SF 1313

as introduced - 85th Legislature (2007 - 2008) Posted on 12/15/2009 12:00am

A bill for an act
relating to commerce; regulating mortgage originators and services; establishing
continuing education requirements; creating a residential mortgage originators
and servicers recovery fund; proposing coding for new law in Minnesota
Statutes, chapter 58.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1.

new text begin [58.105] CONTINUING EDUCATION.
new text end

new text begin Subdivision 1. new text end

new text begin License renewals. new text end

new text begin A licensee shall present evidence satisfactory to
the commissioner of having met the continuing education requirements of this chapter
before the commissioner renews a license.
new text end

new text begin The basic continuing education requirement for renewal of a license is the
completion by the applicant either as a student or as an instructor, during the immediately
preceding term of licensing, of at least 30 classroom hours of instruction in courses or
seminars that have received the approval of the commissioner. Classroom hour credit must
not be accepted for courses of less than two hours. If the applicant's immediately preceding
term of licensing consisted of 12 or more months, but fewer than 24 months, the applicant
must provide evidence of completion of 15 hours of instruction during the license period.
new text end

new text begin Subd. 2. new text end

new text begin Rules. new text end

new text begin (a) The commissioner may adopt rules defining the standards for
course and instructor approval, and may adopt rules for the proper administration of
continuing education as required by this section.
new text end

new text begin (b) As a prerequisite for course approval, sponsors shall submit proposed monitoring
methods, and systems for recording attendance sufficient to ensure that participants
receive course credit only for portions actually attended.
new text end

new text begin Subd. 3. new text end

new text begin Reinstatements. new text end

new text begin A license that has been revoked as a result of disciplinary
action by the commissioner may not be reinstated unless the applicant presents evidence
of completion of the continuing education required by this chapter.
new text end

new text begin Subd. 4. new text end

new text begin Renewal of accreditation. new text end

new text begin The commissioner is authorized to establish a
procedure for renewal of course accreditation.
new text end

Sec. 2.

new text begin [58.165] RESIDENTIAL MORTGAGE ORIGINATORS AND
SERVICERS RECOVERY FUND.
new text end

new text begin Subdivision 1. new text end

new text begin Creation and administration. new text end

new text begin The "residential mortgage originators
and servicers recovery fund" is created in the state treasury and must be administered by
the commissioner of commerce for the purposes of this section. The commissioner of
finance is the custodian of the fund and operates under the direction of the commissioner
of commerce.
new text end

new text begin Subd. 2. new text end

new text begin Funding. new text end

new text begin (a) On an application for an original license or for renewal
of a license issued under this chapter, the applicant, in addition to paying the original
application fee or renewal fee, shall pay a $20 fee. The fee must be deposited in the fund.
new text end

new text begin (b) If the balance remaining in the fund at the end of a calendar year after 2010 is
less than $500,000, each mortgage originator and servicer licensed under this chapter, on
the next renewal of the license, shall pay, in addition to any other required fees, the lesser
of a $10 fee or a pro rata share of the amount necessary to bring the fund to $1,000,000.
The fee must be deposited in the fund.
new text end

new text begin (c) If the balance remaining in the fund at the end of a calendar year is more than
the greater of $3,500,000 or the total amount of claims paid from the fund during the
previous four fiscal years, the amount of money in excess of the greater amount shall be
transferred to the general fund.
new text end

new text begin Subd. 3. new text end

new text begin Investment of funds. new text end

new text begin Any funds shall, upon request of the commissioner,
be invested by the State Board of Investment in the class of securities specified in section
11A.24 and acts amendatory thereto. All interest and profits from such investments shall
be credited to the real estate education, research and recovery fund. The commissioner of
finance shall be the custodian of securities purchased under the provisions of this section.
new text end

new text begin Subd. 4. new text end

new text begin Procedure for recovery. new text end

new text begin (a) An aggrieved person who recovers against
a mortgage originator or servicer licensed under this chapter a valid court judgment for
conduct described by section 58.13 that occurred on or after January 1, 2008, after final
judgment has been entered, execution returned nulla bona, and a judgment lien perfected,
may file a verified claim in the court in which the judgment was entered and, on 20 days'
written notice to the commissioner and to the judgment debtor, may apply to the court for
an order directing payment from the fund of any unpaid judgment amount.
new text end

new text begin (b) On the hearing on the application, the aggrieved person is required to show:
new text end

new text begin (1) that the judgment is based on facts allowing recovery;
new text end

new text begin (2) that the person is not a spouse of the debtor, or the personal representative of the
spouse, and that the person is not licensed as a mortgage originator or servicer under this
chapter who is seeking to recover any compensation in the transaction or transactions for
which the application for payment is made;
new text end

new text begin (3) that based on the best available information, the judgment debtor lacks sufficient
attachable assets in this state or any other state to satisfy the judgment, and the bond or
letter of credit required by section 58.08 is not sufficient to satisfy the judgment; and
new text end

new text begin (4) the amount that may be realized from the sale of property or other assets liable to
be sold or applied in satisfaction of the judgment and the balance remaining due on the
judgment after application of the amount that may be realized.
new text end

new text begin (c) A recovery on the judgment against a single defendant made before payment
from the fund shall be applied first by the creditor to actual damages.
new text end

new text begin (d) The court shall make an order directed to the commissioner requiring payment
from the fund of the amount the court finds to be payable on the claim, pursuant to and
in accordance with the limitations contained in this section, if the court is satisfied, on
the hearing, of the truth of all matters required to be shown by the aggrieved person
under paragraph (b) and that the aggrieved person has satisfied all of the requirements
of this section.
new text end

new text begin (e) When the commissioner receives notice of entry of a final judgment and a hearing
is scheduled under this section, the commissioner may notify the attorney general of the
commissioner's desire to enter an appearance, file a response, appear at the court hearing,
defend the action, or take any other appropriate action. In taking any action described
by this section, the commissioner and the attorney general shall act only to protect the
fund from spurious or unjust claims or to ensure compliance with the requirements for
recovery under this chapter.
new text end

new text begin (f) The commissioner may relitigate any issue material and relevant in the hearing
on the application that was determined in the underlying action on which the judgment in
favor of the applicant was based.
new text end

new text begin (g) If the court finds that the aggregate amount of claims against a licensed mortgage
originator or servicer exceeds the limits contained in this section, the court shall reduce
proportionately the amount the court finds payable on the claim.
new text end

new text begin Subd. 5. new text end

new text begin Recovery limits. new text end

new text begin (a) A person entitled to receive payment out of the fund
is entitled to receive reimbursement of actual, out-of-pocket damages, reasonable attorney
fees, and court costs as determined by the court as provided by this section.
new text end

new text begin (b) A payment from the fund may be made only pursuant to a court order as provided
by this section. A payment for claims:
new text end

new text begin (1) arising out of the same transaction, including attorney fees, interest, and court
costs, is limited in the aggregate to $25,000, regardless of the number of claimants; and
new text end

new text begin (2) based on judgments against a single person licensed as a mortgage originator or
servicer under this chapter is limited in the aggregate to $50,000 until the fund has been
reimbursed for all amounts paid.
new text end

new text begin Subd. 6. new text end

new text begin Revocation of license for payment from fund. new text end

new text begin (a) The commissioner
may revoke a license issued under this chapter on proof that the commissioner has made a
payment from the fund of any amount toward satisfaction of a judgment against a person
licensed as a mortgage broker or loan officer under this chapter.
new text end

new text begin (b) The commissioner may probate an order revoking a license under this
subdivision.
new text end

new text begin (c) A person on whose behalf payment was made from the fund is not eligible to
receive a new license under this chapter until the person has repaid in full, plus interest at
the current legal rate, the amount paid from the fund on the person's behalf.
new text end

new text begin (d) This section does not limit the authority of the commissioner to take disciplinary
action against a mortgage originator or servicer for a violation of this chapter. The
repayment in full to the fund of all obligations of a mortgage broker or loan officer does not
nullify or modify the effect of any other disciplinary proceeding brought under this chapter.
new text end

new text begin Subd. 7. new text end

new text begin Subrogation. new text end

new text begin When the commissioner has paid a judgment creditor an
amount from the fund as directed by the court, the commissioner is subrogated to all of the
rights of the judgment creditor to the extent of the amount paid. The judgment creditor
shall assign all of the creditor's right, title, and interest in the judgment up to the amount
paid by the commissioner, and that amount has priority for repayment in the event of any
subsequent recovery on the judgment. Any amount, including interest, recovered by the
commissioner on the judgment shall be deposited to the credit of the fund.
new text end

new text begin Subd. 8. new text end

new text begin Failure to comply with chapter. new text end

new text begin The failure of an aggrieved person to
comply with a provision of this chapter relating to the fund constitutes a waiver of any
rights under this chapter.
new text end