HF 753

1st 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; 47.55, subdivision 1; 47.56; 
  1.13            47.59, subdivisions 1 and 12; 47.61, subdivision 3; 
  1.14            48.01, subdivision 2; 48.09, by adding a subdivision; 
  1.15            48.15, subdivision 2; 48.24, subdivision 2, and by 
  1.16            adding a subdivision; 48.512, by adding subdivisions; 
  1.17            48.61, subdivision 7, and by adding a subdivision; 
  1.18            49.215, subdivision 3; 49.33; 49.42; 50.245; 51A.38, 
  1.19            subdivision 1; 52.04, subdivision 2a, and by adding a 
  1.20            subdivision; 52.062, subdivision 1, and by adding a 
  1.21            subdivision; 52.063; 52.064, by adding a subdivision; 
  1.22            52.201; 53.04, by adding a subdivision; 53.05; 53.09, 
  1.23            subdivision 2a; 55.06, subdivision 1; 56.07; 56.10, 
  1.24            subdivision 1; 56.131, subdivisions 1 and 4; 59A.08, 
  1.25            subdivision 3, and by adding a subdivision; 59A.11, 
  1.26            subdivisions 2 and 3; 62B.04, subdivision 1; 300.20, 
  1.27            subdivision 2; 303.25, subdivision 5; 325F.68, 
  1.28            subdivision 2; 332.21; 332.23, subdivisions 2 and 5; 
  1.29            proposing coding for new law in Minnesota Statutes, 
  1.30            chapter 48; repealing Minnesota Statutes 1996, 
  1.31            sections 13.99, subdivision 13; 47.29; 47.31; 47.32; 
  1.32            49.47; 49.48; 50.03; 50.23; and 59A.14. 
  1.33  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.34     Section 1.  Minnesota Statutes 1996, section 46.04, is 
  1.35  amended by adding a subdivision to read: 
  1.36     Subd. 4.  [APPLICATIONS, FACSIMILE OR ELECTRONIC MEDIA.] (a)
  1.37  The commissioner when providing forms and procedural guidance to 
  1.38  persons governed by or seeking approval to operate under the 
  1.39  chapters referred to in this section may prescribe alternatives 
  2.1   to paper forms and delivery in person or by mail.  In 
  2.2   considering accepting filings by facsimile or electronic media, 
  2.3   the commissioner may accept fees and reimbursement for costs 
  2.4   associated with the applications and notices by wire transfer 
  2.5   and debit card. 
  2.6      (b) Certifications required to authenticate, officiate, or 
  2.7   establish standing of the application or notice as a matter of 
  2.8   law, rule, or sound business practice may be authenticated in an 
  2.9   alternative to paper-based original signatures or notarial seals 
  2.10  on facsimile or electronic media submissions in a technically 
  2.11  competent means at the discretion of the commissioner, including 
  2.12  but not limited to, document imaging meeting the standard in 
  2.13  subdivision 3, bar coding, personal identification numbers, or 
  2.14  other reliable communicated verification technique. 
  2.15     Sec. 2.  Minnesota Statutes 1996, section 46.044, is 
  2.16  amended by adding a subdivision to read: 
  2.17     Subd. 3.  [SPECIAL PURPOSE BANKS, EXCEPTIONS.] For purposes 
  2.18  of applications to organize and operate special purpose banks as 
  2.19  defined in section 46.046, subdivision 5, the conditions in 
  2.20  subdivision 1, clauses (2) and (4), do not apply. 
  2.21     Sec. 3.  Minnesota Statutes 1996, section 46.046, is 
  2.22  amended by adding a subdivision to read: 
  2.23     Subd. 5.  [SPECIAL PURPOSE BANK.] Special purpose bank 
  2.24  means a bank as defined in subdivision 2 that: 
  2.25     (1) engages only in credit card operations as authorized in 
  2.26  section 47.59; 
  2.27     (2) does not accept demand deposits or deposits that the 
  2.28  depositor may withdraw by check or similar means for payment to 
  2.29  third parties or others; 
  2.30     (3) does not accept savings or time deposits of less than 
  2.31  $100,000; 
  2.32     (4) maintains only one office that accepts deposits; and 
  2.33     (5) does not engage in the business of making commercial 
  2.34  loans. 
  2.35     Sec. 4.  Minnesota Statutes 1996, section 46.047, 
  2.36  subdivision 2, is amended to read: 
  3.1      Subd. 2.  [BANKING INSTITUTION.] The term "banking 
  3.2   institution" means a bank, trust company, bank and trust 
  3.3   company, savings bank, or industrial loan and thrift institution 
  3.4   operating under section 53.04, subdivision 5, that is organized 
  3.5   under the laws of this state, or a holding company which owns or 
  3.6   otherwise controls the banking institution. 
  3.7      Sec. 5.  Minnesota Statutes 1996, section 46.07, 
  3.8   subdivision 2, is amended to read: 
  3.9      Subd. 2.  [CONFIDENTIAL RECORDS.] The commissioner shall 
  3.10  divulge facts and information obtained in the course of 
  3.11  examining financial institutions under the commissioner's 
  3.12  supervision only when and to the extent required or permitted by 
  3.13  law to report upon or take special action regarding the affairs 
  3.14  of an institution, or ordered by a court of law to testify or 
  3.15  produce evidence in a civil or criminal proceeding, except that 
  3.16  the commissioner may furnish information as to matters of mutual 
  3.17  interest to an official or examiner of the federal reserve 
  3.18  system, the Federal Deposit Insurance Corporation, the Federal 
  3.19  Office of Thrift Supervision, the Federal Home Loan Bank System, 
  3.20  the National Credit Union Administration, comptroller of the 
  3.21  currency, a legally constituted state credit union share 
  3.22  insurance corporation approved under section 52.24 other state 
  3.23  bank supervisory agencies subject to cooperative agreements 
  3.24  authorized by section 49.411, subdivision 7, the United States 
  3.25  Small Business Administration, for purposes of sections 53.09, 
  3.26  subdivision 2a, and 56.10, subdivision 1, or state and federal 
  3.27  law enforcement agencies.  The commissioner shall not be 
  3.28  required to disclose the name of a debtor of a financial 
  3.29  institution under the commissioner's supervision, or anything 
  3.30  relative to the private accounts, ownership, or transactions of 
  3.31  an institution, or any fact obtained in the course of an 
  3.32  examination thereof, except as herein provided.  For purposes of 
  3.33  this subdivision, a subpoena is not an order of a court of law.  
  3.34  These records are classified confidential or protected nonpublic 
  3.35  for purposes of the Minnesota government data practices act and 
  3.36  their destruction, as prescribed in section 46.21, is exempt 
  4.1   from the provisions of chapter 138 and Laws 1971, chapter 529, 
  4.2   so far as their deposit with the state archives.  
  4.3      Sec. 6.  Minnesota Statutes 1996, section 46.131, 
  4.4   subdivision 2, is amended to read: 
  4.5      Subd. 2.  Each bank, trust company, savings bank, savings 
  4.6   association, small loan company regulated lender, industrial 
  4.7   loan and thrift company, credit union, motor vehicle sales 
  4.8   finance company, debt prorating agency and insurance premium 
  4.9   finance company organized under the laws of this state or 
  4.10  required to be administered by the commissioner of commerce 
  4.11  shall pay into the state treasury its proportionate share of the 
  4.12  cost of maintaining the department of commerce. 
  4.13     Sec. 7.  Minnesota Statutes 1996, section 47.20, 
  4.14  subdivision 9, is amended to read: 
  4.15     Subd. 9.  For purposes of this subdivision the term 
  4.16  "mortgagee" shall mean all state banks and trust companies, 
  4.17  national banking associations, state and federally chartered 
  4.18  savings associations, mortgage banks, savings banks, insurance 
  4.19  companies, credit unions or assignees of the above. 
  4.20     (a) Each mortgagee requiring funds of a mortgagor to be 
  4.21  paid into an escrow, agency or similar account for the payment 
  4.22  of taxes or insurance premiums with respect to a mortgaged 
  4.23  one-to-four family, owner occupied residence located in this 
  4.24  state, unless the account is required by federal law or 
  4.25  regulation or maintained in connection with a conventional loan 
  4.26  in an original principal amount in excess of 80 percent of the 
  4.27  lender's appraised value of the residential unit at the time the 
  4.28  loan is made or maintained in connection with loans insured or 
  4.29  guaranteed by the secretary of housing and urban development, by 
  4.30  the administrator of veterans affairs, or by the administrator 
  4.31  of the farmers home administration or any successor, shall 
  4.32  calculate interest on such funds at a rate of not less than 
  4.33  three percent per annum.  Such interest shall be computed on the 
  4.34  average monthly balance in such account on the first of each 
  4.35  month for the immediately preceding 12 months of the calendar 
  4.36  year or such other fiscal year as may be uniformly adopted by 
  5.1   the mortgagee for such purposes and shall be annually credited 
  5.2   to the remaining principal balance on the mortgage, or at the 
  5.3   election of the mortgagee, paid to the mortgagor or credited to 
  5.4   the mortgagor's account.  If the interest exceeds the remaining 
  5.5   balance, the excess shall be paid to the mortgagor or vendee.  
  5.6   The requirement to pay interest shall apply to such accounts 
  5.7   created in conjunction with mortgage loans made prior to July 1, 
  5.8   1996. 
  5.9      (b) Unless the account is exempt from the requirements of 
  5.10  paragraph (a), a mortgagee shall allow a mortgagor to elect to 
  5.11  discontinue the escrow account after the seventh fifth 
  5.12  anniversary of the date of the mortgage, unless the mortgagor 
  5.13  has been more than 30 days delinquent in the previous 12 
  5.14  months.  This paragraph shall apply to accounts created prior to 
  5.15  July 1, 1996, as well as to accounts created on or after July 1, 
  5.16  1996.  The mortgagor's election shall be in writing.  The lender 
  5.17  or mortgage broker shall, with respect to mortgages made on or 
  5.18  after August 1, 1997, inform an applicant for a mortgage of the 
  5.19  applicant's rights under this paragraph.  If the escrow account 
  5.20  has a negative balance or a shortage at the time the mortgagor 
  5.21  requests discontinuance, the mortgagee is not obligated to allow 
  5.22  discontinuance until the escrow account is balanced or the 
  5.23  shortage has been repaid. 
  5.24     (c) The mortgagee shall notify the mortgagor within 60 days 
  5.25  after the seventh fifth anniversary of the date of the mortgage 
  5.26  if the right to discontinue the escrow account is in accordance 
  5.27  with paragraph (b).  For mortgage loans entered into, on or 
  5.28  prior to July 1, 1989, the notice required by this paragraph 
  5.29  shall be provided to the mortgagor by January 1, 1997. 
  5.30     (d) A mortgagee may require the mortgagor to reestablish 
  5.31  the escrow account if the mortgagor has failed to make timely 
  5.32  payments for two consecutive payment periods at any time during 
  5.33  the remaining term of the mortgage, or if the mortgagor has 
  5.34  failed to pay taxes or insurance premiums when due.  A payment 
  5.35  received during a grace period shall be deemed timely. 
  5.36     (e) The mortgagee shall, subject to paragraph (b), return 
  6.1   any funds remaining in the account to the mortgagor within 60 
  6.2   days after receipt of the mortgagor's written notice of election 
  6.3   to discontinue the escrow account. 
  6.4      (f) The mortgagee shall not charge a direct fee for the 
  6.5   administration of the escrow account, nor shall the mortgagee 
  6.6   charge a fee or other consideration for allowing the mortgagor 
  6.7   to discontinue the escrow account. 
  6.8      Sec. 8.  Minnesota Statutes 1996, section 47.20, 
  6.9   subdivision 14, is amended to read: 
  6.10     Subd. 14.  (a) A lender requiring or offering private 
  6.11  mortgage insurance shall make available to the borrower or other 
  6.12  person paying the insurance premium the same premium payment 
  6.13  plans as are available to the lender in paying the private 
  6.14  mortgage insurance premium.  
  6.15     (b) Any refund or rebate for unearned private mortgage 
  6.16  insurance premiums shall be paid to the borrower or other person 
  6.17  actually providing the funds for payment of the premium.  
  6.18     (c) With regard to first mortgage loans made before, on, or 
  6.19  after January 1, 1997, the mortgagor shall have the right to 
  6.20  elect, in writing, to cancel borrower-purchased private mortgage 
  6.21  insurance if all of the following terms and conditions have been 
  6.22  met: 
  6.23     (1) if the current unpaid principal balance of a first 
  6.24  mortgage is 75 percent or less of the current fair market 
  6.25  appraised value of the property.  "Current fair market appraised 
  6.26  value" shall be based upon a current appraisal by a real estate 
  6.27  appraiser licensed or certified by the appropriate state or 
  6.28  federal agency and reasonably acceptable to the lender.  The 
  6.29  lender may require the mortgagor to pay for the appraisal; 
  6.30     (2) the mortgagor's monthly installments of principal, 
  6.31  interest, and escrow obligations have not been more than 30 days 
  6.32  past due over the 24-month period immediately preceding the 
  6.33  request for cancellation and all accrued late charges have been 
  6.34  paid; 
  6.35     (3) the mortgage was made at least 24 months prior to the 
  6.36  receipt of a request for cancellation of private mortgage 
  7.1   insurance; 
  7.2      (4) the property securing the mortgage is owner-occupied; 
  7.3   and 
  7.4      (5) the mortgage has not been pooled with other mortgages 
  7.5   in order to constitute, in whole or in part, collateral for 
  7.6   bonds issued by the state of Minnesota or any political 
  7.7   subdivision of the state of Minnesota or of any agency of any 
  7.8   political subdivision of the state of Minnesota. 
  7.9      (d) Other than the appraisal fee allowed pursuant to 
  7.10  paragraph (c), clause (1), the lender shall not charge the 
  7.11  borrower a fee or other consideration for cancellation of the 
  7.12  private mortgage insurance. 
  7.13     (e) A lender requiring private mortgage insurance shall, 
  7.14  after the payment of the 24th monthly premium installment of 
  7.15  private mortgage insurance, provide an annual written notice to 
  7.16  each mortgagor currently paying premiums for private mortgage 
  7.17  insurance.  The notice may be included in the annual statement 
  7.18  or may be included in other regular mailings to the mortgagor.  
  7.19  For mortgage loans made prior to January 1, 1997, the first 
  7.20  required annual notice must be provided no later than January 1, 
  7.21  1998.  The annual notice shall be on its own page, unless 
  7.22  included in a private mortgage insurance notice required under 
  7.23  the federal Real Estate Settlement Procedures Act, and shall 
  7.24  appear substantially as follows: 
  7.25       "NOTICE OF RIGHT TO CANCEL PRIVATE MORTGAGE INSURANCE 
  7.26     If you currently pay private mortgage insurance premiums, 
  7.27  you may have the right to cancel the insurance and cease paying 
  7.28  premiums.  This would permit you to make a lower total monthly 
  7.29  mortgage payment.  In most cases, you have the right to cancel 
  7.30  private mortgage insurance if the principal balance of your loan 
  7.31  is 80 percent or less of the current fair market appraised value 
  7.32  of your home.  If you wish to learn whether you are eligible to 
  7.33  cancel this insurance, please contact us at (address/phone)." 
  7.34     (f) If a mortgage loan governed by paragraph (c) is 
  7.35  serviced in accordance with the guidelines of either the Federal 
  7.36  National Mortgage Association or the Federal Home Loan Mortgage 
  8.1   Corporation, the lender shall cancel private mortgage insurance 
  8.2   in accordance with the cancellation guidelines of the applicable 
  8.3   entity in effect at the time the request for cancellation is 
  8.4   received. 
  8.5      Sec. 9.  Minnesota Statutes 1996, section 47.55, 
  8.6   subdivision 1, is amended to read: 
  8.7      Subdivision 1.  [BANKING FACILITIES IN OPERATION PRIOR TO 
  8.8   MAY 1, 1971.] A bank may retain and operate one detached 
  8.9   facility as it may have had in operation prior to May 1, 1971 
  8.10  without requirement of approval hereunder, provided that its 
  8.11  function is limited as provided in section 47.53 and its 
  8.12  location conforms with the provisions of section 47.52.  A bank 
  8.13  having such a retained detached facility shall be limited to 
  8.14  operating five additional detached facilities. 
  8.15     Sec. 10.  Minnesota Statutes 1996, section 47.56, is 
  8.16  amended to read: 
  8.17     47.56 [TRANSFER OF LOCATION.] 
  8.18     The location of a detached facility transferred to another 
  8.19  location outside of a radius of three miles measured in a 
  8.20  straight line is subject to the same procedures and approval as 
  8.21  required hereunder for establishing a new detached facility, 
  8.22  except that.  The location of a detached facility transferred to 
  8.23  another location within the lesser of a radius of three miles 
  8.24  measured in a straight line from the existing location or the 
  8.25  municipality, as defined in section 47.51, in which it is 
  8.26  located is subject to the same procedures and approval as are 
  8.27  required in section 47.101, subdivision 2.  The relocation of a 
  8.28  detached facility within a municipality of 10,000 or less 
  8.29  population shall not require consent of other banks required in 
  8.30  section 47.52.  
  8.31     Sec. 11.  Minnesota Statutes 1996, section 47.59, 
  8.32  subdivision 1, is amended to read: 
  8.33     Subdivision 1.  [DEFINITIONS.] For purposes of this 
  8.34  section, the following definitions shall apply. 
  8.35     (a) "Actuarial method" has the meaning given the term in 
  8.36  the Code of Federal Regulations, title 12, part 226, and 
  9.1   appendix J thereto. 
  9.2      (b) "Annual percentage rate" has the meaning given the term 
  9.3   in the Code of Federal Regulations, title 12, part 226, but 
  9.4   using the definition of "finance charge" used in this section. 
  9.5      (c) "Borrower" means a debtor under a loan or a purchaser 
  9.6   or debtor under a credit sale contract. 
  9.7      (d) "Business purpose" means a purpose other than a 
  9.8   personal, family, household, or agricultural purpose. 
  9.9      (e) "Cardholder" means a person to whom a credit card is 
  9.10  issued or who has agreed with the financial institution to pay 
  9.11  obligations arising from the issuance to or use of the card by 
  9.12  another person. 
  9.13     (f) "Consumer loan" means a loan made by a financial 
  9.14  institution in which: 
  9.15     (1) the debtor is a person other than an organization; 
  9.16     (2) the debt is incurred primarily for a personal, family, 
  9.17  or household purpose; and 
  9.18     (3) the debt is payable in installments or a finance charge 
  9.19  is made. 
  9.20     (g) "Credit" means the right granted by a financial 
  9.21  institution to a borrower to defer payment of a debt, to incur 
  9.22  debt and defer its payment, or to purchase property or services 
  9.23  and defer payment. 
  9.24     (h) "Credit card" means a card or device issued under an 
  9.25  arrangement pursuant to which a financial institution gives to a 
  9.26  cardholder the privilege of obtaining credit from the financial 
  9.27  institution or other person in purchasing or leasing property or 
  9.28  services, obtaining loans, or otherwise.  A transaction is 
  9.29  "pursuant to a credit card" only if credit is obtained according 
  9.30  to the terms of the arrangement by transmitting information 
  9.31  contained on the card or device orally, in writing, by 
  9.32  mechanical or electronic methods, or in any other manner.  A 
  9.33  transaction is not "pursuant to a credit card" if the card or 
  9.34  device is used solely in that transaction to: 
  9.35     (1) identify the cardholder or evidence the cardholder's 
  9.36  creditworthiness and credit is not obtained according to the 
 10.1   terms of the arrangement; 
 10.2      (2) obtain a guarantee of payment from the cardholder's 
 10.3   deposit account, whether or not the payment results in a credit 
 10.4   extension to the cardholder by the financial institution; or 
 10.5      (3) effect an immediate transfer of funds from the 
 10.6   cardholder's deposit account by electronic or other means, 
 10.7   whether or not the transfer results in a credit extension to the 
 10.8   cardholder by the financial institution. 
 10.9      (i) "Credit sale contract" means a contract evidencing a 
 10.10  credit sale.  "Credit sale" means a sale of goods or services, 
 10.11  or an interest in land, in which: 
 10.12     (1) credit is granted by a seller who regularly engages as 
 10.13  a seller in credit transactions of the same kind; and 
 10.14     (2) the debt is payable in installments or a finance charge 
 10.15  is made. 
 10.16     (j) "Finance charge" has the meaning given in the Code of 
 10.17  Federal Regulations, title 12, part 226, except that the 
 10.18  following will not in any event be considered a finance charge: 
 10.19     (1) a charge as a result of default or delinquency under 
 10.20  subdivision 6 if made for actual unanticipated late payment, 
 10.21  delinquency, default, or other similar occurrence, and a charge 
 10.22  made for an extension or deferment under subdivision 5, unless 
 10.23  the parties agree that these charges are finance charges; 
 10.24     (2) an additional charge under subdivision 6; or 
 10.25     (3) a discount, if a financial institution purchases a loan 
 10.26  at less than the face amount of the obligation or purchases or 
 10.27  satisfies obligations of a cardholder pursuant to a credit card 
 10.28  and the purchase or satisfaction is made at less than the face 
 10.29  amount of the obligation.; 
 10.30     (4) fees paid by a borrower to a broker, provided the 
 10.31  financial institution or a person described in subdivision 4 
 10.32  does not require use of the broker to obtain credit; or 
 10.33     (5) a commission, expense reimbursement, or other sum 
 10.34  received by a financial institution or a person described in 
 10.35  subdivision 4 in connection with insurance described in 
 10.36  subdivision 6. 
 11.1      (k) "Financial institution" means a state or federally 
 11.2   chartered bank, a state or federally chartered bank and trust, a 
 11.3   trust company with banking powers, a state or federally 
 11.4   chartered saving bank, a state or federally chartered savings 
 11.5   association, an industrial loan and thrift company, or a 
 11.6   regulated lender. 
 11.7      (l) "Loan" means: 
 11.8      (1) the creation of debt by the financial institution's 
 11.9   payment of money to the borrower or a third person for the 
 11.10  account of the borrower; 
 11.11     (2) the creation of debt pursuant to a credit card in any 
 11.12  manner, including a cash advance or the financial institution's 
 11.13  honoring a draft or similar order for the payment of money drawn 
 11.14  or accepted by the borrower, paying or agreeing to pay the 
 11.15  borrower's obligation, or purchasing or otherwise acquiring the 
 11.16  borrower's obligation from the obligee or the borrower's 
 11.17  assignee; 
 11.18     (3) the creation of debt by a cash advance to a borrower 
 11.19  pursuant to an overdraft line of credit arrangement; 
 11.20     (4) the creation of debt by a credit to an account with the 
 11.21  financial institution upon which the borrower is entitled to 
 11.22  draw immediately; 
 11.23     (5) the forbearance of debt arising from a loan; and 
 11.24     (6) the creation of debt pursuant to open-end credit. 
 11.25     "Loan" does not include the forbearance of debt arising 
 11.26  from a sale or lease, a credit sale contract, or an overdraft 
 11.27  from a person's deposit account with a financial institution 
 11.28  which is not pursuant to a written agreement to pay overdrafts 
 11.29  with the right to defer repayment thereof. 
 11.30     (m) "Official fees" means: 
 11.31     (1) fees and charges which actually are or will be paid to 
 11.32  public officials for determining the existence of or for 
 11.33  perfecting, releasing, terminating, or satisfying a security 
 11.34  interest or mortgage relating to a loan or credit sale, and any 
 11.35  separate fees or charges which actually are or will be paid to 
 11.36  public officials for recording a notice described in section 
 12.1   580.032, subdivision 1; and 
 12.2      (2) premiums payable for insurance in lieu of perfecting a 
 12.3   security interest or mortgage otherwise required by a financial 
 12.4   institution in connection with a loan or credit sale, if the 
 12.5   premium does not exceed the fees and charges described in clause 
 12.6   (1), which would otherwise be payable. 
 12.7      (n) "Organization" means a corporation, government, 
 12.8   government subdivision or agency, trust, estate, partnership, 
 12.9   joint venture, cooperative, limited liability company, limited 
 12.10  liability partnership, or association. 
 12.11     (o) "Person" means a natural person or an organization. 
 12.12     (p) "Principal" means the total of: 
 12.13     (1) the amount paid to, received by, or paid or repayable 
 12.14  for the account of, the borrower; and 
 12.15     (2) to the extent that payment is deferred: 
 12.16     (i) the amount actually paid or to be paid by the financial 
 12.17  institution for additional charges permitted under this section; 
 12.18  and 
 12.19     (ii) prepaid finance charges. 
 12.20     Sec. 12.  Minnesota Statutes 1996, section 47.59, 
 12.21  subdivision 12, is amended to read: 
 12.22     Subd. 12.  [CONSUMER PROTECTIONS.] (a) Financial 
 12.23  institutions shall comply with the requirements of the federal 
 12.24  Truth in Lending Act, United States Code, title 15, sections 
 12.25  1601 to 1693, in connection with a consumer loan or credit sale 
 12.26  for a consumer purpose where the federal Truth in Lending Act is 
 12.27  applicable.  A financial institution shall give the following 
 12.28  disclosure to the borrower in writing at the time an open-end 
 12.29  credit account is established if the financial institution 
 12.30  imposes a loan fee, points, or similar charge that relates to 
 12.31  the opening of the account which is not included in the annual 
 12.32  percentage rate given pursuant to the federal Truth in Lending 
 12.33  Act:  "YOU HAVE BEEN ASSESSED FINANCE CHARGES, OR POINTS, WHICH 
 12.34  ARE NOT INCLUDED IN THE ANNUAL PERCENTAGE RATE.  THESE CHARGES 
 12.35  MAY BE REFUNDED, IN WHOLE OR IN PART, IF YOU DO NOT USE YOUR 
 12.36  LINE OF CREDIT OR IF YOU REPAY YOUR LINE OF CREDIT EARLY.  THESE 
 13.1   CHARGES INCREASE THE COST OF YOUR CREDIT." 
 13.2      (b) Financial institutions shall comply with the following 
 13.3   consumer protection provisions in connection with a consumer 
 13.4   loan or credit sale for a consumer purpose:  sections 325G.02 to 
 13.5   325G.05; 325G.06 to 325G.11; 325G.15 to 325G.22; and 325G.29 to 
 13.6   325G.36, and Code of Federal Regulations, title 12, part 535, 
 13.7   where those statutes or regulations are applicable.  
 13.8      (c) An assignment of a consumer's earnings by the consumer 
 13.9   to a financial institution as payment or as security for payment 
 13.10  of a debt arising out of a consumer loan or consumer credit sale 
 13.11  is unenforceable by the financial institution and revocable by 
 13.12  the consumer except where the assignment:  (1) by its terms is 
 13.13  revocable at the will of the consumer; (2) is a payroll 
 13.14  deduction plan or preauthorized payment plan, beginning at the 
 13.15  time of the transaction, in which the consumer authorizes a 
 13.16  series of wage deductions as a method of making each payment; or 
 13.17  (3) applies only to wages or other earnings already earned at 
 13.18  the time of the assignment.  
 13.19     Sec. 13.  Minnesota Statutes 1996, section 47.61, 
 13.20  subdivision 3, is amended to read: 
 13.21     Subd. 3.  (a) "Electronic financial terminal" means an 
 13.22  electronic information processing device that is established to 
 13.23  do either or both of the following: 
 13.24     (1) capture the data necessary to initiate financial 
 13.25  transactions; or 
 13.26     (2) through its attendant support system, store or initiate 
 13.27  the transmission of the information necessary to consummate a 
 13.28  financial transaction. 
 13.29     (b) "Electronic financial terminal" does not include: 
 13.30     (1) a telephone; 
 13.31     (2) an electronic information processing device that is 
 13.32  used internally by a financial institution to conduct the 
 13.33  business activities of the institution; or 
 13.34     (3) an electronic point-of-sale terminal operated by a 
 13.35  retailer that is used to process payments for the purchase of 
 13.36  goods and services by consumers, and which also may be used to 
 14.1   obtain cash advances or cash back not to exceed $25 and only if 
 14.2   incidental to the retail sale transactions, through the use of 
 14.3   credit cards or debit cards, provided that the payment 
 14.4   transactions using debit cards are subject to the federal 
 14.5   Electronic Funds Transfer Act, United States Code, title 12, 
 14.6   sections 1693 et seq., and Regulation E of the Federal Reserve 
 14.7   Board, Code of Federal Regulations, title 12, subpart 205.2; 
 14.8   this clause does not exempt the retailer from liability for 
 14.9   negligent conduct or intentional misconduct of the operator 
 14.10  under section 47.69, subdivision 5.; 
 14.11     (4) stored-value cards to only process transactions other 
 14.12  than those authorized by this section.  Stored-value cards are 
 14.13  transaction cards having magnetic stripes or computer chips that 
 14.14  enable electronic value to be added or deducted as needed; or 
 14.15     (5) a personal computer possessed by and operated 
 14.16  exclusively by the account holder. 
 14.17     Sec. 14.  Minnesota Statutes 1996, section 48.01, 
 14.18  subdivision 2, is amended to read: 
 14.19     Subd. 2.  [BANKING INSTITUTION.] The term "banking 
 14.20  institution" means any bank, trust company, bank and trust 
 14.21  company, or savings bank which is now or may hereafter be 
 14.22  organized under the laws of this state.  For purposes of 
 14.23  sections 48.38, 48.84, and 501B.10 501B.151, subdivision 6 11, 
 14.24  and to the extent permitted by federal law, "banking 
 14.25  institution" includes any national banking association or 
 14.26  affiliate exercising trust powers in this state. 
 14.27     Sec. 15.  Minnesota Statutes 1996, section 48.09, is 
 14.28  amended by adding a subdivision to read: 
 14.29     Subd. 3.  [QUALIFIED SUBCHAPTER S SUBSIDIARY.] A bank that 
 14.30  has met the eligibility requirements under title I, subtitle C 
 14.31  of the Small Business Job Protection Act of 1996 or related 
 14.32  state of Minnesota tax law may apply to the commissioner for 
 14.33  approval of a plan and agreement for a distribution of earnings 
 14.34  to the shareholder(s) of the bank on a basis other than a 
 14.35  dividend under subdivisions 1 and 2.  Approval of a plan of 
 14.36  distribution under this subdivision may be rescinded by the 
 15.1   commissioner upon 90-day prior notice to the bank.  Failure to 
 15.2   comply with this notice or qualification of a distribution under 
 15.3   subdivisions 1 and 2 is considered a violation subject to the 
 15.4   commissioner's action under section 45.027 or 46.24. 
 15.5      Sec. 16.  Minnesota Statutes 1996, section 48.15, 
 15.6   subdivision 2, is amended to read: 
 15.7      Subd. 2.  The commissioner of commerce may authorize banks, 
 15.8   bank and trust companies, or trust companies organized under the 
 15.9   laws of this state to engage in any banking or trust activity in 
 15.10  which banks subject to the jurisdiction of the federal 
 15.11  government may hereafter be authorized to engage by federal 
 15.12  legislation, ruling, or regulation and those activities 
 15.13  authorized in section 48.61, subdivision 7, paragraph (a), 
 15.14  clause (3).  The commissioner may not authorize state banks as 
 15.15  defined by section 48.01, to engage in any banking activity 
 15.16  prohibited by the laws of this state. 
 15.17     Sec. 17.  Minnesota Statutes 1996, section 48.24, 
 15.18  subdivision 2, is amended to read: 
 15.19     Subd. 2.  Loans not exceeding 25 percent of such capital 
 15.20  and surplus made upon first mortgage security on improved real 
 15.21  estate in the state or in an adjoining state within 20 miles of 
 15.22  the place where the bank or a branch of the bank established 
 15.23  according to section 49.411 is located, shall not constitute a 
 15.24  liability of the maker of the notes secured by such mortgages 
 15.25  within the meaning of the foregoing provision limiting 
 15.26  liability, but shall be an actual liability of the maker.  These 
 15.27  mortgage loans shall be limited to, and in no case exceed, 50 
 15.28  percent of the cash value of the security covered by the 
 15.29  mortgage, except mortgage loans guaranteed as provided by the 
 15.30  servicemen's readjustment act of 1944, as now or hereafter 
 15.31  amended, or for which there is a commitment to so guarantee or 
 15.32  for which a conditional guarantee has been issued, which loans 
 15.33  shall in no case exceed 60 percent of the cash value of the 
 15.34  security covered by such mortgage.  For the purposes of this 
 15.35  subdivision, real estate is improved when substantial and 
 15.36  permanent development or construction has contributed 
 16.1   substantially to its value, and agricultural land is improved 
 16.2   when farm crops are regularly raised on such land without 
 16.3   further substantial improvements.  
 16.4      Sec. 18.  Minnesota Statutes 1996, section 48.24, is 
 16.5   amended by adding a subdivision to read: 
 16.6      Subd. 9.  [RIGHT TO ACT TO AVOID LOSS.] This section does 
 16.7   not prohibit the bank from advancing funds that may be 
 16.8   reasonably necessary to avoid loss on a loan or investment made 
 16.9   subject to this section or an obligation created in good faith.  
 16.10  The rights under this subdivision are in addition to and not 
 16.11  inconsistent with section 48.21. 
 16.12     Sec. 19.  [48.476] [REPRESENTATIVE TRUST OFFICE.] 
 16.13     Subdivision 1.  [DEFINITIONS.] For purposes of this 
 16.14  section, the terms in this subdivision have the meanings given. 
 16.15     (a) "Representative trust office" means an office at which 
 16.16  a trust company or bank with trust powers has been authorized by 
 16.17  the commissioner to engage in a trust business other than acting 
 16.18  as a fiduciary. 
 16.19     (b) "Acting as a fiduciary" means to: 
 16.20     (1) accept or execute trusts, including to: 
 16.21     (i) act as trustee under a written agreement; 
 16.22     (ii) receive money or other property in its capacity as a 
 16.23  trustee for investment in real or personal property; 
 16.24     (iii) act as trustee and perform the fiduciary duties 
 16.25  committed or transferred to it by order of court of competent 
 16.26  jurisdiction; 
 16.27     (iv) act as trustee of the estate of a deceased person; or 
 16.28     (v) act as trustee for a minor or incapacitated person; 
 16.29     (2) administer in any other fiduciary capacity real or 
 16.30  personal property; or 
 16.31     (3) act according to order of court of competent 
 16.32  jurisdiction as executor or administrator of the estate of a 
 16.33  deceased person or as a guardian or conservator for a minor or 
 16.34  incapacitated person. 
 16.35     Subd. 2.  [AUTHORITY FOR REPRESENTATIVE TRUST OFFICES; 
 16.36  PRIOR WRITTEN NOTICE.] (a) A state trust institution may 
 17.1   establish or acquire and maintain representative trust offices 
 17.2   anywhere in this state.  A state trust institution desiring to 
 17.3   establish or acquire and maintain such an office shall file a 
 17.4   written notice with the commissioner setting forth the name of 
 17.5   the state trust institution and the location of the proposed 
 17.6   additional office and furnish a copy of the resolution adopted 
 17.7   by the board authorizing the additional office. 
 17.8      (b) The state trust institution may begin business at the 
 17.9   additional office on the 31st day after the date the 
 17.10  commissioner receives the notice, unless the commissioner 
 17.11  specifies an earlier or later date. 
 17.12     (c) The 30-day period of review may be extended by the 
 17.13  commissioner on a determination that the written notice raises 
 17.14  issues that require additional information or additional time 
 17.15  for analysis.  If the period of review is extended, the state 
 17.16  trust institution may establish the additional office only on 
 17.17  prior written approval by the commissioner. 
 17.18     (d) The commissioner may deny approval of the additional 
 17.19  office if the commissioner finds that the state trust 
 17.20  institution lacks sufficient financial resources to undertake 
 17.21  the proposed expansion without adversely affecting its safety or 
 17.22  soundness or that the proposed office would be contrary to the 
 17.23  public interest. 
 17.24     Subd. 3.  [AUTHORITY FOR OUT-OF-STATE TRUST OFFICES; PRIOR 
 17.25  WRITTEN NOTICE.] (a) A state trust institution may establish and 
 17.26  maintain representative trust office or acquire and maintain an 
 17.27  office in a state other than this state.  A state trust 
 17.28  institution desiring to establish or acquire and maintain an 
 17.29  office in another state under this section shall file a notice 
 17.30  on a form prescribed by the commissioner, which shall set forth 
 17.31  the name of the state trust institution, the location of the 
 17.32  proposed office, and whether the laws of the jurisdiction where 
 17.33  the office will be located permit the office to be maintained by 
 17.34  the state trust institution; and furnish a copy of the 
 17.35  resolution adopted by the board authorizing the out-of-state 
 17.36  office. 
 18.1      (b) The state trust institution may begin business at the 
 18.2   additional office on the 31st day after the date the 
 18.3   commissioner receives the notice, unless the commissioner 
 18.4   specifies an earlier or later date. 
 18.5      (c) The 30-day period of review may be extended by the 
 18.6   commissioner on a determination that the written notice raises 
 18.7   issues that require additional information or additional time 
 18.8   for analysis.  If the period of review is extended, the state 
 18.9   trust institution may establish the additional office only on 
 18.10  prior written approval by the commissioner. 
 18.11     (d) The commissioner may deny approval of the additional 
 18.12  office if the commissioner finds that the state trust 
 18.13  institution lacks sufficient financial resources to undertake 
 18.14  the proposed expansion without adversely affecting its safety or 
 18.15  soundness or that the proposed office would be contrary to the 
 18.16  public interest.  In acting on the notice, the commissioner 
 18.17  shall consider the views of the appropriate bank supervisory 
 18.18  agencies. 
 18.19     Sec. 20.  Minnesota Statutes 1996, section 48.512, is 
 18.20  amended by adding a subdivision to read: 
 18.21     Subd. 4a.  [IDENTIFICATION NOT REQUIRED FOR DEBIT CARD 
 18.22  TRANSACTIONS.] The identification requirements of subdivision 4 
 18.23  do not apply to a transaction account that is accessible 
 18.24  exclusively by debit card.  A debit card activates a transaction 
 18.25  account at a financial intermediary by means of an electronic 
 18.26  information processing device and contemporaneously completes 
 18.27  the debt to the account only on the condition that funds are 
 18.28  available and confirmed. 
 18.29     Sec. 21.  Minnesota Statutes 1996, section 48.512, is 
 18.30  amended by adding a subdivision to read: 
 18.31     Subd. 11.  [FORMAL POLICY DEVELOPMENT; REQUIRED SIGHT DRAFT 
 18.32  DISCLOSURE.] A financial intermediary offering transaction 
 18.33  accounts shall by board resolution adopt a policy to be enforced 
 18.34  internally regarding the following: 
 18.35     (1) the standards identify a level of misuse by customers 
 18.36  for purposes of enforcing the deterrence objectives of 
 19.1   subdivision 7; 
 19.2      (2) the method of disclosing to the customer the risks 
 19.3   related to providing account identification information to third 
 19.4   parties for purposes of authorizing their issuance of sight 
 19.5   drafts; and 
 19.6      (3) the method of informing the customer of the privacy 
 19.7   terms related to the bank's use of customer personal information.
 19.8      Sec. 22.  Minnesota Statutes 1996, section 48.61, 
 19.9   subdivision 7, is amended to read: 
 19.10     Subd. 7.  [SUBSIDIARIES.] (a) A state bank or trust company 
 19.11  may organize, acquire, or invest in a subsidiary located in this 
 19.12  state for the purposes of engaging in one or more of the 
 19.13  following activities, subject to the prior written approval of 
 19.14  the commissioner: 
 19.15     (1) any activity, not including receiving deposits or 
 19.16  paying checks, that a state bank is authorized to engage in 
 19.17  under state law or rule or under federal law or regulation 
 19.18  unless the activity is prohibited by the laws of this state; 
 19.19     (2) any activity that a bank clerical service corporation 
 19.20  is authorized to engage in under section 48.89; and 
 19.21     (3) any other activity authorized for a national bank, a 
 19.22  bank holding company, or a subsidiary of a national bank or bank 
 19.23  holding company under federal law or regulation of general 
 19.24  applicability, and approved by the commissioner by rule.  
 19.25     (b) A bank or trust company subsidiary may engage in an 
 19.26  activity under this section only upon application together with 
 19.27  a filing fee of $250 and with the prior written approval of the 
 19.28  commissioner.  In approving or denying a proposed activity, the 
 19.29  commissioner shall consider the financial and management 
 19.30  strength of the bank or trust company, the current written 
 19.31  operating plan and policies of the proposed subsidiary 
 19.32  corporation, the bank or trust company's community reinvestment 
 19.33  record, and whether the proposed activity should be conducted 
 19.34  through a subsidiary of the bank or trust company. 
 19.35     (c) The aggregate amount of funds invested in either an 
 19.36  equity or loan capacity in all of the subsidiaries of the bank 
 20.1   or trust company authorized under this subdivision shall not 
 20.2   exceed 25 percent of the capital stock and paid in surplus of 
 20.3   the bank or trust company. 
 20.4      (d) A subsidiary organized or acquired under this 
 20.5   subdivision is subject to the examination and enforcement 
 20.6   authority of the commissioner under chapters 45 and 46 to the 
 20.7   same extent as a state bank or trust company. 
 20.8      (e) For the purposes of this section, "subsidiary" means a 
 20.9   corporation of which more than 50 percent of the voting shares 
 20.10  are owned or controlled by the bank or trust company. 
 20.11     Sec. 23.  Minnesota Statutes 1996, section 48.61, is 
 20.12  amended by adding a subdivision to read: 
 20.13     Subd. 10.  [SUBSIDIARIES ORGANIZED FOR PURPOSES OF 
 20.14  CORPORATE REORGANIZATION.] A subsidiary may be organized solely 
 20.15  for purposes of liquidating assets in a reorganization subject 
 20.16  to the following conditions: 
 20.17     (1) the subsidiary must be a bank holding company whose 
 20.18  assets and liabilities and subsidiary bank control have been 
 20.19  removed; and 
 20.20     (2) the operations of the subsidiary must be limited to the 
 20.21  time period reasonably related to the completion of the 
 20.22  reorganization. 
 20.23     Sec. 24.  Minnesota Statutes 1996, section 49.215, 
 20.24  subdivision 3, is amended to read: 
 20.25     Subd. 3.  [CERTIFICATE OF LIQUIDATION.] Upon compliance 
 20.26  with the foregoing and upon filing with the commissioner an 
 20.27  affidavit of the president and cashier or vice president 
 20.28  conducting the duties of cashier of said financial institution 
 20.29  that the provisions of subdivision 4 have been complied with and 
 20.30  that all depositors and other creditors have been paid in full, 
 20.31  or, if any dividends or any moneys set apart for the payment of 
 20.32  claims remain unpaid and the places of residence of the 
 20.33  depositors or other creditors are unknown to the persons making 
 20.34  the affidavit, that sufficient funds have been turned over to 
 20.35  the commissioner for payment into the state treasury to pay said 
 20.36  depositors and other creditors, in the manner provided by 
 21.1   subdivision 5, the commissioner shall issue a certificate of 
 21.2   liquidation, and, upon the filing for record of said certificate 
 21.3   of liquidation in the office of the secretary of state and in 
 21.4   the office of the county recorder of the county of the principal 
 21.5   place of business of such financial institution immediately 
 21.6   prior to its voluntary liquidation, the liquidation of said 
 21.7   financial institution shall be complete, and its corporate 
 21.8   existence shall thereupon terminate.  
 21.9      Sec. 25.  Minnesota Statutes 1996, section 49.33, is 
 21.10  amended to read: 
 21.11     49.33 [CONSOLIDATION AND MERGER, WHEN AUTHORIZED.] 
 21.12     Subject to the provisions of sections 49.33 to 49.41, with 
 21.13  the written consent of the commissioner of commerce, any bank of 
 21.14  discount and deposit, savings bank, or trust company may effect 
 21.15  a transfer of its assets and liabilities to another bank, 
 21.16  savings bank, or trust company for the purpose of consolidating 
 21.17  or merging, but the same shall be without prejudice to the 
 21.18  creditors of either.  
 21.19     Sec. 26.  Minnesota Statutes 1996, section 49.42, is 
 21.20  amended to read: 
 21.21     49.42 [STATE BANK.] 
 21.22     As used in sections 49.42 to 49.46: 
 21.23     "State bank" means any bank, savings bank, trust company, 
 21.24  or bank and trust company which is now or may hereafter be 
 21.25  organized under the laws of this state.  
 21.26     "National banking association" means a bank, savings bank, 
 21.27  bank and trust company, or bank exclusively exercising trust 
 21.28  powers organized under the laws of the United States. 
 21.29     Sec. 27.  Minnesota Statutes 1996, section 50.245, is 
 21.30  amended to read: 
 21.31     50.245 [BRANCHES; ACQUISITIONS.] 
 21.32     Subdivision 1.  [AUTHORITY FOR BRANCH OFFICES.] A savings 
 21.33  bank may establish any number of detached facilities as may be 
 21.34  approved by the commissioner of commerce pursuant to sections 
 21.35  47.51 to 47.57.  The savings bank shall not change the location 
 21.36  of a detached facility without prior written approval of the 
 22.1   commissioner of commerce.  A savings bank may establish a loan 
 22.2   production office, without restriction as to geographical 
 22.3   location, upon written notice to the commissioner of commerce. 
 22.4      Subd. 2.  [AUTHORITY FOR BRANCH OFFICES IN OTHER STATES.] 
 22.5   The authorization contained in subdivision 1 is in addition to 
 22.6   the authority granted savings banks in section 47.52.  A savings 
 22.7   bank chartered in this state, whether or not the subsidiary of a 
 22.8   savings bank holding company, may, by acquisition, merger, 
 22.9   purchase, and assumption of some or all assets and liabilities, 
 22.10  consolidation, or de novo formation, establish or operate 
 22.11  detached facilities in another state on the same terms and 
 22.12  conditions and subject to the same limitations and restrictions 
 22.13  as are applicable to the establishment of branches by national 
 22.14  banks located in Minnesota, except that approval of the 
 22.15  comptroller of the currency shall not be required for such 
 22.16  detached facilities has the same authority as a bank to conduct 
 22.17  interstate mergers affecting interstate branching under section 
 22.18  49.411.  The merger may be between banks and with other banks or 
 22.19  savings banks. 
 22.20     Subd. 3.  [RECIPROCATING STATE INTERSTATE ACQUISITIONS.] A 
 22.21  savings bank chartered in this state and a savings bank holding 
 22.22  company with its principal offices in this state may acquire 
 22.23  control of a financial institution chartered in a reciprocating 
 22.24  state or, subject to applicable federal law, any other state or 
 22.25  a financial institution holding company with principal offices 
 22.26  in a reciprocating state or, subject to applicable federal law, 
 22.27  any other state.  A savings bank chartered in a reciprocating 
 22.28  state or, subject to applicable federal law, any other state and 
 22.29  a savings bank holding company with principal offices in a 
 22.30  reciprocating state or, subject to applicable federal law, any 
 22.31  other state may acquire control of a savings bank chartered in 
 22.32  this state or a savings bank holding company with principal 
 22.33  offices in this state.  
 22.34     Subd. 4.  [PROCEDURAL REQUIREMENTS.] Procedural 
 22.35  requirements equivalent to those contained in sections 48.90 to 
 22.36  48.995 48.99 apply to reciprocal interstate branching and 
 23.1   acquisitions by savings banks and savings bank holding companies.
 23.2      Subd. 5.  [DEFINITIONS.] For the purpose of this section, 
 23.3   the terms defined in this subdivision have the meanings given 
 23.4   them. 
 23.5      (a) "Financial institution" means a bank, savings bank, 
 23.6   savings association, or trust company, or credit union, whether 
 23.7   chartered under the laws of this state, another state or 
 23.8   territory, or under the laws of the United States. 
 23.9      (b) "Loan production office" means a place of business at 
 23.10  which a savings bank provides lending if the loans are approved 
 23.11  at the main office or detached facility of the savings bank, but 
 23.12  at which a savings bank may not accept deposits except through a 
 23.13  remote service unit. 
 23.14     (c) "Reciprocating state" means a state that authorizes the 
 23.15  acquisition of control of financial institutions chartered in 
 23.16  that state and financial institution holding companies with 
 23.17  principal offices in that state by a savings bank chartered in 
 23.18  this state or savings bank holding company with principal 
 23.19  offices in this state under conditions substantially similar to 
 23.20  those imposed by the laws of Minnesota, as determined by the 
 23.21  commissioner of commerce. 
 23.22     (d) "Remote service unit" means an electronic financial 
 23.23  terminal as defined in section 47.61. 
 23.24     Subd. 6.  [COMMISSIONER'S AUTHORITY.] The authority of the 
 23.25  commissioner of commerce to approve a transaction under this 
 23.26  section is in addition to that provided for in section 49.48. 
 23.27     Sec. 28.  Minnesota Statutes 1996, section 51A.38, 
 23.28  subdivision 1, is amended to read: 
 23.29     Subdivision 1.  [GENERALLY.] Real estate loans and other 
 23.30  loans secured by a mortgage on real estate that are eligible for 
 23.31  investment by an association under sections 51A.01 to 51A.57 may 
 23.32  be written according to this section and section 
 23.33  51A.385 51A.386, or upon any other plan approved by the 
 23.34  commissioner.  
 23.35     Sec. 29.  Minnesota Statutes 1996, section 52.04, 
 23.36  subdivision 2a, is amended to read: 
 24.1      Subd. 2a.  [CREDIT SALES OR SERVICE CONTRACTS.] A person 
 24.2   may enter into a credit sale or service contract for sale to a 
 24.3   state or federal credit union doing business in this state, and 
 24.4   a credit union may purchase and enforce the contract under the 
 24.5   terms and conditions set forth in section 47.59, subdivisions 
 24.6   4 and 6 to 14. 
 24.7      Sec. 30.  Minnesota Statutes 1996, section 52.04, is 
 24.8   amended by adding a subdivision to read: 
 24.9      Subd. 3.  [COMPARABILITY WITH FEDERAL CREDIT UNIONS.] The 
 24.10  commissioner of commerce may authorize credit union activity in 
 24.11  which credit unions subject to the jurisdiction of the federal 
 24.12  government may be authorized to engage by federal legislation, 
 24.13  ruling, or regulation.  The commissioner may not authorize state 
 24.14  credit unions subject to this chapter to engage in credit union 
 24.15  activity prohibited by the laws of this state. 
 24.16     Sec. 31.  Minnesota Statutes 1996, section 52.062, 
 24.17  subdivision 1, is amended to read: 
 24.18     Subdivision 1.  [REASONS FOR COMMISSIONER'S ACTION.] 
 24.19  Whenever the commissioner of commerce shall find that a credit 
 24.20  union is engaged in unsafe or unsound practices in conducting 
 24.21  its business or that the shares of the members are impaired or 
 24.22  are in immediate danger of becoming impaired, or that such 
 24.23  credit union has knowingly or negligently permitted any of its 
 24.24  officers, directors, committee members, or employees to violate 
 24.25  any material provision of any law, bylaw, or rule to which the 
 24.26  credit union is subject, the commissioner of commerce may 
 24.27  proceed in the manner provided by either subdivision 2 or, 3, or 
 24.28  4. 
 24.29     Sec. 32.  Minnesota Statutes 1996, section 52.062, is 
 24.30  amended by adding a subdivision to read: 
 24.31     Subd. 4.  [CONSENT CEASE AND DESIST ORDER.] In lieu of 
 24.32  suspension of the operation of the credit union, the 
 24.33  commissioner of commerce and the board of directors of the 
 24.34  credit union may agree to execute a consent cease and desist 
 24.35  order in which the parties agree to waive the right to a hearing 
 24.36  and agree that the credit union shall cease and desist from 
 25.1   unsafe or unsound practices, or violations.  The order must 
 25.2   specify whether credit union operation may continue, and if 
 25.3   operation may continue, the conditions under which operation may 
 25.4   continue. 
 25.5      Sec. 33.  Minnesota Statutes 1996, section 52.063, is 
 25.6   amended to read: 
 25.7      52.063 [PROCEEDINGS FOLLOWING SUSPENSION OR, CONTINUATION 
 25.8   OF SUSPENSION, OR CONSENT CEASE AND DESIST ORDER; APPOINTMENT OF 
 25.9   NATIONAL CREDIT UNION ADMINISTRATION BOARD AS RECEIVER.] 
 25.10     Subdivision 1.  [PROCEEDINGS FOLLOWING SUSPENSION OR 
 25.11  CONTINUATION OF SUSPENSION.] Upon receipt of the suspension 
 25.12  notice or the notice of the continuation of suspension under 
 25.13  section 52.062, subdivision 2 or 3, the credit union shall 
 25.14  immediately cease or continue cessation of all operations except 
 25.15  those operations specifically authorized by the commissioner of 
 25.16  commerce.  If the notice is given pursuant to determination by 
 25.17  the commissioner of commerce after a hearing, the board of 
 25.18  directors shall have 60 days from the receipt of said notice in 
 25.19  which to file with the commissioner of commerce a proposed plan 
 25.20  of corrective actions or to request that a receiver be appointed 
 25.21  for the credit union.  The commissioner of commerce shall have 
 25.22  30 days from the receipt of the proposed plan of corrective 
 25.23  actions to determine if the proposed corrective actions are 
 25.24  sufficient to correct the deficiencies which formed the basis 
 25.25  for the suspension.  If the commissioner of commerce determines 
 25.26  that the proposed corrective actions are sufficient, the 
 25.27  suspension shall be lifted and the credit union returned to 
 25.28  normal operations under its board of directors.  If the 
 25.29  commissioner of commerce believes the proposed corrective 
 25.30  actions insufficient, or if the board has failed to answer the 
 25.31  suspension notice, or has requested that a receiver be 
 25.32  appointed, then the commissioner of commerce shall apply to the 
 25.33  district court for appointment of a receiver.  The credit union 
 25.34  shall have the right, within six months of the receipt of any 
 25.35  notice of suspension or continuation of suspension pursuant to a 
 25.36  determination by the commissioner of commerce after hearing, to 
 26.1   appeal to the district court for a ruling as to the validity of 
 26.2   such notice.  
 26.3      Subd. 2.  [PROCEEDINGS FOLLOWING CONSENT CEASE AND DESIST 
 26.4   ORDER.] If the commissioner of commerce and the board of 
 26.5   directors of the credit union execute a consent cease and desist 
 26.6   order in lieu of a suspension under section 52.062, subdivision 
 26.7   4, the board of directors of the credit union may request that 
 26.8   the commissioner of commerce seek court appointment of a 
 26.9   receiver for the credit union.  The consent cease and desist 
 26.10  order must state that the credit union has requested that the 
 26.11  commissioner seek appointment of a receiver. 
 26.12     Subd. 3.  [APPOINTMENT OF NATIONAL CREDIT UNION 
 26.13  ADMINISTRATION BOARD AS RECEIVER.] Upon a request by the 
 26.14  commissioner of commerce, the court may appoint the National 
 26.15  Credit Union Administration Board, created by section 3 of the 
 26.16  Federal Credit Union Act, as amended, as receiver of a credit 
 26.17  union, without bond, when the deposits of the credit union are 
 26.18  to any extent insured by the National Credit Union 
 26.19  Administration Board, and the credit union has had its 
 26.20  operations suspended or has executed a consent cease and desist 
 26.21  order with the commissioner in lieu of a suspension under 
 26.22  section 52.062.  Notwithstanding any other provisions of law, 
 26.23  the commissioner of commerce may, in the event of the suspension 
 26.24  or consent cease and desist order, tender to the National Credit 
 26.25  Union Administration Board the proposed appointment as receiver 
 26.26  of the credit union.  If the National Credit Union 
 26.27  Administration Board accepts the proposed appointment and the 
 26.28  court appoints the National Credit Union Administration Board as 
 26.29  receiver upon a request by the commissioner, the National Credit 
 26.30  Union Administration Board shall have and possess all the powers 
 26.31  and privileges provided by the laws of this state and section 
 26.32  207 of the Federal Credit Union Act, as amended, with respect to 
 26.33  a receiver of a credit union, the board of directors of the 
 26.34  credit union, and its members. 
 26.35     Sec. 34.  Minnesota Statutes 1996, section 52.064, is 
 26.36  amended by adding a subdivision to read: 
 27.1      Subd. 3.  [WAIVER WHEN CREDIT UNION REQUESTS APPOINTMENT OF 
 27.2   NATIONAL CREDIT UNION ADMINISTRATION BOARD AS RECEIVER.] If the 
 27.3   board of directors of the credit union has made a request to the 
 27.4   commissioner of commerce to seek court appointment of the 
 27.5   National Credit Union Administration Board as its receiver, and 
 27.6   the commissioner elects to seek this appointment, then the board 
 27.7   of directors of the credit union may waive the right to apply to 
 27.8   the court for permission to file, and the right to file, a plan 
 27.9   of reorganization, merger, or consolidation for the credit union 
 27.10  within 90 days of the appointment of the receiver under 
 27.11  subdivision 1.  The board of directors of the credit union may 
 27.12  waive this right on behalf of itself, and on behalf of the 
 27.13  members of the credit union, when the board of directors of the 
 27.14  credit union determines that such action is in the best 
 27.15  interests of the credit union and its members, so that the 
 27.16  deposit insurer may proceed expeditiously to wind up the affairs 
 27.17  of the credit union upon appointment as receiver. 
 27.18     Sec. 35.  Minnesota Statutes 1996, section 52.201, is 
 27.19  amended to read: 
 27.20     52.201 [REORGANIZING FEDERAL CREDIT UNION INTO STATE CREDIT 
 27.21  UNION.] 
 27.22     When any federal credit union authorized to convert to a 
 27.23  state charter has taken the necessary steps under the federal 
 27.24  law for that purpose, seven or more members, upon authority of 
 27.25  two-thirds of the members present and entitled to vote and who 
 27.26  shall have voted for such conversion at a regular or special 
 27.27  meeting upon 14 days mailed written notice to each member at the 
 27.28  member's last known address clearly stating that such conversion 
 27.29  is to be acted upon, and upon approval of the commissioner of 
 27.30  commerce, may execute a certificate of incorporation under the 
 27.31  provisions of the state credit union act, which, in addition to 
 27.32  the other requirements of law, shall state the authority derived 
 27.33  from the shareholders of such federal credit union; and upon 
 27.34  recording such certificate as required by law, it shall become a 
 27.35  legal state credit union and the members of the federal credit 
 27.36  union shall without further action be members of the state 
 28.1   credit union.  This includes members of the federal credit union 
 28.2   on the basis of acceptance of small employer groups provided the 
 28.3   commissioner may require contemporaneous filing of applications 
 28.4   under section 52.05, subdivision 2.  Thereupon the assets of the 
 28.5   federal credit union, subject to its liabilities not liquidated 
 28.6   under the federal law before such incorporation, shall vest in 
 28.7   and become the property of such state credit union and the 
 28.8   members upon request shall be entitled to a new passbook showing 
 28.9   existing share and loan balances.  The commissioner of commerce 
 28.10  shall approve or disapprove of the conversion within 60 days of 
 28.11  the date the proposal is presented.  
 28.12     Sec. 36.  Minnesota Statutes 1996, section 53.04, is 
 28.13  amended by adding a subdivision to read: 
 28.14     Subd. 5b.  [NEGOTIABLE ORDER OF WITHDRAWAL 
 28.15  ACCOUNTS.] Notwithstanding section 53.05, clause (1), issue 
 28.16  negotiable order of withdrawal accounts, which may not be 
 28.17  referred to as checking accounts and may include the following 
 28.18  transactions: 
 28.19     (1) automatic (preauthorized) transfers for the purpose of 
 28.20  paying loans at the same institution; 
 28.21     (2) transfers or withdrawals made by mail, messenger, 
 28.22  automated teller machine, or in person as withdrawals or 
 28.23  transfers to another account of the depositor at the same 
 28.24  institution; 
 28.25     (3) withdrawals initiated by telephone and consummated by 
 28.26  an official check mailed to the depository; 
 28.27     (4) automated clearinghouse debits; 
 28.28     (5) transfers from a customer's account under a 
 28.29  preauthorized agreement to cover overdrafts on another 
 28.30  transaction account; 
 28.31     (6) drafts payable to third parties; and 
 28.32     (7) debit card transactions. 
 28.33     Agreements establishing negotiable order of withdrawal 
 28.34  accounts must include a prominent disclosure of the following: 
 28.35     "We reserve the right to at any time require not less than 
 28.36  seven days' notice in writing before each withdrawal from this 
 29.1   account." 
 29.2      A negotiable order of withdrawal account may be with or 
 29.3   without interest and is considered a transaction account for 
 29.4   purposes of section 48.512. 
 29.5      Before exercising this power, the company must submit a 
 29.6   plan to the commissioner detailing implementation of the power. 
 29.7      Sec. 37.  Minnesota Statutes 1996, section 53.05, is 
 29.8   amended to read: 
 29.9      53.05 [POWERS, LIMITATION.] 
 29.10     No industrial loan and thrift company may do any of the 
 29.11  following: 
 29.12     (1) carry demand banking accounts; use the word "savings" 
 29.13  unless the institution's investment certificates, savings 
 29.14  accounts, and savings deposits are insured by the Federal 
 29.15  Deposit Insurance Corporation and then only if the word is not 
 29.16  followed by the words "and loan" in its corporate name; use the 
 29.17  word "bank" or "banking" in its corporate name; operate as a 
 29.18  savings bank; 
 29.19     (2) have outstanding at any one time certificates of 
 29.20  indebtedness, savings accounts, and savings deposits 30 times 
 29.21  the sum of capital stock and surplus of the company; 
 29.22     (3) accept trusts, except as provided in section 47.75, 
 29.23  subdivision 1, or act as guardian, administrator, or judicial 
 29.24  trustee in any form; 
 29.25     (4) deposit any of its funds in any banking corporation, 
 29.26  unless that corporation has been designated by vote of a 
 29.27  majority of directors or of the executive committee present at a 
 29.28  meeting duly called, at which a quorum was in attendance; 
 29.29     (5) change any allocation of capital made pursuant to 
 29.30  section 53.03 or reduce or withdraw in any way any portion of 
 29.31  the capital stock and surplus without prior written approval of 
 29.32  the commissioner of commerce; 
 29.33     (6) take any instrument in which blanks are left to be 
 29.34  filled in after execution; 
 29.35     (7) lend money in excess of 20 percent of the total of its 
 29.36  capital stock and surplus at all its authorized locations to a 
 30.1   person primarily liable.  Companies not issuing investment 
 30.2   certificates of indebtedness under section 53.04 need not comply 
 30.3   with the requirement if the amount of money lent does not exceed 
 30.4   $100,000 of principal as defined by section 47.59, subdivision 
 30.5   1, paragraph (p).  
 30.6      However, industrial loan and thrift companies with deposit 
 30.7   liabilities must comply with the provisions of section 48.24; or 
 30.8      (8) issue cashier's checks pursuant to section 48.151, 
 30.9   unless and at all times the aggregate liability to all creditors 
 30.10  on these instruments is protected by a special fund in cash or 
 30.11  due from banks to be used solely for payment of the cashier's 
 30.12  checks. 
 30.13     Sec. 38.  Minnesota Statutes 1996, section 53.09, 
 30.14  subdivision 2a, is amended to read: 
 30.15     Subd. 2a.  [COMPLIANCE EXAMINATIONS.] For the purpose of 
 30.16  discovering violations of this chapter or securing information 
 30.17  lawfully required by the commissioner under this chapter, the 
 30.18  commissioner may, at any time, either personally or by a person 
 30.19  or persons duly designated, investigate the loans and business, 
 30.20  and examine the books, accounts, records, and files used in the 
 30.21  business, of every licensee and of every person engaged in the 
 30.22  business whether or not the person acts or claims to act as 
 30.23  principal or agent, or under the authority of this chapter.  For 
 30.24  the purposes of this subdivision, the commissioner and duly 
 30.25  designated representatives have free access to the offices and 
 30.26  places of business, books, accounts, papers, records, files, 
 30.27  safes, and vaults of all these persons.  The commissioner and 
 30.28  all persons duly designated may require the attendance of and 
 30.29  examine, under oath, all persons whose testimony the 
 30.30  commissioner may require relative to the loans or business or to 
 30.31  the subject matter of an examination, investigation, or 
 30.32  hearing.  Upon written agreement with the company, the 
 30.33  commissioner may conduct examinations applying the procedures 
 30.34  for purposes of subdivision 1, and section 46.04, subdivision 1, 
 30.35  to facilitate the qualifications of the company to participate 
 30.36  in the United States Small Business Administration loan 
 31.1   guarantee or similar programs. 
 31.2      Each licensee shall pay to the commissioner the amount 
 31.3   required under section 46.131, and the commissioner may maintain 
 31.4   an action for the recovery of the costs in a court of competent 
 31.5   jurisdiction. 
 31.6      Sec. 39.  Minnesota Statutes 1996, section 55.06, 
 31.7   subdivision 1, is amended to read: 
 31.8      Subdivision 1. [PROHIBITION.] No person except a bank, a 
 31.9   savings bank, a credit union, a savings association, industrial 
 31.10  loan and thrift company issuing investment certificates of 
 31.11  indebtedness, or a trust company may let out or rent as lessor, 
 31.12  for hire, safe deposit boxes or take or receive valuable 
 31.13  personal property for safekeeping and storage, as bailee, for 
 31.14  hire, without procuring a license and giving a bond, as required 
 31.15  by this chapter, except as otherwise authorized by law so to do. 
 31.16     Sec. 40.  Minnesota Statutes 1996, section 56.07, is 
 31.17  amended to read: 
 31.18     56.07 [CONTROL OVER LOCATION.] 
 31.19     Subdivision 1.  [GENERAL.] Not more than one place of 
 31.20  business shall be maintained under the same license, but the 
 31.21  commissioner may issue more than one license to the same 
 31.22  licensee upon compliance with all the provisions of this chapter 
 31.23  governing an original issuance of a license, for each such new 
 31.24  license.  To the extent that previously filed applicable 
 31.25  information remains substantially unchanged, the applicant need 
 31.26  not refile this information, unless requested. 
 31.27     When a licensee shall wish to change a place of business, 
 31.28  the licensee shall give written notice thereof 30 days in 
 31.29  advance to the commissioner, who shall within 30 days of receipt 
 31.30  of such notice, issue an amended license approving the change.  
 31.31  No change in the place of business of a licensee to a location 
 31.32  outside of its current trade area or more than 25 miles from its 
 31.33  present location, whichever distance is greater, shall be 
 31.34  permitted under the same license unless all of the requirements 
 31.35  of section 56.04 have been met.  
 31.36     A licensed place of business shall be open during regular 
 32.1   business hours each weekday, except for legal holidays and for 
 32.2   any weekday the commissioner grants approval to the licensee to 
 32.3   remain closed.  A licensed place of business may be open on 
 32.4   Saturday, but shall be closed on Sunday.  A licensed location 
 32.5   must be open for business and examination purposes on a schedule 
 32.6   provided to and approved by the commissioner.  This schedule of 
 32.7   regular business must be conspicuously posted at the licensed 
 32.8   location. 
 32.9      Subd. 2.  [INTERACTIVE KIOSK LOCATIONS.] Licensed locations 
 32.10  providing limited services on an interactive telephone-customer 
 32.11  service communications terminal are required to comply with 
 32.12  paragraphs (a) to (c). 
 32.13     (a) The licensee must maintain business books, accounts, 
 32.14  and records on a suitable alternative system of maintenance 
 32.15  approved by the commissioner. 
 32.16     (b) The license required to be posted under section 56.05 
 32.17  may be displayed on the customer service communications terminal 
 32.18  screen for a period of no less than 15 seconds. 
 32.19     (c) The full and accurate schedule of charges required by 
 32.20  section 56.14, clause (5), may be displayed on the customer 
 32.21  service communications terminal screen for no less than 20 
 32.22  seconds. 
 32.23     Sec. 41.  Minnesota Statutes 1996, section 56.10, 
 32.24  subdivision 1, is amended to read: 
 32.25     Subdivision 1.  For the purpose of discovering violations 
 32.26  of this chapter or securing information lawfully required by the 
 32.27  commissioner hereunder, the commissioner may, at any time, 
 32.28  either personally or by a person or persons duly designated, 
 32.29  investigate the loans and business and examine the books, 
 32.30  accounts, records, and files used therein, of every licensee and 
 32.31  of every person who shall be engaged in the business described 
 32.32  in section 56.01, whether the person shall act or claim to act 
 32.33  as principal or agent, or under or without the authority of this 
 32.34  chapter.  For that purpose the commissioner and a duly 
 32.35  designated representative shall have free access to the offices 
 32.36  and places of business, books, accounts, papers, records, files, 
 33.1   safes, and vaults of all such persons.  The commissioner and all 
 33.2   persons duly designated shall have authority to require the 
 33.3   attendance of and to examine, under oath, all persons whomsoever 
 33.4   whose testimony the commissioner may require relative to the 
 33.5   loan or the business or to the subject matter of any 
 33.6   examination, investigation, or hearing.  Upon written agreement 
 33.7   with the licensee, the commissioner may conduct examinations 
 33.8   applying the procedures for purposes of this subdivision and 
 33.9   section 46.04, subdivision 1, to facilitate the qualifications 
 33.10  of the licensee to participate in the United States Small 
 33.11  Business Administration loan guarantee or similar programs. 
 33.12     Each licensee shall pay to the commissioner such amount as 
 33.13  may be required under section 46.131, and the commissioner may 
 33.14  maintain an action for the recovery of such costs in any court 
 33.15  of competent jurisdiction. 
 33.16     Sec. 42.  Minnesota Statutes 1996, section 56.131, 
 33.17  subdivision 1, is amended to read: 
 33.18     Subdivision 1.  [INTEREST RATES AND CHARGES.] (a) On any 
 33.19  loan in a principal amount not exceeding $56,000 $100,000 or 15 
 33.20  percent of a Minnesota corporate licensee's capital stock and 
 33.21  surplus as defined in section 53.015, if greater, a licensee may 
 33.22  contract for and receive interest, finance charges, and other 
 33.23  charges as provided in section 47.59. 
 33.24     (b) Loans may be interest-bearing or precomputed. 
 33.25     (c) Notwithstanding section 47.59 to the contrary, to 
 33.26  compute time on interest-bearing and precomputed loans, 
 33.27  including, but not limited to the calculation of interest, a day 
 33.28  is considered 1/30 of a month when calculation is made for a 
 33.29  fraction of a calendar month.  A year is 12 calendar months.  A 
 33.30  calendar month is that period from a given date in one month to 
 33.31  the same numbered date in the following month, and if there is 
 33.32  no same numbered date, to the last day of the following month.  
 33.33  When a period of time includes a whole month and a fraction of a 
 33.34  month, the fraction of a month is considered to follow the whole 
 33.35  month.  
 33.36     In the alternative, for interest-bearing loans, a licensee 
 34.1   may charge interest at the rate of 1/365 of the agreed annual 
 34.2   rate for each actual day elapsed.  
 34.3      (d) With respect to interest-bearing loans and 
 34.4   notwithstanding section 47.59: 
 34.5      (1) Interest must be computed on unpaid principal balances 
 34.6   outstanding from time to time, for the time outstanding.  Each 
 34.7   payment must be applied first to the accumulated interest and 
 34.8   the remainder of the payment applied to the unpaid principal 
 34.9   balance; provided however, that if the amount of the payment is 
 34.10  insufficient to pay the accumulated interest, the unpaid 
 34.11  interest continues to accumulate to be paid from the proceeds of 
 34.12  subsequent payments and is not added to the principal balance. 
 34.13     (2) Interest must not be payable in advance or compounded.  
 34.14  However, if part or all of the consideration for a new loan 
 34.15  contract is the unpaid principal balance of a prior loan, then 
 34.16  the principal amount payable under the new loan contract may 
 34.17  include any unpaid interest which has accrued.  The unpaid 
 34.18  principal balance of a precomputed loan is the balance due after 
 34.19  refund or credit of unearned interest as provided in paragraph 
 34.20  (e), clause (3).  The resulting loan contract is deemed a new 
 34.21  and separate loan transaction for all purposes. 
 34.22     (e) With respect to precomputed loans and notwithstanding 
 34.23  section 47.59 to the contrary: 
 34.24     (1) Loans must be repayable in substantially equal and 
 34.25  consecutive monthly installments of principal and interest 
 34.26  combined, except that the first installment period may be more 
 34.27  or less than one month by not more than 15 days, and the first 
 34.28  installment payment amount may be larger than the remaining 
 34.29  payments by the amount of interest charged for the extra days 
 34.30  and must be reduced by the amount of interest for the number of 
 34.31  days less than one month to the first installment payment; and 
 34.32  monthly installment payment dates may be omitted to accommodate 
 34.33  borrowers with seasonal income. 
 34.34     (2) Payments may be applied to the combined total of 
 34.35  principal and precomputed interest until the loan is fully 
 34.36  paid.  Payments must be applied in the order in which they 
 35.1   become due. 
 35.2      (3) If the maturity of the loan is accelerated for any 
 35.3   reason and judgment is entered, the licensee shall credit the 
 35.4   borrower with the same refund as if prepayment in full had been 
 35.5   made on the date the judgment is entered. 
 35.6      (4) If two or more installments are delinquent one full 
 35.7   month or more on any due date, and if the contract so provides, 
 35.8   the licensee may reduce the unpaid balance by the refund credit 
 35.9   which would be required for prepayment in full on the due date 
 35.10  of the most recent maturing installment in default.  Thereafter, 
 35.11  and in lieu of any other default or deferment charges, the 
 35.12  single annual percentage rate permitted by this subdivision may 
 35.13  be charged on the unpaid balance until fully paid. 
 35.14     (5) Following the final installment as originally scheduled 
 35.15  or deferred, the licensee, for any loan contract which has not 
 35.16  previously been converted to interest-bearing under 
 35.17  clause (4) (7), may charge interest on any balance remaining 
 35.18  unpaid, including unpaid default or deferment charges, at the 
 35.19  single annual percentage rate permitted by this subdivision 
 35.20  until fully paid.  
 35.21     (6) (5) With respect to a loan secured by an interest in 
 35.22  real estate, and having a maturity of more than 60 months, the 
 35.23  original schedule of installment payments must fully amortize 
 35.24  the principal and interest on the loan.  The original schedule 
 35.25  of installment payments for any other loan secured by an 
 35.26  interest in real estate must provide for payment amounts that 
 35.27  are sufficient to pay all interest scheduled to be due on the 
 35.28  loan. 
 35.29     (6) A delinquency charge as provided for in section 47.59, 
 35.30  subdivision 6, paragraph (a), clause (4). 
 35.31     (7) Grant extensions, deferments, or conversions to 
 35.32  interest-bearing as provided in section 47.59, subdivision 5. 
 35.33     Sec. 43.  Minnesota Statutes 1996, section 56.131, 
 35.34  subdivision 4, is amended to read: 
 35.35     Subd. 4.  [ADJUSTMENT OF DOLLAR AMOUNTS.] The dollar 
 35.36  amounts in this section subdivision 2, sections 53.04, 
 36.1   subdivision 3a, paragraph (c), 56.01, 56.12, and 56.125 shall 
 36.2   change periodically, as provided in section 47.59, subdivision 3.
 36.3      Sec. 44.  Minnesota Statutes 1996, section 59A.08, 
 36.4   subdivision 3, is amended to read: 
 36.5      Subd. 3.  The information required by subdivision 1 shall 
 36.6   only be required in the initial insurance premium finance 
 36.7   agreement entered into if said agreement is open end.  An 
 36.8   insurance premium finance agreement is open end if it provides 
 36.9   that additional or subsequent insurance premiums may be financed 
 36.10  and added to the initial insurance premium finance agreement 
 36.11  from time to time.  
 36.12     Additional or subsequent premiums may be added to an open 
 36.13  end insurance premium finance agreement from time to time, 
 36.14  provided that: 
 36.15     (a) The additional or subsequent insurance premium to be 
 36.16  added results from additional premiums required under policies 
 36.17  presently being financed under the open end insurance premium 
 36.18  finance agreement or from a renewal of a policy or from other 
 36.19  policies owned or purchased by the insured.  
 36.20     (b) The insurance premium finance company receives written 
 36.21  notice or advice from an insurer authorized to do business in 
 36.22  this state or from an insurance agent licensed in this state 
 36.23  acknowledging that the premium on an existing financed policy 
 36.24  has been increased or that a policy has been renewed or that 
 36.25  additional policies have or will be issued to the insured.  The 
 36.26  notice or advice shall contain the amount of the additional 
 36.27  premium, the down payment collected by the insurer or agent, if 
 36.28  any, and the amount of premium to be added to the open end 
 36.29  insurance premium finance agreement.  
 36.30     (c) If the additional premiums to be added to the open end 
 36.31  insurance premium finance agreement result from additional 
 36.32  premiums required on policies presently financed under the 
 36.33  agreement which are to be financed beyond the scheduled maturity 
 36.34  of the original financing, the renewal of a policy or from an 
 36.35  additional policy owned or purchased by the insured, the 
 36.36  insurance premium finance company shall mail a notice to the 
 37.1   insured at the address shown in the policy.  Said notice shall 
 37.2   contain: 
 37.3      (1) The information required by subdivision 1, 
 37.4   notwithstanding that the notice is not signed by, nor on behalf 
 37.5   of the insured; 
 37.6      (2) A conspicuous statement to the insured stating that the 
 37.7   insured may tender the premiums in full or disaffirm the 
 37.8   financing of the premium on the renewal or additional policies 
 37.9   by mailing to the insurance premium finance company notice of 
 37.10  intention to do so within ten days after the insurance premium 
 37.11  finance company mails to the insured the notice required by this 
 37.12  subdivision; 
 37.13     (3) A conspicuous statement to the insured that the 
 37.14  insurance premium finance company may, in event of default in 
 37.15  payment of the additional premium, or any installment thereof, 
 37.16  cause the insured's insurance contract or contracts to be 
 37.17  canceled as provided in section 59A.11.  
 37.18     (d) At the time the notice of additional premium to be 
 37.19  added to the open end insurance premium finance agreement is 
 37.20  mailed to the insured as provided in clause (c), an employee of 
 37.21  the insurance premium finance company shall prepare and sign a 
 37.22  certificate or affidavit of mailing setting forth the following: 
 37.23     (1) The name of the employee who mailed the notice of the 
 37.24  additional premium to be financed.  
 37.25     (2) That the employee mailing the notice is over 18 years 
 37.26  of age.  
 37.27     (3) The date and place of the deposit of the notice in the 
 37.28  mail.  
 37.29     (4) The name and address of the person to whom the notice 
 37.30  was mailed as shown on the envelope containing the notice.  
 37.31     (5) That the envelope containing the notice was sealed and 
 37.32  deposited in the mail with the proper postage thereon.  
 37.33     A certificate or affidavit of mailing, prepared and signed 
 37.34  as prescribed in this subdivision shall raise rebuttable 
 37.35  presumption that the notice was mailed to the insured at the 
 37.36  address shown in the certificate or affidavit of mailing.  
 38.1      (e) The insurance premium finance company may make a 
 38.2   finance charge in accordance with section 59A.09 for additional 
 38.3   premiums financed and added to an open end insurance premium 
 38.4   finance agreement; however, only one flat rate service fee may 
 38.5   be made or charged for each insurance premium finance agreement 
 38.6   entered into and no additional flat service fee may be made or 
 38.7   charged for adding additional or subsequent premiums to an open 
 38.8   end insurance premium finance agreement for which a flat service 
 38.9   fee was previously made or charged. or from a renewal of a 
 38.10  policy or from other policies owned or purchased by the insured, 
 38.11  a written notice must be mailed, faxed, or delivered to the 
 38.12  insured outlining any changes to the information required by 
 38.13  subdivision 1 along with a conspicuous statement to the insured 
 38.14  that the insured may tender the premiums in full or affirm the 
 38.15  proposed changes by tendering either an additional down payment 
 38.16  or tendering the proposed revised installment amount, or 
 38.17  disaffirm the financing of the additional premium by continuing 
 38.18  the original payment amount as agreed to in the initial 
 38.19  agreement.  
 38.20     If the proposed revisions in paragraph (c) are affirmed by 
 38.21  the insured, the finance company may make an additional finance 
 38.22  charge according to section 59A.09 for the additional premium 
 38.23  financed and added to the open-end agreement; however, no 
 38.24  additional flat service fee may be made or charged for adding 
 38.25  additional or subsequent premiums to an open-end insurance 
 38.26  premium finance agreement for which a flat service fee was 
 38.27  previously made or charged. 
 38.28     Sec. 45.  Minnesota Statutes 1996, section 59A.08, is 
 38.29  amended by adding a subdivision to read: 
 38.30     Subd. 5.  [COMPETITIVE EQUALITY.] No insurance agent, 
 38.31  insurance broker, or insurer may require a person to use a 
 38.32  particular insurance premium finance company or other 
 38.33  installment payment plan for which a finance charge or other fee 
 38.34  in connection with an installment payment has been or will be 
 38.35  imposed. 
 38.36     Sec. 46.  Minnesota Statutes 1996, section 59A.11, 
 39.1   subdivision 2, is amended to read: 
 39.2      Subd. 2.  Not less than ten days' written notice shall be 
 39.3   mailed to the insured setting forth the intent of the insurance 
 39.4   premium finance company to cancel the insurance contract unless 
 39.5   the default is cured prior to the date stated in the notice.  
 39.6   The insurance agent or insurance broker indicated on the premium 
 39.7   finance agreement shall also be mailed given ten days' notice of 
 39.8   this action in a manner agreed upon between the insurance 
 39.9   premium finance company and insurance agent or insurance broker. 
 39.10     Sec. 47.  Minnesota Statutes 1996, section 59A.11, 
 39.11  subdivision 3, is amended to read: 
 39.12     Subd. 3.  (a) Pursuant to the power of attorney or other 
 39.13  authority referred to above, the insurance premium finance 
 39.14  company may cancel on behalf of the insured by mailing to the 
 39.15  insurer written notice stating when thereafter the cancellation 
 39.16  shall be effective, and the insurance contract shall be canceled 
 39.17  as if such notice of cancellation had been submitted by the 
 39.18  insured personally, but without requiring the return of the 
 39.19  insurance contract.  In the event that the insurer or its agent 
 39.20  does not provide the insurance premium finance company with a 
 39.21  specific mailing address for the purposes of receipt of the 
 39.22  above notice, then mailing by the insurance premium finance 
 39.23  company to the insurer at the address which is on file and of 
 39.24  record with the commissioner of commerce pursuant to the 
 39.25  provisions of chapters 60A and 72A shall be considered 
 39.26  sufficient notice under this section.  The notice requirements 
 39.27  of this paragraph only apply if an insurance premium finance 
 39.28  company and an insurer have not agreed on a method of providing 
 39.29  notice of cancellation. 
 39.30     (b) The insurance premium finance company shall also mail a 
 39.31  notice of cancellation to the insured at the insured's last 
 39.32  known address and.  
 39.33     (c) Written notice of the cancellation must also be given 
 39.34  to the insurance agent or insurance broker indicated on the 
 39.35  premium finance agreement.  Written notice to the insurance 
 39.36  agent or broker required by this paragraph may be given in a 
 40.1   manner agreed upon between the insurance premium finance 
 40.2   company, insurer, agent, or broker.  
 40.3      Sec. 48.  Minnesota Statutes 1996, section 62B.04, 
 40.4   subdivision 1, is amended to read: 
 40.5      Subdivision 1.  [CREDIT LIFE INSURANCE.] (1) The initial 
 40.6   amount of credit life insurance shall not exceed the amount of 
 40.7   principal repayable under the contract of indebtedness plus an 
 40.8   amount equal to one monthly payment.  Thereafter, if the 
 40.9   indebtedness is repayable in substantially equal installments 
 40.10  according to a predetermined schedule, the amount of insurance 
 40.11  on which the premium is calculated shall be equal to not exceed 
 40.12  the scheduled indebtedness plus one monthly payment or actual 
 40.13  amount of indebtedness, whichever is greater.  If the contract 
 40.14  of indebtedness provides for a variable rate of finance charge 
 40.15  or interest, the initial rate or the scheduled rates based on 
 40.16  the initial index must be used in determining the scheduled 
 40.17  amount of indebtedness and subsequent changes to the rate must 
 40.18  be disregarded in determining whether the contract is repayable 
 40.19  in substantially equal installments according to a predetermined 
 40.20  schedule. 
 40.21     (2) Notwithstanding clause (1), the amount of credit life 
 40.22  insurance written in connection with credit transactions 
 40.23  repayable over a specified term exceeding 63 months shall not 
 40.24  exceed the greater of:  (i) the actual amount of unpaid 
 40.25  indebtedness as it exists from time to time; or (ii) where an 
 40.26  indebtedness is repayable in substantially equal installments 
 40.27  according to a predetermined schedule, the scheduled amount of 
 40.28  unpaid indebtedness, less any unearned interest or finance 
 40.29  charges, plus an amount equal to two monthly payments.  If the 
 40.30  credit transaction provides for a variable rate of finance 
 40.31  charge or interest, the initial rate or the scheduled rates 
 40.32  based on the initial index must be used in determining the 
 40.33  scheduled amount of unpaid indebtedness and subsequent changes 
 40.34  in the rate must be disregarded in determining whether the 
 40.35  contract is repayable in substantially equal installments 
 40.36  according to a predetermined schedule. 
 41.1      (3) Notwithstanding clauses (1) and (2), insurance on 
 41.2   educational, agricultural, and horticultural credit transaction 
 41.3   commitments may be written on a nondecreasing or level term plan 
 41.4   for the amount of the loan commitment. 
 41.5      (4) If the contract of indebtedness provides for a variable 
 41.6   rate of finance charge or interest, the initial rate or the 
 41.7   scheduled rates based on the initial index shall be used in 
 41.8   determining the scheduled amount of indebtedness, and subsequent 
 41.9   changes to the rate shall be disregarded in determining whether 
 41.10  the contract is repayable in substantially equal installments 
 41.11  according to a predetermined schedule. 
 41.12     Sec. 49.  Minnesota Statutes 1996, section 300.20, 
 41.13  subdivision 2, is amended to read: 
 41.14     Subd. 2.  [VACANCIES.] If the certificate of incorporation 
 41.15  or the bylaws so provides, a vacancy in the board of directors 
 41.16  may be filled by the remaining directors.  Not more than 
 41.17  one-third of the members of the board may be so filled in any 
 41.18  one year except any number may be appointed to provide for at 
 41.19  least three five directors until any subsequent meeting of the 
 41.20  stockholders.  
 41.21     Sec. 50.  Minnesota Statutes 1996, section 303.25, 
 41.22  subdivision 5, is amended to read: 
 41.23     Subd. 5.  [SOLICITATION OF BUSINESS.] A foreign trust 
 41.24  association may not maintain an office within this state, but it 
 41.25  may solicit business within this state if banking or trust 
 41.26  associations or corporations organized under the laws of this 
 41.27  state or national banking associations maintaining their 
 41.28  principal offices in this state may solicit business in the 
 41.29  state in which the foreign trust association maintains its 
 41.30  principal office.  For purposes of this subdivision, 
 41.31  solicitation of business includes the activities authorized for 
 41.32  state or national banking associations exercising fiduciary 
 41.33  powers maintaining their principal offices in this state 
 41.34  considered a representative trust office established under 
 41.35  section 48.476. 
 41.36     Sec. 51.  Minnesota Statutes 1996, section 325F.68, 
 42.1   subdivision 2, is amended to read: 
 42.2      Subd. 2.  "Merchandise" means any objects, wares, goods, 
 42.3   commodities, intangibles, real estate, loans, or services. 
 42.4      Sec. 52.  Minnesota Statutes 1996, section 332.21, is 
 42.5   amended to read: 
 42.6      332.21 [CONTRACTS.] 
 42.7      (a) Each contract entered into by the licensee and the 
 42.8   debtor shall be in writing and signed by both parties.  The 
 42.9   licensee shall furnish the debtor with a copy of the signed 
 42.10  contract.  Each such contract shall set forth: 
 42.11     (1) the dollar charges agreed upon for the services of the 
 42.12  licensee, clearly disclosing to such debtor the total amount 
 42.13  which may be retained by licensee for services if the contract 
 42.14  is fully performed, which maximum amount would be the 
 42.15  origination fee together with 15 percent of the amount scheduled 
 42.16  to be liquidated by such contract,.  This disclosure must state 
 42.17  that if the amount of debt owed is increased by interest, late 
 42.18  fees, over the limit fees, and other amounts imposed by the 
 42.19  creditor or by reason of the events under paragraph (c), the 
 42.20  length of the contract would be extended and remain in force and 
 42.21  that the total dollar charges agreed upon may increase at the 
 42.22  rate agreed upon in the original contract; 
 42.23     (2) the terms upon which the debtor may cancel the contract 
 42.24  as set out in section 332.23,; 
 42.25     (3) all debts which are to be managed by the licensee, 
 42.26  including the name of the creditor and the amount of the debt,; 
 42.27  and 
 42.28     (4) such other matter as the commissioner may require by 
 42.29  rule.  
 42.30     (b) A contract shall not be effective until a payment has 
 42.31  been made to the licensee for distribution to creditors or until 
 42.32  three business days after the signing thereof, whichever is 
 42.33  later.  Within such period an individual may disaffirm said 
 42.34  contract and upon such disaffirmance said contract shall be null 
 42.35  and void.  
 42.36     (c) Total fees contained in the contract may be exceeded in 
 43.1   relation to creditors under open-end agreements if it is agreed 
 43.2   to in the contract and the additional debts so contracted to be 
 43.3   prorated do not exceed ten percent of the original debts in the 
 43.4   contract or written revisions to the original contract. 
 43.5      Sec. 53.  Minnesota Statutes 1996, section 332.23, 
 43.6   subdivision 2, is amended to read: 
 43.7      Subd. 2.  [WITHDRAWAL OF FEE.] The licensee may withdraw 
 43.8   and retain as partial payment of the licensee's total fee not 
 43.9   more than 15 percent of any sum deposited with the licensee by 
 43.10  the debtor for distribution.  The remaining 85 percent must be 
 43.11  disbursed to listed creditors pursuant to and in accordance with 
 43.12  the contract between the debtor and the licensee within 35 days 
 43.13  after receipt unless the reasonable payment of one or more of 
 43.14  the debtor's obligations requires that the funds be held for a 
 43.15  longer period so as to accumulate a sum certain or where the 
 43.16  debtor's payment is returned for nonsufficient funds, then no 
 43.17  longer than 42 days.  Total payment to licensee for services 
 43.18  rendered, excluding the origination fee and any credit 
 43.19  background report, shall not exceed 15 percent of funds 
 43.20  deposited with licensee by debtor for distribution. 
 43.21     Sec. 54.  Minnesota Statutes 1996, section 332.23, 
 43.22  subdivision 5, is amended to read: 
 43.23     Subd. 5.  [ADVANCE PAYMENTS.] Notwithstanding anything 
 43.24  herein to the contrary no fees or charges shall be received or 
 43.25  retained for any payments by the debtor made more than the 
 43.26  following number of days in advance of the date specified in the 
 43.27  contract on which they are due:  (a) 30 42 days in the case of 
 43.28  contracts requiring monthly payments; (b) 15 days in the case of 
 43.29  contracts requiring biweekly payments; or (c) seven days in the 
 43.30  case of contracts requiring weekly payments.  For those 
 43.31  contracts which do not require payments in specified amounts, a 
 43.32  payment shall be deemed an advance payment to the extent it 
 43.33  exceeds twice the average regular payment theretofore made by 
 43.34  the debtor pursuant to that contract.  This subdivision shall 
 43.35  not apply when it is the intention of the debtor to use such 
 43.36  advance payments to satisfy future payment of obligations due 
 44.1   within 30 days under the contract. 
 44.2      Sec. 55.  [REPEALER.] 
 44.3      Minnesota Statutes 1996, sections 13.99, subdivision 13; 
 44.4   47.29; 47.31; 47.32; 49.47; 49.48; 50.03; 50.23; and 59A.14, are 
 44.5   repealed. 
 44.6      Sec. 56.  [EFFECTIVE DATE; APPLICABILITY.] 
 44.7      Sections 1, 4 to 6, 9, 10, 13 to 18, 22 to 48, 50, and 52 
 44.8   to 55 are effective the day following final enactment.