34 establish or acquire and maintain representative trust offices 25.35 anywhere in this state. A state trust institution desiring to 25.36 establish or acquire and maintain such an office shall file a 26.1 written notice with the commissioner setting forth the name of 26.2 the state trust institution and the location of the proposed 26.3 additional office and furnish a copy of the resolution adopted 26.4 by the board authorizing the additional office. 26.5 (b) The state trust institution may begin business at the 26.6 additional office on the 31st day after the date the 26.7 commissioner receives the notice, unless the commissioner 26.8 specifies an earlier or later date. 26.9 (c) The 30-day period of review may be extended by the 26.10 commissioner on a determination that the written notice raises 26.11 issues that require additional information or additional time 26.12 for analysis. If the period of review is extended, the state 26.13 trust institution may establish the additional office only on 26.14 prior written approval by the commissioner. 26.15 (d) The commissioner may deny approval of the additional 26.16 office if the commissioner finds that the state trust 26.17 institution lacks sufficient financial resources to undertake 26.18 the proposed expansion without adversely affecting its safety or 26.19 soundness or that the proposed office would be contrary to the 26.20 public interest. 26.21 Subd. 3. [AUTHORITY FOR OUT-OF-STATE TRUST OFFICES; PRIOR 26.22 WRITTEN NOTICE.] (a) A state trust institution may establish and 26.23 maintain representative trust office or acquire and maintain an 26.24 office in a state other than this state. A state trust 26.25 institution desiring to establish or acquire and maintain an 26.26 office in another state under this section shall file a notice 26.27 on a form prescribed by the commissioner, which shall set forth 26.28 the name of the state trust institution, the location of the 26.29 proposed office, and whether the laws of the jurisdiction where 26.30 the office will be located permit the office to be maintained by 26.31 the state trust institution; and furnish a copy of the 26.32 resolution adopted by the board authorizing the out-of-state 26.33 office. 26.34 (b) The state trust institution may begin business at the 26.35 additional office on the 31st day after the date the 26.36 commissioner receives the notice, unless the commissioner 27.1 specifies an earlier or later date. 27.2 (c) The 30-day period of review may be extended by the 27.3 commissioner on a determination that the written notice raises 27.4 issues that require additional information or additional time 27.5 for analysis. If the period of review is extended, the state 27.6 trust institution may establish the additional office only on 27.7 prior written approval by the commissioner. 27.8 (d) The commissioner may deny approval of the additional 27.9 office if the commissioner finds that the state trust 27.10 institution lacks sufficient financial resources to undertake 27.11 the proposed expansion without adversely affecting its safety or 27.12 soundness or that the proposed office would be contrary to the 27.13 public interest. In acting on the notice, the commissioner 27.14 shall consider the views of the appropriate bank supervisory 27.15 agencies. 27.16 Sec. 27. Minnesota Statutes 1996, section 48.512, is 27.17 amended by adding a subdivision to read: 27.18 Subd. 4a. [IDENTIFICATION NOT REQUIRED FOR DEBIT CARD 27.19 TRANSACTIONS.] The identification requirements of subdivision 4 27.20 do not apply to a transaction account that is accessible 27.21 exclusively by debit card. A debit card activates a transaction 27.22 account at a financial intermediary by means of an electronic 27.23 information processing device and contemporaneously completes 27.24 the debt to the account only on the condition that funds are 27.25 available and confirmed. 27.26 Sec. 28. Minnesota Statutes 1996, section 48.61, 27.27 subdivision 7, is amended to read: 27.28 Subd. 7. [SUBSIDIARIES.] (a) A state bank or trust company 27.29 may organize, acquire, or invest in a subsidiary located in this 27.30 state for the purposes of engaging in one or more of the 27.31 following activities, subject to the prior written approval of 27.32 the commissioner: 27.33 (1) any activity, not including receiving deposits or 27.34 paying checks, that a state bank is authorized to engage in 27.35 under state law or rule or under federal law or regulation 27.36 unless the activity is prohibited by the laws of this state; 28.1 (2) any activity that a bank clerical service corporation 28.2 is authorized to engage in under section 48.89; and 28.3 (3) any other activity authorized for a national bank, a 28.4 bank holding company, or a subsidiary of a national bank or bank 28.5 holding company under federal law or regulation of general 28.6 applicability, and approved by the commissioner by rule. 28.7 (b) A bank or trust company subsidiary may engage in an 28.8 activity under this section only upon application together with 28.9 a filing fee of $250 and with the prior written approval of the 28.10 commissioner. In approving or denying a proposed activity, the 28.11 commissioner shall consider the financial and management 28.12 strength of the bank or trust company, the current written 28.13 operating plan and policies of the proposed subsidiary 28.14 corporation, the bank or trust company's community reinvestment 28.15 record, and whether the proposed activity should be conducted 28.16 through a subsidiary of the bank or trust company. 28.17 (c) The aggregate amount of funds invested in either an 28.18 equity or loan capacity in all of the subsidiaries of the bank 28.19 or trust company authorized under this subdivision shall not 28.20 exceed 25 percent of the capital stock and paid in surplus of 28.21 the bank or trust company. 28.22 (d) A subsidiary organized or acquired under this 28.23 subdivision is subject to the examination and enforcement 28.24 authority of the commissioner under chapters 45 and 46 to the 28.25 same extent as a state bank or trust company. 28.26 (e) For the purposes of this section, "subsidiary" means a 28.27 corporation of which more than 50 percent of the voting shares 28.28 are owned or controlled by the bank or trust company. 28.29 Sec. 29. Minnesota Statutes 1996, section 48.61, is 28.30 amended by adding a subdivision to read: 28.31 Subd. 10. [SUBSIDIARIES ORGANIZED FOR PURPOSES OF 28.32 CORPORATE REORGANIZATION.] A subsidiary may be organized solely 28.33 for purposes of liquidating assets in a reorganization subject 28.34 to the following conditions: 28.35 (1) the subsidiary must be a bank holding company whose 28.36 assets and liabilities and subsidiary bank control have been 29.1 removed; and 29.2 (2) the operations of the subsidiary must be limited to the 29.3 time period reasonably related to the completion of the 29.4 reorganization. 29.5 Sec. 30. Minnesota Statutes 1996, section 49.215, 29.6 subdivision 3, is amended to read: 29.7 Subd. 3. [CERTIFICATE OF LIQUIDATION.] Upon compliance 29.8 with the foregoing and upon filing with the commissioner an 29.9 affidavit of the president and cashier or vice president 29.10 conducting the duties of cashier of said financial institution 29.11 that the provisions of subdivision 4 have been complied with and 29.12 that all depositors and other creditors have been paid in full, 29.13 or, if any dividends or any moneys set apart for the payment of 29.14 claims remain unpaid and the places of residence of the 29.15 depositors or other creditors are unknown to the persons making 29.16 the affidavit, that sufficient funds have been turned over to 29.17 the commissioner for payment into the state treasury to pay said 29.18 depositors and other creditors, in the manner provided by 29.19 subdivision 5, the commissioner shall issue a certificate of 29.20 liquidation, and, upon the filing for record of said certificate 29.21 of liquidation in the office of the secretary of state and in 29.22 the office of the county recorder of the county of the principal 29.23 place of business of such financial institution immediately 29.24 prior to its voluntary liquidation, the liquidation of said 29.25 financial institution shall be complete, and its corporate 29.26 existence shall thereupon terminate. 29.27 Sec. 31. Minnesota Statutes 1996, section 49.33, is 29.28 amended to read: 29.29 49.33 [CONSOLIDATION AND MERGER, WHEN AUTHORIZED.] 29.30 Subject to the provisions of sections 49.33 to 49.41, with 29.31 the written consent of the commissioner of commerce, any bank of29.32 discount and deposit, savings bank, or trust company may effect 29.33 a transfer of its assets and liabilities to another bank, 29.34 savings bank, or trust company for the purpose of consolidating 29.35 or merging, but the same shall be without prejudice to the 29.36 creditors of either. 30.1 Sec. 32. Minnesota Statutes 1996, section 49.36, 30.2 subdivision 4, is amended to read: 30.3 Subd. 4. [NOTICE OF PROPOSED ACQUISITION.] The successor 30.4 bank shall give reasonable notice of the acquisition to each of 30.5 the depositors and creditors of an acquired bank or savings 30.6 association within 30 days after the order is activatedat a 30.7 time and in a form determined in the discretion of the 30.8 commissioner. This notice may be coordinated to include federal 30.9 regulator concerns for impact on deposit insurance of accounts 30.10 and information designed to alert depositors and creditors of 30.11 any changes in procedures or practices. If detached facilities 30.12 are to be closed as a result of transactions authorized by this 30.13 section, adequate notice shall be provided by the bank prior to 30.14 closing, unless the commissioner has acted to prevent the 30.15 probable failure of the bank or savings association, and then as 30.16 soon as practicable after the acquisition date. 30.17 Sec. 33. Minnesota Statutes 1996, section 49.42, is 30.18 amended to read: 30.19 49.42 [STATE BANK.] 30.20 As used in sections 49.42 to 49.46: 30.21 "State bank" means any bank, savings bank, trust company, 30.22 or bank and trust company which is now or may hereafter be 30.23 organized under the laws of this state. 30.24 "National banking association" means a bank, savings bank, 30.25 bank and trust company, or bank exclusively exercising trust 30.26 powers organized under the laws of the United States. 30.27 Sec. 34. Minnesota Statutes 1996, section 50.245, is 30.28 amended to read: 30.29 50.245 [BRANCHES; ACQUISITIONS.] 30.30 Subdivision 1. [AUTHORITY FOR BRANCH OFFICES.] A savings 30.31 bank may establish any number of detached facilities as may be 30.32 approved by the commissioner of commerce pursuant to sections 30.33 47.51 to 47.57. The savings bank shall not change the location 30.34 of a detached facility without prior written approval of the 30.35 commissioner of commerce. A savings bank may establish a loan 30.36 production office, without restriction as to geographical 31.1 location, upon written notice to the commissioner of commerce. 31.2 Subd. 2. [AUTHORITY FOR BRANCH OFFICES IN OTHER STATES.] 31.3 The authorization contained in subdivision 1 is in addition to 31.4 the authority granted savings banks in section 47.52. A savings 31.5 bank chartered in this state, whether or not the subsidiary of a 31.6 savings bank holding company, may, by acquisition, merger,31.7 purchase, and assumption of some or all assets and liabilities,31.8 consolidation, or de novo formation, establish or operate31.9 detached facilities in another state on the same terms and31.10 conditions and subject to the same limitations and restrictions31.11 as are applicable to the establishment of branches by national31.12 banks located in Minnesota, except that approval of the31.13 comptroller of the currency shall not be required for such31.14 detached facilitieshas the same authority as a bank to conduct 31.15 interstate mergers affecting interstate branching under section 31.16 49.411. The merger may be between banks and with other banks or 31.17 savings banks. 31.18 Subd. 3. [ RECIPROCATING STATEINTERSTATE ACQUISITIONS.] A 31.19 savings bank chartered in this state and a savings bank holding 31.20 company with its principal offices in this state may acquire 31.21 control of a financial institution chartered in a reciprocating31.22 state or, subject to applicable federal law,any other state or 31.23 a financial institution holding company with principal offices 31.24 in a reciprocating state or, subject to applicable federal law,31.25 any other state. A savings bank chartered in a reciprocating31.26 state or, subject to applicable federal law,any other state and 31.27 a savings bank holding company with principal offices in a31.28 reciprocating state or, subject to applicable federal law,any 31.29 other state may acquire control of a savings bank chartered in 31.30 this state or a savings bank holding company with principal 31.31 offices in this state. 31.32 Subd. 4. [PROCEDURAL REQUIREMENTS.] Procedural 31.33 requirements equivalent to thosecontained in sections 48.90 to 31.34 48.99548.99 apply to reciprocalinterstate branching and31.35 acquisitions by savings banks and savings bank holding companies. 31.36 Subd. 5. [DEFINITIONS.] For the purpose of this section, 32.1 the terms defined in this subdivision have the meanings given 32.2 them. 32.3 (a) "Financial institution" means a bank, savings bank, 32.4 savings association, or trust company, or credit union,whether 32.5 chartered under the laws of this state, another state or 32.6 territory, or under the laws of the United States. 32.7 (b) "Loan production office" means a place of business at 32.8 which a savings bank provides lending if the loans are approved 32.9 at the main office or detached facility of the savings bank, but 32.10 at which a savings bank may not accept deposits except through a 32.11 remote service unit. 32.12 (c) "Reciprocating state" means a state that authorizes the32.13 acquisition of control of financial institutions chartered in32.14 that state and financial institution holding companies with32.15 principal offices in that state by a savings bank chartered in32.16 this state or savings bank holding company with principal32.17 offices in this state under conditions substantially similar to32.18 those imposed by the laws of Minnesota, as determined by the32.19 commissioner of commerce.32.20 (d)"Remote service unit" means an electronic financial 32.21 terminal as defined in section 47.61. 32.22 Subd. 6. [COMMISSIONER'S AUTHORITY.] The authority of the32.23 commissioner of commerce to approve a transaction under this32.24 section is in addition to that provided for in section 184.108.40.206 Sec. 35. Minnesota Statutes 1996, section 51A.38, 32.26 subdivision 1, is amended to read: 32.27 Subdivision 1. [GENERALLY.] Real estate loans and other 32.28 loans secured by a mortgage on real estate that are eligible for 32.29 investment by an association under sections 51A.01 to 51A.57 may 32.30 be written according to this section and section 32.31 51A.38551A.386, or upon any other plan approved by the 32.32 commissioner. 32.33 Sec. 36. Minnesota Statutes 1996, section 52.04, 32.34 subdivision 2a, is amended to read: 32.35 Subd. 2a. [CREDIT SALES OR SERVICE CONTRACTS.] A person 32.36 may enter into a credit sale or service contract for sale to a 33.1 state or federal credit union doing business in this state, and 33.2 a credit union may purchase and enforce the contract under the 33.3 terms and conditions set forth in section 47.59, subdivisions 33.4 4 and 6to 14. 33.5 Sec. 37. Minnesota Statutes 1996, section 52.04, is 33.6 amended by adding a subdivision to read: 33.7 Subd. 3. [COMPARABILITY WITH FEDERAL CREDIT UNIONS.] The 33.8 commissioner of commerce may authorize credit union activity in 33.9 which credit unions subject to the jurisdiction of the federal 33.10 government may be authorized to engage by federal legislation, 33.11 ruling, or regulation. The commissioner may not authorize state 33.12 credit unions subject to this chapter to engage in credit union 33.13 activity prohibited by the laws of this state. 33.14 Sec. 38. Minnesota Statutes 1996, section 52.062, 33.15 subdivision 1, is amended to read: 33.16 Subdivision 1. [REASONS FOR COMMISSIONER'S ACTION.] 33.17 Whenever the commissioner of commerce shall find that a credit 33.18 union is engaged in unsafe or unsound practices in conducting 33.19 its business or that the shares of the members are impaired or 33.20 are in immediate danger of becoming impaired, or that such 33.21 credit union has knowingly or negligently permitted any of its 33.22 officers, directors, committee members, or employees to violate 33.23 any material provision of any law, bylaw, or rule to which the 33.24 credit union is subject, the commissioner of commerce may 33.25 proceed in the manner provided by eithersubdivision 2 or, 3, or 33.26 4. 33.27 Sec. 39. Minnesota Statutes 1996, section 52.062, is 33.28 amended by adding a subdivision to read: 33.29 Subd. 4. [CONSENT CEASE AND DESIST ORDER.] In lieu of 33.30 suspension of the operation of the credit union, the 33.31 commissioner of commerce and the board of directors of the 33.32 credit union may agree to execute a consent cease and desist 33.33 order in which the parties agree to waive the right to a hearing 33.34 and agree that the credit union shall cease and desist from 33.35 unsafe or unsound practices, or violations. The order must 33.36 specify whether credit union operation may continue, and if 34.1 operation may continue, the conditions under which operation may 34.2 continue. 34.3 Sec. 40. Minnesota Statutes 1996, section 52.063, is 34.4 amended to read: 34.5 52.063 [PROCEEDINGS FOLLOWING SUSPENSION OR, CONTINUATION 34.6 OF SUSPENSION, OR CONSENT CEASE AND DESIST ORDER; APPOINTMENT OF 34.7 NATIONAL CREDIT UNION ADMINISTRATION BOARD AS RECEIVER.] 34.8 Subdivision 1. [PROCEEDINGS FOLLOWING SUSPENSION OR 34.9 CONTINUATION OF SUSPENSION.] Upon receipt of the suspension 34.10 notice or the notice of the continuation of suspension under 34.11 section 52.062, subdivision 2 or 3, the credit union shall 34.12 immediately cease or continue cessation of all operations except 34.13 those operations specifically authorized by the commissioner of 34.14 commerce. If the notice is given pursuant to determination by 34.15 the commissioner of commerce after a hearing, the board of 34.16 directors shall have 60 days from the receipt of said notice in 34.17 which to file with the commissioner of commerce a proposed plan 34.18 of corrective actions or to request that a receiver be appointed 34.19 for the credit union. The commissioner of commerce shall have 34.20 30 days from the receipt of the proposed plan of corrective 34.21 actions to determine if the proposed corrective actions are 34.22 sufficient to correct the deficiencies which formed the basis 34.23 for the suspension. If the commissioner of commerce determines 34.24 that the proposed corrective actions are sufficient, the 34.25 suspension shall be lifted and the credit union returned to 34.26 normal operations under its board of directors. If the 34.27 commissioner of commerce believes the proposed corrective 34.28 actions insufficient, or if the board has failed to answer the 34.29 suspension notice, or has requested that a receiver be 34.30 appointed, then the commissioner of commerce shall apply to the 34.31 district court for appointment of a receiver. The credit union 34.32 shall have the right, within six months of the receipt of any 34.33 notice of suspension or continuation of suspension pursuant to a 34.34 determination by the commissioner of commerce after hearing, to 34.35 appeal to the district court for a ruling as to the validity of 34.36 such notice. 35.1 Subd. 2. [PROCEEDINGS FOLLOWING CONSENT CEASE AND DESIST 35.2 ORDER.] If the commissioner of commerce and the board of 35.3 directors of the credit union execute a consent cease and desist 35.4 order in lieu of a suspension under section 52.062, subdivision 35.5 4, the board of directors of the credit union may request that 35.6 the commissioner of commerce seek court appointment of a 35.7 receiver for the credit union. The consent cease and desist 35.8 order must state that the credit union has requested that the 35.9 commissioner seek appointment of a receiver. 35.10 Subd. 3. [APPOINTMENT OF NATIONAL CREDIT UNION 35.11 ADMINISTRATION BOARD AS RECEIVER.] Upon a request by the 35.12 commissioner of commerce, the court may appoint the National 35.13 Credit Union Administration Board, created by section 3 of the 35.14 Federal Credit Union Act, as amended, as receiver of a credit 35.15 union, without bond, when the deposits of the credit union are 35.16 to any extent insured by the National Credit Union 35.17 Administration Board, and the credit union has had its 35.18 operations suspended or has executed a consent cease and desist 35.19 order with the commissioner in lieu of a suspension under 35.20 section 52.062. Notwithstanding any other provisions of law, 35.21 the commissioner of commerce may, in the event of the suspension 35.22 or consent cease and desist order, tender to the National Credit 35.23 Union Administration Board the proposed appointment as receiver 35.24 of the credit union. If the National Credit Union 35.25 Administration Board accepts the proposed appointment and the 35.26 court appoints the National Credit Union Administration Board as 35.27 receiver upon a request by the commissioner, the National Credit 35.28 Union Administration Board shall have and possess all the powers 35.29 and privileges provided by the laws of this state and section 35.30 207 of the Federal Credit Union Act, as amended, with respect to 35.31 a receiver of a credit union, the board of directors of the 35.32 credit union, and its members. 35.33 Sec. 41. Minnesota Statutes 1996, section 52.064, is 35.34 amended by adding a subdivision to read: 35.35 Subd. 3. [WAIVER WHEN CREDIT UNION REQUESTS APPOINTMENT OF 35.36 NATIONAL CREDIT UNION ADMINISTRATION BOARD AS RECEIVER.] If the 36.1 board of directors of the credit union has made a request to the 36.2 commissioner of commerce to seek court appointment of the 36.3 National Credit Union Administration Board as its receiver, and 36.4 the commissioner elects to seek this appointment, then the board 36.5 of directors of the credit union may waive the right to apply to 36.6 the court for permission to file, and the right to file, a plan 36.7 of reorganization, merger, or consolidation for the credit union 36.8 within 90 days of the appointment of the receiver under 36.9 subdivision 1. The board of directors of the credit union may 36.10 waive this right on behalf of itself, and on behalf of the 36.11 members of the credit union, when the board of directors of the 36.12 credit union determines that such action is in the best 36.13 interests of the credit union and its members, so that the 36.14 deposit insurer may proceed expeditiously to wind up the affairs 36.15 of the credit union upon appointment as receiver. 36.16 Sec. 42. Minnesota Statutes 1996, section 52.13, is 36.17 amended to read: 36.18 52.13 [DEPOSITS IN NAME OF MINOR.] 36.19 Any deposit made in the name of a minor, or shares issued 36.20 in a minor's name, shall be held for the exclusive right and 36.21 benefit of the minor, free from the control or lien of all other 36.22 persons except creditors, and together with the dividends or 36.23 interest thereon shall be paid to the minor; and the minor's 36.24 receipt, check, or acquittance in any form shall be a sufficient 36.25 release and discharge of the depository for the deposits or 36.26 shares, or any part thereof, until a conservator or guardian 36.27 appointed for the minor shall have delivered a certificate of 36.28 appointment to the depository. Deposits may be accepted 36.29 pursuant to the authority set forth in chapter 527, provided 36.30 that either the custodian or the minor is a member of the credit 36.31 union accepting the deposit. 36.32 Sec. 43. Minnesota Statutes 1996, section 52.201, is 36.33 amended to read: 36.34 52.201 [REORGANIZING FEDERAL CREDIT UNION INTO STATE CREDIT 36.35 UNION.] 36.36 When any federal credit union authorized to convert to a 37.1 state charter has taken the necessary steps under the federal 37.2 law for that purpose, seven or more members, upon authority of 37.3 two-thirds of the members present and entitled to vote and who 37.4 shall have voted for such conversion at a regular or special 37.5 meeting upon 14 days mailed written notice to each member at the 37.6 member's last known address clearly stating that such conversion 37.7 is to be acted upon, and upon approval of the commissioner of 37.8 commerce, may execute a certificate of incorporation under the 37.9 provisions of the state credit union act, which, in addition to 37.10 the other requirements of law, shall state the authority derived 37.11 from the shareholders of such federal credit union; and upon 37.12 recording such certificate as required by law, it shall become a 37.13 legal state credit union and the members of the federal credit 37.14 union shall without further action be members of the state 37.15 credit union. This includes members of the federal credit union 37.16 on the basis of acceptance of small employer groups provided the 37.17 commissioner may require contemporaneous filing of applications 37.18 under section 52.05, subdivision 2. Thereupon the assets of the 37.19 federal credit union, subject to its liabilities not liquidated 37.20 under the federal law before such incorporation, shall vest in 37.21 and become the property of such state credit union and the 37.22 members upon request shall be entitled to a new passbook showing 37.23 existing share and loan balances. The commissioner of commerce 37.24 shall approve or disapprove of the conversion within 60 days of 37.25 the date the proposal is presented. 37.26 Sec. 44. Minnesota Statutes 1996, section 53.04, is 37.27 amended by adding a subdivision to read: 37.28 Subd. 5b. [NEGOTIABLE ORDER OF WITHDRAWAL 37.29 ACCOUNTS.] Notwithstanding section 53.05, clause (1), and 37.30 consistent with United States Code, title 12, section 1832, 37.31 issue negotiable order of withdrawal accounts, which may not be 37.32 referred to as checking accounts and may include the following 37.33 transactions: 37.34 (1) automatic (preauthorized) transfers for the purpose of 37.35 paying loans at the same institution; 37.36 (2) transfers or withdrawals made by mail, messenger, 38.1 automated teller machine, or in person as withdrawals or 38.2 transfers to another account of the depositor at the same 38.3 institution; 38.4 (3) withdrawals initiated by telephone and consummated by 38.5 an official check mailed to the depository; 38.6 (4) automated clearinghouse debits; 38.7 (5) transfers from a customer's account under a 38.8 preauthorized agreement to cover overdrafts on another 38.9 transaction account; 38.10 (6) drafts payable to third parties; and 38.11 (7) debit card transactions. 38.12 Agreements establishing negotiable order of withdrawal 38.13 accounts must include a prominent disclosure of the following: 38.14 "We reserve the right to at any time require not less than 38.15 seven days' notice in writing before each withdrawal from this 38.16 account." 38.17 A negotiable order of withdrawal account may be with or 38.18 without interest and is considered a transaction account for 38.19 purposes of section 48.512. 38.20 Before exercising this power, the company must submit a 38.21 plan to the commissioner detailing implementation of the power. 38.22 Sec. 45. Minnesota Statutes 1996, section 53.05, is 38.23 amended to read: 38.24 53.05 [POWERS, LIMITATION.] 38.25 No industrial loan and thrift company may do any of the 38.26 following: 38.27 (1) carry demand banking accounts; use the word "savings" 38.28 unless the institution's investment certificates, savings 38.29 accounts, and savings deposits are insured by the Federal 38.30 Deposit Insurance Corporation and then only if the word is not 38.31 followed by the words "and loan" in its corporate name; use the 38.32 word "bank" or "banking" in its corporate name; operate as a 38.33 savings bank; 38.34 (2) have outstanding at any one time certificates of 38.35 indebtedness, savings accounts, and savings deposits 30 times 38.36 the sum of capital stock and surplus of the company; 39.1 (3) accept trusts, except as provided in section 47.75, 39.2 subdivision 1, or act as guardian, administrator, or judicial 39.3 trustee in any form; 39.4 (4) deposit any of its funds in any banking corporation, 39.5 unless that corporation has been designated by vote of a 39.6 majority of directors or of the executive committee present at a 39.7 meeting duly called, at which a quorum was in attendance; 39.8 (5) change any allocation of capital made pursuant to 39.9 section 53.03 or reduce or withdraw in any way any portion of 39.10 the capital stock and surplus without prior written approval of 39.11 the commissioner of commerce; 39.12 (6) take any instrument in which blanks are left to be 39.13 filled in after execution; 39.14 (7) lend money in excess of 20 percent of the total of its 39.15 capital stock and surplus at all its authorized locations to a 39.16 person primarily liable. Companies not issuing investment 39.17 certificates of indebtedness under section 53.04 need not comply 39.18 with the requirement if the amount of money lent does not exceed 39.19 $100,000 of principal as defined by section 47.59, subdivision 39.20 1, paragraph (p). 39.21 However, industrial loan and thrift companies with deposit 39.22 liabilities must comply with the provisions of section 48.24; or 39.23 (8) issue cashier's checks pursuant to section 48.151, 39.24 unless and at all times the aggregate liability to all creditors 39.25 on these instruments is protected by a special fund in cash or 39.26 due from banks to be used solely for payment of the cashier's 39.27 checks. 39.28 Sec. 46. Minnesota Statutes 1996, section 53.09, 39.29 subdivision 2a, is amended to read: 39.30 Subd. 2a. [COMPLIANCE EXAMINATIONS.] For the purpose of 39.31 discovering violations of this chapter or securing information 39.32 lawfully required by the commissioner under this chapter, the 39.33 commissioner may, at any time, either personally or by a person 39.34 or persons duly designated, investigate the loans and business, 39.35 and examine the books, accounts, records, and files used in the 39.36 business, of every licensee and of every person engaged in the 40.1 business whether or not the person acts or claims to act as 40.2 principal or agent, or under the authority of this chapter. For 40.3 the purposes of this subdivision, the commissioner and duly 40.4 designated representatives have free access to the offices and 40.5 places of business, books, accounts, papers, records, files, 40.6 safes, and vaults of all these persons. The commissioner and 40.7 all persons duly designated may require the attendance of and 40.8 examine, under oath, all persons whose testimony the 40.9 commissioner may require relative to the loans or business or to 40.10 the subject matter of an examination, investigation, or 40.11 hearing. Upon written agreement with the company, the 40.12 commissioner may conduct examinations applying the procedures 40.13 for purposes of subdivision 1, and section 46.04, subdivision 1, 40.14 to facilitate the qualifications of the company to participate 40.15 in the United States Small Business Administration loan 40.16 guarantee or similar programs. 40.17 Each licensee shall pay to the commissioner the amount 40.18 required under section 46.131, and the commissioner may maintain 40.19 an action for the recovery of the costs in a court of competent 40.20 jurisdiction. 40.21 Sec. 47. Minnesota Statutes 1996, section 55.06, 40.22 subdivision 1, is amended to read: 40.23 Subdivision 1. [PROHIBITION.] No person except a bank, a 40.24 savings bank, a credit union, a savings association, industrial 40.25 loan and thrift company issuing investment certificates of 40.26 indebtedness, or a trust company may let out or rent as lessor, 40.27 for hire, safe deposit boxes or take or receive valuable 40.28 personal property for safekeeping and storage, as bailee, for 40.29 hire, without procuring a license and giving a bond, as required 40.30 by this chapter, except as otherwise authorized by law so to do. 40.31 Sec. 48. Minnesota Statutes 1996, section 56.07, is 40.32 amended to read: 40.33 56.07 [CONTROL OVER LOCATION.] 40.34 Subdivision 1. [GENERAL.] Not more than one place of 40.35 business shall be maintained under the same license, but the 40.36 commissioner may issue more than one license to the same 41.1 licensee upon compliance with all the provisions of this chapter 41.2 governing an original issuance of a license, for each such new 41.3 license. To the extent that previously filed applicable 41.4 information remains substantially unchanged, the applicant need 41.5 not refile this information, unless requested. 41.6 When a licensee shall wish to change a place of business, 41.7 the licensee shall give written notice thereof 30 days in 41.8 advance to the commissioner, who shall within 30 days of receipt 41.9 of such notice, issue an amended license approving the change. 41.10 No change in the place of business of a licensee to a location 41.11 outside of its current trade area or more than 25 miles from its 41.12 present location, whichever distance is greater, shall be 41.13 permitted under the same license unless all of the requirements 41.14 of section 56.04 have been met. 41.15 A licensed place of business shall be open during regular41.16 business hours each weekday, except for legal holidays and for41.17 any weekday the commissioner grants approval to the licensee to41.18 remain closed. A licensed place of business may be open on41.19 Saturday, but shall be closed on Sunday.A licensed location 41.20 must be open for business and examination purposes on a schedule 41.21 provided to and approved by the commissioner. This schedule of 41.22 regular business must be conspicuously posted at the licensed 41.23 location. 41.24 Subd. 2. [INTERACTIVE KIOSK LOCATIONS.] Licensed locations 41.25 providing limited services on an interactive telephone-customer 41.26 service communications terminal are required to comply with 41.27 paragraphs (a) to (c). 41.28 (a) The licensee must maintain business books, accounts, 41.29 and records on a suitable alternative system of maintenance 41.30 approved by the commissioner. 41.31 (b) The license required to be posted under section 56.05 41.32 may be displayed on the customer service communications terminal 41.33 screen for a period of no less than 15 seconds. 41.34 (c) The full and accurate schedule of charges required by 41.35 section 56.14, clause (5), may be displayed on the customer 41.36 service communications terminal screen for no less than 20 42.1 seconds. 42.2 Sec. 49. Minnesota Statutes 1996, section 56.10, 42.3 subdivision 1, is amended to read: 42.4 Subdivision 1. For the purpose of discovering violations 42.5 of this chapter or securing information lawfully required by the 42.6 commissioner hereunder, the commissioner may, at any time, 42.7 either personally or by a person or persons duly designated, 42.8 investigate the loans and business and examine the books, 42.9 accounts, records, and files used therein, of every licensee and 42.10 of every person who shall be engaged in the business described 42.11 in section 56.01, whether the person shall act or claim to act 42.12 as principal or agent, or under or without the authority of this 42.13 chapter. For that purpose the commissioner and a duly 42.14 designated representative shall have free access to the offices 42.15 and places of business, books, accounts, papers, records, files, 42.16 safes, and vaults of all such persons. The commissioner and all 42.17 persons duly designated shall have authority to require the 42.18 attendance of and to examine, under oath, all persons whomsoever 42.19 whose testimony the commissioner may require relative to the 42.20 loan or the business or to the subject matter of any 42.21 examination, investigation, or hearing. Upon written agreement 42.22 with the licensee, the commissioner may conduct examinations 42.23 applying the procedures for purposes of this subdivision and 42.24 section 46.04, subdivision 1, to facilitate the qualifications 42.25 of the licensee to participate in the United States Small 42.26 Business Administration loan guarantee or similar programs. 42.27 Each licensee shall pay to the commissioner such amount as 42.28 may be required under section 46.131, and the commissioner may 42.29 maintain an action for the recovery of such costs in any court 42.30 of competent jurisdiction. 42.31 Sec. 50. Minnesota Statutes 1996, section 56.131, 42.32 subdivision 1, is amended to read: 42.33 Subdivision 1. [INTEREST RATES AND CHARGES.] (a) On any 42.34 loan in a principal amount not exceeding $56,000$100,000 or 15 42.35 percent of a Minnesota corporate licensee's capital stock and 42.36 surplus as defined in section 53.015, if greater, a licensee may 43.1 contract for and receive interest, finance charges, and other 43.2 charges as provided in section 47.59. 43.3 (b) Loans may be interest-bearing or precomputed. 43.4 (c) Notwithstanding section 47.59 to the contrary, to 43.5 compute time on interest-bearing and precomputed loans, 43.6 including, but not limited to the calculation of interest, a day 43.7 is considered 1/30 of a month when calculation is made for a 43.8 fraction of a calendar month. A year is 12 calendar months. A 43.9 calendar month is that period from a given date in one month to 43.10 the same numbered date in the following month, and if there is 43.11 no same numbered date, to the last day of the following month. 43.12 When a period of time includes a whole month and a fraction of a 43.13 month, the fraction of a month is considered to follow the whole 43.14 month. 43.15 In the alternative, for interest-bearing loans, a licensee 43.16 may charge interest at the rate of 1/365 of the agreed annual 43.17 rate for each actual day elapsed. 43.18 (d) With respect to interest-bearing loans and 43.19 notwithstanding section 47.59: 43.20 (1) Interest must be computed on unpaid principal balances 43.21 outstanding from time to time, for the time outstanding. Each 43.22 payment must be applied first to the accumulated interest and 43.23 the remainder of the payment applied to the unpaid principal 43.24 balance; provided however, that if the amount of the payment is 43.25 insufficient to pay the accumulated interest, the unpaid 43.26 interest continues to accumulate to be paid from the proceeds of 43.27 subsequent payments and is not added to the principal balance. 43.28 (2) Interest must not be payable in advance or compounded. 43.29 However, if part or all of the consideration for a new loan 43.30 contract is the unpaid principal balance of a prior loan, then 43.31 the principal amount payable under the new loan contract may 43.32 include any unpaid interest which has accrued. The unpaid 43.33 principal balance of a precomputed loan is the balance due after 43.34 refund or credit of unearned interest as provided in paragraph 43.35 (e), clause (3). The resulting loan contract is deemed a new 43.36 and separate loan transaction for all purposes. 44.1 (e) With respect to precomputed loans and notwithstanding 44.2 section 47.59 to the contrary: 44.3 (1) Loans must be repayable in substantially equal and 44.4 consecutive monthly installments of principal and interest 44.5 combined, except that the first installment period may be more 44.6 or less than one month by not more than 15 days, and the first 44.7 installment payment amount may be larger than the remaining 44.8 payments by the amount of interest charged for the extra days 44.9 and must be reduced by the amount of interest for the number of 44.10 days less than one month to the first installment payment; and 44.11 monthly installment payment dates may be omitted to accommodate 44.12 borrowers with seasonal income. 44.13 (2) Payments may be applied to the combined total of 44.14 principal and precomputed interest until the loan is fully 44.15 paid. Payments must be applied in the order in which they 44.16 become due. 44.17 (3) If the maturity of the loan is accelerated for any 44.18 reason and judgment is entered, the licensee shall credit the 44.19 borrower with the same refund as if prepayment in full had been 44.20 made on the date the judgment is entered. 44.21 (4) If two or more installments are delinquent one full44.22 month or more on any due date, and if the contract so provides,44.23 the licensee may reduce the unpaid balance by the refund credit44.24 which would be required for prepayment in full on the due date44.25 of the most recent maturing installment in default. Thereafter,44.26 and in lieu of any other default or deferment charges, the44.27 single annual percentage rate permitted by this subdivision may44.28 be charged on the unpaid balance until fully paid.44.29 (5)Following the final installment as originally scheduled 44.30 or deferred, the licensee, for any loan contract which has not 44.31 previously been converted to interest-bearing under 44.32 clause (4)(7), may charge interest on any balance remaining 44.33 unpaid, including unpaid default or deferment charges, at the 44.34 single annual percentage rate permitted by this subdivision 44.35 until fully paid. 44.36 (6)(5) With respect to a loan secured by an interest in 45.1 real estate, and having a maturity of more than 60 months, the 45.2 original schedule of installment payments must fully amortize 45.3 the principal and interest on the loan. The original schedule 45.4 of installment payments for any other loan secured by an 45.5 interest in real estate must provide for payment amounts that 45.6 are sufficient to pay all interest scheduled to be due on the 45.7 loan. 45.8 (6) A delinquency charge as provided for in section 47.59, 45.9 subdivision 6, paragraph (a), clause (4). 45.10 (7) Grant extensions, deferments, or conversions to 45.11 interest-bearing as provided in section 47.59, subdivision 5. 45.12 Sec. 51. Minnesota Statutes 1996, section 56.131, 45.13 subdivision 4, is amended to read: 45.14 Subd. 4. [ADJUSTMENT OF DOLLAR AMOUNTS.] The dollar 45.15 amounts in this sectionsubdivisions 2 and 6, sections 53.04, 45.16 subdivision 3a, paragraph (c), 56.01, 56.12, and 56.125 shall 45.17 change periodically, as provided in section 47.59, subdivision 3. 45.18 Sec. 52. Minnesota Statutes 1996, section 59A.08, 45.19 subdivision 3, is amended to read: 45.20 Subd. 3. The information required by subdivision 1 shall45.21 only be required in the initial insurance premium finance45.22 agreement entered into if said agreement is open end. An45.23 insurance premium finance agreement is open end if it provides45.24 that additional or subsequent insurance premiums may be financed45.25 and added to the initial insurance premium finance agreement45.26 from time to time.45.27 Additional or subsequent premiums may be added to an open45.28 endinsurance premium finance agreement from time to time, 45.29 provided that: 45.30 (a) The additional or subsequent insurance premium to be 45.31 added results from additional premiums required under policies 45.32 presently being financed under the open endinsurance premium 45.33 finance agreement or from a renewal of a policy or from other 45.34 policies owned or purchased by the insured. 45.35 (b) The insurance premium finance company receives written 45.36 notice or advice from an insurer authorized to do business in 46.1 this state or from an insurance agent licensed in this state 46.2 acknowledging that the premium on an existing financed policy 46.3 has been increased or that a policy has been renewed or that 46.4 additional policies have or will be issued to the insured. The 46.5 notice or advice shall contain the amount of the additional 46.6 premium, the down payment collected by the insurer or agent, if 46.7 any, and the amount of premium to be added to the open end46.8 insurance premium finance agreement. 46.9 (c) If the additional premiums to be added to the open end46.10 insurance premium finance agreement result from additional 46.11 premiums required on policies presently financed under the 46.12 agreement which are to be financed beyond the scheduled maturity46.13 of the original financing, the renewal of a policy or from an46.14 additional policy owned or purchased by the insured, the46.15 insurance premium finance company shall mail a notice to the46.16 insured at the address shown in the policy. Said notice shall46.17 contain:46.18 (1) The information required by subdivision 1,46.19 notwithstanding that the notice is not signed by, nor on behalf46.20 of the insured;46.21 (2) A conspicuous statement to the insured stating that the46.22 insured may tender the premiums in full or disaffirm the46.23 financing of the premium on the renewal or additional policies46.24 by mailing to the insurance premium finance company notice of46.25 intention to do so within ten days after the insurance premium46.26 finance company mails to the insured the notice required by this46.27 subdivision;46.28 (3) A conspicuous statement to the insured that the46.29 insurance premium finance company may, in event of default in46.30 payment of the additional premium, or any installment thereof,46.31 cause the insured's insurance contract or contracts to be46.32 canceled as provided in section 59A.11.46.33 (d) At the time the notice of additional premium to be46.34 added to the open end insurance premium finance agreement is46.35 mailed to the insured as provided in clause (c), an employee of46.36 the insurance premium finance company shall prepare and sign a47.1 certificate or affidavit of mailing setting forth the following:47.2 (1) The name of the employee who mailed the notice of the47.3 additional premium to be financed.47.4 (2) That the employee mailing the notice is over 18 years47.5 of age.47.6 (3) The date and place of the deposit of the notice in the47.7 mail.47.8 (4) The name and address of the person to whom the notice47.9 was mailed as shown on the envelope containing the notice.47.10 (5) That the envelope containing the notice was sealed and47.11 deposited in the mail with the proper postage thereon.47.12 A certificate or affidavit of mailing, prepared and signed47.13 as prescribed in this subdivision shall raise rebuttable47.14 presumption that the notice was mailed to the insured at the47.15 address shown in the certificate or affidavit of mailing.47.16 (e) The insurance premium finance company may make a47.17 finance charge in accordance with section 59A.09 for additional47.18 premiums financed and added to an open end insurance premium47.19 finance agreement; however, only one flat rate service fee may47.20 be made or charged for each insurance premium finance agreement47.21 entered into and no additional flat service fee may be made or47.22 charged for adding additional or subsequent premiums to an open47.23 end insurance premium finance agreement for which a flat service47.24 fee was previously made or charged.or from a renewal of a 47.25 policy or from other policies owned or purchased by the insured, 47.26 a written notice must be mailed, faxed, or delivered to the 47.27 insured outlining any changes to the information required by 47.28 subdivision 1 along with a conspicuous statement to the insured 47.29 that the insured may tender the premiums in full or affirm the 47.30 proposed changes by tendering either an additional down payment 47.31 or tendering the proposed revised installment amount, or 47.32 disaffirm the financing of the additional premium by continuing 47.33 the original payment amount as agreed to in the initial 47.34 agreement. 47.35 If the proposed revisions in paragraph (c) are affirmed by 47.36 the insured, the finance company may make an additional finance 48.1 charge according to section 59A.09 for the additional premium 48.2 financed and added to the open-end agreement; however, no 48.3 additional flat service fee may be made or charged for adding 48.4 additional or subsequent premiums to an open-end insurance 48.5 premium finance agreement for which a flat service fee was 48.6 previously made or charged. 48.7 Sec. 53. Minnesota Statutes 1996, section 59A.08, is 48.8 amended by adding a subdivision to read: 48.9 Subd. 5. [COMPETITIVE EQUALITY.] No insurance agent, 48.10 insurance broker, or insurer may require a person to use a 48.11 particular insurance premium finance company or other 48.12 installment payment plan for which a finance charge or other fee 48.13 in connection with an installment payment has been or will be 48.14 imposed or refuse to accept premium payment from a company 48.15 licensed under sections 59A.01 to 59A.15. 48.16 Sec. 54. Minnesota Statutes 1996, section 59A.11, 48.17 subdivision 2, is amended to read: 48.18 Subd. 2. Not less than ten days' written notice shall be 48.19 mailed to the insured setting forth the intent of the insurance 48.20 premium finance company to cancel the insurance contract unless 48.21 the default is cured prior to the date stated in the notice. 48.22 The insurance agent or insurance broker indicated on the premium 48.23 finance agreement shall also be mailedgiven ten days' notice of 48.24 this action in a manner agreed upon between the insurance 48.25 premium finance company and insurance agent or insurance broker. 48.26 Sec. 55. Minnesota Statutes 1996, section 59A.11, 48.27 subdivision 3, is amended to read: 48.28 Subd. 3. (a) Pursuant to the power of attorney or other 48.29 authority referred to above, the insurance premium finance 48.30 company may cancel on behalf of the insured by mailing to the 48.31 insurer written notice stating when thereafter the cancellation 48.32 shall be effective, and the insurance contract shall be canceled 48.33 as if such notice of cancellation had been submitted by the 48.34 insured personally, but without requiring the return of the 48.35 insurance contract. In the event that the insurer or its agent 48.36 does not provide the insurance premium finance company with a 49.1 specific mailing address for the purposes of receipt of the 49.2 above notice, then mailing by the insurance premium finance 49.3 company to the insurer at the address which is on file and of 49.4 record with the commissioner of commerce pursuant to the 49.5 provisions of chapters 60A and 72A shall be considered 49.6 sufficient notice under this section. The notice requirements 49.7 of this paragraph only apply if an insurance premium finance 49.8 company and an insurer have not agreed on a method of providing 49.9 notice of cancellation. 49.10 (b) The insurance premium finance company shall also mail a 49.11 notice of cancellation to the insured at the insured's last 49.12 known address and. 49.13 (c) Written notice of the cancellation must also be given 49.14 to the insurance agent or insurance broker indicated on the 49.15 premium finance agreement. Written notice to the insurance 49.16 agent or broker required by this paragraph may be given in a 49.17 manner agreed upon between the insurance premium finance 49.18 company, insurer, agent, or broker. 49.19 Sec. 56. Minnesota Statutes 1996, section 62B.04, 49.20 subdivision 1, is amended to read: 49.21 Subdivision 1. [CREDIT LIFE INSURANCE.] (1) The initial 49.22 amount of credit life insurance shall not exceed the amount of 49.23 principal repayable under the contract of indebtedness plus an 49.24 amount equal to one monthly payment. Thereafter, if the 49.25 indebtedness is repayable in substantially equal installments 49.26 according to a predetermined schedule, the amount of insurance 49.27 on which the premium is calculatedshall be equal tonot exceed 49.28 the scheduled indebtedness plus one monthly payment or actual 49.29 amount of indebtedness, whichever is greater. If the contract 49.30 of indebtedness provides for a variable rate of finance charge 49.31 or interest, the initial rate or the scheduled rates based on 49.32 the initial index must be used in determining the scheduled 49.33 amount of indebtedness and subsequent changes to the rate must 49.34 be disregarded in determining whether the contract is repayable 49.35 in substantially equal installments according to a predetermined 49.36 schedule. 50.1 (2) Notwithstanding clause (1), the amount of credit life 50.2 insurance written in connection with credit transactions 50.3 repayable over a specified term exceeding 63 months shall not 50.4 exceed the greater of: (i) the actual amount of unpaid 50.5 indebtedness as it exists from time to time; or (ii) where an 50.6 indebtedness is repayable in substantially equal installments 50.7 according to a predetermined schedule, the scheduled amount of 50.8 unpaid indebtedness, less any unearned interest or finance 50.9 charges, plus an amount equal to two monthly payments. If the 50.10 credit transaction provides for a variable rate of finance 50.11 charge or interest, the initial rate or the scheduled rates 50.12 based on the initial index must be used in determining the 50.13 scheduled amount of unpaid indebtedness and subsequent changes 50.14 in the rate must be disregarded in determining whether the 50.15 contract is repayable in substantially equal installments 50.16 according to a predetermined schedule. 50.17 (3) Notwithstanding clauses (1) and (2), insurance on 50.18 educational, agricultural, and horticultural credit transaction 50.19 commitments may be written on a nondecreasing or level term plan 50.20 for the amount of the loan commitment. 50.21 (4) If the contract of indebtedness provides for a variable 50.22 rate of finance charge or interest, the initial rate or the 50.23 scheduled rates based on the initial index shall be used in 50.24 determining the scheduled amount of indebtedness, and subsequent 50.25 changes to the rate shall be disregarded in determining whether 50.26 the contract is repayable in substantially equal installments 50.27 according to a predetermined schedule. 50.28 Sec. 57. Minnesota Statutes 1996, section 300.20, 50.29 subdivision 2, is amended to read: 50.30 Subd. 2. [VACANCIES.] If the certificate of incorporation 50.31 or the bylaws so provides, a vacancy in the board of directors 50.32 may be filled by the remaining directors. Not more than 50.33 one-third of the members of the board may be so filled in any 50.34 one year except any number may be appointed to provide for at 50.35 least threefive directors until any subsequent meeting of the 50.36 stockholders. 51.1 Sec. 58. Minnesota Statutes 1996, section 303.02, 51.2 subdivision 4, is amended to read: 51.3 Subd. 4. [FOREIGN CORPORATION.] "Foreign corporation" does 51.4 not include any corporation which, under the constitution and 51.5 statutes of the United States, may transact business in this 51.6 state without first obtaining a certificate of authority so to 51.7 do, insurance companies as defined by section 60A.02, and any 51.8 banking or trust association or corporation or national banking 51.9 association acting in this state as an executor, administrator, 51.10 trustee, orguardian, or conservator under section 303.25. 51.11 Sec. 59. Minnesota Statutes 1996, section 303.25, 51.12 subdivision 5, is amended to read: 51.13 Subd. 5. [SOLICITATION OF BUSINESS.] A foreign trust 51.14 association may not maintain an office within this state, but it 51.15 may solicit business within this state if banking or trust 51.16 associations or corporations organized under the laws of this 51.17 state or national banking associations maintaining their 51.18 principal offices in this state may solicit business in the 51.19 state in which the foreign trust association maintains its 51.20 principal office. For purposes of this subdivision, 51.21 solicitation of business includes the activities authorized for 51.22 state or national banking associations exercising fiduciary 51.23 powers maintaining their principal offices in this state 51.24 considered a representative trust office established under 51.25 section 48.476. 51.26 Sec. 60. Minnesota Statutes 1996, section 325F.68, 51.27 subdivision 2, is amended to read: 51.28 Subd. 2. "Merchandise" means any objects, wares, goods, 51.29 commodities, intangibles, real estate, loans, or services. 51.30 Sec. 61. Minnesota Statutes 1996, section 332.21, is 51.31 amended to read: 51.32 332.21 [CONTRACTS.] 51.33 (a) Each contract entered into by the licensee and the 51.34 debtor shall be in writing and signed by both parties. The 51.35 licensee shall furnish the debtor with a copy of the signed 51.36 contract. Each such contract shall set forth: 52.1 (1) the dollar charges agreed upon for the services of the 52.2 licensee, clearly disclosing to such debtor the total amount 52.3 which may be retained by licensee for services if the contract 52.4 is fully performed, which maximum amount would be the 52.5 origination fee together with 15 percent of the amount scheduled 52.6 to be liquidated by such contract ,. This disclosure must state 52.7 that if the amount of debt owed is increased by interest, late 52.8 fees, over the limit fees, and other amounts imposed by the 52.9 creditor or by reason of the events under paragraph (c), the 52.10 length of the contract would be extended and remain in force and 52.11 that the total dollar charges agreed upon may increase at the 52.12 rate agreed upon in the original contract; 52.13 (2) the terms upon which the debtor may cancel the contract 52.14 as set out in section 332.23 ,; 52.15 (3) all debts which are to be managed by the licensee, 52.16 including the name of the creditor and the amount of the debt ,; 52.17 and 52.18 (4) such other matter as the commissioner may require by 52.19 rule. 52.20 (b) A contract shall not be effective until a payment has 52.21 been made to the licensee for distribution to creditors or until 52.22 three business days after the signing thereof, whichever is 52.23 later. Within such period an individual may disaffirm said 52.24 contract and upon such disaffirmance said contract shall be null 52.25 and void. 52.26 (c) Total fees contained in the contract may be exceeded in 52.27 relation to creditors under open-end agreements if it is agreed 52.28 to in the contract and the additional debts so contracted to be 52.29 prorated do not exceed ten percent of the original debts in the 52.30 contract or written revisions to the original contract. 52.31 Sec. 62. Minnesota Statutes 1996, section 332.23, 52.32 subdivision 1, is amended to read: 52.33 Subdivision 1. [ORIGINATION FEE, CREDIT BACKGROUND REPORT 52.34 COST.] The licensee may charge an origination fee of not more 52.35 than $25 and collect from the debtor the actual cost of a credit 52.36 background report obtained from a credit reporting agency not 53.1 related to or affiliated with the licensee or if affiliated, the 53.2 total cost of the report may not exceed $8. The costs to the 53.3 debtor of said origination fee and credit background report may 53.4 be made from the originating amount paid by the debtor to the 53.5 licensee. The cost of only one credit background report may be 53.6 collected from the debtor in any 12-month period. 53.7 Sec. 63. Minnesota Statutes 1996, section 332.23, 53.8 subdivision 2, is amended to read: 53.9 Subd. 2. [WITHDRAWAL OF FEE.] The licensee may withdraw 53.10 and retain as partial payment of the licensee's total fee not 53.11 more than 15 percent of any sum deposited with the licensee by 53.12 the debtor for distribution. The remaining 85 percent must be 53.13 disbursed to listed creditors pursuant to and in accordance with 53.14 the contract between the debtor and the licensee within 35 days 53.15 after receipt unless the reasonable payment of one or more of 53.16 the debtor's obligations requires that the funds be held for a 53.17 longer period so as to accumulate a sum certain or where the 53.18 debtor's payment is returned for nonsufficient funds, then no 53.19 longer than 42 days. Total payment to licensee for services 53.20 rendered, excluding the origination fee and any credit 53.21 background report, shall not exceed 15 percent of funds 53.22 deposited with licensee by debtor for distribution. 53.23 Sec. 64. Minnesota Statutes 1996, section 332.23, 53.24 subdivision 5, is amended to read: 53.25 Subd. 5. [ADVANCE PAYMENTS.] Notwithstanding anything 53.26 herein to the contrary no fees or charges shall be received or 53.27 retained for any payments by the debtor made more than the 53.28 following number of days in advance of the date specified in the 53.29 contract on which they are due: (a) 3042 days in the case of 53.30 contracts requiring monthly payments; (b) 15 days in the case of 53.31 contracts requiring biweekly payments; or (c) seven days in the 53.32 case of contracts requiring weekly payments. For those 53.33 contracts which do not require payments in specified amounts, a 53.34 payment shall be deemed an advance payment to the extent it 53.35 exceeds twice the average regular payment theretofore made by 53.36 the debtor pursuant to that contract. This subdivision shall 54.1 not apply when it is the intention of the debtor to use such 54.2 advance payments to satisfy future payment of obligations due 54.3 within 30 days under the contract. 54.4 Sec. 65. Minnesota Statutes 1996, section 332.50, 54.5 subdivision 1, is amended to read: 54.6 Subdivision 1. [DEFINITIONS.] "Check" means a check, 54.7 draft, order of withdrawal, or similar negotiable or 54.8 nonnegotiable instrument. 54.9 "Credit" means an arrangement or understanding with the 54.10 drawee for the payment of the check. 54.11 "Dishonor" has the meaning given in section 336.3-502, but 54.12 does not include dishonor due to a stop payment order requested 54.13 by an issuer who has a good faith defense to payment on the 54.14 check. "Dishonor" does include a stop payment order requested 54.15 by an issuer if the account did not have sufficient funds for 54.16 payment of the check at the time of presentment, except for stop 54.17 payment orders on a check found to be stolen. 54.18 Sec. 66. Minnesota Statutes 1996, section 332.50, 54.19 subdivision 2, is amended to read: 54.20 Subd. 2. [ACTS CONSTITUTING.] (a)Whoever issues any check 54.21 that is dishonored and is not paid within 30 days after mailing54.22 a notice of dishonor that includes a citation to this section54.23 and section 609.535, and a description of the penalties54.24 contained in these sections, in compliance with subdivision 3,54.25 is liable to the payee, holder, or agent of the holderfor the 54.26 following penalties: (1) the amount of the check plus a civil54.27 penalty of up to $100 or up to 100 percent of the value of the54.28 check, whichever is greater; (2) interest at the rate payable on54.29 judgments pursuant to section 549.09 on the face amount of the54.30 check from the date of dishonor; and (3) reasonable attorney54.31 fees if the aggregate amount of dishonored checks issued by the54.32 issuer to all payees within a six-month period is over $1,250.54.33 (b) If the amount of the dishonored check plus any service54.34 charges that have been incurred under paragraph (d) or (e) have54.35 not been paid within 30 days after having mailed a notice of54.36 dishonor in compliance with subdivision 3 but before bringing an55.1 action, a payee, holder, or agent of the holder may make a55.2 written demand for payment for the liability imposed by55.3 paragraph (a) by sending a copy of this section and a55.4 description of the liability contained in this section to the55.5 issuer's last known address.55.6 (c) After notice has been sent but before an action under55.7 this section is heard by the court, the plaintiff shall settle55.8 the claim if the defendant gives the plaintiff the amount of the55.9 check plus court costs, any service charge owed under paragraph55.10 (d), and reasonable attorney fees if provided for under55.11 paragraph (a), clause (3).55.12 (d) A service charge may be imposed immediately on any55.13 dishonored check, regardless of mailing a notice of dishonor, if55.14 written notice of the service charge was conspicuously displayed55.15 on the premises when the check was issued. The service charge55.16 may not exceed $20, except that if the payee uses the services55.17 of a law enforcement agency to obtain payment of a dishonored55.18 check, a service charge of up to $25 may be imposed if the55.19 service charge is used to reimburse the law enforcement agency55.20 for its expenses. A payee may impose only one service charge55.21 under this paragraph for each dishonored check.55.22 (e) This subdivision prevails over any provision of law55.23 limiting, prohibiting, or otherwise regulating service charges55.24 authorized by this subdivision, but does not nullify charges for55.25 dishonored checks, which do not exceed the charges in paragraph55.26 (d) or the actual cost of collection, but in no case more than55.27 $30, or terms or conditions for imposing the charges which have55.28 been agreed to by the parties to an express contract.55.29 (a) A service charge of up to $20, or actual costs of 55.30 collection not to exceed $30, may be imposed immediately on any 55.31 dishonored check, regardless of mailing a notice of dishonor, if 55.32 notice of the service charge was conspicuously displayed on the 55.33 premises when the check was issued. If a law enforcement agency 55.34 obtains payment of a dishonored check, a service charge not to 55.35 exceed $25 may be imposed if the service charge is retained by 55.36 the law enforcement agency for its expenses. Only one service 56.1 charge may be imposed under this paragraph for each dishonored 56.2 check. 56.3 (b) If the amount of the dishonored check is not paid 56.4 within 30 days after the payee or holder has mailed notice of 56.5 dishonor pursuant to section 609.535 and a description of the 56.6 penalties contained in this subdivision, whoever issued the 56.7 dishonored check is liable to the payee or holder of the check 56.8 for: 56.9 (1) the amount of the check, the service charge as provided 56.10 in paragraph (a), plus a civil penalty of up to $100 or the 56.11 value of the check, whichever is greater. The civil penalty may 56.12 not be imposed until 30 days following the mailing of the notice 56.13 of dishonor. A payee or holder of the check may make a written 56.14 demand for payment of the civil liability by sending a copy of 56.15 this section and a description of the liability contained in 56.16 this section to the issuer's last known address. Notice as 56.17 provided in paragraph (a) must also include notification that 56.18 additional civil penalties will be imposed for dishonored checks 56.19 for nonpayment after 30 days; 56.20 (2) interest at the rate payable on judgments pursuant to 56.21 section 549.09 on the face amount of the check from the date of 56.22 dishonor; and 56.23 (3) reasonable attorney fees if the aggregate amount of 56.24 dishonored checks issued by the issuer to all payees within a 56.25 six-month period is over $1,250. 56.26 (c) This subdivision prevails over any provision of law 56.27 limiting, prohibiting, or otherwise regulating service charges 56.28 authorized by this subdivision, but does not nullify charges for 56.29 dishonored checks, which do not exceed the charges in paragraph 56.30 (a) or terms or conditions for imposing the charges which have 56.31 been agreed to by the parties in an express contract. 56.32 (d) A sight draft may not be used as a means of collecting 56.33 the civil penalties provided in this section without prior 56.34 consent of the issuer. 56.35 Sec. 67. Laws 1996, chapter 414, article 1, section 45, is 56.36 amended to read: 57.1 Sec. 45. [EFFECTIVE DATE.] 57.2 Sections 1 to 5, 7 to 9, 11, 12, 16, 20 to 27, 30, 33, 35, 57.3 42, 43, and 44, paragraphs (b) and (c), are effective the day 57.4 following final enactment. Section 44, paragraph (a), is 57.5 effective July 1, 19981999. 57.6 Sections 10, 14, 15, 19, and 36 are effective on the 57.7 effective date of the repeals in section 44, paragraph (a). 57.8 Sec. 68. [TOWN OF HASSAN; DETACHED BANKING FACILITY.] 57.9 With the prior approval of the commissioner of commerce, a 57.10 bank operating its main banking office within six miles of the 57.11 town of Hassan may establish and maintain not more than one 57.12 detached facility in the town of Hassan. A bank desiring to 57.13 establish a detached facility must follow the approval procedure 57.14 prescribed in Minnesota Statutes, section 47.54. The 57.15 establishment of a detached facility according to this section 57.16 is subject to the provisions of Minnesota Statutes, sections 57.17 47.51 to 47.57, except to the extent those sections are 57.18 inconsistent with this section. 57.19 Sec. 69. [TOWN OF THOMSON; DETACHED BANKING FACILITY.] 57.20 With the prior approval of the commissioner of commerce, a 57.21 bank operating its main office within 20 miles of the town of 57.22 Thomson may establish and maintain not more than one detached 57.23 facility in the town of Thomson. A bank desiring to establish a 57.24 detached facility must follow the approval procedure prescribed 57.25 in Minnesota Statutes, section 47.54. The establishment of a 57.26 detached facility pursuant to this section is subject to the 57.27 provisions of Minnesota Statutes, sections 47.51 to 47.57, 57.28 except to the extent those sections are inconsistent with this 57.29 section. 57.30 Sec. 70. [TRANSACTION ACCOUNT CUSTOMER INFORMATION; 57.31 INFORMAL WORKING GROUP.] 57.32 The commissioner of commerce shall select and convene an 57.33 informal working group to make recommendation to financial 57.34 intermediaries for notices to transaction account customers 57.35 regarding: 57.36 (1) risks and effects of account closing due to misuse by 58.1 customers as a means to enforce the deterrence objectives of 58.2 Minnesota Statutes, section 48.512, subdivision 7; 58.3 (2) risks related to providing account identification to 58.4 third parties for purposes of or resulting in their issuance of 58.5 sight drafts; and 58.6 (3) informing the customers of the privacy terms related to 58.7 the financial intermediaries' use of customer information. 58.8 The informal working group must include persons representing 58.9 financial intermediaries, transaction account clearing 58.10 organizations, retailers, and consumers. The commissioner shall 58.11 accept recommendations from the working group for distribution 58.12 to financial intermediaries to effect voluntary implementation 58.13 of transaction account customer information notices prior to 58.14 September 1, 1997. 58.15 Sec. 71. [SCHOOL BANK PILOT PROJECT.] 58.16 (a) A school bank sponsored by independent school district 58.17 No. 31, Bemidji, that meets all requirements of paragraph (b) is 58.18 not subject to Minnesota Statutes, section 47.03, subdivision 1, 58.19 or to any other statute or rule that regulates banks, other 58.20 financial institutions, or currency exchanges. 58.21 (b) To qualify under paragraph (a), the school bank must: 58.22 (1) be operated as part of a high school educational 58.23 program and under guidelines adopted by the school board; 58.24 (2) be advised on a regular basis by a state-chartered or 58.25 federally-chartered financial institution, but not owned or 58.26 operated by that financial institution; 58.27 (3) be located on school premises and have as customers 58.28 only students enrolled in, or employees of, the school in which 58.29 it is located; and 58.30 (4) have a written commitment from the school board, 58.31 guaranteeing reimbursement of any depositor's funds lost due to 58.32 insolvency of the school bank. 58.33 (c) Funds of a school bank that meets the requirements of 58.34 this section are not school district or other public funds for 58.35 purposes of any state law governing the use or investment of 58.36 school district or other public funds. 59.1 (d) The school district shall annually file with the 59.2 commissioner of commerce a report, prepared by the students and 59.3 teachers involved, summarizing the operation of the school bank. 59.4 (e) This section expires June 30, 2000. The commissioner 59.5 of commerce shall, no later than December 15, 1999, provide a 59.6 written report to the legislature regarding this pilot project 59.7 and any recommended legislation regarding school banks. 59.8 Sec. 72. [REPEALER.] 59.9 Minnesota Statutes 1996, sections 13.99, subdivision 13; 59.10 47.29; 47.31; 47.32; 49.47; 49.48; 50.03; 50.23; and 59A.14, are 59.11 repealed. 59.12 Sec. 73. [EFFECTIVE DATE; APPLICABILITY.] 59.13 Sections 1, 4 to 6, 8, 10, 11, 17, 19 to 25, 28 to 31, 33 59.14 to 56, 59, 61, 63, 64, 71, and 72 are effective the day 59.15 following final enactment. 59.16 Section 68 takes effect the day after compliance by the 59.17 town board of the town of Hassan with Minnesota Statutes, 59.18 section 645.021, subdivision 3. 59.19 Section 69 takes effect the day after compliance by the 59.20 town board of the town of Thomson with Minnesota Statutes, 59.21 section 645.021, subdivision 3. 59.22 Section 70 is effective June 1, 1997.