4th Engrossment - 79th Legislature (1995 - 1996) Posted on 12/15/2009 12:00am
1.1 A bill for an act 1.2 relating to financial institutions; regulating 1.3 notices, electronic financial terminals, mergers with 1.4 subsidiaries, the powers and duties of the 1.5 commissioner of commerce, reporting and records 1.6 requirements, lending powers, the powers and duties of 1.7 institutions, detached facilities, and interstate 1.8 banking; making technical changes; amending Minnesota 1.9 Statutes 1994, sections 46.04, subdivision 1, and by 1.10 adding a subdivision; 46.041, subdivision 4; 46.046, 1.11 subdivision 1; 46.048, subdivision 1, and by adding 1.12 subdivisions; 47.10, subdivision 3; 47.11; 47.20, 1.13 subdivisions 5 and 10; 47.28, subdivision 1; 47.52; 1.14 47.56; 47.58, subdivision 2; 47.61, subdivision 3; 1.15 47.62, subdivisions 2, 3, and by adding subdivisions; 1.16 47.67; 47.69, subdivisions 3 and 5; 47.78; 48.16; 1.17 48.194; 48.24, subdivision 5; 48.475, subdivision 3; 1.18 48.48, subdivisions 1 and 2; 48.49; 48.61, subdivision 1.19 7, and by adding a subdivision; 48.65; 48.90, 1.20 subdivision 1; 48.91; 48.92, subdivisions 1, 2, 6, 7, 1.21 8, 9, and by adding a subdivision; 48.93, subdivisions 1.22 1, 3, and 4; 48.96; 48.99, subdivision 1; 49.01, 1.23 subdivision 3; 51A.02, subdivisions 6, 26, and 40; 1.24 51A.19, subdivision 9; 51A.50; 51A.58; 52.04, 1.25 subdivision 2a; 52.05, subdivision 2; 53.015, 1.26 subdivision 4; 53.04, subdivisions 3a, 3c, 4a, and 5a; 1.27 53.09, subdivisions 1, 2, and by adding a subdivision; 1.28 56.11; 56.12; 56.125, subdivisions 1, 2, and 3; 1.29 56.131, subdivisions 1, 2, 4, and 6; 56.132; 56.14; 1.30 56.155, subdivision 1; 56.17; 59A.06, subdivision 2; 1.31 62B.04, subdivision 1; 62B.08, subdivision 2; 300.20, 1.32 subdivision 1; 327B.04, subdivision 1; 327B.09, 1.33 subdivision 1; 332.23, subdivisions 1 and 2; and 1.34 334.011, by adding a subdivision; proposing coding for 1.35 new law in Minnesota Statutes, chapters 45; 47; 48; 1.36 51A; 52; and 334; repealing Minnesota Statutes 1994, 1.37 sections 46.03; 47.80; 47.81; 47.82; 47.83; 47.84; 1.38 47.85; 47.95; 47.98; 48.1585; 48.512, subdivision 6; 1.39 48.611; 48.97; 48.991; 51A.385; and 325F.91, 1.40 subdivision 2. 1.41 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 1.42 ARTICLE 1 1.43 FINANCIAL INSTITUTIONS TECHNICAL CORRECTIONS 2.1 Section 1. [45.014] [SEAL OF DEPARTMENT OF COMMERCE.] 2.2 The commissioner of commerce shall devise a seal for 2.3 official use as the seal of the department of commerce. The 2.4 seal must be capable of being legibly reproduced under 2.5 photographic methods. A description of the seal, and a copy of 2.6 it, must be filed in the office of the secretary of state. 2.7 Sec. 2. Minnesota Statutes 1994, section 46.04, 2.8 subdivision 1, is amended to read: 2.9 Subdivision 1. The commissioner of commerce, referred to 2.10 in chapters 46 to
5959A, and sections 332.12 to 332.29, as the 2.11 commissioner, is vested with all the powers, authority, and 2.12 privileges which, prior to the enactment of Laws 1909, chapter 2.13 201, were conferred by law upon the public examiner, and shall 2.14 take over all duties in relation to state banks, savings banks, 2.15 trust companies, savings associations, and other financial 2.16 institutions within the state which, prior to the enactment of 2.17 chapter 201, were imposed upon the public examiner. The 2.18 commissioner of commerce shall exercise a constant supervision, 2.19 either personally or through the examiners herein provided for, 2.20 over the books and affairs of all state banks, savings banks, 2.21 trust companies, savings associations, credit unions, industrial 2.22 loan and thrift companies, and other financial institutions 2.23 doing business within this state; and shall, through examiners, 2.24 examine each financial institution at least once every 18 2.25 calendar months. In satisfying this examination requirement, 2.26 the commissioner may accept reports of examination prepared by a 2.27 federal agency having comparable supervisory powers and 2.28 examination procedures. With the exception of industrial loan 2.29 and thrift companies which do not have deposit liabilities and 2.30 licensed regulated lenders, it shall be the principal purpose of 2.31 these examinations to inspect and verify the assets and 2.32 liabilities of each and so far investigate the character and 2.33 value of the assets of each institution as to determine with 2.34 reasonable certainty that the values are correctly carried on 2.35 its books. Assets and liabilities shall be verified in 2.36 accordance with methods of procedure which the commissioner may 3.1 determine to be adequate to carry out the intentions of this 3.2 section. It shall be the further purpose of these examinations 3.3 to assess the adequacy of capital protection and the capacity of 3.4 the institution to meet usual and reasonably anticipated deposit 3.5 withdrawals and other cash commitments without resorting to 3.6 excessive borrowing or sale of assets at a significant loss, and 3.7 to investigate each institution's compliance with applicable 3.8 laws and rules. Based on the examination findings, the 3.9 commissioner shall make a determination as to whether the 3.10 institution is being operated in a safe and sound manner. None 3.11 of the above provisions limits the commissioner in making 3.12 additional examinations as deemed necessary or advisable. The 3.13 commissioner shall investigate the methods of operation and 3.14 conduct of these institutions and their systems of accounting, 3.15 to ascertain whether these methods and systems are in accordance 3.16 with law and sound banking principles. The commissioner may 3.17 make requirements as to records as deemed necessary to 3.18 facilitate the carrying out of the commissioner's duties and to 3.19 properly protect the public interest. The commissioner may 3.20 examine, or cause to be examined by these examiners, on oath, 3.21 any officer, director, trustee, owner, agent, clerk, customer, 3.22 or depositor of any financial institution touching the affairs 3.23 and business thereof, and may issue, or cause to be issued by 3.24 the examiners, subpoenas, and administer, or cause to be 3.25 administered by the examiners, oaths. In case of any refusal to 3.26 obey any subpoena issued under the commissioner's direction, the 3.27 refusal may at once be reported to the district court of the 3.28 district in which the bank or other financial institution is 3.29 located, and this court shall enforce obedience to these 3.30 subpoenas in the manner provided by law for enforcing obedience 3.31 to subpoenas of the court. In all matters relating to official 3.32 duties, the commissioner of commerce has the power possessed by 3.33 courts of law to issue subpoenas and cause them to be served and 3.34 enforced, and all officers, directors, trustees, and employees 3.35 of state banks, savings banks, trust companies, savings 3.36 associations, and other financial institutions within the state, 4.1 and all persons having dealings with or knowledge of the affairs 4.2 or methods of these institutions, shall afford reasonable 4.3 facilities for these examinations, make returns and reports to 4.4 the commissioner of commerce as the commissioner may require; 4.5 attend and answer, under oath, the commissioner's lawful 4.6 inquiries; produce and exhibit any books, accounts, documents, 4.7 and property as the commissioner may desire to inspect, and in 4.8 all things aid the commissioner in the performance of duties. 4.9 Sec. 3. Minnesota Statutes 1994, section 46.041, 4.10 subdivision 4, is amended to read: 4.11 Subd. 4. [HEARING.] In any case in which the commissioner 4.12 grants a request for a hearing or makes the independent 4.13 determination that a hearing is warranted on the basis of the 4.14 conditions in subdivision 3, the commissioner shall fix a time 4.15 for a hearing conducted pursuant to chapter 14 to decide whether 4.16 or not the application will be granted. A notice of the hearing 4.17 must be published by the applicant in the form prescribed by the 4.18 commissioner in a newspaper published in the municipality in 4.19 which the proposed bank is to be located, and if there is no 4.20 such newspaper, then at the county seat of the countyin a 4.21 qualified newspaper likely to give notice in the municipality in 4.22 which the bank is proposed to be located. The notice must be 4.23 published once, at the expense of the applicants, not less than 4.24 30 days prior to the date of the hearing. At the hearing the 4.25 commissioner shall consider the application and hear the 4.26 applicants and witnesses that appear in favor of or against the 4.27 granting of the application of the proposed bank. If an 4.28 application is contested, 50 percent of an additional fee equal 4.29 to the actual costs incurred by the department of commerce in 4.30 approving or disapproving the application, payable to the 4.31 department of commerce to be deposited in the general fund, must 4.32 be paid by the applicant and 50 percent equally by the 4.33 intervening parties. 4.34 Sec. 4. Minnesota Statutes 1994, section 46.046, 4.35 subdivision 1, is amended to read: 4.36 Subdivision 1. [WORDS, TERMS, AND PHRASES.] Unless the 5.1 language or context clearly indicates that a different meaning 5.2 is intended, the word defined in subdivision 2, for the purposes 5.3 of sections 46.041 to 46.044, shall be given the meaning 5.4 subjoined to it; and the word defined in subdivision 3, for the 5.5 purposes of chapters 46 to 7783, shall be given the meaning 5.6 subjoined to it. 5.7 Sec. 5. Minnesota Statutes 1994, section 47.11, is amended 5.8 to read: 5.9 47.11 [SELECTION OF NAME.] 5.10 Before execution of the certificate of incorporation of any 5.11 such corporation or conduct of business under an assumed name, 5.12 its proposed name or proposed assumed name shall be submitted to 5.13 the commissioner of commerce, who shall compare it with those of 5.14 corporations operating in the state, and if it is likely to be 5.15 mistaken for any of them, or to confuse the public as to the 5.16 character of its business, or is otherwise objectionable, 5.17 additional names shall be submitted until a satisfactory one is 5.18 selected, whereupon the commissioner shall issue a certificate 5.19 of approval thereof. 5.20 Sec. 6. Minnesota Statutes 1994, section 47.28, 5.21 subdivision 1, is amended to read: 5.22 Subdivision 1. Any savings bank organized and existing 5.23 under and by virtue of the law of this state may amend its 5.24 articles of incorporation so as to convert itself into a 5.25 savings , building and loanassociation, by complying with the 5.26 following requirements and procedure: 5.27 The savings bank by a two-thirds vote of the entire board 5.28 of trustees, at any regular or special meeting of said board 5.29 duly called for that purpose, shall (a) pass a resolution 5.30 declaring their intention to convert the savings bank into a 5.31 savings , building and loanassociation, and (b) cause an 5.32 application in writing to be executed, by such persons as the 5.33 trustees may direct, in the form prescribed by the department of 5.34 commerce, requesting a certificate of authorization (charter) as 5.35 a savings , building and loanassociation to transact business at 5.36 the place and in the name stated in the application. The 6.1 amendments proposed to the articles of incorporation and bylaws 6.2 shall be included as part of the application. 6.3 The application shall be submitted to, considered and acted 6.4 upon by the department of commerce in the same manner and by the 6.5 same standards as applications are submitted, considered and 6.6 acted upon under section 51.08chapter 51A. 6.7 Sec. 7. Minnesota Statutes 1994, section 47.58, 6.8 subdivision 2, is amended to read: 6.9 Subd. 2. [AUTHORIZATION.] Pursuant to rules which the 6.10 commissioner of commerce or commissioner of insurancemay find 6.11 to be necessary and proper, if any, and subject to federal laws 6.12 and regulations, lenders may make investments in reverse 6.13 mortgage loans and purchases of obligations representing reverse 6.14 mortgage loans, provided the aggregate total of committed 6.15 principal of the investment in reverse mortgage loans by any 6.16 bank, savings bank, or savings and loan association, does not 6.17 exceed five percent of that lender's total deposits and savings 6.18 accounts. This limitation shall be determined at each June 30 6.19 and December 31 for the following six-month period. Any decline 6.20 in the total of deposits and savings accounts subsequent to a 6.21 determination may be disregarded. Security for loans made under 6.22 this section shall be a first lien on residential property (a) 6.23 which the borrower occupies as principal residence and which 6.24 qualifies for homestead classification pursuant to section 6.25 273.13, and (b) to which the borrower alone has title. 6.26 Sec. 8. Minnesota Statutes 1994, section 47.62, 6.27 subdivision 3, is amended to read: 6.28 Subd. 3. Application for authorization shall be made in 6.29 the manner prescribed by rule. The commissioner shall grant 6.30 authorization for the establishment of an electronic financial 6.31 terminal if the commissioner finds that: 6.32 (a) There is reason to believe that the terminal will be 6.33 properly and safely managed; 6.34 (b) The applicant is financially sound; 6.35 (c) The proposed charges for making the services of the 6.36 terminal available to financial institutions are fair, 7.1 equitable, and nondiscriminatory; 7.2 (d) The applicant has furnished all of the information 7.3 required by rule; 7.4 (e) The terminal applicant will not gain an unfair 7.5 competitive advantage because the terminal is not operationally 7.6 available to other financial institutions or their data 7.7 processors within a reasonable period of time ; and. 7.8 (f) The location and placement of the electronic financial7.9 terminal is not designed to give or promote an unfair7.10 competitive advantage to any financial institution.7.11 If the commissioner has not denied the application within 7.12 45 days of its submission, the authorization shall be deemed to 7.13 be granted. 7.14 Sec. 9. Minnesota Statutes 1994, section 48.475, 7.15 subdivision 3, is amended to read: 7.16 Subd. 3. [GENERAL REQUIREMENTS.] If the bank at which a 7.17 trust service office is to be established has exercised trust 7.18 powers, then the trust company or bank which is establishing the 7.19 trust service office shall enter into an agreement respecting 7.20 those fiduciary powers to which the trust company or bank shall 7.21 succeed and shall file the agreement with the commissioner. The 7.22 trust company or bank which is establishing a trust service 7.23 office under subdivision 1 shall publish a notice of the filing 7.24 in the form prescribed by the commissioner in a newspaper 7.25 published in the municipality in which the trust service office 7.26 is to be located, and if there is no such newspaper, then at the7.27 county seat of the county in which the trust service office is7.28 to be located. The notice shall be published once in a7.29 qualified newspaper in the municipality in which the proposed7.30 trust service office is to be located, and if there is no such7.31 newspaper,then in a qualified newspaper likely to give notice 7.32 in the municipality in which the proposed trust service office 7.33 is to be located, and proof of publication shall be filed with 7.34 the commissioner immediately after publication of the notice of 7.35 filing. After filing and publication, the trust company or bank 7.36 establishing the trust service office shall, as of the date the 8.1 office first opens for business, and without further 8.2 authorization of any kind, succeed to and be substituted for the 8.3 bank at which the trust service office is located as to all 8.4 fiduciary powers, rights, duties, privileges, and liabilities of 8.5 the bank in its capacity as fiduciary for all estates, trusts, 8.6 conservatorships, guardianships, and other fiduciary 8.7 relationships of which the bank is then serving as fiduciary, 8.8 except as may be otherwise specified in the agreement between 8.9 the bank and the trust company or bank which has established the 8.10 trust service office. The trust company or bank which has 8.11 established the trust service office shall also be deemed named 8.12 as fiduciary in all writings, including, but not limited to, 8.13 wills, trusts, court orders, and similar documents and 8.14 instruments, naming the bank at which the trust service office 8.15 is located signed before the date the trust service office first 8.16 opens for business, unless expressly negated by the writing or 8.17 otherwise specified in the agreement between the trust company 8.18 or bank and the bank at which the trust service office is 8.19 located. On the effective date of the substitution, the bank at 8.20 which the trust service office has been established shall be 8.21 released and absolved from all fiduciary duties and obligations 8.22 under the writings and shall discontinue its exercise of trust 8.23 powers on all matters not specifically retained by the 8.24 agreement. This subdivision does not absolve the bank from 8.25 liabilities arising out of any breach of fiduciary duty or 8.26 obligation occurring prior to the date the trust service office 8.27 first opens for business. This subdivision does not affect the 8.28 authority, duties, or obligations of a bank with respect to 8.29 relationships which may be established without trust powers, 8.30 whether the relationships arise before or after the 8.31 establishment of the trust service office. 8.32 Sec. 10. Minnesota Statutes 1994, section 48.61, is 8.33 amended by adding a subdivision to read: 8.34 Subd. 9. [MERGER WITH SUBSIDIARIES; AUTHORITY.] (a) 8.35 Notwithstanding any other law to the contrary, a bank may merge 8.36 a subsidiary authorized and established according to this 9.1 section into itself if it owns 100 percent of the outstanding 9.2 voting stock. 9.3 (b) A merger of a subsidiary authorized by subdivision 1 9.4 must conform to the procedures in section 302A.621. 9.5 (c) Before filing the articles of merger with the secretary 9.6 of state, the merger plan must be filed with and approved in 9.7 writing by the commissioner who shall determine that: 9.8 (1) the provisions of section 302A.621 are followed; and 9.9 (2) the merger will not have an undue adverse effect on the 9.10 safety and soundness of the bank. 9.11 Sec. 11. Minnesota Statutes 1994, section 48.65, is 9.12 amended to read: 9.13 48.65 [TRUST COMPANIES TO COMPLY WITH CERTAIN LAWS.] 9.14 No trust company of this state shall conduct a banking 9.15 business, as defined in section 47.02, without fully complying 9.16 with the provisions of section 48.2248.221 relating to the 9.17 reserve requirements of the state banks. 9.18 Sec. 12. Minnesota Statutes 1994, section 48.92, 9.19 subdivision 1, is amended to read: 9.20 Subdivision 1. [TERMS.] When used in sections 48.90 to 9.21 48.99148.99, the terms defined in this section have the 9.22 meanings given them, unless their context requires a different 9.23 meaning. 9.24 Sec. 13. Minnesota Statutes 1994, section 49.01, 9.25 subdivision 3, is amended to read: 9.26 Subd. 3. [INVESTMENT COMPANY.] "Investment company" means 9.27 any person, copartnership, association, or corporation referred 9.28 to in sections 54.26 to 54.2954.297. 9.29 Sec. 14. Minnesota Statutes 1994, section 51A.58, is 9.30 amended to read: 9.31 51A.58 [INTERSTATE BRANCHING.] 9.32 An association, whether or not the subsidiary of a savings 9.33 and loan holding company, may, by acquisition, merger, purchase 9.34 and assumption of some or all of the assets and liabilities, or 9.35 consolidation, establish or operate branch offices in any 9.36 reciprocating state, and a savings and loan association 10.1 chartered in any reciprocating state may establish or operate 10.2 branch offices in this state by acquisition, merger, purchase, 10.3 and assumption of some or all of the assets or liabilities or 10.4 consolidation. A savings and loan holding company with its 10.5 headquarters in this state may acquire by direct or indirect 10.6 ownership or control the voting shares of a savings and loan 10.7 holding company, savings and loan association, or savings bank 10.8 located in any reciprocating state, and a savings and loan 10.9 holding company with its headquarters in a reciprocating state, 10.10 may acquire by direct or indirect ownership or control the 10.11 voting shares of a savings and loan holding company, a savings 10.12 and loan association, or savings bank located in this state, and 10.13 may acquire and merge with a savings and loan holding company 10.14 with its headquarters in this state. For the purposes of this 10.15 section, "reciprocating state" is a state that authorizes the 10.16 establishment of branch offices in that state by an association 10.17 located in this state, and the acquisition of savings and loan 10.18 associations and savings banks located in that state by a 10.19 savings and loan holding company with its headquarters in this 10.20 state, under conditions no more restrictive than those imposed 10.21 by the laws of Minnesota as determined by the commissioner of 10.22 commerce. 10.23 The commissioner of commerce shall adopt rules to provide 10.24 that procedural requirements equivalent to those contained in 10.25 sections 48.90 to 48.99148.99 apply to reciprocal interstate 10.26 branching and acquisitions by savings and loan associations. 10.27 Sec. 15. Minnesota Statutes 1994, section 53.04, 10.28 subdivision 3a, is amended to read: 10.29 Subd. 3a. (a) The right to make loans, secured or 10.30 unsecured, at the rates and on the terms and other conditions 10.31 permitted licensees under chapter 56. Loans made under the 10.32 authority of section 56.125 must be in amounts in compliance 10.33 with section 53.05, clause (7). All other loans made under the 10.34 authority of chapter 56 must be in amounts in compliance with 10.35 section 53.05, clause (7), or 56.131, subdivision 1, paragraph 10.36 (a), whichever is less. The right to extend credit or lend 11.1 money and to collect and receive charges therefor as provided by 11.2 chapter 334, or in lieu thereof to charge, collect, and receive 11.3 interest at the rate of 21.75 percent per annum, including the 11.4 right to contract for, charge, and collect all other charges 11.5 including discount points, fees, late payment charges, and 11.6 insurance premiums on the loans to the same extent permitted on 11.7 loans made under the authority of chapter 56, regardless of the 11.8 amount of the loan. The provisions of sections 47.20 and 47.21 11.9 do not apply to loans made under this subdivision, except as 11.10 specifically provided in this subdivision. Nothing in this 11.11 subdivision is deemed to supersede, repeal, or amend any 11.12 provision of section 53.05. A licensee making a loan under this 11.13 chapter secured by a lien on real estate shall comply with the 11.14 requirements of section 47.20, subdivision 8. 11.15 (b) Loans made under this subdivision at a rate of interest 11.16 not in excess of that provided for in paragraph (a) may be 11.17 secured by real or personal property, or both. If the proceeds 11.18 of a loan secured by a first lien on the borrower's primary 11.19 residence are used to finance the purchase of the borrower's 11.20 primary residence, the loan must comply with the provisions of 11.21 section 47.20. 11.22 (c) A loan made under this subdivision that is secured by 11.23 real estate and that is in a principal amount of $7,500$12,000 11.24 or more and a maturity of 60 months or more may contain a 11.25 provision permitting discount points, if the loan does not 11.26 provide a loan yield in excess of the maximum rate of interest 11.27 permitted by this subdivision. Loan yield means the annual rate 11.28 of return obtained by a licensee computed as the annual 11.29 percentage rate is computed under Federal Regulation Z. If the 11.30 loan is prepaid in full, the licensee must make a refund to the 11.31 borrower to the extent that the loan yield will exceed the 11.32 maximum rate of interest provided by this subdivision when the 11.33 prepayment is taken into account. 11.34 (d) An agency or instrumentality of the United States 11.35 government or a corporation otherwise created by an act of the 11.36 United States Congress or a lender approved or certified by the 12.1 secretary of housing and urban development, or approved or 12.2 certified by the administrator of veterans affairs, or approved 12.3 or certified by the administrator of the farmers home 12.4 administration, or approved or certified by the federal home 12.5 loan mortgage corporation, or approved or certified by the 12.6 federal national mortgage association, that engages in the 12.7 business of purchasing or taking assignments of mortgage loans 12.8 and undertakes direct collection of payments from or enforcement 12.9 of rights against borrowers arising from mortgage loans, is not 12.10 required to obtain a certificate of authorization under this 12.11 chapter in order to purchase or take assignments of mortgage 12.12 loans from persons holding a certificate of authorization under 12.13 this chapter. 12.14 Sec. 16. Minnesota Statutes 1994, section 53.09, 12.15 subdivision 1, is amended to read: 12.16 Subdivision 1. [FREQUENCY AND EXPENSE.] The commissioner 12.17 shall make examinations for the purposes set forth in section 12.18 46.04, subdivision 1, at least once every 18 calendar months, of 12.19 each authorized place of business of every industrial loan and 12.20 thrift company with the right to issue thrift certificates for 12.21 investment organized or operating under this chapter to satisfy 12.22 the commissioner that the corporation is in a solvent condition 12.23 and is complying with the requirements of this chapter and 12.24 operating according to sound business principles. In order to 12.25 enforce actions in this connection, the commissioner is hereby 12.26 vested with the same authority as in the examination and 12.27 regulation of state banks. The corporation so examined shall 12.28 pay to the commissioner such fees as may be required under 12.29 section 46.131. The commissioner may maintain an action for the 12.30 recovery of such costs in any court of competent jurisdiction. 12.31 Sec. 17. Minnesota Statutes 1994, section 53.09, 12.32 subdivision 2, is amended to read: 12.33 Subd. 2. [REPORT TO COMMISSIONER.] (1) Each industrial 12.34 loan and thrift company shall annually on or before the first 12.35 day of FebruaryMarch file a report with the commissioner 12.36 stating in detail, under appropriate heads, its assets and 13.1 liabilities at the close of business on the last day of the 13.2 preceding calendar year. This report shall be made under oath 13.3 in the form prescribed by the commissioner. 13.4 (2) Each industrial loan and thrift company which holds 13.5 authority to accept accounts pursuant to section 53.04, 13.6 subdivision 5, shall in place of the requirement in clause (1) 13.7 submit the reports and make the publication required of state 13.8 banks pursuant to section 48.48. 13.9 (3) Within 30 days following a change in controlling 13.10 ownership of the capital stock of an industrial loan and thrift 13.11 company, it shall file a written report with the commissioner 13.12 stating in detail the nature of such change in ownership. 13.13 Sec. 18. Minnesota Statutes 1994, section 53.09, is 13.14 amended by adding a subdivision to read: 13.15 Subd. 2a. [COMPLIANCE EXAMINATIONS.] For the purpose of 13.16 discovering violations of this chapter or securing information 13.17 lawfully required by the commissioner under this chapter, the 13.18 commissioner may, at any time, either personally or by a person 13.19 or persons duly designated, investigate the loans and business, 13.20 and examine the books, accounts, records, and files used in the 13.21 business, of every licensee and of every person engaged in the 13.22 business whether or not the person acts or claims to act as 13.23 principal or agent, or under the authority of this chapter. For 13.24 the purposes of this subdivision, the commissioner and duly 13.25 designated representatives have free access to the offices and 13.26 places of business, books, accounts, papers, records, files, 13.27 safes, and vaults of all these persons. The commissioner and 13.28 all persons duly designated may require the attendance of and 13.29 examine, under oath, all persons whose testimony the 13.30 commissioner may require relative to the loans or business or to 13.31 the subject matter of an examination, investigation, or hearing. 13.32 Each licensee shall pay to the commissioner the amount 13.33 required under section 46.131, and the commissioner may maintain 13.34 an action for the recovery of the costs in a court of competent 13.35 jurisdiction. 13.36 Sec. 19. Minnesota Statutes 1994, section 56.11, is 14.1 amended to read: 14.2 56.11 [BOOKS OF ACCOUNT; ANNUAL REPORT.] 14.3 The licensee shall keep and use in the licensee's business 14.4 such books, accounts, and records as will enable the 14.5 commissioner to determine whether the licensee is complying with 14.6 the provisions of this chapter and with the rules lawfully made 14.7 by the commissioner hereunder. Every licensee shall preserve 14.8 such books, accounts, and records, including cards used in the 14.9 card system, if any, for at least two years after making the 14.10 final entry on any loan recorded therein. Accounting systems 14.11 maintained in whole or in part by mechanical or electronic data 14.12 processing methods which provide information equivalent to that 14.13 otherwise required are acceptable for this purpose. 14.14 Each licensee shall annually on or before the fifteenth day14.15 of March, except in odd numbered years and then on or before the14.16 seventhfirst day of FebruaryMarch, file a report with the 14.17 commissioner giving such relevant information as the 14.18 commissioner reasonably may require concerning the business and 14.19 operations during the preceding calendar year of each licensed 14.20 place of business, conducted by such licensee within the state. 14.21 Such report shall be made under oath and shall be in the form 14.22 prescribed by the commissioner, who shall make and publish 14.23 annually an analysis and recapitulation of such reports. 14.24 Sec. 20. Minnesota Statutes 1994, section 56.12, is 14.25 amended to read: 14.26 56.12 [ADVERTISING; TAKING OF SECURITY; PLACE OF BUSINESS.] 14.27 No licensee shall advertise, print, display, publish, 14.28 distribute, or broadcast, or cause or permit to be advertised, 14.29 printed, displayed, published, distributed, or broadcast, in any 14.30 manner any statement or representation with regard to the rates, 14.31 terms, or conditions for the lending of money, credit, goods, or 14.32 things in action which is false, misleading, or deceptive. The 14.33 commissioner may order any licensee to desist from any conduct 14.34 which the commissioner shall find to be a violation of the 14.35 foregoing provisions. 14.36 The commissioner may require that rates of charge, if 15.1 stated by a licensee, be stated fully and clearly in such manner 15.2 as the commissioner may deem necessary to prevent 15.3 misunderstanding thereof by prospective borrowers. In lieu of 15.4 the disclosure requirements of this section and section 56.14, a 15.5 licensee may give the disclosures required by the federal 15.6 Truth-in-Lending Act. 15.7 A licensee may take a lien upon real estate as security for 15.8 any loan exceeding $2,700$4,320 in principal amount made under 15.9 this chapter. The provisions of sections 47.20 and 47.21 do not 15.10 apply to loans made under this chapter, except as provided in 15.11 this section. No loan secured by a first lien on a borrower's 15.12 primary residence shall be made pursuant to this section if the 15.13 proceeds of the loan are used to finance the purchase of the 15.14 borrower's primary residence, unless: 15.15 (1) the proceeds of the loan are used to finance the 15.16 purchase of a manufactured home or a prefabricated building; or 15.17 (2) the proceeds of the loan are used in whole or in part 15.18 to satisfy the balance owed on a contract for deed. 15.19 If the proceeds of the loan are used to finance the 15.20 purchase of the borrower's primary residence, the licensee shall 15.21 consent to the subsequent transfer of the real estate if the 15.22 existing borrower continues after transfer to be obligated for 15.23 repayment of the entire remaining indebtedness. The licensee 15.24 shall release the existing borrower from all obligations under 15.25 the loan instruments, if the transferee (1) meets the standards 15.26 of credit worthiness normally used by persons in the business of 15.27 making loans, including but not limited to the ability of the 15.28 transferee to make the loan payments and satisfactorily maintain 15.29 the property used as collateral, and (2) executes an agreement 15.30 in writing with the licensee whereby the transferee assumes the 15.31 obligations of the existing borrower under the loan 15.32 instruments. Any such agreement shall not affect the priority, 15.33 validity or enforceability of any loan instrument. A licensee 15.34 may charge a fee not in excess of one-tenth of one percent of 15.35 the remaining unpaid principal balance in the event the loan is 15.36 assumed by the transferee and the existing borrower continues 16.1 after the transfer to be obligated for repayment of the entire 16.2 assumed indebtedness. A licensee may charge a fee not in excess 16.3 of one percent of the remaining unpaid principal balance in the 16.4 event the remaining indebtedness is assumed by the transferee 16.5 and the existing borrower is released from all obligations under 16.6 the loan instruments, but in no event shall the fee exceed 16.7 $150$240. 16.8 A licensee making a loan under this chapter secured by a 16.9 lien on real estate shall comply with the requirements of 16.10 section 47.20, subdivision 8. 16.11 No licensee shall conduct the business of making loans 16.12 under this chapter within any office, room, or place of business 16.13 in which any other business is solicited or engaged in, or in 16.14 association or conjunction therewith, if the commissioner finds 16.15 that the character of the other business is such that it would 16.16 facilitate evasions of this chapter or of the rules lawfully 16.17 made hereunder. The commissioner may promulgate rules dealing 16.18 with such other businesses. 16.19 No licensee shall transact the business or make any loan 16.20 provided for by this chapter under any other name or at any 16.21 other place of business than that named in the license. No 16.22 licensee shall take any confession of judgment or any power of 16.23 attorney. No licensee shall take any note or promise to pay 16.24 that does not accurately disclose the principal amount of the 16.25 loan, the time for which it is made, and the agreed rate or 16.26 amount of charge, nor any instrument in which blanks are left to 16.27 be filled in after execution. Nothing herein is deemed to 16.28 prohibit the making of loans by mail or arranging for settlement 16.29 and closing of real estate secured loans by an unrelated 16.30 qualified closing agent at a location other than the licensed 16.31 location. 16.32 Sec. 21. Minnesota Statutes 1994, section 56.125, 16.33 subdivision 2, is amended to read: 16.34 Subd. 2. [REAL ESTATE AS SECURITY.] A licensee may take a 16.35 lien upon real estate as security for any open-end loan at or 16.36 after such time as the outstanding balance first exceeds 17.1 $2,700$4,320. A subsequent reduction in the balance 17.2 below $2,700$4,320 has no effect on the lien. A licensee may 17.3 retain the security interest until it terminates the open-end 17.4 account. If there is no outstanding balance in the account and 17.5 there is no commitment by the licensee to a line of credit in 17.6 excess of $2,700$4,320, the licensee shall, within 20 days 17.7 following written demand by the borrower, deliver to the 17.8 borrower a release of the mortgage on any real property taken as 17.9 security for the open-end loan agreement. A real estate 17.10 mortgage authorized for a financial institution secures all 17.11 advances and obligations thereunder from the date of recording. 17.12 Sec. 22. Minnesota Statutes 1994, section 56.131, 17.13 subdivision 4, is amended to read: 17.14 Subd. 4. [ADJUSTMENT OF DOLLAR AMOUNTS.] (a) The dollar 17.15 amounts in this section, sections 53.04, subdivision 3a, 17.16 paragraph (c), 56.01, 56.12, and 56.125 shall change 17.17 periodically, as provided in this section, according to and to 17.18 the extent of changes in the implicit price deflator for the 17.19 gross nationaldomestic product, 19721987 = 100, compiled by 17.20 the United States Department of Commerce, and hereafter referred 17.21 to as the index. The index for December 19801991 is the 17.22 reference base index for adjustments of dollar amounts , except17.23 that the index for December 1984 is the reference base index for17.24 the minimum default charge of $4. The reference base index for17.25 subdivision 1, paragraph (a), clause (1), and subdivision 2,17.26 paragraph (d), is December 1990. 17.27 (b) The designated dollar amounts shall change on July 1 of 17.28 each even-numbered year if the percentage of change, calculated 17.29 to the nearest whole percentage point, between the index for 17.30 December of the preceding year and the reference base index is 17.31 ten percent or more, but; 17.32 (1) the portion of the percentage change in the index in 17.33 excess of a multiple of ten percent shall be disregarded and the 17.34 dollar amounts shall change only in multiples of ten percent of 17.35 the amounts appearing in Laws 1981, chapter 258this act, on the 17.36 date of enactment; and 18.1 (2) the dollar amounts shall not change if the amounts 18.2 required by this section are those currently in effect pursuant 18.3 to Laws 1981, chapter 258this act, as a result of earlier 18.4 application of this section. 18.5 (c) If the index is revised, the percentage of change 18.6 pursuant to this section shall be calculated on the basis of the 18.7 revised index. If a revision of the index changes the reference 18.8 base index, a revised reference base index shall be determined 18.9 by multiplying the reference base index then applicable by the 18.10 rebasing factor furnished by the department of commerce. If the 18.11 index is superseded, the index referred to in this section is 18.12 the one represented by the department of commerce as reflecting 18.13 most accurately changes in the purchasing power of the dollar 18.14 for consumers. 18.15 (d) The commissioner shall announce and publish: 18.16 (1) on or before April 30 of each year in which dollar 18.17 amounts are to change, the changes in dollar amounts required by 18.18 paragraph (b); and 18.19 (2) promptly after the changes occur, changes in the index 18.20 required by paragraph (c) including, if applicable, the 18.21 numerical equivalent of the reference base index under a revised 18.22 reference base index and the designation or title of any index 18.23 superseding the index. 18.24 (e) A person does not violate this chapter with respect to 18.25 a transaction otherwise complying with this chapter if that 18.26 person relies on dollar amounts either determined according to 18.27 paragraph (b), clause (2) or appearing in the last publication 18.28 of the commissioner announcing the then current dollar amounts. 18.29 (f) The adjustments provided in this section shall not be 18.30 affected unless explicitly provided otherwise by law. 18.31 Sec. 23. Minnesota Statutes 1994, section 56.131, 18.32 subdivision 6, is amended to read: 18.33 Subd. 6. [DISCOUNT POINTS.] A loan made under this section 18.34 that is secured by real estate and that is in a principal amount 18.35 of $7,500$12,000 or more and has a maturity of 60 months or 18.36 more may contain a provision permitting discount points, if the 19.1 loan does not provide a loan yield in excess of the maximum rate 19.2 of interest permitted by this section. Loan yield means the 19.3 annual rate of return obtained by a licensee computed as the 19.4 annual percentage rate is computed under Federal Regulation Z. 19.5 If the loan is prepaid in full, the licensee must make a refund 19.6 to the borrower to the extent that the loan yield will exceed 19.7 the maximum rate of interest provided by this section when the 19.8 prepayment is taken into account. 19.9 Sec. 24. Minnesota Statutes 1994, section 56.17, is 19.10 amended to read: 19.11 56.17 [LIMITATION; ASSIGNMENT OF WAGES; SECURITY 19.12 AGREEMENT.] 19.13 No assignment of, or order for payment of, any salary, 19.14 wages, commissions, or other compensation for services earned or 19.15 to be earned, given to secure any loan made by any licensee 19.16 under this chapter, shall be valid unless the principal amount 19.17 of the loan is $1,200 or less and ispaid to the borrower 19.18 simultaneously with its execution; nor shall any assignment or 19.19 order, or any security agreement or other lien on household 19.20 furniture then in the possession and use of the borrower, be 19.21 valid unless it is in writing, signed in person by the borrower ,19.22 nor if the borrower is married, unless it is signed in person by19.23 both husband and wife; provided, that written assent of a spouse19.24 shall not be required when husband and wife have been living19.25 separate and apart for a period of at least five months prior to19.26 the making of the assignment, order, security agreement, or19.27 lien. If the borrower is married, an assignment, order, 19.28 security agreement, or other lien is not valid without the 19.29 spouse's written consent, if the spouse's consent would be 19.30 necessary under applicable law to make the property offered as 19.31 security available to satisfy the debt in the event of default. 19.32 Under any assignment or order for the payment of future 19.33 salary, wages, commissions, or other compensation for services, 19.34 given as security for a loan made by any licensee under this 19.35 chapter, a sum not to exceed ten percent of the borrower's 19.36 salary, wages, commissions, or other compensation for services 20.1 shall be collectible from the employer of the borrower by the 20.2 licensee at the time for each payment to the borrower of salary, 20.3 wages, commissions, or other compensation for services, from the 20.4 time that a copy of the assignment, verified by the oath of the 20.5 licensee or the licensee's agent, together with a similarly 20.6 verified statement of the amount unpaid upon the loan and a 20.7 printed copy of this section is served upon the employer; 20.8 provided, that this section shall not be construed as giving the 20.9 assignee any greater rights than those under section 181.05. 20.10 This section shall control, with respect to licensees, 20.11 notwithstanding anything in section 47.59, subdivision 12, 20.12 clause (c), to the contrary. 20.13 Sec. 25. [REVISOR INSTRUCTION.] 20.14 The revisor of statutes shall change the term "building and 20.15 loan association" or "savings, building and loan association" or 20.16 "savings and loan association" or similar term to "savings 20.17 association" or similar term in Minnesota Statutes and Minnesota 20.18 Rules. 20.19 Sec. 26. [REPEALER.] 20.20 Minnesota Statutes 1994, sections 46.03; 48.611; and 48.97, 20.21 subdivisions 2, 3, and 4, are repealed. 20.22 Sec. 27. [EFFECTIVE DATE.] 20.23 Sections 1 to 21 and 23 to 26 are effective the day 20.24 following final enactment. 20.25 ARTICLE 2 20.26 REGULATORY IMPROVEMENT 20.27 Section 1. Minnesota Statutes 1994, section 46.04, is 20.28 amended by adding a subdivision to read: 20.29 Subd. 3. [FINANCIAL INSTITUTIONS AND LICENSEE RECORDS.] 20.30 For purposes of examination and regulation of those entities 20.31 referred to in subdivisions 1 and 2, records may be maintained 20.32 on optical image storage systems acceptable to the 20.33 commissioner. Electronically maintained and stored records must 20.34 meet the following minimum standards: 20.35 (1) a document or record may be transferred to and stored 20.36 on a nonerasable imaging system and retained only in that format 21.1 if all documents and records preserved on nonerasable optical 21.2 imaging systems meet nationally recognized standards for 21.3 permanent records and are available for retrieval for as long as 21.4 applicable law requires; 21.5 (2) a backup copy of the record is created and stored at a 21.6 site other than the site where the original is kept. The backup 21.7 copy must be preserved either: (i) on a nonerasable optical 21.8 imaging system; or (ii) by another reproduction method approved 21.9 by the commissioner; and 21.10 (3) all contracts for third-party maintenance and storage 21.11 of those records must include assurance of access by the 21.12 commissioner consistent with the purposes of this section. 21.13 Sec. 2. Minnesota Statutes 1994, section 47.10, 21.14 subdivision 3, is amended to read: 21.15 Subd. 3. [LEASEHOLD PLACE OF BUSINESS; APPROVAL OF CERTAIN 21.16 LEASE AGREEMENTS.] No bank, trust company, savings bank, or 21.17 building and loansavings association may acquire real property 21.18 and improvements of any nature to it for its place of business 21.19 by lease agreement if the lessor has an existing direct or 21.20 indirect interest in the management or ownership of the bank, 21.21 trust company, savings bank, or building and loansavings 21.22 association without prior written approval by the commissioner. 21.23 This includes subsequent amendments and associated leasehold 21.24 improvements. A lessee's expenditures to maintain the leasehold 21.25 premises consistent with ordinary business conditions and within 21.26 the preapproved lease agreement does not constitute an amendment 21.27 requiring prior written approval. 21.28 Sec. 3. Minnesota Statutes 1994, section 47.20, 21.29 subdivision 5, is amended to read: 21.30 Subd. 5. [PREPAYMENT PENALTY.] (a) Unless the mortgagor 21.31 waives its right to prepay the mortgage loan without penalty, in 21.32 a uniform written disclosure waiver approved by the commissioner 21.33 and signed by the mortgagor, no conventional loan or loan 21.34 authorized in subdivision 1 made on or after the effective date21.35 of Laws 1977, chapter 350shall contain a provision requiring or 21.36 permitting the imposition of a penalty in the event the loan or 22.1 advance of credit is prepaid. The prepayment penalty shall not 22.2 exceed the lesser of two percent of the unpaid principal balance 22.3 or 60 days interest on the unpaid principal balance. A lender 22.4 that offers a mortgage loan with a prepayment penalty shall also 22.5 offer a mortgage loan without a prepayment penalty. 22.6 This section does not permit the imposition of a prepayment 22.7 penalty in the event that the property securing the mortgage 22.8 loan is sold or the mortgage loan is prepaid in part. No 22.9 prepayment penalty may be enforced after 42 months from the date 22.10 of the mortgage loan. 22.11 (b) A precomputed conventional loan or precomputed loan 22.12 authorized in subdivision 1 shall provide for a refund of the 22.13 precomputed finance charge according to the actuarial method if 22.14 the loan is paid in full by cash, renewal or refinancing, or a 22.15 new loan, one month or more before the final installment due 22.16 date. The actuarial method for the purpose of this section is 22.17 the amount of interest attributable to each fully unexpired 22.18 monthly installment period of the loan contract following the 22.19 date of prepayment in full, calculated as if the loan was made 22.20 on an interest-bearing basis at the rate of interest provided 22.21 for in the note based on the assumption that all payments were 22.22 made according to schedule. A precomputed loan for the purpose 22.23 of this section means a loan for which the debt is expressed as 22.24 a sum comprised of the principal amount and the amount of 22.25 interest for the entire term of the loan computed actuarially in 22.26 advance on the assumption that all scheduled payments will be 22.27 made when due, and does not include a loan for which interest is 22.28 computed from time to time by application of a rate to the 22.29 unpaid principal balance, interest-bearing loans, or 22.30 simple-interest loans. For the purpose of calculating a refund 22.31 for precomputed loans under this section, any portion of the 22.32 finance charge for extending the first payment period beyond one 22.33 month may be ignored. Nothing in this section shall be 22.34 considered a limitation on discount points or other finance 22.35 charges charged or collected in advance, and nothing in this 22.36 section shall require a refund of the charges in the event of 23.1 prepayment. Nothing in this section shall be considered to 23.2 supersede section 47.204. 23.3 Sec. 4. Minnesota Statutes 1994, section 47.20, 23.4 subdivision 10, is amended to read: 23.5 Subd. 10. [WAIVER.] Notwithstanding any other lawExcept 23.6 as provided in subdivision 5, the provisions of this section may 23.7 not be waived by any oral or written agreement executed by any 23.8 person. 23.9 Sec. 5. Minnesota Statutes 1994, section 47.52, is amended 23.10 to read: 23.11 47.52 [AUTHORIZATION.] 23.12 (a) With the prior approval of the commissioner, any bank 23.13 doing business in this state may establish and maintain not more 23.14 than five detached facilities provided the facilities are 23.15 located within the municipality in which the principal office of 23.16 the applicant bank is located; or within 5,000 feet of its 23.17 principal office measured in a straight line from the closest 23.18 points of the closest structures involved; or within 100 miles 23.19 of its principal office measured in a straight line from the 23.20 closest points of the closest structures involved, if the 23.21 detached facility is within any municipality in which no bank is 23.22 located at the time of application or if the detached facility 23.23 is in a municipality having a population of more than 10,000, or 23.24 if the detached facility is located in a municipality having a 23.25 population of 10,000 or less, as determined by the commissioner 23.26 from the latest available data from the state demographer, or 23.27 for municipalities located in the seven-county metropolitan area 23.28 from the metropolitan council, and all the banks having a 23.29 principal office in the municipality have consented in writing 23.30 to the establishment of the facility. 23.31 (b) A detached facility shall not be closer than 50 feet to 23.32 a detached facility operated by any other bank and shall not be 23.33 closer than 100 feet to the principal office of any other bank, 23.34 the measurement to be made in the same manner as provided 23.35 above. This paragraph shall not be applicable if the proximity 23.36 to the facility or the bank is waived in writing by the other 24.1 bank and filed with the application to establish a detached 24.2 facility. 24.3 (c) Any bank is allowed, in addition to other facilities, 24.4 one drive-in or walk-up facility located between 150 to 1,500 24.5 feet of the main banking house or within 1,500 feet from a 24.6 detached facility. The drive-in or walk-up facility permitted 24.7 by this clause is subject to paragraph (b) and section 47.53. 24.8 (d) A bank is allowed, in addition to other facilities, 24.9 part-time deposit-taking locations at elementary and secondary 24.10 schools located within the municipality in which the main 24.11 banking house or a detached facility is located if they are 24.12 established in connection with student education programs 24.13 approved by the school administration and consistent with safe, 24.14 sound banking practices. 24.15 Sec. 6. Minnesota Statutes 1994, section 47.56, is amended 24.16 to read: 24.17 47.56 [TRANSFER OF LOCATION.] 24.18 The location of a detached facility may betransferred to 24.19 another location ,outside of a radius of three miles measured in 24.20 a straight line is subject to the same procedures and approval 24.21 as required hereunder for establishing a new detached facility, 24.22 except that the relocation of a detached facility within a 24.23 municipality of 10,000 or less population shall not require 24.24 consent of other banks required in section 47.52. 24.25 Sec. 7. Minnesota Statutes 1994, section 47.61, 24.26 subdivision 3, is amended to read: 24.27 Subd. 3. (a) "Electronic financial terminal" means an 24.28 electronic information processing device ,that is established to 24.29 do either or both of the following: 24.30 (1) capture the data necessary to initiate financial 24.31 transactions; or 24.32 (2) through its attendant support system, store or initiate 24.33 the transmission of the information necessary to consummate a 24.34 financial transaction. other than24.35 (b) "Electronic financial terminal" does not include: 24.36 (1) a telephone or; 25.1 (2) an electronic information processing device that is 25.2 used internally by a financial institution to conduct the 25.3 business activities of the institution , that is established to25.4 do either or both of the following:25.5 (a) capture the data necessary to initiate financial25.6 transactions; or25.7 (b) through its attendant support system, store or initiate25.8 the transmission of the information necessary to consummate a25.9 financial transaction.; or 25.10 (3) an electronic point-of-sale terminal operated by a 25.11 retailer that is used to process payments for the purchase of 25.12 goods and services by consumers through the use of credit cards 25.13 or debit cards, provided that the payment transactions using 25.14 debit cards are subject to the federal Electronic Funds Transfer 25.15 Act, United States Code, title 12, sections 1693 et seq., and 25.16 Regulation E of the Federal Reserve Board, Code of Federal 25.17 Regulations, title 12, subpart 205.2; this clause does not 25.18 exempt the retailer from liability for negligent conduct or 25.19 intentional misconduct of the operator under section 47.69, 25.20 subdivision 5. 25.21 Sec. 8. Minnesota Statutes 1994, section 47.62, 25.22 subdivision 2, is amended to read: 25.23 Subd. 2. [APPROVAL REQUIRED.] No electronic financial 25.24 terminal shall be established by a person other than a state or 25.25 federal savings and loanassociation, state or federal savings 25.26 bank, state or federal credit union, or state bank or national 25.27 banking association unless the commissioner has approved the 25.28 establishment of the terminal. 25.29 Sec. 9. Minnesota Statutes 1994, section 47.62, is amended 25.30 by adding a subdivision to read: 25.31 Subd. 5. [ESTABLISHMENT BY NOTICE.] A bank, savings bank, 25.32 savings association, or credit union organized under the laws of 25.33 this state may, after completing the notification procedure 25.34 required by this subdivision, establish and maintain one or more 25.35 electronic financial terminals. The filing must be on forms 25.36 provided by the commissioner. No electronic financial terminal 26.1 may be established under sections 47.61 to 47.74 if disallowed 26.2 by order of the commissioner within 15 days of the filing of a 26.3 complete and acceptable notification of the intent to establish 26.4 an electronic financial terminal. 26.5 Sec. 10. Minnesota Statutes 1994, section 47.62, is 26.6 amended by adding a subdivision to read: 26.7 Subd. 6. [RELOCATION; PROCEDURE.] An application or 26.8 notification to relocate an existing financial terminal outside 26.9 a radius of three miles measured in a straight line must be 26.10 approved by, or a notification must be filed with, the 26.11 commissioner of commerce as provided for in this section. 26.12 Sec. 11. Minnesota Statutes 1994, section 47.67, is 26.13 amended to read: 26.14 47.67 [ADVERTISING.] 26.15 No advertisement by a person which relates to an electronic 26.16 financial terminal may be inaccurate or misleading with respect 26.17 to such a terminal. Except with respect to direct mailings by 26.18 financial institutions to their customers, the advertising of 26.19 rate of interest paid on accounts in connection with electronic 26.20 financial terminals is prohibited. Any advertisement, either on 26.21 or off the site of an electronic financial terminal, promoting 26.22 the use or identifying the location of an electronic financial 26.23 terminal, which identifies any financial institution, group or 26.24 combination of financial institutions, or third parties as 26.25 owning or providing for the use of its services is prohibited. 26.26 The following shall be expressly permitted: 26.27 (a) a simple directory listing placed at the site of an 26.28 electronic financial terminal identifying the particular 26.29 financial institutions using its services; 26.30 (b) the use of a generic name, either on or off the site of 26.31 an electronic financial terminal, which does not promote or 26.32 identify any particular financial institution, group or 26.33 combination of financial institutions, or any third parties; 26.34 (c) media advertising or direct mailing of information by a 26.35 financial institution or retailer identifying locations of 26.36 electronic financial terminals and promoting their usage; and27.1 (d) any advertising, whether on or off the site, relating 27.2 to electronic financial terminals, or the services performed at 27.3 the electronic financial terminals located on the premises of 27.4 the main office, or any office or detached facility of any 27.5 financial institution; 27.6 (e) a coupon or other promotional advertising that is 27.7 printed upon the reverse side of the receipt or record of each 27.8 transaction required under section 47.69, subdivision 6; and 27.9 (f) promotional advertising displayed on the electronic 27.10 screen. 27.11 Sec. 12. Minnesota Statutes 1994, section 47.69, 27.12 subdivision 3, is amended to read: 27.13 Subd. 3. Every financial institution using an electronic 27.14 financial terminal shall maintain reasonable procedures to 27.15 minimize losses from unauthorized withdrawals from its 27.16 customers' accounts by use of an electronic financial terminal. 27.17 After a customer makes a bona fide deposit or payment at an 27.18 electronic financial terminal and has received a receipt, any 27.19 loss due to theft or other reason shall not be borne by the 27.20 customer; provided, loss due to the nonpayment or dishonor of a 27.21 check, or other order for payment, deposited at an electronic 27.22 financial terminal shall be governed by the applicable 27.23 provisions of chapter 336. A financial institution shall be 27.24 liable for all unauthorized withdrawals unless the unauthorized 27.25 withdrawal was (1) due to the negligent conduct or the27.26 intentional misconduct of the operator of an electronic27.27 financial terminal or that operator's agent in which case the27.28 operator of an electronic financial terminal or the agent shall27.29 be liable, or (2)due to the loss or theft of the customer 27.30 machine readable card in which case the customer shall be 27.31 liable, subject to a maximum liability of $50, for those 27.32 unauthorized withdrawals made prior to the time the financial 27.33 institution is notified of the loss or theft. The limitation on 27.34 liability contained in clause (2)is effective only if the 27.35 issuer is notified of unauthorized charges contained in a bill 27.36 within 60 days of receipt of the bill by the person in whose 28.1 name the card is issued. For purposes of this subdivision, 28.2 "unauthorized withdrawal" means a withdrawal by a person other 28.3 than the customer who does not have actual, implied, or apparent28.4 authority for such withdrawal, and from which withdrawal the28.5 customer or a member of the customer's family or household28.6 receives no benefit.without actual authority to initiate the 28.7 withdrawal and from which the customer receives no benefit. The 28.8 term does not include any withdrawal that is: (1) initiated by 28.9 a person who was furnished with the card by the customer, unless 28.10 the customer has notified the financial institution involved 28.11 that transfers by that person are no longer authorized; (2) 28.12 initiated with fraudulent intent by the customer or any person 28.13 acting in concert with the customer; or (3) initiated by the 28.14 financial institution or its employee. 28.15 Sec. 13. Minnesota Statutes 1994, section 47.69, 28.16 subdivision 5, is amended to read: 28.17 Subd. 5. Any customer of a financial institution may bring 28.18 a civil action against any person violating any subdivision of 28.19 this section in the district court in the county of the alleged 28.20 violator's residence or principal place of business or in the 28.21 county wherein the alleged violation occurred. Upon adverse 28.22 adjudication, the defendant shall be liable for actual damages, 28.23 or $500, whichever is greater, punitive damages when applicable, 28.24 together with the court costs and reasonable attorneys' fees 28.25 incurred by the plaintiff. The court may provide such equitable 28.26 relief as it deems necessary or proper, including enjoining the 28.27 defendant from further violations. If the unauthorized 28.28 withdrawal was due to the negligent conduct or the intentional 28.29 misconduct of an operator or person establishing and maintaining 28.30 an electronic financial terminal other than a financial 28.31 institution or agent of a financial institution, that operator 28.32 or person establishing and maintaining an electronic financial 28.33 terminal or its agent is liable and subject to a civil action 28.34 under this subdivision by the financial institution considered 28.35 liable under subdivision 3 that has reimbursed the customer. 28.36 Sec. 14. Minnesota Statutes 1994, section 48.16, is 29.1 amended to read: 29.2 48.16 [BANKS MAY NOT PLEDGE ASSETS; EXCEPTIONS.] 29.3 No bank or trust company shall pledge, hypothecate, assign, 29.4 transfer, or create a lien upon or charge against any of its 29.5 assets except as follows: 29.6 (1) to the state; 29.7 (2) to secure public deposits; 29.8 (3) to secure funds of trustees in bankruptcy; 29.9 (4) to secure money borrowed in good faith from other 29.10 banks, trust companies, ora financial agency created by act of 29.11 Congress, or the state in programs specifically authorizing 29.12 state banks to participate as an eligible local lender; 29.13 (5) to finance the acquisition of real estate to be carried 29.14 as an asset as provided for in section 47.10; 29.15 (6) to secure a liability that arises from a transfer of a 29.16 direct obligation of, or obligations that are fully guaranteed 29.17 as to principal and interest by, the United States government or 29.18 an agency thereof that the bank or trust company is obligated to 29.19 repurchase. 29.20 This section shall not be construed to permit the use of 29.21 assets as security for public deposits other than the securities 29.22 made eligible by law for that purpose. 29.23 Sec. 15. Minnesota Statutes 1994, section 48.24, 29.24 subdivision 5, is amended to read: 29.25 Subd. 5. Loans or obligations shall not be subject under 29.26 this section to any limitation based upon such capital and 29.27 surplus to the extent that they are secured or covered by 29.28 guarantees, or by commitments or agreements to take over or to 29.29 purchase the same, made by: 29.30 (1) the commissioner of agriculture on the purchase of 29.31 agricultural land; 29.32 (2) any Federal Reserve bank; 29.33 (3) the United States or any department, bureau, board, 29.34 commission, or establishment of the United States, including any 29.35 corporation wholly owned directly or indirectly by the United 29.36 States; 30.1 (4) the Minnesota energy and economic development 30.2 authority; or30.3 (5) the Minnesota export finance authority; or 30.4 (6) a municipality or political subdivision within 30.5 Minnesota to the extent that the guarantee or collateral is a 30.6 valid and enforceable general obligation of that political body. 30.7 Sec. 16. Minnesota Statutes 1994, section 48.48, 30.8 subdivision 1, is amended to read: 30.9 Subdivision 1. [SUBMISSION AND PUBLICATION.] At least four 30.10 times in each year, and at any other time when so requested by 30.11 the commissioner, every bank or trust company shall, within 30 30.12 days of the date of notice, make and transmit to the 30.13 commissioner or to the commissioner's designee, in a form the 30.14 commissioner prescribes, a report, verified by its president or30.15 vice-president and by its cashier or treasurer, andattested by30.16 at least twoto in the official minutes of its directors, 30.17 stating in detail, under appropriate heads, as required by the 30.18 commissioner, its assets and liabilities at the close of 30.19 business on the day specified in the request. The commissioner 30.20 may accept a report made to a federal authority having 30.21 supervision of banks or trust companies in fulfilling this 30.22 requirement. This statement shall be published once at the30.23 expense of the bank or trust company in a qualified newspaper in30.24 the municipality or town in which the bank or trust company is30.25 located, and if there is no such newspaper, then in a qualified30.26 newspaper likely to give notice in the municipality or town in30.27 which the bank or trust company is located. Proof of30.28 publication shall be filed with the commissioner immediately30.29 after publication of the report, but no later than 60 days30.30 following the date of the notice.That portion of the report 30.31 constituting the statement of assets, liabilities, and capital 30.32 and statement of income and expenses must be made available to 30.33 the public within 45 days of the notice at every location of the 30.34 bank or trust company including detached facilities and trust 30.35 service offices. 30.36 Sec. 17. Minnesota Statutes 1994, section 48.48, 31.1 subdivision 2, is amended to read: 31.2 Subd. 2. [PENALTIES FOR LATE SUBMISSION.] For failure to 31.3 send these reports to the commissioner or to the commissioner's 31.4 designee in the time specified, a bank or trust company shall 31.5 forfeit to the state the sum of $25 for each day of delay and 31.6 shall pay the accumulated sum to the commissioner upon a formal 31.7 demand for payment by the commissioner. If it appears that a 31.8 report was mailedtransmitted by a bank or trust company on or 31.9 before the end of the 30-day period, or proof of publication31.10 mailed on or before the end of the 60-day period,the 31.11 commissioner shall waive any forfeit. In the event it does not 31.12 appear that a report was timely mailedtransmitted, the 31.13 commissioner may nevertheless waive forfeit upon a showing by 31.14 the bank or trust company to the satisfaction of the 31.15 commissioner that failure to send the reports was the result of 31.16 causes beyond the control of the bank or trust company. 31.17 Sec. 18. Minnesota Statutes 1994, section 48.49, is 31.18 amended to read: 31.19 48.49 [BOOKS TO BE KEPT.] 31.20 Every such bank shall open and keep such books and accounts 31.21 as the commissioner may prescribe, for the purpose of keeping 31.22 accurate and convenient records of its transactions ; and every31.23 bank refusing or neglecting so to do shall forfeit $10 for every31.24 day of such neglect or refusal. 31.25 Sec. 19. Minnesota Statutes 1994, section 48.61, 31.26 subdivision 7, is amended to read: 31.27 Subd. 7. [SUBSIDIARIES.] (a) A state bank or trust company 31.28 may organize, acquire, or invest in a subsidiary located in this 31.29 state for the purposes of engaging in one or more of the 31.30 following activities, subject to the prior written approval of 31.31 the commissioner: 31.32 (1) any activity, not including receiving deposits , lending31.33 money,or paying checks, that a state bank is authorized to 31.34 engage in under state law or rule or under federal law or 31.35 regulation unless the activity is prohibited by the laws of this 31.36 state; 32.1 (2) any activity that a bank clerical service corporation 32.2 is authorized to engage in under section 48.89; and 32.3 (3) any other activity authorized for a national bank, a 32.4 bank holding company, or a subsidiary of a national bank or bank 32.5 holding company under federal law or regulation of general 32.6 applicability, and approved by the commissioner by rule. 32.7 (b) A bank or trust company subsidiary may engage in an 32.8 activity under this section only upon application together with 32.9 a filing fee of $250 and with the prior written approval of the 32.10 commissioner. In approving or denying a proposed activity, the 32.11 commissioner shall consider the financial and management 32.12 strength of the bank or trust company, the current written 32.13 operating plan and policies of the proposed subsidiary 32.14 corporation, the bank or trust company's community reinvestment 32.15 record, and whether the proposed activity should be conducted 32.16 through a subsidiary of the bank or trust company. 32.17 (c) The aggregate amount of funds invested in either an 32.18 equity or loan capacity in all of the subsidiaries of the bank 32.19 or trust company authorized under this subdivision shall not 32.20 exceed 25 percent of the capital stock and paid in surplus of 32.21 the bank or trust company. 32.22 (d) A subsidiary organized or acquired under this 32.23 subdivision is subject to the examination and enforcement 32.24 authority of the commissioner under chapters 45 and 46 to the 32.25 same extent as a state bank or trust company. 32.26 (e) For the purposes of this section, "subsidiary" means a 32.27 corporation of which more than 50 percent of the voting shares 32.28 are owned or controlled by the bank or trust company. 32.29 Sec. 20. [52.211] [STUDENT EDUCATION PROGRAMS.] 32.30 A credit union is allowed to establish part-time 32.31 deposit-taking locations at elementary and secondary schools 32.32 provided that the locations are established in connection with 32.33 student education programs approved by the school administration 32.34 and consistent with safe and sound financial institution 32.35 practices. For purposes of this section, students do not need 32.36 to be members of the credit union to participate, and the 33.1 students' parents are not eligible to become members solely by 33.2 reason of their child's participation. 33.3 Sec. 21. Minnesota Statutes 1994, section 53.015, 33.4 subdivision 4, is amended to read: 33.5 Subd. 4. [CAPITAL STOCK.] "Capital stock" means the par 33.6 value of preferred or common stock multiplied by the respective 33.7 number of shares of each type of stock. For purposes of section 33.8 53.05, clause (7), capital stock may include an amount of 33.9 mandatory convertible debentures approved by the commissioner. 33.10 The terms and conditions for redemption of the qualifying 33.11 debentures must include the prior written approval of the 33.12 commissioner as a condition for a redemption, but in no event an 33.13 amount in excess of 50 percent of total preferred or common 33.14 stock. 33.15 Sec. 22. Minnesota Statutes 1994, section 56.14, is 33.16 amended to read: 33.17 56.14 [DUTIES OF LICENSEE.] 33.18 Every licensee shall: 33.19 (1) deliver to the borrower (or if there are two or more 33.20 borrowers to one of them) at the time any loan is made a 33.21 statement making the disclosures and furnishing the information 33.22 required by the federal Truth-in-Lending Act, United States 33.23 Code, title 15, sections 1601 to 1667e, as amended from time to 33.24 time, with respect to the contract of loan. A copy of the loan 33.25 contract may be delivered in lieu of a statement if it discloses 33.26 the required information; 33.27 (2) deliver or mail to the borrower without request, a 33.28 written receipt within 30 days following payment for each 33.29 payment by coin or currency made on account of any loan wherein 33.30 charges are computed and paid on unpaid principal balances for 33.31 the time actually outstanding, specifying the amount applied to 33.32 charges and the amount, if any, applied to principal, and 33.33 stating the unpaid principal balance, if any, of the loan; and 33.34 wherein precomputed charges have been added to the principal of 33.35 the loan specifying the amount of the payment applied to 33.36 principal and charges combined, the amount applied to default or 34.1 extension charges, if any, and stating the unpaid balance, if 34.2 any, of the precomputed loan contract. A periodic statement 34.3 showing a payment received by mail complies with this clause; 34.4 (3) permit payment to be made in advance in any amount on 34.5 any contract of loan at any time, but the licensee may apply the 34.6 payment first to all charges in full at the agreed rate up to 34.7 the date of the payment; 34.8 (4) upon repayment of the loan in full, mark indelibly 34.9 every obligation and security, other than a mortgage or security 34.10 agreement which secures a new loan to the licensee, signed by 34.11 the borrower with the word "Paid" or "Canceled," and release any 34.12 mortgage or security agreement which no longer secures a loan to 34.13 the licensee, restore any pledge, and cancel and return any 34.14 note, and any assignment given to the licensee which does not 34.15 secure a new loan to the licensee within 20 days after the 34.16 repayment. For purposes of this requirement, the document 34.17 including actual evidence of an obligation or security may be 34.18 maintained, stored, and retrieved in a form or format acceptable 34.19 to the commissioner under section 46.04, subdivision 3; 34.20 (5) display prominently in each licensed place of business 34.21 a full and accurate schedule, to be approved by the 34.22 commissioner, of the charges to be made and the method of 34.23 computing the same; furnish a copy of the contract of loan to 34.24 any person obligated on it or who may become obligated on it at 34.25 any time upon the request of that person; 34.26 (6) show in the loan contract or statement of loan the rate 34.27 or rates of charge on which the charge in the contract is based, 34.28 expressed in terms of rate or rates per annum. The rate 34.29 expression shall be printed in at least 8-point type on the loan 34.30 statement or copy of the loan contract given to the borrower .; 34.31 (7) if a payment results in the prepayment of three or more 34.32 installment payments on a precomputed loan, at the same time the 34.33 receipt required by clause (2) is delivered or mailed, deliver 34.34 or mail to the borrower a notice in at least eight-point type as 34.35 part of the receipt or together with the receipt. The notice 34.36 must contain the following statement: 35.1 "You have substantially prepaid the installment payments on 35.2 your loan and may experience an interest savings over the 35.3 remaining term only if you refinance the balance within the 35.4 next 30 days." 35.5 Sec. 23. Minnesota Statutes 1994, section 56.155, 35.6 subdivision 1, is amended to read: 35.7 Subdivision 1. [AUTHORIZATION.] No licensee shall, 35.8 directly or indirectly, sell or offer for sale any insurance in 35.9 connection with any loan made under this chapter except as and 35.10 to the extent authorized by this section. The sale of credit 35.11 life, credit accident and health, and credit involuntary 35.12 unemployment insurance is subject to the provisions of chapter 35.13 62B, except that the term of the insurance may exceed 60 months 35.14 if the term of the loan exceeds 60 months. Life, accident, 35.15 health, and involuntary unemployment insurance, or any of them, 35.16 may be written upon or in connection with any loan but must not 35.17 be required as additional security for the indebtedness. If the 35.18 debtor chooses to procure credit life insurance, credit accident 35.19 and health insurance, or credit involuntary unemployment 35.20 insurance as security for the indebtedness, the debtor shall 35.21 have the option of furnishing this security through existing 35.22 policies of insurance that the debtor owns or controls, or of 35.23 furnishing the coverage through any insurer authorized to 35.24 transact business in this state. A statement in substantially 35.25 the following form must be made orally, except for loans by mail 35.26 pursuant to section 56.12, and provided in writing in bold face 35.27 type of a minimum size of 12 points to the borrower before the 35.28 transaction is completed for each credit life, accident and 35.29 health, and involuntary unemployment insurance coverage sold: 35.30 CREDIT LIFE INSURANCE, CREDIT DISABILITY INSURANCE, AND 35.31 CREDIT INVOLUNTARY UNEMPLOYMENT INSURANCE ARE NOT REQUIRED 35.32 TO OBTAIN CREDIT. YOU MAY BUY ANY INSURANCE FROM ANYONE 35.33 YOU CHOOSE OR YOU MAY USE EXISTING INSURANCE. 35.34 The licensee shall disclose whether or not the benefits 35.35 commence as of the first day of disability or involuntary 35.36 unemployment and shall further disclose the number of days that 36.1 an insured obligor must be disabled or involuntarily unemployed, 36.2 as defined in the policy, before benefits, whether retroactive 36.3 or nonretroactive, commence. In case there are multiple36.4 obligors under a transaction subject to this chapter, no policy36.5 or certificate of insurance providing credit unemployment36.6 benefits may be procured by or through a licensee upon more than36.7 one of the obligors.In case there are multiple obligors under 36.8 a transaction subject to this chapter, no policy or certificate 36.9 of insurance providing credit accident and health or, credit 36.10 life insurance, or credit unemployment benefits may be procured 36.11 by or through a licensee upon more than two of the obligors in 36.12 which case they shall be insured jointly or in the case of 36.13 credit unemployment benefits on a basis provided for in rules 36.14 adopted by the commissioner. The premium or identifiable charge 36.15 for the insurance must not exceed that filed by the insurer with 36.16 the department of commerce. The charge, computed at the time 36.17 the loan is made for a period not to exceed the full term of the 36.18 loan contract on an amount not to exceed the total amount 36.19 required to pay principal and charges, may be deducted from the 36.20 proceeds or may be included as part of the principal of any 36.21 loan. If a borrower procures insurance by or through a 36.22 licensee, the statement required by section 56.14 must disclose 36.23 the cost to the borrower and the type of insurance, and the 36.24 licensee shall cause to be delivered to the borrower a copy of 36.25 the policy, certificate, or other evidence thereof, within a 36.26 reasonable time. No licensee shall decline new or existing 36.27 insurance which meets the standards set out in this section nor 36.28 prevent any obligor from obtaining this insurance coverage from 36.29 other sources. Notwithstanding any other provision of this 36.30 chapter, any gain or advantage to the licensee or to any 36.31 employee, affiliate, or associate of the licensee from this 36.32 insurance or the sale or provision thereof is not an additional 36.33 or further charge in connection with the loan; nor are any of 36.34 the provisions pertaining to insurance contained in this section 36.35 prohibited by any other provision of this chapter. 36.36 Sec. 24. Minnesota Statutes 1994, section 59A.06, 37.1 subdivision 2, is amended to read: 37.2 Subd. 2. Every licensee shall preserve its records of 37.3 premium finance transactions for at least three years after 37.4 making the final entry in respect to any premium finance 37.5 agreement. The records may be preserved in photographic form or 37.6 in a form acceptable to the commissioner under section 46.04, 37.7 subdivision 3. 37.8 Sec. 25. Minnesota Statutes 1994, section 62B.04, 37.9 subdivision 1, is amended to read: 37.10 Subdivision 1. [CREDIT LIFE INSURANCE.] (1) The initial 37.11 amount of credit life insurance shall not exceed the amount of 37.12 principal repayable under the contract of indebtedness plus an 37.13 amount equal to one monthly payment. Thereafter, if the 37.14 indebtedness is repayable in substantially equal installments 37.15 according to a predetermined schedule, the amount of insurance 37.16 shall not exceed the scheduled indebtedness plus one monthly 37.17 payment or actual amount of indebtedness, whichever is greater. 37.18 (2) Notwithstanding clause (1), the amount of credit life 37.19 insurance written in connection with credit transactions 37.20 repayable over a specified term exceeding 63 months shall not 37.21 exceed the greater of: (i) the actual amount of unpaid 37.22 indebtedness as it exists from time to time; or (ii) where an 37.23 indebtedness is repayable in substantially equal installments 37.24 according to a predetermined schedule, the scheduled amount of 37.25 unpaid indebtedness, less any unearned interest or finance 37.26 charges, plus an amount equal to two monthly payments. 37.27 (3) Notwithstanding clauses (1) and (2), insurance on 37.28 educational, agricultural, and horticultural credit transaction 37.29 commitments may be written on a nondecreasing or level term plan 37.30 for the amount of the loan commitment. 37.31 (4) If the contract of indebtedness provides for a variable 37.32 rate of finance charge or interest, the initial rate or the 37.33 scheduled rates based on the initial index shall be used in 37.34 determining the scheduled amount of indebtedness, and subsequent 37.35 changes to the rate shall be disregarded in determining whether 37.36 the contract is repayable in substantially equal installments 38.1 according to a predetermined schedule. 38.2 Sec. 26. Minnesota Statutes 1994, section 62B.08, 38.3 subdivision 2, is amended to read: 38.4 Subd. 2. Each individual policy or group certificate shall 38.5 provide that in the event of termination of the insurance prior 38.6 to the scheduled maturity date of the indebtedness, any refund 38.7 of an amount paid by the debtor for insurance shall be paid or 38.8 credited promptly to the person entitled thereto; provided, 38.9 however, that the commissioner shall prescribe a minimum refund38.10 and no refund which would be less than such minimum need be made38.11 a premium refund or credit need not be made if the amount 38.12 thereof is less than $5. The formula to be used in computing 38.13 the refund shall be filed with and approved by the commissioner. 38.14 Sec. 27. Minnesota Statutes 1994, section 300.20, 38.15 subdivision 1, is amended to read: 38.16 Subdivision 1. [ELECTION.] The business of savings banks 38.17 must be managed by a board of at least seven trustees, residents 38.18 of this state, each of whom, before being authorized to act, 38.19 must file a written acceptance of the trust. The business of 38.20 other corporations must be managed by a board of at least three38.21 five directors, unless a greater number is otherwise required by 38.22 law, elected by ballot by the stockholders or members. A board 38.23 of directors of a financial institution referred to in section 38.24 47.12 which has less than five members on August 1, 1995, is not 38.25 subject to this requirement but may be increased to not more 38.26 than five members by order of the commissioner of commerce. 38.27 Sec. 28. Minnesota Statutes 1994, section 327B.04, 38.28 subdivision 1, is amended to read: 38.29 Subdivision 1. [LICENSE AND BOND REQUIRED.] No person 38.30 shall act as a dealer in manufactured homes, new or used, 38.31 without a license and a surety bond as provided in this 38.32 section. No person shall manufacture manufactured homes without 38.33 a license and a surety bond as provided in this section. The 38.34 licensing and bonding requirements of this section do not apply 38.35 to any bank, savings bank, savings and loanassociation, or 38.36 credit union, chartered by either this state or the federal 39.1 government, which acts as a dealer only by repossessing 39.2 manufactured homes and then offering the homes for resale 39.3 through the brokering services of a licensed dealer or real39.4 estate broker or salesperson. 39.5 Sec. 29. Minnesota Statutes 1994, section 327B.09, 39.6 subdivision 1, is amended to read: 39.7 Subdivision 1. [LICENSE REQUIRED.] No person shall engage 39.8 in the business, either exclusively or in addition to any other 39.9 occupation of manufacturing, selling, offering to sell, 39.10 soliciting or advertising the sale of manufactured homes, or act 39.11 as a broker without being licensed as a manufacturer or a dealer 39.12 as provided in section 327B.04. Any person who manufactures, 39.13 sells, offers to sell, solicits or advertises the sale of 39.14 manufactured homes, or acts as a broker in violation of this 39.15 subdivision shall nevertheless be subject to the duties, 39.16 prohibitions and penalties imposed by sections 327B.01 to 39.17 327B.12. This subdivisionchapter does not prohibit either an 39.18 individual from reselling, without a license, a manufactured 39.19 home which is or has been the individual's residence or any 39.20 bank, savings bank, savings association, or credit union, 39.21 chartered by either this state or the federal government, from 39.22 reselling, without a license, a repossessed manufactured home. 39.23 Sec. 30. Minnesota Statutes 1994, section 332.23, 39.24 subdivision 1, is amended to read: 39.25 Subdivision 1. [ORIGINATION FEE, CREDIT BACKGROUND REPORT 39.26 COST.] The licensee may charge an origination fee of not more 39.27 than $25 and collect from the debtor the actual cost of a credit 39.28 background report obtained from a credit reporting agency not 39.29 related to or affiliated with the licensee. The costs to the 39.30 debtor of said origination fee and credit background report may 39.31 be made from the originating amount paid by the debtor to the 39.32 licensee. The cost of only one credit background report may be 39.33 collected from the debtor in any 12-month period. 39.34 Sec. 31. Minnesota Statutes 1994, section 332.23, 39.35 subdivision 2, is amended to read: 39.36 Subd. 2. [WITHDRAWAL OF FEE.] The licensee may withdraw 40.1 and retain as partial payment of the licensee's total fee not 40.2 more than 15 percent of any sum deposited with the licensee by 40.3 the debtor for distribution. The remaining 85 percent must be 40.4 disbursed to listed creditors pursuant to and in accordance with 40.5 the contract between the debtor and the licensee within 35 days 40.6 after receipt. Total payment to licensee for services rendered, 40.7 excluding the origination fee and any credit background report, 40.8 shall not exceed 15 percent of funds deposited with licensee by 40.9 debtor for distribution. 40.10 Sec. 32. Minnesota Statutes 1994, section 334.011, is 40.11 amended by adding a subdivision to read: 40.12 Subd. 5. [LOANS BY CHARITABLE ORGANIZATIONS TO ASSIST 40.13 CERTAIN SMALL BUSINESSES.] (a) This subdivision applies to 40.14 nonprofit charitable organizations recognized as exempt from 40.15 federal income taxation under section 501(c)(3) of the federal 40.16 Internal Revenue Code of 1986, as amended, that make loans for 40.17 business purposes to individuals who are disadvantaged or 40.18 otherwise unable to access standard sources of business credit, 40.19 in conjunction with a program of education, training, business 40.20 counseling, or other assistance to assist borrowers in 40.21 developing their businesses at no extra charge to the borrowers 40.22 or at a charge that does not exceed the cost of providing the 40.23 assistance. 40.24 (b) Notwithstanding section 334.01 and subdivisions 1 and 40.25 2, an organization described in paragraph (a) may make loans 40.26 described in that paragraph, in principal amounts not to exceed 40.27 $10,000, at a rate of interest not to exceed 16 percent per 40.28 year, and with an origination fee not to exceed two percent of 40.29 the principal amount. 40.30 (c) Prior to beginning to make loans under this 40.31 subdivision, the lender shall provide written notice to the 40.32 commissioner of commerce, on a form prescribed by that 40.33 commissioner. The lender shall at the same time provide a copy 40.34 of that written notice to the commissioner of trade and economic 40.35 development. 40.36 (d) A lender making loans under this subdivision shall 41.1 annually file with the commissioner an annual report, on a date 41.2 and on a form prescribed by the commissioner, summarizing the 41.3 lender's loans made or outstanding in this state during the 41.4 preceding year. The lender shall at the same time provide a 41.5 copy of that annual report to the commissioner of trade and 41.6 economic development. 41.7 Sec. 33. [RECOMMENDATIONS; POINT-OF-SALE TERMINALS.] 41.8 The commissioner of commerce shall select and convene an 41.9 informal workgroup to make recommendations to the commissioner 41.10 regarding whether there is a need to license electronic 41.11 point-of-sale terminals operated by a retailer for use with 41.12 credit cards or debit cards. The informal workgroup must 41.13 include persons representing retailers, financial institutions, 41.14 and consumers. The commissioner shall make recommendations to 41.15 the legislature no later than December 1, 1994. 41.16 Sec. 34. [EFFECTIVE DATE.] 41.17 Sections 1 to 2, 5 to 15, 17 to 21, 23 to 31, and 33 are 41.18 effective the day following final enactment. Sections 3 and 4 41.19 are effective September 1, 1995. Section 16 is effective for 41.20 reports filed for close of business beginning June 30, 1995. 41.21 ARTICLE 3 41.22 INTEREST RATE SIMPLIFICATION AND SMALL DOLLAR 41.23 CREDIT AVAILABILITY 41.24 Section 1. [47.59] [FINANCIAL INSTITUTION CREDIT EXTENSION 41.25 MAXIMUM RATES.] 41.26 Subdivision 1. [DEFINITIONS.] For purposes of this 41.27 section, the following definitions shall apply. 41.28 (a) "Actuarial method" has the meaning given the term in 41.29 the Code of Federal Regulations, title 12, part 226, and 41.30 appendix J thereto. 41.31 (b) "Annual percentage rate" has the meaning given the term 41.32 in the Code of Federal Regulations, title 12, part 226, but 41.33 using the definition of "finance charge" used in this section. 41.34 (c) "Borrower" means a debtor under a loan or a purchaser 41.35 or debtor under a credit sale contract. 41.36 (d) "Business purpose" means a purpose other than a 42.1 personal, family, household, or agricultural purpose. 42.2 (e) "Cardholder" means a person to whom a credit card is 42.3 issued or who has agreed with the financial institution to pay 42.4 obligations arising from the issuance to or use of the card by 42.5 another person. 42.6 (f) "Consumer loan" means a loan made by a financial 42.7 institution in which: 42.8 (1) the debtor is a person other than an organization; 42.9 (2) the debt is incurred primarily for a personal, family, 42.10 or household purpose; and 42.11 (3) the debt is payable in installments or a finance charge 42.12 is made. 42.13 (g) "Credit" means the right granted by a financial 42.14 institution to a borrower to defer payment of a debt, to incur 42.15 debt and defer its payment, or to purchase property or services 42.16 and defer payment. 42.17 (h) "Credit card" means a card or device issued under an 42.18 arrangement pursuant to which a financial institution gives to a 42.19 cardholder the privilege of obtaining credit from the financial 42.20 institution or other person in purchasing or leasing property or 42.21 services, obtaining loans, or otherwise. A transaction is 42.22 "pursuant to a credit card" only if credit is obtained according 42.23 to the terms of the arrangement by transmitting information 42.24 contained on the card or device orally, in writing, by 42.25 mechanical or electronic methods, or in any other manner. A 42.26 transaction is not "pursuant to a credit card" if the card or 42.27 device is used solely in that transaction to: 42.28 (1) identify the cardholder or evidence the cardholder's 42.29 creditworthiness and credit is not obtained according to the 42.30 terms of the arrangement; 42.31 (2) obtain a guarantee of payment from the cardholder's 42.32 deposit account, whether or not the payment results in a credit 42.33 extension to the cardholder by the financial institution; or 42.34 (3) effect an immediate transfer of funds from the 42.35 cardholder's deposit account by electronic or other means, 42.36 whether or not the transfer results in a credit extension to the 43.1 cardholder by the financial institution. 43.2 (i) "Credit sale contract" means a contract evidencing a 43.3 credit sale. "Credit sale" means a sale of goods or services, 43.4 or an interest in land, in which: 43.5 (1) credit is granted by a seller who regularly engages as 43.6 a seller in credit transactions of the same kind; and 43.7 (2) the debt is payable in installments or a finance charge 43.8 is made. 43.9 (j) "Finance charge" has the meaning given in the Code of 43.10 Federal Regulations, title 12, part 226, except that the 43.11 following will not in any event be considered a finance charge: 43.12 (1) a charge as a result of default or delinquency under 43.13 subdivision 6 if made for actual unanticipated late payment, 43.14 delinquency, default, or other similar occurrence, and a charge 43.15 made for an extension or deferment under subdivision 5, unless 43.16 the parties agree that these charges are finance charges; 43.17 (2) an additional charge under subdivision 6; or 43.18 (3) a discount, if a financial institution purchases a loan 43.19 at less than the face amount of the obligation or purchases or 43.20 satisfies obligations of a cardholder pursuant to a credit card 43.21 and the purchase or satisfaction is made at less than the face 43.22 amount of the obligation. 43.23 (k) "Financial institution" means a state or federally 43.24 chartered bank, a state or federally chartered bank and trust, a 43.25 trust company with banking powers, a state or federally 43.26 chartered saving bank, a state or federally chartered savings 43.27 association, an industrial loan and thrift company, or a 43.28 regulated lender. 43.29 (l) "Loan" means: 43.30 (1) the creation of debt by the financial institution's 43.31 payment of money to the borrower or a third person for the 43.32 account of the borrower; 43.33 (2) the creation of debt pursuant to a credit card in any 43.34 manner, including a cash advance or the financial institution's 43.35 honoring a draft or similar order for the payment of money drawn 43.36 or accepted by the borrower, paying or agreeing to pay the 44.1 borrower's obligation, or purchasing or otherwise acquiring the 44.2 borrower's obligation from the obligee or the borrower's 44.3 assignee; 44.4 (3) the creation of debt by a cash advance to a borrower 44.5 pursuant to an overdraft line of credit arrangement; 44.6 (4) the creation of debt by a credit to an account with the 44.7 financial institution upon which the borrower is entitled to 44.8 draw immediately; 44.9 (5) the forbearance of debt arising from a loan; and 44.10 (6) the creation of debt pursuant to open-end credit. 44.11 "Loan" does not include the forbearance of debt arising 44.12 from a sale or lease, a credit sale contract, or an overdraft 44.13 from a person's deposit account with a financial institution 44.14 which is not pursuant to a written agreement to pay overdrafts 44.15 with the right to defer repayment thereof. 44.16 (m) "Official fees" means: 44.17 (1) fees and charges which actually are or will be paid to 44.18 public officials for determining the existence of or for 44.19 perfecting, releasing, terminating, or satisfying a security 44.20 interest or mortgage relating to a loan or credit sale, and any 44.21 separate fees or charges which actually are or will be paid to 44.22 public officials for recording a notice described in section 44.23 580.032, subdivision 1; and 44.24 (2) premiums payable for insurance in lieu of perfecting a 44.25 security interest or mortgage otherwise required by a financial 44.26 institution in connection with a loan or credit sale, if the 44.27 premium does not exceed the fees and charges described in clause 44.28 (1), which would otherwise be payable. 44.29 (n) "Organization" means a corporation, government, 44.30 government subdivision or agency, trust, estate, partnership, 44.31 joint venture, cooperative, limited liability company, limited 44.32 liability partnership, or association. 44.33 (o) "Person" means a natural person or an organization. 44.34 (p) "Principal" means the total of: 44.35 (1) the amount paid to, received by, or paid or repayable 44.36 for the account of, the borrower; and 45.1 (2) to the extent that payment is deferred: 45.2 (i) the amount actually paid or to be paid by the financial 45.3 institution for additional charges permitted under this section; 45.4 and 45.5 (ii) prepaid finance charges. 45.6 Subd. 2. [APPLICATION.] This section does not apply to 45.7 loans and other extensions of credit or purchases of extensions 45.8 of credit by financial institutions under sections 47.20, 47.21, 45.9 47.201, 47.204, 47.58, 47.60, 48.153, 48.185, 48.195, 59A.01, 45.10 168.66 to 168.77, 334.01, 334.011, 334.012, 334.06, and 334.061 45.11 to 334.19. 45.12 Subd. 3. [FINANCE CHARGE FOR LOANS.] (a) With respect to a 45.13 loan, including a loan pursuant to open-end credit but excluding 45.14 open-end credit pursuant to a credit card, a financial 45.15 institution may contract for and receive a finance charge on the 45.16 unpaid balance of the principal amount not to exceed the greater 45.17 of: 45.18 (1) an annual percentage rate not exceeding 21.75 percent; 45.19 or 45.20 (2) the total of: 45.21 (i) 33 percent per year on that part of the unpaid balance 45.22 of the principal amount not exceeding $750; and 45.23 (ii) 19 percent per year on that part of the unpaid balance 45.24 of the principal amount exceeding $750. 45.25 With respect to open-end credit pursuant to a credit card, 45.26 the financial institution may contract for and receive a finance 45.27 charge on the unpaid balance of the principal amount at an 45.28 annual percentage rate not exceeding 18 percent per year. 45.29 (b) On a loan where the finance charge is calculated 45.30 according to the method provided for in paragraph (a), clause 45.31 (2), the finance charge must be contracted for and earned as 45.32 provided in that provision or at the single annual percentage 45.33 rate computed to the nearest .001 of one percent that would earn 45.34 the same total finance charge at maturity of the contract as 45.35 would be earned by the application of the graduated rates 45.36 provided in paragraph (a), clause (2), when the debt is paid 46.1 according to the agreed terms and the calculations are made 46.2 according to the actuarial method. 46.3 (c) With respect to a loan, the finance charge must be 46.4 considered not to exceed the maximum annual percentage rate 46.5 permitted under this section if the finance charge contracted 46.6 for and received does not exceed the equivalent of the maximum 46.7 annual percentage rate calculated in accordance with Code of 46.8 Federal Regulations, title 12, part 226, but using the 46.9 definition of finance charge provided in this section. 46.10 (d) This subdivision does not limit or restrict the manner 46.11 of calculating the finance charge, whether by way of add-on, 46.12 discount, discount points, precomputed charges, single annual 46.13 percentage rate, variable rate, interest in advance, 46.14 compounding, average daily balance method, or otherwise, if the 46.15 annual percentage rate does not exceed that permitted by this 46.16 section. 46.17 (e) With respect to a loan secured by real estate, if a 46.18 finance charge is calculated or collected in advance, or 46.19 included in the principal amount of the loan, and the borrower 46.20 prepays the loan in full, the financial institution shall credit 46.21 the borrower with a refund of the charge to the extent that the 46.22 annual percentage rate yield on the loan would exceed the 46.23 maximum rate permitted under paragraph (a), taking into account 46.24 the prepayment. 46.25 (f) With respect to all other loans, if the finance charge 46.26 is calculated or collected in advance, or included in the 46.27 principal amount of the loan, and the borrower prepays the loan 46.28 in full, the financial institution shall credit the borrower 46.29 with a refund of the charge to the extent the annual percentage 46.30 rate yield on the loan would exceed the annual percentage rate 46.31 on the loan as originally determined under paragraph (a) and 46.32 taking into account the prepayment. 46.33 (g) For the purpose of calculating the refund under this 46.34 subdivision, the financial institution may assume that the 46.35 contract was paid before the date of prepayment according to the 46.36 schedule of payments under the loan and that all payments were 47.1 paid on their due dates. 47.2 (h) For loans repayable in substantially equal successive 47.3 monthly installments, the financial institution may calculate 47.4 the refund under paragraph (f) as the portion of the finance 47.5 charge allocable on an actuarial basis to all wholly unexpired 47.6 payment periods following the date of prepayment, based on the 47.7 annual percentage rate on the loan as originally determined 47.8 under paragraph (a), and for the purpose of calculating the 47.9 refund may assume that all payments are made on the due date. 47.10 (i) The dollar amounts in this subdivision and subdivision 47.11 (6), clause (4), shall change periodically, as provided in this 47.12 section, according to and to the extent of changes in the 47.13 implicit price deflator for the gross domestic product, 1987 = 47.14 100, compiled by the United States Department of Commerce, and 47.15 hereafter referred to as the index. The index for December 1991 47.16 is the reference base index for adjustments of dollar amounts. 47.17 (j) The designated dollar amounts shall change on July 1 of 47.18 each even-numbered year if the percentage of change, calculated 47.19 to the nearest whole percentage point, between the index for 47.20 December of the preceding year and the reference base index is 47.21 ten percent or more; but 47.22 (1) the portion of the percentage change in the index in 47.23 excess of a multiple of ten percent shall be disregarded and the 47.24 dollar amounts shall change only in multiples of ten percent of 47.25 the amounts appearing in this act, on the date of enactment; and 47.26 (2) the dollar amounts shall not change if the amounts 47.27 required by this section are those currently in effect pursuant 47.28 to this act, as a result of earlier application of this section. 47.29 (k) If the index is revised, the percentage of change 47.30 pursuant to this section shall be calculated on the basis of the 47.31 revised index. If a revision of the index changes the reference 47.32 base index, a revised reference base index shall be determined 47.33 by multiplying the reference base index then applicable by the 47.34 rebasing factor furnished by the department of commerce. If the 47.35 index is superseded, the index referred to in this section is 47.36 the one represented by the department of commerce as reflecting 48.1 most accurately changes in the purchasing power of the dollar 48.2 for consumers. 48.3 (l) The commissioner shall announce and publish: 48.4 (1) on or before April 30 of each year in which dollar 48.5 amounts are to change, the changes in dollar amounts required by 48.6 paragraph (j); and 48.7 (2) promptly after the changes occur, changes in the index 48.8 required by paragraph (k) including, if applicable, the 48.9 numerical equivalent of the reference base index under a revised 48.10 reference base index and the designation or title of any index 48.11 superseding the index. 48.12 (m) A person does not violate this chapter with respect to 48.13 a transaction otherwise complying with this chapter if that 48.14 person relies on dollar amounts either determined according to 48.15 paragraph (j), clause (2), or appearing in the last publication 48.16 of the commissioner announcing the then current dollar amounts. 48.17 (n) The adjustments provided in this section shall not be 48.18 affected unless explicitly provided otherwise by law. 48.19 Subd. 4. [FINANCE CHARGE FOR CREDIT SALES MADE BY A THIRD 48.20 PARTY.] (a) A person may enter into a credit sale contract for 48.21 sale to a financial institution and a financial institution may 48.22 purchase and enforce the contract, if the annual percentage rate 48.23 provided for in the contract does not exceed that permitted in 48.24 this section, or, in the case of contracts governed by sections 48.25 168.66 to 168.77, the rates permitted by those sections. 48.26 (b) The annual percentage rate may not exceed the 48.27 equivalent of the greater of either of the following: 48.28 (1) the total of: 48.29 (i) 36 percent per year on that part of the unpaid balances 48.30 of the amount financed that is $300 or less; 48.31 (ii) 21 percent per year on that part of the unpaid 48.32 balances of the amount financed which exceeds $300 but does not 48.33 exceed $1,000; and 48.34 (iii) 15 percent per year on that part of the unpaid 48.35 balances of the amount financed which exceeds $1,000; or 48.36 (2) 19 percent per year on the unpaid balances of the 49.1 amount financed. 49.2 (c) This subdivision does not limit or restrict the manner 49.3 of calculating the finance charge whether by way of add-on, 49.4 discount, discount points, single annual percentage rate, 49.5 precomputed charges, variable rate, interest in advance, 49.6 compounding, or otherwise, if the annual percentage rate 49.7 calculated under paragraph (d) does not exceed that permitted by 49.8 this section. The finance charge may be contracted for and 49.9 earned at the single annual percentage rate that would earn the 49.10 same finance charge as the graduated rates when the debt is paid 49.11 according to the agreed terms and the finance charge is 49.12 calculated under paragraph (d). If the finance charge is 49.13 calculated and collected in advance, or included in the 49.14 principal amount of the contract, and the borrower prepays the 49.15 contract in full, the financial institution shall credit the 49.16 borrower with a refund of the charge to the extent the annual 49.17 percentage rate yield on the contract would exceed the annual 49.18 percentage rate on the contract as originally determined under 49.19 paragraph (d) and taking into account the prepayment. For the 49.20 purpose of calculating the refund under this subdivision, the 49.21 financial institution may assume that the contract was paid 49.22 before the date of prepayment according to the schedule of 49.23 payments under the contract and that all payments were paid on 49.24 their due dates. For contracts repayable in substantially equal 49.25 successive monthly installments, the financial institution may 49.26 calculate the refund as the portion of the finance charge 49.27 allocable on an actuarial basis to all wholly unexpired payment 49.28 periods following the date of prepayment, based on the annual 49.29 percentage rate on the contract as originally determined under 49.30 paragraph (d), and for the purpose of calculating the refund may 49.31 assume that all payments are made on the due date. 49.32 (d) The annual percentage rate must be calculated in 49.33 accordance with Code of Federal Regulations, title 12, part 226, 49.34 except that the following will not in any event be considered a 49.35 finance charge: 49.36 (1) a charge as a result of delinquency or default under 50.1 subdivision 6 if made for actual unanticipated late payment, 50.2 delinquency, default, or other similar occurrence, and a charge 50.3 made for an extension or deferment under subdivision 5, unless 50.4 the parties agree that these charges are finance charges; 50.5 (2) an additional charge under subdivision 6; or 50.6 (3) a discount, if a financial institution purchases a 50.7 contract evidencing a credit sale at less than the face amount 50.8 of the obligation or purchases or satisfies obligations of a 50.9 cardholder according to a credit card and the purchase or 50.10 satisfaction is made at less than the face amount of the 50.11 obligation. 50.12 Subd. 5. [EXTENSIONS AND DEFERMENTS.] The parties may 50.13 agree in writing, either in the loan contract or credit sale 50.14 contract or in a subsequent agreement, to a deferment of wholly 50.15 unpaid installments. For precomputed loans and credit sale 50.16 contracts, the manner of deferment charge shall be determined as 50.17 provided for in this section. A deferment postpones the 50.18 scheduled due date of the earliest unpaid installment and all 50.19 subsequent installments as originally scheduled, or as 50.20 previously deferred, for a period equal to the deferment 50.21 period. The deferment period is that period during which no 50.22 installment is scheduled to be paid by reason of the deferment. 50.23 The deferment charge for a one-month period may not exceed the 50.24 applicable charge for the installment period immediately 50.25 following the due date of the last undeferred payment. A 50.26 proportionate charge may be made for deferment periods of more 50.27 or less than one month. A deferment charge is earned pro rata 50.28 during the deferment period and is fully earned on the last day 50.29 of the deferment period. If a loan or credit sale is prepaid in 50.30 full during a deferment period, the financial institution shall 50.31 make or credit to the borrower a refund of the unearned 50.32 deferment charge in addition to any other refund or credit made 50.33 for prepayment of the loan or credit sale in full. 50.34 For the purpose of this subdivision, "applicable charge" 50.35 means the amount of finance charge attributable to each monthly 50.36 installment period for the loan or credit sale contract. The 51.1 applicable charge is computed as if each installment period were 51.2 one month and any charge for extending the first installment 51.3 period beyond the one month, or reduction in charge for a first 51.4 installment less than one month, is ignored. The applicable 51.5 charge for any installment period is that which would have been 51.6 made for the period had the loan been made on an 51.7 interest-bearing basis at the single annual percentage rate 51.8 provided for in the contract based upon the assumption that all 51.9 payments were made according to schedule. For convenience in 51.10 computation, the financial institution may round the single 51.11 annual rate to the nearest one quarter of one percent. 51.12 Subd. 6. [ADDITIONAL CHARGES.] (a) In addition to the 51.13 finance charges permitted by this section, a financial 51.14 institution may contract for and receive the following 51.15 additional charges that may be included in the amount financed: 51.16 (1) official fees and taxes; 51.17 (2) charges for insurance as described in paragraph (b); 51.18 (3) with respect to a loan or credit sale contract secured 51.19 by real estate, the following "closing costs," if they are bona 51.20 fide, reasonable in amount, and not for the purpose of 51.21 circumvention or evasion of this section: 51.22 (i) fees or premiums for title examination, abstract of 51.23 title, title insurance, surveys, or similar purposes; 51.24 (ii) fees for preparation of a deed, mortgage, settlement 51.25 statement, or other documents, if not paid to the financial 51.26 institution; 51.27 (iii) escrows for future payments of taxes, including 51.28 assessments for improvements, insurance, and water, sewer, and 51.29 land rents; 51.30 (iv) fees for notarizing deeds and other documents; 51.31 (v) appraisal and credit report fees; and 51.32 (vi) fees for determining whether any portion of the 51.33 property is located in a flood zone and fees for ongoing 51.34 monitoring of the property to determine changes, if any, in 51.35 flood zone status; 51.36 (4) a delinquency charge on a payment, including the 52.1 minimum payment due in connection with the open-end credit, not 52.2 paid in full on or before the tenth day after its due date in an 52.3 amount not to exceed five percent of the amount of the payment 52.4 or $5.20, whichever is greater; 52.5 (5) for a returned check or returned automatic payment 52.6 withdrawal request, an amount not in excess of the service 52.7 charge limitation in section 332.50; and 52.8 (6) charges for other benefits, including insurance, 52.9 conferred on the borrower that are of a type that is not for 52.10 credit. 52.11 (b) An additional charge may be made for insurance written 52.12 in connection with the loan or credit sale contract, which may 52.13 be included in the amount financed: 52.14 (1) with respect to insurance against loss of or damage to 52.15 property, or against liability arising out of the ownership or 52.16 use of property, if the financial institution furnishes a clear, 52.17 conspicuous, and specific statement in writing to the borrower 52.18 setting forth the cost of the insurance if obtained from or 52.19 through the financial institution and stating that the borrower 52.20 may choose the person through whom the insurance is to be 52.21 obtained; 52.22 (2) with respect to credit insurance or mortgage insurance 52.23 providing life, accident, health, or unemployment coverage, if 52.24 the insurance coverage is not required by the financial 52.25 institution, and this fact is clearly and conspicuously 52.26 disclosed in writing to the borrower, and the borrower gives 52.27 specific, dated, and separately signed affirmative written 52.28 indication of the borrower's desire to do so after written 52.29 disclosure to the borrower of the cost of the insurance; and 52.30 (3) with respect to the vendor's single interest insurance, 52.31 but only (i) to the extent that the insurer has no right of 52.32 subrogation against the borrower; and (ii) to the extent that 52.33 the insurance does not duplicate the coverage of other insurance 52.34 under which loss is payable to the financial institution as its 52.35 interest may appear, against loss of or damage to property for 52.36 which a separate charge is made to the borrower according to 53.1 clause (1); and (iii) if a clear, conspicuous, and specific 53.2 statement in writing is furnished by the financial institution 53.3 to the borrower setting forth the cost of the insurance if 53.4 obtained from or through the financial institution and stating 53.5 that the borrower may choose the person through whom the 53.6 insurance is to be obtained. 53.7 (c) In addition to the finance charges and other additional 53.8 charges permitted by this section, a financial institution may 53.9 contract for and receive the following additional charges in 53.10 connection with open-end credit, which may be included in the 53.11 amount financed or balance upon which the finance charge is 53.12 computed: 53.13 (1) annual charges, not to exceed $50 per annum, payable in 53.14 advance, for the privilege of opening and maintaining open-end 53.15 credit; 53.16 (2) charges for the use of an automated teller machine; 53.17 (3) charges for any monthly or other periodic payment 53.18 period in which the borrower has exceeded or, except for the 53.19 financial institution's dishonor would have exceeded, the 53.20 maximum approved credit limit, in an amount not in excess of the 53.21 service charge permitted in section 332.50; 53.22 (4) charges for obtaining a cash advance in an amount not 53.23 to exceed the service charge permitted in section 332.50; and 53.24 (5) charges for check and draft copies and for the 53.25 replacement of lost or stolen credit cards. 53.26 (d) In addition to the finance charges and other additional 53.27 charges permitted by this section, a financial institution may 53.28 contract for and receive a one-time loan administrative fee not 53.29 exceeding $25 in connection with closed-end credit, which may be 53.30 included in the amount financed or principal balance upon which 53.31 the finance charge is computed. This paragraph applies only to 53.32 closed-end credit in an original principal amount of $4,320 or 53.33 less. 53.34 Subd. 7. [ADVANCES TO PERFORM COVENANTS OF BORROWER OR 53.35 PURCHASER.] (a) If the agreement with respect to a loan or 53.36 credit sale contract contains covenants by the borrower or 54.1 purchaser to perform certain duties pertaining to insuring or 54.2 preserving collateral and the financial institution according to 54.3 the agreement pays for performance of the duties on behalf of 54.4 the borrower or purchaser, the financial institution may add to 54.5 the debt or contract balance the amounts so advanced. Before or 54.6 within a reasonable time not less than 30 days after advancing 54.7 any sums, the financial institution shall state to the borrower 54.8 or purchaser in writing the amount of sums advanced or to be 54.9 advanced, any charges with respect to this amount, and any 54.10 revised payment schedule and, if the duties of the borrower or 54.11 purchaser performed by the financial institution pertain to 54.12 insurance, a brief description of the insurance paid for or to 54.13 be paid for by the financial institution including the type and 54.14 amount of coverages. Additional information need not be given. 54.15 The actions of the financial institution pursuant to this 54.16 subdivision shall not be deemed to cure the borrower's failure 54.17 to perform covenants in the loan or credit sale contract, unless 54.18 the loan or credit sale contract expressly provides otherwise. 54.19 (b) A finance charge equal to that specified in the loan 54.20 agreement or credit sale contract may be made for sums advanced 54.21 under paragraph (a). 54.22 Subd. 8. [ATTORNEY'S FEES.] With respect to a loan or 54.23 credit sale, the agreement may provide for payment by the 54.24 borrower of the attorney's fees and court costs incurred in 54.25 connection with collection or foreclosure. This subdivision is 54.26 not a limitation on attorney's fees that may be charged to an 54.27 organization. 54.28 Subd. 9. [RIGHT TO PREPAY.] The borrower or purchaser may 54.29 prepay in full the unpaid balance of a consumer loan or credit 54.30 sale contract, at any time without penalty. 54.31 Subd. 10. [CREDIT INSURANCE.] (a) The sale of credit 54.32 insurance or mortgage insurance is subject to chapters 61A, 62A, 54.33 and 62B, as applicable, and the rules adopted under those 54.34 chapters, if any. In case there are multiple consumers 54.35 obligated under a transaction subject to this chapter, no policy 54.36 or certificate or insurance providing credit life insurance may 55.1 be procured by or through a financial institution or person 55.2 described in subdivision 2 upon more than two of the consumers, 55.3 in which case they may be insured jointly. 55.4 (b) A financial institution that provides credit insurance 55.5 in relation to open-end credit may calculate the charge to the 55.6 borrower in each billing cycle by applying the current premium 55.7 rate to the balance in the manner permitted with respect to 55.8 finance charges by the provisions on finance charge in this 55.9 section. 55.10 (c) Upon prepayment in full of a consumer loan or credit 55.11 sale contract by the proceeds of credit insurance or mortgage 55.12 insurance, the consumer or the consumer's estate is entitled to 55.13 a refund of any portion of a separate charge for insurance that 55.14 by reason of prepayment is retained by the financial institution 55.15 or returned to it by the insurer, unless the charge was computed 55.16 from time to time on the basis of the balances of the consumer's 55.17 loan or credit sale contract. 55.18 (d) This section does not require a financial institution 55.19 to grant a refund to the consumer if all refunds due to the 55.20 consumer under paragraph (c) amount to less than $5 and, except 55.21 as provided in paragraph (c), does not require the financial 55.22 institution to account to the consumer for any portion of a 55.23 separate charge for insurance because: 55.24 (1) the insurance is terminated by performance of the 55.25 insurer's obligation; 55.26 (2) the financial institution pays or accounts for premiums 55.27 to the insurer in amounts and at times determined by the 55.28 agreement between them; or 55.29 (3) the financial institution receives directly or 55.30 indirectly under a policy of insurance a gain or advantage not 55.31 prohibited by law. 55.32 (e) Except as provided in paragraph (d), the financial 55.33 institution shall promptly make or cause to be made an 55.34 appropriate refund to the consumer with respect to a separate 55.35 charge made to the consumer for insurance if: 55.36 (1) the insurance is not provided or is provided for a 56.1 shorter term than for which the charge to the borrower for 56.2 insurance was computed; or 56.3 (2) the insurance terminates before the end of the term for 56.4 which it was written because of prepayment in full or otherwise. 56.5 (f) If a financial institution requires insurance, upon 56.6 notice to the borrower, the borrower has the option of providing 56.7 the required insurance through an existing policy of insurance 56.8 owned or controlled by the borrower, or through a policy to be 56.9 obtained and paid for by the borrower, but the financial 56.10 institution for reasonable cause may decline the insurance 56.11 provided by the borrower. 56.12 Subd. 11. [PROPERTY AND LIABILITY INSURANCE.] (a) Except 56.13 as otherwise provided in this section and subject to the 56.14 provisions on additional charges and maximum finance charges in 56.15 this section, a financial institution may agree to sell, as an 56.16 agent, property and liability insurance, and may contract for 56.17 and receive a charge for this insurance separate from and in 56.18 addition to other charges. This section does not authorize the 56.19 issuance of the insurance prohibited under any statute or rule 56.20 governing the business of insurance nor does it authorize a 56.21 financial institution to underwrite insurance. 56.22 (b) This section does not apply to an insurance premium 56.23 loan. A financial institution may request cancellation of a 56.24 policy of property or liability insurance only after the 56.25 borrower's default or in accordance with a written authorization 56.26 by the borrower. In either case, the cancellation does not take 56.27 effect until written notice is delivered to the borrower or 56.28 mailed to the borrower at the borrower's address as stated by 56.29 the borrower. The notice must state that the policy may be 56.30 canceled on a date not less than ten days after the notice is 56.31 delivered, or, if the notice is mailed, not less than 13 days 56.32 after it is mailed. A cancellation may not take effect until 56.33 those notice periods expire. 56.34 Subd. 12. [CONSUMER PROTECTIONS.] (a) Financial 56.35 institutions shall comply with the requirements of the federal 56.36 Truth in Lending Act, United States Code, title 15, sections 57.1 1601 to 1693, in connection with a consumer loan or credit sale 57.2 for a consumer purpose where the federal Truth in Lending Act is 57.3 applicable. 57.4 (b) Financial institutions shall comply with the following 57.5 consumer protection provisions in connection with a consumer 57.6 loan or credit sale for a consumer purpose: sections 325G.02 to 57.7 325G.05; 325G.06 to 325G.11; 325G.15 to 325G.22; and 325G.29 to 57.8 325G.36, and Code of Federal Regulations, title 12, part 535, 57.9 where those statutes or regulations are applicable. 57.10 (c) An assignment of a consumer's earnings by the consumer 57.11 to a financial institution as payment or as security for payment 57.12 of a debt arising out of a consumer loan or consumer credit sale 57.13 is unenforceable by the financial institution and revocable by 57.14 the consumer. 57.15 Subd. 13. [LOANS AND CONTRACTS OTHER THAN CONSUMER LOANS 57.16 AND CONTRACTS.] Loans and credit sale contracts other than 57.17 consumer loans and consumer credit sale contracts are not 57.18 subject to the provisions and limitations of subdivisions 9; 10; 57.19 11, paragraph (b); and 12. 57.20 Subd. 14. [EFFECT OF VIOLATIONS ON RIGHTS OF PARTIES.] (a) 57.21 If a financial institution has violated any provision of this 57.22 section applying to collection of finance or other charges, the 57.23 borrower or purchaser under a credit sale contract may recover 57.24 from the financial institution actual damages and, in an action 57.25 other than a class action, a penalty in an amount determined by 57.26 the court but not less than $100 nor more than $1,000. With 57.27 respect to violations arising from other than open-end credit 57.28 transactions, no action may be brought according to this 57.29 paragraph and no set-off or recoupment may be asserted according 57.30 to this paragraph more than one year after the making of the 57.31 debt. 57.32 (b) A borrower or purchaser under a credit sale contract is 57.33 not obligated to pay a charge in excess of that allowed by this 57.34 section and has a right of refund of any excess charge paid. A 57.35 refund may not be made by reducing the borrower's or purchaser's 57.36 obligation by the amount of the excess charge, unless the 58.1 financial institution has notified the borrower or purchaser 58.2 that the borrower or purchaser may request a refund and the 58.3 borrower or purchaser has not so requested within 30 days 58.4 thereafter. If the borrower or purchaser has paid an amount in 58.5 excess of the lawful obligation under the agreement, the 58.6 borrower or purchaser may recover the excess amount from the 58.7 financial institution that made the excess charge or from an 58.8 assignee of the financial institution's rights that undertakes 58.9 direct collection of payments from or enforcement of rights 58.10 against borrowers or purchasers arising from the debt. 58.11 (c) If a financial institution has contracted for or 58.12 received a charge in excess of that allowed by this section, or 58.13 if a borrower or purchaser under a credit sale contract is 58.14 entitled to a refund and a person liable to the borrower or 58.15 purchaser refuses to make a refund within a reasonable time 58.16 after demand, the borrower or purchaser may recover from the 58.17 financial institution or the person liable in an action other 58.18 than a class action a penalty in an amount determined by the 58.19 court but not less than $100 nor more than $1,000. With respect 58.20 to excess charges arising from other than open-end credit 58.21 transactions, no action according to this paragraph may be 58.22 brought more than one year after the making of the debt. For 58.23 purposes of this paragraph, a reasonable time is presumed to be 58.24 30 days. 58.25 (d) A violation of this section does not impair rights on a 58.26 debt. 58.27 (e) A financial institution is not liable for a penalty 58.28 under paragraph (a) or (c) if it notifies the borrower or 58.29 purchaser under a credit sale contract of a violation before the 58.30 financial institution receives from the borrower or purchaser 58.31 written notice of the violation or the borrower or purchaser has 58.32 brought an action under this section, and the financial 58.33 institution corrects the violation within 45 days after 58.34 notifying the borrower or purchaser. If the violation consists 58.35 of a prohibited agreement, giving the borrower or purchaser a 58.36 corrected copy of the writing containing the violation is 59.1 sufficient notification and correction. If the violation 59.2 consists of an excess charge, correction must be made by an 59.3 adjustment or refund. 59.4 (f) A financial institution may not be held liable in an 59.5 action brought under this section for a violation of this 59.6 section if the financial institution shows by a preponderance of 59.7 evidence that the violation was not intentional and resulted 59.8 from a bona fide error notwithstanding the maintenance of 59.9 procedures reasonably adopted to avoid the error. 59.10 (g) In an action in which it is found that a financial 59.11 institution has violated this section, the court shall award to 59.12 the borrower or the purchaser under a credit sale contract the 59.13 costs of the action and to the borrower's or purchaser's 59.14 attorneys their reasonable fees. 59.15 Sec. 2. [47.60] [CONSUMER SMALL LOANS.] 59.16 Subdivision 1. [DEFINITIONS.] For purposes of this 59.17 section, the terms defined have the meanings given them: 59.18 (a) "Consumer small loan" is a loan transaction in which 59.19 cash is advanced to a borrower for the borrower's own personal, 59.20 family, or household purpose. A consumer small loan is a 59.21 short-term, unsecured loan to be repaid in a single 59.22 installment. The cash advance of a consumer small loan is equal 59.23 to or less than $350. A consumer small loan includes an 59.24 indebtedness evidenced by but not limited to a promissory note 59.25 or agreement to defer the presentation of a personal check for a 59.26 fee. 59.27 (b) "Consumer small loan lender" is a financial institution 59.28 as defined in section 47.59 or a person registered with the 59.29 commissioner and engaged in the business of making consumer 59.30 small loans. 59.31 Subd. 2. [AUTHORIZATION, TERMS, CONDITIONS, AND 59.32 PROHIBITIONS.] (a) In lieu of the interest, finance charges, or 59.33 fees in any other law, a consumer small loan lender may charge 59.34 the following: 59.35 (i) on any amount up to and including $50, a charge of 59.36 $5.50 may be added; 60.1 (ii) on amounts in excess of $50, but not more than $100, a 60.2 charge may be added equal to ten percent of the loan proceeds 60.3 plus a $5 administrative fee; 60.4 (iii) on amounts in excess of $100, but not more than $250, 60.5 a charge may be added equal to seven percent of the loan 60.6 proceeds with a minimum of $10 plus a $5 administrative fee; 60.7 (iv) for amounts in excess of $250 and not greater than the 60.8 maximum in subdivision 1, paragraph (a), a charge may be added 60.9 equal to six percent of the loan proceeds with a minimum of 60.10 $17.50 plus a $5 administrative fee. 60.11 (b) The term of a loan made under this section shall be 30 60.12 days. 60.13 (c) After maturity, the contract rate must not exceed 2.75 60.14 percent per month of the remaining loan proceeds after the 60.15 maturity date calculated at a rate of 1/30 of the monthly rate 60.16 in the contract for each calendar day the balance is outstanding. 60.17 (d) No insurance charges or other charges must be permitted 60.18 to be charged, collected, or imposed on a consumer small loan 60.19 except as authorized in this section. 60.20 (e) On a loan transaction in which cash is advanced in 60.21 exchange for a personal check, a return check charge may be 60.22 charged as authorized by section 332.50, subdivision 2, 60.23 paragraph (d). 60.24 (f) A loan made under this section must not be repaid by 60.25 the proceeds of another loan made under this section by the same 60.26 lender or related interest. The proceeds from a loan made under 60.27 this section must not be applied to another loan from the same 60.28 lender or related interest. No loan to a single borrower made 60.29 pursuant to this section shall be split or divided and no single 60.30 borrower shall have outstanding more than one loan with the 60.31 result of collecting a higher charge than permitted by this 60.32 section or in an aggregate amount of principal exceed at any one 60.33 time the maximum of $350. 60.34 Subd. 3. [FILING.] Before a person other than a financial 60.35 institution as defined by section 47.59 engages in the business 60.36 of making consumer small loans, the person shall file with the 61.1 commissioner as a consumer small loan lender. The filing must 61.2 be on a form prescribed by the commissioner together with a fee 61.3 of $150 for each place of business and contain the following 61.4 information in addition to the information required by the 61.5 commissioner: 61.6 (1) evidence that the filer has available for the operation 61.7 of the business at the location specified, liquid assets of at 61.8 least $50,000; and 61.9 (2) a biographical statement on the principal person 61.10 responsible for the operation and management of the business to 61.11 be certified. 61.12 Revocation of the filing and the right to engage in the 61.13 business of a consumer small loan lender is the same as in the 61.14 case of a regulated lender license in section 56.09. 61.15 Subd. 4. [BOOKS OF ACCOUNT; ANNUAL REPORT; SCHEDULE OF 61.16 CHARGES; DISCLOSURES.] (a) A lender filing under subdivision 3 61.17 shall keep and use in the business books, accounts, and records 61.18 as will enable the commissioner to determine whether the filer 61.19 is complying with this section. 61.20 (b) A lender filing under subdivision 3 shall annually on 61.21 or before March 15 file a report to the commissioner giving the 61.22 information the commissioner reasonably requires concerning the 61.23 business and operations during the preceding calendar year. 61.24 (c) A lender filing under subdivision 3 shall display 61.25 prominently in each place of business a full and accurate 61.26 schedule, to be approved by the commissioner, of the charges to 61.27 be made and the method of computing those charges; furnish a 61.28 copy of the contract of loan to a person obligated on it or who 61.29 may become obligated on it at any time upon the request of that 61.30 person. This is in addition to any disclosures required by the 61.31 federal Truth in Lending Act, United States Code, title 15. 61.32 (d) A lender filing under subdivision 3 shall, upon 61.33 repayment of the loan in full, mark indelibly every obligation 61.34 signed by the borrower with the word "Paid" or "Canceled" within 61.35 20 days after repayment. 61.36 (e) A lender filing under subdivision 3 shall display 62.1 prominently, in each licensed place of business, a full and 62.2 accurate statement of the charges to be made for loans made 62.3 under this section. The statement of charges must be displayed 62.4 in a notice, on plastic or other durable material measuring at 62.5 least 12 inches by 18 inches, headed "CONSUMER NOTICE REQUIRED 62.6 BY THE STATE OF MINNESOTA." The notice shall include, 62.7 immediately above the statement of charges, the following 62.8 sentence, or a substantially similar sentence approved by the 62.9 commissioner: "These loan charges are higher than otherwise 62.10 permitted under Minnesota law. Minnesota law permits these 62.11 higher charges only because short-term small loans might 62.12 otherwise not be available to consumers. If you have another 62.13 source of a loan, you may be able to benefit from a lower 62.14 interest rate and other loan charges." The notice must not 62.15 contain any other statement or information, unless the 62.16 commissioner has determined that the additional statement or 62.17 information is necessary to prevent confusion or inaccuracy. 62.18 The notice must be designed with a type size that is large 62.19 enough to be readily noticeable and legible. The form of the 62.20 notice must be approved by the commissioner prior to its use. 62.21 Subd. 5. [COMPLAINTS ALLEGING VIOLATION.] A person 62.22 obligated to or having been obligated to a consumer small loan 62.23 lender filing under subdivision 3 and having reason to believe 62.24 that this section has been violated may file with the 62.25 commissioner a written complaint setting forth the details of 62.26 the alleged violation. The commissioner, upon receipt of the 62.27 complaint, may inspect the pertinent books, records, letters, 62.28 and contracts of the lender and borrower involved. The 62.29 commissioner may assess against the lender a fee covering the 62.30 necessary costs of an investigation under this section. The 62.31 commissioner may maintain an action for the recovery of the 62.32 costs in a court of competent jurisdiction. 62.33 Subd. 6. [PENALTIES FOR VIOLATION.] A person or the 62.34 person's members, officers, directors, agents, and employees who 62.35 violate or participate in the violation of any of the provisions 62.36 of this section may be liable in the same manner as in section 63.1 56.19. 63.2 Sec. 3. Minnesota Statutes 1994, section 48.194, is 63.3 amended to read: 63.4 48.194 [INSTALLMENT SALES CONTRACTS; LOANS.] 63.5 A person may enter into a credit sale or service contract 63.6 for sale to a state or national bank doing business in this 63.7 state, and a bank may purchase and enforce the contract under 63.8 the terms and conditions set forth in section 51A.385,63.9 subdivisions 2 and 5 to 13sections 47.59, subdivisions 2 and 4 63.10 to 14; and 51A.386, subdivision 4. A state bank or national 63.11 bank may extend credit pursuant to the terms and conditions set 63.12 forth in section 51A.385sections 47.59, 47.60, and 51A.386, 63.13 subdivision 4. 63.14 Sec. 4. Minnesota Statutes 1994, section 51A.02, 63.15 subdivision 6, is amended to read: 63.16 Subd. 6. [ANNUAL PERCENTAGE RATE.] "Annual percentage 63.17 rate" has the meaning given the term in the Code of Federal 63.18 Regulations, title 12, part 226, but using the definition of 63.19 "finance charge" used in this section. 63.20 Sec. 5. Minnesota Statutes 1994, section 51A.02, 63.21 subdivision 26, is amended to read: 63.22 Subd. 26. [FINANCE CHARGE.] "Finance charge" has the 63.23 meaning given the term in the Code of Federal Regulations, title 63.24 12, part 226, except that the following will not in any event be 63.25 considered a finance charge: 63.26 (1) a charge as a result of default or delinquency under 63.27 section 51A.38547.59 if made for actual unanticipated late 63.28 payment, delinquency, default, or other similar occurrence, and 63.29 a charge for an extension or deferment under section 47.59, 63.30 unless the parties agree that these charges are finance charges; 63.31 (2) any additional charge under section 51A.38547.59, 63.32 subdivision 56; or 63.33 (3) a discount, if an association purchases a contract 63.34 evidencing a contractcredit sale or loan at less than the face 63.35 amount of the obligation or purchases or satisfies obligations 63.36 of a cardholder pursuant to a credit card and the purchase or 64.1 satisfaction is made at less than the face amount of the 64.2 obligation. 64.3 Sec. 6. Minnesota Statutes 1994, section 51A.02, 64.4 subdivision 40, is amended to read: 64.5 Subd. 40. [OFFICIAL FEES.] "Official fees" means: 64.6 (1) fees and charges which actually are or will be paid to 64.7 public officials for determining the existence of or for 64.8 perfecting, releasing, terminating, or satisfying a security 64.9 interest or mortgage related to a loan or credit sale, and any 64.10 separate fees or charges which actually are or will be paid to 64.11 public officials for recording a notice described in section 64.12 580.032, subdivision 1; and 64.13 (2) premiums payable for insurance in lieu of perfecting a 64.14 security interest or mortgage otherwise required by an 64.15 association in connection with a loan or credit sale, if the 64.16 premium does not exceed the fees and charges described in clause 64.17 (1) which would otherwise be payable. 64.18 Sec. 7. Minnesota Statutes 1994, section 51A.19, 64.19 subdivision 9, is amended to read: 64.20 Subd. 9. [MAINTENANCE OF LOAN AND INVESTMENT RECORDS.] 64.21 Every association shall maintain complete loan and investment 64.22 records, and shall do so in a manner satisfactory to the 64.23 commissioner. Detailed records necessary to make determinations 64.24 of compliance by an association with the requirements of 64.25 sections 47.59 and 51A.35 to 51A.38551A.386, and other 64.26 provisions of sections 51A.01 to 51A.57 shall be maintained 64.27 consistently and at all times, the record of each real estate 64.28 loan or other secured loan or investment containing 64.29 documentation to the satisfaction of the commissioner of the 64.30 type, adequacy, and complexion of the security. 64.31 Sec. 8. [51A.386] [TERMS AND CONDITIONS OF LOANS, 64.32 CONTRACTS, AND EXTENSIONS OF CREDIT.] 64.33 Subdivision 1. [APPLICATION.] Except as otherwise provided 64.34 in this section, this section applies to loans made and 64.35 contracts purchased by federal and state associations, and 64.36 "association" as used in this section applies to federal and 65.1 state associations. 65.2 Subd. 2. [FINANCE CHARGE FOR CREDIT SALES MADE BY A THIRD 65.3 PARTY.] A person may enter into a credit sale contract for sale 65.4 to an association and an association may purchase and enforce a 65.5 contract evidencing the sale, if the annual percentage rate 65.6 provided for in the contract does not exceed that permitted in 65.7 section 47.59 or, in the case of contracts governed by sections 65.8 168.66 to 168.77, the rates permitted by those sections. 65.9 Subd. 3. [FINANCE CHARGE FOR LOANS.] An association may 65.10 make loans and extend credit at the rates and on the terms 65.11 provided for in section 47.59. 65.12 Subd. 4. [ADDITIONAL AUTHORITY.] Extensions of credit, and 65.13 purchases of extensions of credit, authorized by sections 47.20, 65.14 subdivision 1, 3, or 4a; 47.204; 47.21; 47.58; 47.60; 47.69; 65.15 48.153; 48.185; 48.195; 59A.01 to 59A.15; 168.66 to 168.77; 65.16 334.01; 334.011; and 334.012 may, but need not, be made 65.17 according to those sections in lieu of the authority set forth 65.18 in subdivisions 1 to 3, and if so, are subject to those 65.19 sections, and not this section, except this subdivision. An 65.20 association may also charge an organization a rate of interest 65.21 and any charges agreed to by the organization and may calculate 65.22 and collect finance and other charges in any manner agreed to by 65.23 that organization. Except for extensions of credit the 65.24 association elects to make under section 334.01, 334.011, or 65.25 334.012, chapter 334 does not apply to extensions of credit made 65.26 according to this section or the sections mentioned in this 65.27 subdivision. 65.28 Subd. 5. [ADDITIONAL CHARGES.] In addition to the finance 65.29 charges permitted by this section, an association, or a person 65.30 described in subdivision 2, to the extent not otherwise 65.31 prohibited by law, may contract for and receive the additional 65.32 charges that may be included in the amount financed provided for 65.33 in section 47.59. 65.34 Sec. 9. Minnesota Statutes 1994, section 51A.50, is 65.35 amended to read: 65.36 51A.50 [FEDERAL ASSOCIATIONS.] 66.1 The following sections apply to federal associations, 66.2 except to the extent they are inconsistent with federal law or 66.3 regulations: sections 47.59; 51A.01; 51A.02; 51A.065; 51A.15, 66.4 subdivision 6; 51A.21, subdivisions 6a, 15, 16, 22, 25, 27, and 66.5 28; 51A.23, subdivision 1; 51A.24; 51A.251; 51A.261; 51A.262; 66.6 51A.27; 51A.28; 51A.29; 51A.30; 51A.31; 51A.37, subdivisions 1, 66.7 2, 3, paragraphs (a), (c), (d), 4, 5, 6, 7, 8, 9, 10, 11, and 66.8 12; 51A.38; 51A.38551A.386; 51A.40; 51A.50; 51A.52; 51A.56; and 66.9 51A.57. 66.10 Sec. 10. Minnesota Statutes 1994, section 52.04, 66.11 subdivision 2a, is amended to read: 66.12 Subd. 2a. A person may enter into a credit sale or service 66.13 contract for sale to a state or federal credit union doing 66.14 business in this state, and a credit union may purchase and 66.15 enforce the contract under the terms and conditions set forth in 66.16 section 51A.38547.59, subdivisions 24 and 56 to 66.17 1314. 66.18 Sec. 11. Minnesota Statutes 1994, section 53.04, 66.19 subdivision 3a, is amended to read: 66.20 Subd. 3a. (a) The right to make loans, secured or 66.21 unsecured, at the rates and on the terms and other conditions 66.22 permitted licensees under chapter 56. Loans made under the66.23 authority of section 56.125in section 47.59. Loans made under 66.24 this authority must be in amounts in compliance with section 66.25 53.05, clause (7). All other loans made under the authority of66.26 chapter 56 must be in amounts in compliance with section 53.05,66.27 clause (7), or 56.131, subdivision 1, paragraph (a), whichever66.28 is less.The right to extend credit or lend money and to 66.29 collect and receive charges therefor as provided by chapter 334 ,66.30 or in lieu thereof to charge, collect, and receive interest at66.31 the rate of 21.75 percent per annum, including the right to66.32 contract for, charge, and collect all other charges including66.33 discount points, fees, late payment charges, and insurance66.34 premiums on the loans to the same extent permitted on loans made66.35 under the authority of chapter 56, regardless of the amount of66.36 the loan. The provisions of sections 47.20 and 47.21 do not 67.1 apply to loans made under this subdivision, except as 67.2 specifically provided in this subdivision. Nothing in this 67.3 subdivision is deemed to supersede, repeal, or amend any 67.4 provision of section 53.05. A licensee making a loan under this 67.5 chapter secured by a lien on real estate shall comply with the 67.6 requirements of section 47.20, subdivision 8. 67.7 (b) Loans made under this subdivision at a rate of interest 67.8 not in excess of that provided for in paragraph (a) may be 67.9 secured by real or personal property, or both. If the proceeds 67.10 of a loan secured by a first lien on the borrower's primary 67.11 residence are used to finance the purchase of the borrower's 67.12 primary residence, the loan must comply with the provisions of 67.13 section 47.20. 67.14 (c) A loan made under this subdivision that is secured by 67.15 real estate and that is in a principal amount of $7,500 or more 67.16 and a maturity of 60 months or more may contain a provision 67.17 permitting discount points, if the loan does not provide a loan 67.18 yield in excess of the maximum rate of interest permitted by 67.19 this subdivision. Loan yield means the annual rate of return67.20 obtained by a licensee computed as the annual percentage rate is67.21 computed under Federal Regulation Z. If the loan is prepaid in67.22 full, the licensee must make a refund to the borrower to the67.23 extent that the loan yield will exceed the maximum rate of67.24 interest provided by this subdivision when the prepayment is67.25 taken into account.67.26 (d) An agency or instrumentality of the United States 67.27 government or a corporation otherwise created by an act of the 67.28 United States Congress or a lender approved or certified by the 67.29 secretary of housing and urban development, or approved or 67.30 certified by the administrator of veterans affairs, or approved 67.31 or certified by the administrator of the farmers home 67.32 administration, or approved or certified by the federal home 67.33 loan mortgage corporation, or approved or certified by the 67.34 federal national mortgage association, that engages in the 67.35 business of purchasing or taking assignments of mortgage loans 67.36 and undertakes direct collection of payments from or enforcement 68.1 of rights against borrowers arising from mortgage loans, is not 68.2 required to obtain a certificate of authorization under this 68.3 chapter in order to purchase or take assignments of mortgage 68.4 loans from persons holding a certificate of authorization under 68.5 this chapter. 68.6 Sec. 12. Minnesota Statutes 1994, section 53.04, 68.7 subdivision 3c, is amended to read: 68.8 Subd. 3c. The right to extend credit and make loans under 68.9 chapter 51Asections 47.59 and 47.60 on the same terms and 68.10 subject to the same conditions as apply to other lenders under 68.11 that chapterthose sections. This subdivision does not 68.12 authorize an industrial loan and thrift company to make loans 68.13 under a credit card oran overdraft checking plan. 68.14 Sec. 13. Minnesota Statutes 1994, section 53.04, 68.15 subdivision 4a, is amended to read: 68.16 Subd. 4a. [DISCLOSURE, AUTHORIZED INTEREST, AND OTHER 68.17 CHARGES.] The documentation of loans made pursuant to this 68.18 section must include in the promissory note clear reference to 68.19 the provisions of Minnesota Statutes under which the rate of 68.20 interest and other charges are authorized. The references must 68.21 be to the chapter number in the case of this chapter or chapter68.22 56, or to theparticular section or sections in the case of68.23 chapter 47 or 334. On loans made under the authority of68.24 subdivision 3a and not under the authority of chapter 334, other68.25 charges including discount points, fees, late payment charges,68.26 and insurance premiums not specifically authorized by this68.27 chapter or any other state statute are controlled by chapter 56.68.28 Sec. 14. Minnesota Statutes 1994, section 53.04, 68.29 subdivision 5a, is amended to read: 68.30 Subd. 5a. A person may enter into a credit sale or service 68.31 contract for sale to an industrial loan and thrift company 68.32 operating under this chapter in this state, and an industrial 68.33 loan and thrift company may purchase and enforce the contract 68.34 under the terms and conditions set forth in section 51A.385,68.35 subdivisions 2 and 5 to 1347.59, subdivisions 2 and 4 to 14. 68.36 Sec. 15. Minnesota Statutes 1994, section 56.125, 69.1 subdivision 1, is amended to read: 69.2 Subdivision 1. [AUTHORIZATION.] A licensee may make 69.3 open-end loans under this chapter other than loans under a69.4 credit card oran overdraft checking plan and may charge a 69.5 daily, monthly, or other periodic rate of finance charge on 69.6 unpaid balances not in excess of the maximum rate of interest 69.7 permitted by section 56.131, subdivision 1, paragraph 69.8 (a), clause (2)under section 47.59, subdivision 3, paragraph 69.9 (a), clause (1). For purposes of this section "open-end loan" 69.10 means an agreement whereby: (1) the licensee pursuant to 69.11 written agreement permits the borrower to obtain advances of 69.12 money from the licensee from time to time or the licensee 69.13 advances money on behalf of the borrower from time to time as 69.14 directed by the borrower; (2) the borrower has the option of 69.15 paying the balance in full at any time without penalty; (3) the 69.16 amount of each advance and permitted charges and costs are 69.17 debited to the borrower's account and payments and other credits 69.18 are credited to the same account; and (4) the charges are 69.19 computed on the unpaid principal balance of the account from 69.20 time to time. A finance charge imposed on a transaction subject 69.21 to this section must be computed on: (1) the previous balance 69.22 after deducting all payments on accounts received by the 69.23 licensee during the cycle and all credits to the account during 69.24 the cycle applicable to any transaction reflected in the 69.25 previous balance; (2) the average daily balance determined by 69.26 adding the daily balances on the account for each day in the 69.27 billing cycle and dividing the total by the number of days in 69.28 the billing cycle; or (3) daily balances. The daily balance is 69.29 figured by taking the beginning balance of the account each day, 69.30 adding any new advances, subtracting any principal payments or 69.31 credits, and any unpaid interest. The average daily balance is 69.32 calculated by adding together all of the daily balances for the 69.33 billing cycle, and the sum is then divided by the total number 69.34 of days in the billing cycle. A billing cycle is considered to 69.35 be monthly if the billing dates are on the same day of each 69.36 month or do not vary by more than four days from that day. If a 70.1 licensee makes loans under a credit card plan, it may do so only 70.2 on the same terms and subject to the same conditions as apply to 70.3 lenders under section 47.59. 70.4 Sec. 16. Minnesota Statutes 1994, section 56.125, 70.5 subdivision 3, is amended to read: 70.6 Subd. 3. [CHARGES.] In addition to the charges authorized 70.7 in subdivision 1, a licensee may contract for and receive in 70.8 connection with an open-end loan agreement the additional 70.9 charges, fees, costs, and expenses with respect to the line of 70.10 credit limit permitted by sections 47.59, subdivisions 5 and 6, 70.11 paragraph (a), clause (4); 56.131, subdivisions 1, paragraph70.12 (f), clauses (4) and (5),2, 5, and 6; and 56.155 with respect 70.13 to other loans, with the following variations: 70.14 (1) If credit life, disability, or involuntary unemployment 70.15 insurance is provided and if the insured dies, becomes disabled, 70.16 or becomes involuntarily unemployed when there is an outstanding 70.17 open-end loan indebtedness, the amount of the insurance may not 70.18 exceed the total balance of the loan due on the date of the 70.19 borrower's death or on the date of the last billing statement in 70.20 the case of credit life insurance, or all minimum payments which 70.21 become due on the loan during the covered period of disability 70.22 in the case of credit disability insurance, or during the 70.23 covered period of involuntary unemployment in the case of credit 70.24 involuntary unemployment insurance. The additional charge for 70.25 credit life insurance, credit disability insurance, or credit 70.26 involuntary unemployment insurance must be calculated in each 70.27 billing cycle by applying the current monthly premium rate for 70.28 the insurance to the unpaid balances in the borrower's account. 70.29 (2) The amount, terms, and conditions of any credit 70.30 insurance against loss or damage to property must be reasonable 70.31 in relation to the character and value of the property insured. 70.32 Sec. 17. Minnesota Statutes 1994, section 56.131, 70.33 subdivision 1, is amended to read: 70.34 Subdivision 1. [INTEREST RATES AND CHARGES.] (a) On any 70.35 loan in a principal amount not exceeding $35,000$56,000 or 15 70.36 percent of a Minnesota corporate licensee's capital stock and 71.1 surplus as defined in section 53.015, if greater, a licensee may 71.2 contract for and receive interest, calculated according to the71.3 actuarial method, not exceeding the equivalent of the greater of71.4 any of the following:71.5 (1) the total of: (i) 33 percent per year on that part of71.6 the unpaid balance of the principal amount not exceeding $750;71.7 and (ii) 19 percent per year on that part of the unpaid balance71.8 of the principal amount exceeding $750; or71.9 (2) 21.75 percent per year on the unpaid balance of the71.10 principal amountfinance charges, and other charges as provided 71.11 in section 47.59. 71.12 (b) On any loan where interest has been calculated71.13 according to the method provided for in paragraph (a), clause71.14 (1), interest must be contracted for and earned as provided in71.15 that provision or at the single annual percentage rate computed71.16 to the nearest 1/100 of one percent that would earn the same71.17 total interest at maturity of the contract as would be earned by71.18 the application of the graduated rates provided in paragraph71.19 (a), clause (1), when the debt is paid according to the agreed71.20 terms and the calculations are made according to the actuarial71.21 method.71.22 (c)(b) Loans may be interest-bearing or precomputed. 71.23 (d)(c) Notwithstanding section 47.59 to the contrary, to 71.24 compute time on interest-bearing and precomputed loans, 71.25 including, but not limited to the calculation of interest, a day 71.26 is considered 1/30 of a month when calculation is made for a 71.27 fraction of a calendar month. A year is 12 calendar months. A 71.28 calendar month is that period from a given date in one month to 71.29 the same numbered date in the following month, and if there is 71.30 no same numbered date, to the last day of the following month. 71.31 When a period of time includes a whole month and a fraction of a 71.32 month, the fraction of a month is considered to follow the whole 71.33 month. 71.34 In the alternative, for interest-bearing loans, a licensee 71.35 may charge interest at the rate of 1/365 of the agreed annual 71.36 rate for each actual day elapsed. 72.1 (e)(d) With respect to interest-bearing loans and 72.2 notwithstanding section 47.59: 72.3 (1) Interest must be computed on unpaid principal balances 72.4 outstanding from time to time, for the time outstanding. Each 72.5 payment must be applied first to the accumulated interest and 72.6 the remainder of the payment applied to the unpaid principal 72.7 balance; provided however, that if the amount of the payment is 72.8 insufficient to pay the accumulated interest, the unpaid 72.9 interest continues to accumulate to be paid from the proceeds of 72.10 subsequent payments and is not added to the principal balance. 72.11 (2) Interest must not be payable in advance or compounded. 72.12 However, if part or all of the consideration for a new loan 72.13 contract is the unpaid principal balance of a prior loan, then 72.14 the principal amount payable under the new loan contract may 72.15 include any unpaid interest which has accrued. The unpaid 72.16 principal balance of a precomputed loan is the balance due after 72.17 refund or credit of unearned interest as provided in paragraph 72.18 (f)(e), clause (3). The resulting loan contract is deemed a 72.19 new and separate loan transaction for all purposes. 72.20 (f)(e) With respect to precomputed loans and 72.21 notwithstanding section 47.59 to the contrary: 72.22 (1) Loans must be repayable in substantially equal and 72.23 consecutive monthly installments of principal and interest 72.24 combined, except that the first installment period may be more 72.25 or less than one month by not more than 15 days, and the first 72.26 installment payment amount may be larger than the remaining 72.27 payments by the amount of interest charged for the extra days 72.28 and must be reduced by the amount of interest for the number of 72.29 days less than one month to the first installment payment; and 72.30 monthly installment payment dates may be omitted to accommodate 72.31 borrowers with seasonal income. 72.32 (2) Payments may be applied to the combined total of 72.33 principal and precomputed interest until the loan is fully 72.34 paid. Payments must be applied in the order in which they 72.35 become due. 72.36 (3) When any loan contract is paid in full by cash, renewal73.1 or refinancing, or a new loan, one month or more before the73.2 final installment due date, a licensee shall refund or credit73.3 the borrower with the total of the applicable charges for all73.4 fully unexpired installment periods, as originally scheduled or73.5 as deferred, which follow the day of prepayment; if the73.6 prepayment is made other than on a scheduled payment date, the73.7 nearest scheduled installment payment date must be used in the73.8 computation; provided further, if the prepayment occurs prior to73.9 the first installment due date, the licensee may retain 1/30 of73.10 the applicable charge for a first installment period of one73.11 month for each day from the date of the loan to the date of73.12 prepayment, and shall refund or credit the borrower with the73.13 balance of the total interest contracted for.If the maturity 73.14 of the loan is accelerated for any reason and judgment is 73.15 entered, the licensee shall credit the borrower with the same 73.16 refund as if prepayment in full had been made on the date the 73.17 judgment is entered. 73.18 (4) If an installment, other than the final installment, is73.19 not paid in full within ten days of its scheduled due date, a73.20 licensee may contract for and receive a default charge not73.21 exceeding five percent of the amount of the installment, but not73.22 less than $4.73.23 A default charge under this subdivision may not be73.24 collected on an installment paid in full within ten days of its73.25 scheduled due date, or deferred installment due date with73.26 respect to deferred installments, even though a default or73.27 deferral charge on an earlier installment has not been paid in73.28 full. A default charge may be collected at the time it accrues73.29 or at any time thereafter.73.30 (5) If the parties agree in writing, either in the loan73.31 contract or in a subsequent agreement, to a deferment of wholly73.32 unpaid installments, a licensee may grant a deferment and may73.33 collect a deferment charge as provided in this section. A73.34 deferment postpones the scheduled due date of the earliest73.35 unpaid installment and all subsequent installments as originally73.36 scheduled, or as previously deferred, for a period equal to the74.1 deferment period. The deferment period is that period during74.2 which no installment is scheduled to be paid by reason of the74.3 deferment. The deferment charge for a one-month period may not74.4 exceed the applicable charge for the installment period74.5 immediately following the due date of the last undeferred74.6 payment. A proportionate charge may be made for deferment for74.7 periods of more or less than one month. A deferment charge is74.8 earned pro rata during the deferment period and is fully earned74.9 on the last day of the deferment period. Should a loan be74.10 prepaid in full during a deferment period, the licensee shall74.11 make or credit to the borrower a refund of the unearned74.12 deferment charge in addition to any other refund or credit made74.13 for prepayment of the loan in full.74.14 (6)(4) If two or more installments are delinquent one full 74.15 month or more on any due date, and if the contract so provides, 74.16 the licensee may reduce the unpaid balance by the refund credit 74.17 which would be required for prepayment in full on the due date 74.18 of the most recent maturing installment in default. Thereafter, 74.19 and in lieu of any other default or deferment charges, the 74.20 single annual percentage rate permitted by this subdivision may 74.21 be charged on the unpaid balance until fully paid. 74.22 (7)(5) Following the final installment as originally 74.23 scheduled or deferred, the licensee, for any loan contract which 74.24 has not previously been converted to interest-bearing under 74.25 clause (6)(4), may charge interest on any balance remaining 74.26 unpaid, including unpaid default or deferment charges, at the 74.27 single annual percentage rate permitted by this subdivision 74.28 until fully paid. 74.29 (8)(6) With respect to a loan secured by an interest in 74.30 real estate, and having a maturity of more than 60 months, the 74.31 original schedule of installment payments must fully amortize 74.32 the principal and interest on the loan. The original schedule 74.33 of installment payments for any other loan secured by an 74.34 interest in real estate must provide for payment amounts that 74.35 are sufficient to pay all interest scheduled to be due on the 74.36 loan. 75.1 Sec. 18. Minnesota Statutes 1994, section 56.131, 75.2 subdivision 2, is amended to read: 75.3 Subd. 2. [ADDITIONAL CHARGES.] In addition to the charges 75.4 provided for by this section and section 56.155, and 75.5 notwithstanding section 47.59, subdivision 5, to the contrary, 75.6 no further or other amount whatsoever, shall be directly or 75.7 indirectly charged, contracted for, or received for the loan 75.8 made, except actual out of pocket expenses of the licensee to 75.9 realize on a security after default, and except for the 75.10 following additional charges which may be included in the 75.11 principal amount of the loan: 75.12 (a) lawful fees and taxes paid to any public officer to 75.13 record, file, or release security; 75.14 (b) with respect to a loan secured by an interest in real 75.15 estate, the following closing costs, if they are bona fide, 75.16 reasonable in amount, and not for the purpose of circumvention 75.17 or evasion of this section; provided the costs do not exceed one 75.18 percent of the principal amount or $250$400, whichever is 75.19 greater: 75.20 (1) fees or premiums for title examination, abstract of 75.21 title, title insurance, surveys, or similar purposes; 75.22 (2) fees, if not paid to the licensee, an employee of the 75.23 licensee, or a person related to the licensee, for preparation 75.24 of a mortgage, settlement statement, or other documents, fees 75.25 for notarizing mortgages and other documents, and appraisal 75.26 fees; 75.27 (c) the premium for insurance in lieu of perfecting and 75.28 releasing a security interest to the extent that the premium 75.29 does not exceed the fees described in paragraph (a); 75.30 (d) discount points and appraisal fees may not be included 75.31 in the principal amount of a loan secured by an interest in real 75.32 estate when the loan is a refinancing for the purpose of 75.33 bringing the refinanced loan current and is made within 24 75.34 months of the original date of the refinanced loan. For 75.35 purposes of this paragraph, a refinancing is not considered to 75.36 be for the purpose of bringing the refinanced loan current if 76.1 new funds advanced to the customer, not including closing costs 76.2 or delinquent installments, exceed $1,000. 76.3 Sec. 19. Minnesota Statutes 1994, section 56.132, is 76.4 amended to read: 76.5 56.132 [INSTALLMENT SALES CONTRACTS.] 76.6 A person may enter into a credit sale or service contract 76.7 for sale to a licensee under this chapter doing business in this 76.8 state, and a licensee may purchase and enforce the contract 76.9 under the terms and conditions set forth in section 51A.385,76.10 subdivisions 2 and 5 to 1347.59, subdivisions 2 and 4 to 14. 76.11 Sec. 20. Minnesota Statutes 1994, section 56.155, 76.12 subdivision 1, is amended to read: 76.13 Subdivision 1. [AUTHORIZATION.] Notwithstanding section 76.14 47.59 to the contrary, no licensee shall, directly or 76.15 indirectly, sell or offer for sale any insurance in connection 76.16 with any loan made under this chapter except as and to the 76.17 extent authorized by this section. The sale of credit life, 76.18 credit accident and health, and credit involuntary unemployment 76.19 insurance is subject to the provisions of chapter 62B, except 76.20 that the term of the insurance may exceed 60 months if the term 76.21 of the loan exceeds 60 months. Life, accident, health, and 76.22 involuntary unemployment insurance, or any of them, may be 76.23 written upon or in connection with any loan but must not be 76.24 required as additional security for the indebtedness. If the 76.25 debtor chooses to procure credit life insurance, credit accident 76.26 and health insurance, or credit involuntary unemployment 76.27 insurance as security for the indebtedness, the debtor shall 76.28 have the option of furnishing this security through existing 76.29 policies of insurance that the debtor owns or controls, or of 76.30 furnishing the coverage through any insurer authorized to 76.31 transact business in this state. A statement in substantially 76.32 the following form must be made orally, except for loans by mail 76.33 pursuant to section 56.12, and provided in writing in bold face 76.34 type of a minimum size of 12 points to the borrower before the 76.35 transaction is completed for each credit life, accident and 76.36 health, and involuntary unemployment insurance coverage sold: 77.1 CREDIT LIFE INSURANCE, CREDIT DISABILITY INSURANCE, AND 77.2 CREDIT INVOLUNTARY UNEMPLOYMENT INSURANCE ARE NOT REQUIRED 77.3 TO OBTAIN CREDIT. YOU MAY BUY ANY INSURANCE FROM ANYONE 77.4 YOU CHOOSE OR YOU MAY USE EXISTING INSURANCE. 77.5 The licensee shall disclose whether or not the benefits 77.6 commence as of the first day of disability or involuntary 77.7 unemployment and shall further disclose the number of days that 77.8 an insured obligor must be disabled or involuntarily unemployed, 77.9 as defined in the policy, before benefits, whether retroactive 77.10 or nonretroactive, commence. In case there are multiple 77.11 obligors under a transaction subject to this chapter, no policy 77.12 or certificate of insurance providing credit unemployment 77.13 benefits may be procured by or through a licensee upon more than 77.14 one of the obligors. In case there are multiple obligors under 77.15 a transaction subject to this chapter, no policy or certificate 77.16 of insurance providing credit accident and health or credit life 77.17 insurance may be procured by or through a licensee upon more 77.18 than two of the obligors in which case they shall be insured 77.19 jointly. The premium or identifiable charge for the insurance 77.20 must not exceed that filed by the insurer with the department of 77.21 commerce. The charge, computed at the time the loan is made for 77.22 a period not to exceed the full term of the loan contract on an 77.23 amount not to exceed the total amount required to pay principal 77.24 and charges, may be deducted from the proceeds or may be 77.25 included as part of the principal of any loan. If a borrower 77.26 procures insurance by or through a licensee, the statement 77.27 required by section 56.14 must disclose the cost to the borrower 77.28 and the type of insurance, and the licensee shall cause to be 77.29 delivered to the borrower a copy of the policy, certificate, or 77.30 other evidence thereof, within a reasonable time. No licensee 77.31 shall decline new or existing insurance which meets the 77.32 standards set out in this section nor prevent any obligor from 77.33 obtaining this insurance coverage from other sources. 77.34 Notwithstanding any other provision of this chapter, any gain or 77.35 advantage to the licensee or to any employee, affiliate, or 77.36 associate of the licensee from this insurance or the sale or 78.1 provision thereof is not an additional or further charge in 78.2 connection with the loan; nor are any of the provisions 78.3 pertaining to insurance contained in this section prohibited by 78.4 any other provision of this chapter. 78.5 Sec. 21. [334.171] [OPEN END CREDIT PLANS; DELINQUENCIES 78.6 AND COLLECTION CHARGES.] 78.7 If an open end credit plan, agreement, or arrangement 78.8 between the buyer and seller so provides, a seller or holder may 78.9 collect a delinquency and collection charge on each installment 78.10 in arrears for a period of not less than ten days in an amount 78.11 not in excess of any such charge which may be imposed on 78.12 residents of this state by any institution defined in subsection 78.13 (c)(2)(F) of section 101(a) of the Competitive Equality 78.14 Amendments of 1987 and the Bank Holding Company Act of 1956, 78.15 United States Code, title 12, section 1841(c)(2)(F), by any 78.16 national banking association under section 85 of the National 78.17 Bank Act of 1864, United States Code, title 12, section 85, or 78.18 by any state chartered insured depository institution under 78.19 section 521 of the Depository Institutions Deregulation and 78.20 Monetary Control Act of 1980, United States Code, title 12, 78.21 section 1813d(a). 78.22 Sec. 22. [REPEALER.] 78.23 Minnesota Statutes 1994, sections 51A.385; and 325F.91, 78.24 subdivision 2, are repealed. 78.25 ARTICLE 4 78.26 INTERSTATE MARKET DEVELOPMENT AND FEDERALIZATION 78.27 OF INTERSTATE BANKING 78.28 Section 1. Minnesota Statutes 1994, section 46.048, 78.29 subdivision 1, is amended to read: 78.30 Subdivision 1. [REQUIREMENT.] Whenever a change in the 78.31 outstanding voting stock of a banking institution will result in 78.32 control or in a change in the control of the banking 78.33 institution, the person acquiring control of the banking 78.34 institution, including an out-of-state bank holding company, 78.35 shall file notice of the proposed acquisition of control with 78.36 the commissioner of commerce at least 60 days before the actual 79.1 effective date of the change, except that the commissioner may 79.2 extend the 60-day period an additional 30 days if in the 79.3 commissioner's judgment any material information submitted is 79.4 substantially inaccurate or the acquiring party has not 79.5 furnished all the information required. As used in this 79.6 section, the term "control" means the power to directly or 79.7 indirectly direct or cause the direction of the management or 79.8 policies of the banking institution. A change in ownership of 79.9 capital stock that would result in direct or indirect ownership 79.10 by a stockholder or an affiliated group of stockholders of less 79.11 than 25 percent of the outstanding capital stock is not 79.12 considered a change of control. If there is any doubt as to 79.13 whether a change in the outstanding voting stock is sufficient 79.14 to result in control or to effect a change in the control, the 79.15 doubt shall be resolved in favor of reporting the facts to the 79.16 commissioner. The commissioner shall use the criteria 79.17 established by the Financial Institution Regulatory and Interest 79.18 Rate Control Act of 1978, United States Code, title 12, section 79.19 1817(j), and the regulations adopted under it, when reviewing 79.20 the acquisition and determining if the acquisition should or 79.21 should not be disapproved. Within three days after making the 79.22 decision to disapprove a proposed acquisition, the commissioner 79.23 shall notify the acquiring party in writing of the disapproval. 79.24 The notice must provide a statement of the basis for the 79.25 disapproval. 79.26 Sec. 2. Minnesota Statutes 1994, section 46.048, is 79.27 amended by adding a subdivision to read: 79.28 Subd. 2a. [CONTENTS.] The notice required by subdivision 1 79.29 must contain the following information to the extent that it is 79.30 known by the person making the notice: 79.31 (1) the identity, personal history, business background, 79.32 and experience of each person by whom or on whose behalf the 79.33 acquisition is to be made, including the person's material 79.34 business activities and affiliations during the past five years, 79.35 and a description of any material pending legal or 79.36 administrative proceedings in which the person is a party and 80.1 any criminal indictment or conviction of that person by a state 80.2 or federal court; 80.3 (2) a statement of the assets and liabilities of each 80.4 person by whom or on whose behalf the acquisition is to be made, 80.5 as of the end of the fiscal year for each of the five years 80.6 immediately preceding the date of the notice, together with 80.7 related statements of income, sources, and application of funds 80.8 for each of the fiscal years then concluded, all prepared in 80.9 accordance with generally accepted accounting principles 80.10 consistently applied, and an interim statement of the assets and 80.11 liabilities for each person, together with related statements of 80.12 income, source, and application of funds as of a date not more 80.13 than 90 days before the date of the filing of the notice; 80.14 (3) the terms and conditions of the proposed acquisition 80.15 and the manner in which the acquisition is to be made; 80.16 (4) the identity, source, and amount of the funds or other 80.17 consideration to be used in making the acquisition, and if any 80.18 part of these funds or other consideration has been or is to be 80.19 borrowed or otherwise obtained for the purpose of making the 80.20 acquisition, a description of the transaction, the names of the 80.21 parties, and any arrangements, agreements, or understandings 80.22 with those persons; 80.23 (5) any plans or proposals that a party making the 80.24 acquisition may have to liquidate the bank, to sell its assets 80.25 or merge it, or make any other major change in its business or 80.26 corporate structure or management; 80.27 (6) the identity of any person employed, retained, or to be 80.28 compensated by the acquiring party, or by any person on the 80.29 acquiring party's behalf, to make solicitations or 80.30 recommendations to stockholders for the purpose of assisting in 80.31 the acquisition, and a brief description of the terms of the 80.32 employment, retainer, or arrangement for compensation; 80.33 (7) copies of all invitations, tenders, or advertisements 80.34 making tender offers to stockholders for purchase of their stock 80.35 to be used in connection with the proposed acquisition; and 80.36 (8) any additional relevant information in the form the 81.1 commissioner requires by rule or by specific request in 81.2 connection with any particular notice. 81.3 Sec. 3. Minnesota Statutes 1994, section 46.048, is 81.4 amended by adding a subdivision to read: 81.5 Subd. 2b. [NOTICE.] Upon the filing of an application: 81.6 (1) an applicant shall publish once in a newspaper of 81.7 general circulation notice of the proposed acquisition in a form 81.8 acceptable to the commissioner; and 81.9 (2) the commissioner shall accept public comment on an 81.10 application for a period of not less than 30 days from the date 81.11 of the publication required by clause (1). 81.12 Sec. 4. Minnesota Statutes 1994, section 46.048, is 81.13 amended by adding a subdivision to read: 81.14 Subd. 4. [HEARINGS.] Within ten days of receipt of notice 81.15 of disapproval according to subdivision 1, the acquiring party 81.16 may request a department hearing on the proposed acquisition. 81.17 At the hearing, all issues must be determined on the record 81.18 according to chapter 14 and the rules adopted by the 81.19 commissioner. At the conclusion of the hearing, the 81.20 commissioner shall by order approve or disapprove the proposed 81.21 acquisition on the basis of the record made at the hearing. 81.22 Sec. 5. Minnesota Statutes 1994, section 47.52, is amended 81.23 to read: 81.24 47.52 [AUTHORIZATION.] 81.25 (a) With the prior approval of the commissioner, any bank 81.26 doing business in this state may establish and maintain not more 81.27 than five detached facilities provided the facilities are 81.28 located within the municipality in which the principal office of 81.29 the applicant bank is located; or within 5,000 feet of its 81.30 principal office measured in a straight line from the closest 81.31 points of the closest structures involved; or within 100 miles 81.32 of its principal office measured in a straight line from the 81.33 closest points of the closest structures involved, if the 81.34 detached facility is within any municipality in which no bank is 81.35 located at the time of application or if the detached facility 81.36 is in a municipality having a population of more than 10,000, or 82.1 if the detached facility is located in a municipality having a 82.2 population of 10,000 or less, as determined by the commissioner 82.3 from the latest available data from the state demographer, or 82.4 for municipalities located in the seven-county metropolitan area 82.5 from the metropolitan council, and all the banks having a 82.6 principal office in the municipality have consented in writing 82.7 to the establishment of the facility. 82.8 (b) A detached facility shall not be closer than 50 feet to 82.9 a detached facility operated by any other bank and shall not be 82.10 closer than 100 feet to the principal office of any other bank, 82.11 the measurement to be made in the same manner as provided 82.12 above. This paragraph shall not be applicable if the proximity 82.13 to the facility or the bank is waived in writing by the other 82.14 bank and filed with the application to establish a detached 82.15 facility. 82.16 (c) Any bank is allowed, in addition to other facilities, 82.17 one drive-in or walk-up facility located between 150 to 1,500 82.18 feet of the main banking house or within 1,500 feet from a 82.19 detached facility. The drive-in or walk-up facility permitted 82.20 by this clause is subject to paragraph (b) and section 47.53. 82.21 (d) A bank whose home state is Minnesota as defined in 82.22 section 48.92 is allowed, in addition to facilities otherwise 82.23 permitted, to establish and operate a de novo detached facility 82.24 in a location in the host states of Iowa, North Dakota, South 82.25 Dakota, and Wisconsin not more than 30 miles from its principal 82.26 office measured in a straight line from the closest points of 82.27 the closest structures involved and subject to requirements of 82.28 sections 47.54 and 47.561 and the following additional 82.29 requirements and conditions: 82.30 (1) there is in effect in the host state a law, rule, or 82.31 ruling that permits Minnesota home state banks to establish de 82.32 novo branches in the host state under conditions substantially 82.33 similar to those imposed by the laws of Minnesota as determined 82.34 by the commissioner; and 82.35 (2) there is in effect a cooperative agreement between the 82.36 home and host state banking regulators to facilitate their 83.1 respective regulation and supervision of the bank including the 83.2 coordination of examinations. 83.3 For purposes of this paragraph, "host state" means a state 83.4 other than the home state, as defined in section 48.92. 83.5 Sec. 6. Minnesota Statutes 1994, section 47.78, is amended 83.6 to read: 83.7 47.78 [CONTRACTS TO ACCEPT AND RECEIVE DEPOSITS-HONOR AND 83.8 PAY WITHDRAWALS.] 83.9 (a) Notwithstanding any other law to the contrary, a 83.10 financial institution, the "customer institution," may contract 83.11 with another financial institution, the "service institution," 83.12 to grant the service institution the authority to render 83.13 services to the customer institution's depositors, borrowers or 83.14 other customers, provided notice of the proposed contract is 83.15 given to the commissioner and the commissioner does not object 83.16 to the contract within 30 days of the notice. 83.17 (b) For purposes of this section: "Financial institution" 83.18 means a national banking association, federal savings and loan83.19 association, or federal credit union having its main office in 83.20 this state, or a bank, savings bank, savings and loan83.21 association, or credit union established and operating under the 83.22 laws of this state; and "services" means accepting and receiving 83.23 deposits, honoring and paying withdrawals, issuing money orders, 83.24 cashiers' checks, and travelers' checks or similar instruments, 83.25 cashing checks or drafts, receiving loan payments, receiving or 83.26 delivering cash and instruments and securities, disbursing loan 83.27 proceeds by machine, and any other transactions authorized by 83.28 section 47.63. 83.29 The term also includes a bank subsidiary of a bank holding 83.30 company or affiliated savings association to the extent agency 83.31 activities are permitted under section 18 of the Federal Deposit 83.32 Insurance Act, United States Code, title 12, section 1828, as 83.33 amended, effective September 29, 1995, and title I, Riegle-Neal 83.34 Interstate Banking and Branching Efficiency Act of 1994. 83.35 (c) A contract entered into pursuant to this section may 83.36 include authority to conduct transactions at or through any 84.1 principal office, branch, or detached facility of either 84.2 financial institution which is a party to the contract, and the 84.3 service institution is not considered a branch of the customer 84.4 institution for purposes of section 48.34. 84.5 Sec. 7. Minnesota Statutes 1994, section 48.90, 84.6 subdivision 1, is amended to read: 84.7 Subdivision 1. [SEVERABILITY.] It is the express intention 84.8 of the Minnesota legislature to act pursuant to the United 84.9 States Code, title 12, section 1842(d) to provide an orderly84.10 transition to interstate banking by initially permitting limited84.11 interstate banking on a regional basisas amended by title I of 84.12 the Riegle-Neal Interstate Banking and Branching Efficiency Act 84.13 of 1994 to provide for interstate banking on a nationwide basis 84.14 and to preserve certain state law, policy, and practices. 84.15 Therefore, notwithstanding the provisions of section 645.20, if84.16 any provision of Laws 1986, chapter 339, other than Laws 1986,84.17 chapter 339, sections 1 to 3, and 14, providing for the84.18 supervisory powers of the commissioner or limiting expansion84.19 into this state to bank holding companies located in states84.20 defined as "reciprocating states" is determined by final,84.21 nonappealable order of any Minnesota or federal court of84.22 competent jurisdiction to be invalid or unconstitutional, Laws84.23 1986, chapter 339, is null and void and of no further force and84.24 effect from the effective date of the final determination.84.25 Sec. 8. Minnesota Statutes 1994, section 48.91, is amended 84.26 to read: 84.27 48.91 [TITLE.] 84.28 Laws 1986, chapter 339Sections 48.90 to 48.99 may be cited 84.29 as the " reciprocalinterstate banking act." 84.30 Sec. 9. Minnesota Statutes 1994, section 48.92, 84.31 subdivision 2, is amended to read: 84.32 Subd. 2. [CONTROL.] "Control," means,with respect to a 84.33 bank holding company, bank, or bank to be organized pursuant to 84.34 chapters 46, 47, 48, and 300, (1) the ownership, directly or84.35 indirectly or acting through one or more other persons, control84.36 of or the power to vote 25 percent or more of any class of85.1 voting securities; (2) control in any manner over the election85.2 of a majority of the directors; or (3) the power to exercise,85.3 directly or indirectly, a controlling influence over management85.4 and policiesmeans that term as defined in section 46.048, 85.5 subdivision 1. 85.6 Sec. 10. Minnesota Statutes 1994, section 48.92, 85.7 subdivision 6, is amended to read: 85.8 Subd. 6. [ LOCATED IN THISHOME STATE.] " Located in85.9 thisHome state" means: (1) a bank whose organizational85.10 certificate identifies an address in this state as the principal85.11 place of conducting the business of banking; or (2) a bank85.12 holding company as defined in the Bank Holding Company Act of85.13 1956, as amended, with banking subsidiaries, the majority of85.14 whose deposits are in Minnesota.with respect to a national 85.15 bank, the state in which the main office of the bank is located; 85.16 (2) with respect to a state bank, the state by which the bank is 85.17 chartered; and (3) with respect to a bank holding company, the 85.18 state in which the total deposits of all banking subsidiaries of 85.19 the company are the largest on the later of (i) July 1, 1966, or 85.20 (ii) the date on which the company becomes a bank holding 85.21 company under the Bank Holding Company Act of 1956, as amended, 85.22 United States Code, title 12, section 1842. 85.23 Sec. 11. Minnesota Statutes 1994, section 48.92, 85.24 subdivision 7, is amended to read: 85.25 Subd. 7. [ RECIPROCATINGHOST STATE.] " ReciprocatingHost 85.26 state" is a state that authorizes the acquisition, directly or85.27 indirectly, or control of, banks in that state by a bank or bank85.28 holding company located in this state under conditions85.29 substantially similar to those imposed by the laws of Minnesota85.30 as determined by the commissioner.other than the home state of 85.31 the bank holding company, in which the company controls, or 85.32 seeks to control, a bank subsidiary. 85.33 Sec. 12. Minnesota Statutes 1994, section 48.92, 85.34 subdivision 8, is amended to read: 85.35 Subd. 8. [ RECIPROCATING STATEOUT-OF-STATE BANK HOLDING 85.36 COMPANY.] " Reciprocating stateOut-of-state bank holding 86.1 company" means a bank holding company as defined in the Bank 86.2 Holding Company Act of 1956, as amended, whose operations are86.3 principally conducted in a reciprocatinghome state is a state 86.4 other than Minnesota and is that state in which the operations86.5 of its banking subsidiaries are the largest in terms of total86.6 deposits. 86.7 Sec. 13. Minnesota Statutes 1994, section 48.92, 86.8 subdivision 9, is amended to read: 86.9 Subd. 9. [INTERSTATE BANK HOLDING COMPANY.] "Interstate 86.10 bank holding company" means (a) a bank holding company located86.11 in this state,whose home state is Minnesota and that is 86.12 engaging in interstate banking under reciprocal86.13 legislation, and (b) a reciprocating statean out-of-state bank 86.14 holding company engaged in banking in this state , and (c) other86.15 out-of-state bank holding companies operating an institution86.16 located in this state having deposits insured by the Federal86.17 Deposit Insurance Corporation. 86.18 Sec. 14. Minnesota Statutes 1994, section 48.92, is 86.19 amended by adding a subdivision to read: 86.20 Subd. 11. [OUT-OF-STATE BANK.] "Out-of-state bank" means a 86.21 bank whose home state is other than Minnesota. 86.22 Sec. 15. Minnesota Statutes 1994, section 48.93, 86.23 subdivision 1, is amended to read: 86.24 Subdivision 1. [APPLICATION.] A reciprocating stateAn 86.25 out-of-state bank holding company may, through a purchase of 86.26 stock or assets of a bank, or through a purchase of stock or 86.27 assets of or merger with a bank holding company, acquire an86.28 interestcontrol in an existing bank or banks located in this86.29 whose home state is Minnesota if it meets the conditions in this 86.30 section, sections 46.047 and 46.048 and , if the interest will86.31 result in control of the bank or banks,it files an application 86.32 in writing with the commissioner on forms provided by the 86.33 department. The commissioner, upon receipt of the application, 86.34 shall act upon it within 30 days of the end of the public86.35 comment period provided by section 48.98, and, unless the86.36 proposed acquisition is disapproved within that period of time,87.1 it becomes effective without approvalin the manner provided for 87.2 in sections 46.047 and 46.048, except that the commissioner may 87.3 extend the 30-day60-day period an additional 30 days if in the 87.4 commissioner's judgment any material information submitted is 87.5 substantially inaccurate or the acquiring party has not 87.6 furnished all the information required by subdivision 3statute, 87.7 rule, or the commissioner. No application for approval required87.8 by this section is complete unless accompanied by an application87.9 fee of $5,000 payable to the state treasurer. Compliance with87.10 the requirements of this section satisfies the requirements of87.11 section 48.03, subdivision 4.Within three days after making 87.12 the decision to disapprove any proposed acquisition, the 87.13 commissioner shall notify the acquiring party in writing of the 87.14 disapproval. The notice must provide a statement of the basis 87.15 for the disapproval. 87.16 Sec. 16. Minnesota Statutes 1994, section 48.93, 87.17 subdivision 3, is amended to read: 87.18 Subd. 3. [CRITERIA FOR APPROVAL.] Except as otherwise 87.19 provided by rule of the department, an application filed 87.20 pursuant to subdivision 1 must contain the following87.21 information :required by sections 46.047 and 46.048. 87.22 (1) the identity, personal history, business background,87.23 and experience of each person by whom or on whose behalf the87.24 acquisition is to be made, including the person's material87.25 business activities and affiliations during the past five years,87.26 and a description of any material pending legal or87.27 administrative proceedings in which the person is a party and87.28 any criminal indictment or conviction of that person by a state87.29 or federal court;87.30 (2) a statement of the assets and liabilities of each87.31 person by whom or on whose behalf the acquisition is to be made,87.32 as of the end of the fiscal year for each of the five years87.33 immediately preceding the date of the notice, together with87.34 related statements of income, sources, and application of funds87.35 for each of the fiscal years then concluded, all prepared in87.36 accordance with generally accepted accounting principles88.1 consistently applied, and an interim statement of the assets and88.2 liabilities for each person, together with related statements of88.3 income, source, and application of funds as of a date not more88.4 than 90 days prior to the date of the filing of the notice;88.5 (3) the terms and conditions of the proposed acquisition88.6 and the manner in which the acquisition is to be made;88.7 (4) the identity, source, and amount of the funds or other88.8 consideration to be used in making the acquisition, and if any88.9 part of these funds or other consideration has been or is to be88.10 borrowed or otherwise obtained for the purpose of making the88.11 acquisition, a description of the transaction, the names of the88.12 parties, and any arrangements, agreements, or understandings88.13 with those persons;88.14 (5) any plans or proposals which an acquiring party making88.15 the acquisition may have to liquidate the bank, to sell its88.16 assets or merge it, or make any other major change in its88.17 business or corporate structure or management;88.18 (6) the identification of any person employed, retained, or88.19 to be compensated by the acquiring party, or by any person on88.20 the acquiring party's behalf, to make solicitations or88.21 recommendations to stockholders for the purpose of assisting in88.22 the acquisition, and a brief description of the terms of the88.23 employment, retainer, or arrangement for compensation;88.24 (7) copies of all invitations, tenders, or advertisements88.25 making tender offers to stockholders for purchase of their stock88.26 to be used in connection with the proposed acquisition;88.27 (8) a statement of how the acquisition will bring "net new88.28 funds" to Minnesota. The description of net new funds must be88.29 filed with the application stating the amount of capital funds,88.30 including the increase in equity capital that will result from88.31 the acquisition or establishment of a bank. The level of total88.32 equity capital must exceed $3,000,000 for a new chartered bank88.33 and $1,000,000 for an acquired bank. The description must state88.34 the net increase in loanable funds expressed as an increase in88.35 the total loan to asset ratio of Minnesota loans and assets.88.36 The statement must also include a discussion of initial capital89.1 investments, loan policy, investment policy, dividend policy,89.2 and the general plan of business, including the full range of89.3 consumer and business services which will be offered; and89.4 (9) any additional relevant information in the form the89.5 commissioner requires by rule or by specific request in89.6 connection with any particular notice.89.7 Sec. 17. Minnesota Statutes 1994, section 48.93, 89.8 subdivision 4, is amended to read: 89.9 Subd. 4. [DISAPPROVAL.] The commissioner shall disapprove 89.10 any proposed acquisition if: 89.11 (1) the financial condition of any acquiring person is such 89.12 as might jeopardize the financial stability of the bank or 89.13 prejudice the interests of the depositors of the bank; 89.14 (2) the competence, experience, integrity of any acquiring 89.15 person or of any of the proposed management personnel indicates 89.16 that it would not be in the interest of the depositors of the 89.17 bank, or in the interest of the public to permit the person to 89.18 control the bank; 89.19 (3) the acquisition will result in undue concentration of 89.20 resources or substantial lessening of competition in this state; 89.21 (4) the application fails to adequately demonstrate that89.22 the acquisition proposal would bring net new funds into89.23 Minnesota;89.24 (5)the application is incomplete or any acquiring party 89.25 neglects, fails, or refuses to furnish all the information 89.26 required by the commissioner; 89.27 (6)(5) a subsidiary of the acquiring bank holding company 89.28 has failed to meet the requirements set forth in the federal 89.29 Community Reinvestment Act; or 89.30 (7) the acquisition will result in over 30 percent of89.31 Minnesota's total deposits in financial institutions as defined89.32 in section 13A.01, subdivision 2, being held by banks located in89.33 this state owned by reciprocating state bank holding companies.89.34 This limitation does not apply to consideration for approval89.35 pursuant to section 48.99, special acquisitions.89.36 (6) the bank to be acquired has not been in existence for 90.1 at least five years. For purposes of this paragraph, a bank 90.2 that has been chartered solely for the purpose of, and does not 90.3 open for business before, acquiring control of, or acquiring all 90.4 or substantially all of the assets of, an existing bank is 90.5 considered to have been in existence for the same period of time 90.6 as the bank to be acquired. For determining the time period of 90.7 existence of a bank, the time period begins after the issuance 90.8 of a certificate of authorization and from the date the approved 90.9 bank actually opens for business. 90.10 Sec. 18. Minnesota Statutes 1994, section 48.96, is 90.11 amended to read: 90.12 48.96 [SUPERVISION.] 90.13 The department may enter into cooperative and reciprocal 90.14 agreements with federal or bankstate regulatory authorities of90.15 reciprocating statesresponsible for supervision of out-of-state 90.16 bank holding companies for exchange or acceptance of reports of 90.17 examination and other records from the authorities in lieu of 90.18 conducting its own examinations. The department may enter into 90.19 joint actions with federal or bankstate regulatory authorities 90.20 of reciprocating statesresponsible for supervision of 90.21 out-of-state bank holding companies to carry out its 90.22 responsibilities under Laws 1986, chapter 339and assure 90.23 compliance with the laws of this state. 90.24 Sec. 19. Minnesota Statutes 1994, section 48.99, 90.25 subdivision 1, is amended to read: 90.26 Subdivision 1. [APPLICATION CRITERIA FOR APPROVAL.] 90.27 Pursuant to the present requirement of the United States Code, 90.28 title 12, section 1842(d) and notwithstanding any other 90.29 provision of state law, a reciprocating statean out-of-state 90.30 bank holding company, or any subsidiary of a bank holding 90.31 company, may acquire a bank located in this state where the 90.32 commissioner has determined that a merger, consolidation, or 90.33 purchase of assets and assumption of liabilities is necessary 90.34 and in the public interest to prevent the probable failure of a 90.35 bank or is made for the incorporation of a new bank in the same 90.36 locality coincidental with the closing of an existing bank by 91.1 the commissioner or federal authorities and does not increase 91.2 the number of banks in the community affected. The acquisition 91.3 is subject to the prior written approval of the commissioner of 91.4 an application submitted under this section and after the 91.5 following considerations: 91.6 (1) the financial and managerial resources of the 91.7 applicant; 91.8 (2) the future prospects of the applicant and the state 91.9 bank or its subsidiary whose assets, interest in, or shares it 91.10 will acquire; 91.11 (3) the financial history of the applicant; 91.12 (4) whether the acquisition or holding may result in undue 91.13 concentration of resources or substantial lessening of 91.14 competition in this state, but any deposit concentration 91.15 limitations imposed on the acquisition by Public Law Number 91.16 103-328, title 1, section 101, (a)(2), may be waived by order of 91.17 the commissioner; 91.18 (5) the convenience and needs of the public of this state; 91.19 and 91.20 (6) whether the acquisition or holding will strengthen the 91.21 financial condition of the state bank. 91.22 Sec. 20. [48.993] [RECIPROCAL INTERSTATE BRANCHING.] 91.23 With the prior approval of the commissioner, a bank doing 91.24 business in the state of Iowa, North Dakota, South Dakota, or 91.25 Wisconsin may establish a de novo detached facility in this 91.26 state not more than 30 miles from its principal office measured 91.27 in a straight line from the closest points of the closest 91.28 structures provided further that: 91.29 (a) There is in effect in the home state a statute, rule, 91.30 or ruling that permits Minnesota home state banks to establish 91.31 de novo branches in the state under conditions substantially 91.32 similar to those imposed by the laws of Minnesota as determined 91.33 by the commissioner. 91.34 (b) There is in effect a cooperative agreement between the 91.35 home state and host state banking regulator to facilitate their 91.36 respective regulation and supervision of the bank including 92.1 application and approval process, and the coordination of 92.2 examinations. The agreement must at a minimum provide: 92.3 (1) common form and information requirements to be 92.4 completed by the applicant bank; 92.5 (2) common form and procedure required to publish the 92.6 application in the location of the branch in the host state; 92.7 (3) a fee for the application to the state of Minnesota, 92.8 department of commerce, for filing and approval as the host 92.9 state of the application of $500; 92.10 (4) the requirements and limitations on the location and 92.11 operations of an interstate branch must be the same as for host 92.12 state branches in sections 47.51 to 47.55. Transfer of location 92.13 under section 47.56 is limited by this section; 92.14 (5) the branch is subject to the laws of the host state 92.15 relating to banking in resolution of conflicts of laws between 92.16 the home and host state; and 92.17 (6) the deposits of the bank must be insured by the Federal 92.18 Deposit Insurance Corporation. 92.19 (c) The home state banking regulator has granted any and 92.20 all necessary approvals. 92.21 (d) Beginning one year following establishment of a 92.22 detached facility in a host state, the home state bank's level 92.23 of lending in the host state relative to the deposits from the 92.24 host state shall not be less than half of the level of the 92.25 bank's loan to deposit ratio in its home state operations. The 92.26 bank shall maintain sufficient records to permit an examination 92.27 to determine compliance with this requirement by the host state 92.28 banking regulator. If the bank is found to be in noncompliance, 92.29 the home state or host state banking regulator may order that an 92.30 interstate branch of the bank in the host state be closed. 92.31 (e) For purposes of this section, "home state" has the 92.32 meaning given in section 48.92, and "host state" means a state 92.33 other than the home state. 92.34 Sec. 21. [48.995] [FOREIGN CORPORATION FILING.] 92.35 Subdivision 1. [TRUST POWERS.] A bank that holds trust 92.36 powers may conduct the activity through a host state branch 93.1 provided it complies with section 303.25. 93.2 Subd. 2. [FILING WITH SECRETARY OF STATE.] Notwithstanding 93.3 section 303.03, the branch in a host state must operate under a 93.4 certificate of authority filed with the Minnesota secretary of 93.5 state. 93.6 Subd. 3. [DEFINITION.] For purposes of this section, "host 93.7 state" means a state other than the home state, as defined in 93.8 section 48.92. 93.9 Sec. 22. Minnesota Statutes 1994, section 52.05, 93.10 subdivision 2, is amended to read: 93.11 Subd. 2. [APPLICATION.] Any 25 residents of the state93.12 persons representing a group may apply to the commissioner, 93.13 advising the commissioner of the common bond of the group and 93.14 its number of potential members, for a determination whether it 93.15 is feasible for the group to form a credit union. Upon a 93.16 determination that it is not feasible to organize because the 93.17 number of potential members is too small, the applicants will be 93.18 certified by the commissioner as eligible to petition for 93.19 membership in an existing credit union capable of serving the 93.20 group. If the credit union so petitioned resolves to accept the 93.21 group into membership, it shall follow the bylaw amendment and 93.22 approval procedure set forth in section 52.02. 93.23 The commissioner shall adopt rules to implement this 93.24 subdivision. These rules must provide that: 93.25 (1) for the purpose of this subdivision, groups with a 93.26 potential membership of less than 1,500 will be considered too 93.27 small to be feasible as a separate credit union, unless there 93.28 are compelling reasons to the contrary, relevant to the 93.29 objectives of this subdivision; 93.30 (2) groups with a potential membership in excess of 1,500 93.31 will be considered in light of all circumstances relevant to the 93.32 objectives of this subdivision; and 93.33 (3) all group applications, except for applications from 93.34 groups made up of members of existing credit unions or groups 93.35 made up of people who have a common employer which qualifies 93.36 them for membership in an existing credit union, will be 94.1 considered separately from any consideration of the membership 94.2 provisions of existing credit unions; except that, groups made 94.3 up of members of an existing credit union may be certified under 94.4 this subdivision with the agreement of the credit union. 94.5 Sec. 23. [NONSEVERABILITY.] 94.6 Notwithstanding Minnesota Statutes, section 645.20, if any 94.7 section, subdivision, clause, phrase, or word of section 5, 94.8 paragraph (d), section 20, or section 21 is for any reason 94.9 determined by a final nonappealable order or judgment of a court 94.10 of competent jurisdiction to be unconstitutional, in violation 94.11 of federal law, or to constitute opting-in to de novo interstate 94.12 branching under section 103 of the federal Riegle-Neal 94.13 Interstate Banking and Branching Efficiency Act of 1994, the 94.14 determination shall cause the remaining portions of those 94.15 sections, subdivisions, clauses, and phrases to be null and void 94.16 from the effective date of the final determination. 94.17 Sec. 24. [SUNSET.] 94.18 Sections 5, 20, and 21 expire May 31, 1997. 94.19 Sec. 25. [IMMEDIATE REPEALER.] 94.20 Minnesota Statutes 1994, sections 48.1585; 48.512, 94.21 subdivision 6; 48.97; and 48.991, are repealed. 94.22 Sec. 26. [DELAYED REPEALER.] 94.23 Minnesota Statutes 1994, sections 47.80; 47.81; 47.82; 94.24 47.83; 47.84; 47.85; 48.95; and 48.98, are repealed. 94.25 Sec. 27. [EFFECTIVE DATE.] 94.26 Sections 1, 5, 20 to 22, and 25 are effective the day 94.27 following final enactment. Sections 2 to 4 and 6 to 19 are 94.28 effective September 29, 1995, except that the portions of 94.29 section 17 that strike existing clauses (4) and (7) are 94.30 effective the day following final enactment.