Minnesota Legislature
SF 2966
as introduced - 80th Legislature (1997 - 1998) Posted on 12/15/2009 12:00am
KEY: stricken = removed, old language.
underscored = added, new language.
1.1 A bill for an act 1.2 relating to mortgages; enacting the Minnesota 1.3 Residential Mortgage Originator and Servicer Licensing 1.4 Act; establishing licensing and enforcement 1.5 mechanisms; amending Minnesota Statutes 1996, sections 1.6 47.206, subdivision 1; 82.17, subdivision 4; 82.18; 1.7 and 82.27, subdivision 1; proposing coding for new law 1.8 as Minnesota Statutes, chapter 58; repealing Minnesota 1.9 Statutes 1996, section 82.175. 1.10 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 1.11 ARTICLE 1 1.12 RESIDENTIAL MORTGAGE ORIGINATOR 1.13 AND SERVICER LICENSING 1.14 Section 1. [58.01] [CITATION.] 1.15 This chapter shall be cited as the "Minnesota Residential 1.16 Mortgage Originator and Servicer Licensing Act." 1.17 Sec. 2. [58.02] [DEFINITIONS.] 1.18 Subdivision 1. [SCOPE.] For purposes of this chapter, the 1.19 terms defined in this section have the meanings given to them. 1.20 Subd. 2. [ACT.] "Act" means the Minnesota Residential 1.21 Mortgage Originator and Servicer Licensing Act. 1.22 Subd. 3. [ADVANCE FEE.] "Advance fee" means a commission, 1.23 fee, charge, or compensation of any kind paid to a residential 1.24 mortgage originator before the closing of a loan, that is 1.25 intended in whole or in part as payment for the originator's 1.26 services in finding or attempting to find a loan for a 1.27 borrower. Advance fee does not include pass-through fees or 2.1 commitment or extended lock fees or other fees as determined by 2.2 the commissioner. 2.3 Subd. 4. [BORROWER.] "Borrower" means a person or persons 2.4 applying for a residential mortgage loan, a mortgagor, or the 2.5 person or persons on whose behalf the activities in subdivisions 2.6 12, 14, 21, and 22 are conducted. 2.7 Subd. 5. [CLOSING.] "Closing" means either or both of the 2.8 following: (1) the process whereby the real estate contract 2.9 between a buyer and a seller is consummated; or (2) the process 2.10 whereby the documents creating a security interest in real 2.11 property become effective between the borrower and the lender. 2.12 Subd. 6. [COMMISSIONER.] "Commissioner" means the 2.13 commissioner of the department of commerce. 2.14 Subd. 7. [EMPLOYEE.] "Employee" means an individual who is 2.15 treated as an employee by the residential mortgage originator or 2.16 servicer for purposes of compliance with federal income tax laws. 2.17 Subd. 8. [ESCROW ACCOUNT.] "Escrow account" means a trust 2.18 account that is established and maintained to hold funds 2.19 received from a borrower, such as real estate taxes and 2.20 insurance premiums, incurred in connection with the servicing of 2.21 the mortgage. 2.22 Subd. 9. [EXEMPT PERSON.] "Exempt person" means a person 2.23 exempt from residential mortgage originator licensing 2.24 requirements, and a person exempt from residential mortgage 2.25 service licensing requirements. 2.26 Subd. 10. [FINANCIAL INSTITUTION.] "Financial institution" 2.27 means a bank, bank and trust, trust company with banking powers, 2.28 savings bank, savings institution, or credit union, organized 2.29 under the laws of this state or the United States; a Minnesota 2.30 host state branch of an out-of-state bank as provided for in 2.31 section 49.411; an industrial loan and thrift under chapter 53; 2.32 or a regulated lender under chapter 56. 2.33 Subd. 11. [LENDER.] "Lender" means a person who makes 2.34 residential mortgage loans including a person who provides table 2.35 funding. 2.36 Subd. 12. [MAKING A RESIDENTIAL MORTGAGE LOAN.] "Making a 3.1 residential mortgage loan" means for compensation or gain, or 3.2 the expectation of compensation or gain, to advance funds or 3.3 make a commitment to advance funds in connection with a 3.4 residential mortgage. 3.5 Subd. 13. [MORTGAGE BROKER; BROKER.] "Mortgage broker" or 3.6 "broker" means a person who performs the activities described in 3.7 subdivisions 14 and 22. 3.8 Subd. 14. [MORTGAGE BROKERING; BROKERING.] "Mortgage 3.9 brokering" or "brokering" means helping to obtain from another 3.10 person, for a borrower, a residential mortgage or assisting a 3.11 borrower in obtaining a residential mortgage loan in return for 3.12 consideration to be paid by the borrower or lender or both. 3.13 Mortgage brokering or brokering includes, but is not limited to, 3.14 soliciting, placing, or negotiating a residential mortgage loan. 3.15 Subd. 15. [NET WORTH.] "Net worth" has the meaning given 3.16 it in section 58.07. 3.17 Subd. 16. [PERSON.] "Person" means a natural person, firm, 3.18 partnership, limited liability partnership, corporation, 3.19 association, limited liability company, or other form of 3.20 business organization and the officers, directors, employees, or 3.21 agents of that person. 3.22 Subd. 17. [PERSON IN CONTROL.] "Person in control" means 3.23 any member of senior management and other persons who possess, 3.24 directly or indirectly, the power to direct or cause the 3.25 direction of the management policies of an applicant or licensee 3.26 under this chapter, regardless of whether the person has any 3.27 ownership interest in the applicant or licensee. Control is 3.28 presumed to exist if a person, directly or indirectly, owns, 3.29 controls, or holds with power to vote ten percent or more of the 3.30 voting stock of an applicant or licensee or of a person who 3.31 owns, controls, or holds with power to vote ten percent or more 3.32 of the voting stock of an applicant or licensee. 3.33 Subd. 18. [RESIDENTIAL MORTGAGE LOAN.] "Residential 3.34 mortgage loan" means a loan made primarily for personal, family, 3.35 or household use, primarily secured by either a: (1) mortgage 3.36 on residential real property; or (2) certificates of stock or 4.1 other evidence of ownership interest in and proprietary lease 4.2 from corporations, partnerships, or other forms of business 4.3 organizations formed for the purpose of cooperative ownership of 4.4 residential real property. 4.5 Subd. 19. [RESIDENTIAL MORTGAGE ORIGINATOR.] "Residential 4.6 mortgage originator" means a person who, directly or indirectly, 4.7 for compensation or gain or in expectation of compensation or 4.8 gain, solicits or offers to solicit, or accepts or offers to 4.9 accept an application for a residential mortgage loan through 4.10 any medium or mode of communication from a borrower, or makes a 4.11 residential mortgage loan. "Residential mortgage originator" 4.12 includes a lender as defined in subdivision 11 and a broker as 4.13 defined in subdivision 13. 4.14 Subd. 20. [RESIDENTIAL REAL PROPERTY; RESIDENTIAL REAL 4.15 ESTATE.] "Residential real property" or "residential real 4.16 estate" means real property improved or intended to be improved 4.17 by a structure designed principally for the occupancy of from 4.18 one to four families. 4.19 Subd. 21. [SERVICING; SERVICING A RESIDENTIAL MORTGAGE.] 4.20 "Servicing" or "servicing a residential mortgage loan" means 4.21 through any medium or mode of communication the collection or 4.22 remittance for, or the right or obligation to collect or remit 4.23 for a lender, mortgagee, note owner, noteholder, or for a 4.24 person's own account, of payments, interest, principal, and 4.25 escrow items such as insurance and taxes for property subject to 4.26 a residential mortgage loan. 4.27 Subd. 22. [SOLICITING, PLACING, OR NEGOTIATING A 4.28 RESIDENTIAL MORTGAGE LOAN.] "Soliciting, placing, or negotiating 4.29 a residential mortgage loan" means for compensation or gain or 4.30 expectation of compensation or gain, whether directly or 4.31 indirectly, accepting or offering to accept an application for a 4.32 residential mortgage loan, assisting, or offering to assist a 4.33 borrower in applying for a residential mortgage loan, or 4.34 negotiating or offering to negotiate the terms or conditions of 4.35 a residential mortgage loan with a lender on behalf of a 4.36 borrower. 5.1 Subd. 23. [TABLE FUNDING.] "Table funding" means a closing 5.2 or settlement at which a residential mortgage loan is funded by 5.3 a lender by way of a contemporaneous advance of residential 5.4 mortgage loan funds and an assignment of the residential 5.5 mortgage loan to the lender advancing the funds. 5.6 Subd. 24. [TRUST ACCOUNT.] "Trust account" means a 5.7 negotiable order of withdrawal account, demand deposit, or 5.8 checking account maintained for the purpose of segregating trust 5.9 funds from other funds. A "trust account" must not allow the 5.10 financial institution a right of set-off against the money owed 5.11 it by the account holder. 5.12 Subd. 25. [TRUST FUNDS.] "Trust funds" means funds 5.13 received by a residential mortgage originator or servicer in a 5.14 fiduciary capacity for later distribution, such as appraisal or 5.15 credit report fees, taxes, or insurance premiums. Trust funds 5.16 includes commitment, lock, extended lock, and advance fees. 5.17 Sec. 3. [58.03] [CLASSES OF LICENSE.] 5.18 The commissioner may issue the following classes of license 5.19 under this chapter: 5.20 (1) a residential mortgage originator license; and 5.21 (2) a residential mortgage servicer license. 5.22 Sec. 4. [58.04] [LICENSING REQUIREMENT.] 5.23 Subdivision 1. [RESIDENTIAL MORTGAGE ORIGINATOR LICENSING 5.24 REQUIREMENTS.] (a) Beginning August 1, 1999, no person shall act 5.25 as a residential mortgage originator, or make residential 5.26 mortgage loans without first obtaining a license from the 5.27 commissioner according to the licensing procedures provided in 5.28 this chapter and rules adopted by the commissioner. 5.29 (b) The following persons are exempt from the residential 5.30 mortgage originator licensing requirements: 5.31 (1) an employee of one mortgage originator licensee or one 5.32 person holding a certificate of exemption; 5.33 (2) a person engaged solely in commercial mortgage 5.34 activities; 5.35 (3) a person licensed as a real estate broker under chapter 5.36 82, and an individual licensee who is licensed to the broker if: 6.1 (i) the individual licensee acts only under the name, 6.2 authority, and supervision of the broker to whom the licensee is 6.3 licensed; 6.4 (ii) the broker obtains a certificate of exemption 6.5 according to section 58.05, subdivision 2; 6.6 (iii) the broker does not collect an advance fee for its 6.7 residential mortgage-related activities; and 6.8 (iv) the residential mortgage origination activities relate 6.9 to an underlying real estate transaction in which the real 6.10 estate broker is assisting the seller, buyer, owner, or lessor; 6.11 (4) a person making no more than five residential mortgage 6.12 loans with its own funds, during any 12-month period; 6.13 (5) a financial institution as defined in section 58.02, 6.14 subdivision 10; 6.15 (6) an agency of the federal government, or of a state or 6.16 municipal government; 6.17 (7) an employee or employer pension plan making loans only 6.18 to its participants; 6.19 (8) a person acting in a fiduciary capacity, such as a 6.20 trustee or receiver, as a result of a specific order issued by a 6.21 court of competent jurisdiction; or 6.22 (9) a person exempted by rule or order of the commissioner. 6.23 Subd. 2. [RESIDENTIAL MORTGAGE SERVICER LICENSING 6.24 REQUIREMENTS.] (a) Beginning August 1, 1999, no person shall 6.25 engage in activities or practices that fall within the 6.26 definition of "servicing a residential mortgage loan" under 6.27 section 58.02, subdivision 21, without first obtaining a license 6.28 from the commissioner according to the licensing procedures 6.29 provided in this chapter and rules adopted by the commissioner. 6.30 (b) The following persons are exempt from the residential 6.31 mortgage servicer licensing requirements: 6.32 (1) a person licensed as a residential mortgage originator; 6.33 (2) an employee of one licensee or one person holding a 6.34 certificate of exemption based on an exemption under this 6.35 subdivision; 6.36 (3) a person engaged solely in commercial mortgage 7.1 activities; 7.2 (4) a person servicing loans made with its own funds, if no 7.3 more than five such loans are made in any 12-month period; 7.4 (5) a financial institution as defined in section 58.02, 7.5 subdivision 10; 7.6 (6) an agency of the federal government, or of a state or 7.7 municipal government; 7.8 (7) an employee or employer pension plan making loans only 7.9 to its participants; 7.10 (8) a person acting in a fiduciary capacity, such as a 7.11 trustee or receiver, as a result of a specific order issued by a 7.12 court of competent jurisdiction; or 7.13 (9) a person exempted by rule or order of the commissioner. 7.14 Subd. 3. [CONDUCTING BUSINESS UNDER LICENSE.] No person 7.15 required to be licensed under this chapter may, without a 7.16 license, do business under a name or title or circulate or use 7.17 advertising or make representations or give information to a 7.18 person, that indicates or reasonably implies activity within the 7.19 scope of this chapter. 7.20 Sec. 5. [58.05] [EXEMPTIONS FROM LICENSE.] 7.21 Subdivision 1. [EXEMPTION FROM LICENSURE.] An exempt 7.22 person as defined by section 58.04, subdivision 1, paragraph 7.23 (b), and subdivision 2, paragraph (b), is exempt from the 7.24 licensing requirements of this chapter, but is subject to all 7.25 other provisions of this chapter. 7.26 Subd. 2. [ELIGIBILITY FOR EXEMPTION.] To qualify as an 7.27 exempt person, a person, except an employee exempt under section 7.28 58.04, subdivision 1, paragraph (b), clause (1), or subdivision 7.29 2, paragraph (b), clause (2), or an individual real estate 7.30 licensee exempt under section 58.04, subdivision 1, paragraph 7.31 (b), clause (3), must obtain a certificate of exemption from the 7.32 commissioner. A certificate of exemption will be issued upon 7.33 the person's filing, on a form provided by the commissioner, a 7.34 statement indicating the basis on which the exemption is claimed 7.35 and, if applicable, the name and address of the state or federal 7.36 regulatory agency or body to which complaints regarding the 8.1 person's residential mortgage originating or servicing 8.2 activities may be directed. 8.3 Sec. 6. [58.06] [APPLICATION REQUIREMENTS FOR RESIDENTIAL 8.4 MORTGAGE ORIGINATORS AND SERVICERS.] 8.5 Subdivision 1. [LICENSE APPLICATION FORM.] Application for 8.6 a residential mortgage originator or a residential mortgage 8.7 servicer license must be in writing, under oath, and on a form 8.8 obtained from and prescribed by the commissioner. 8.9 Subd. 2. [APPLICATION CONTENTS.] The application must 8.10 contain the name and complete business address or addresses of 8.11 the license applicant. If the license applicant is a 8.12 partnership, limited liability partnership, association, limited 8.13 liability company, corporation, or other form of business 8.14 organization, the application must contain the names and 8.15 complete business addresses of each partner, member, director, 8.16 and principal officer. The application must also include a 8.17 description of the activities of the license applicant, in the 8.18 detail and for the periods the commissioner may require. The 8.19 application must also include all of the following: 8.20 (a) an affirmation under oath that the applicant: 8.21 (1) will maintain competent staff and adequate staffing 8.22 levels, through direct employees or otherwise, to meet the 8.23 requirements of this chapter; 8.24 (2) will advise the commissioner of any material changes to 8.25 the information submitted in the most recent application within 8.26 ten days of the change; 8.27 (3) will advise the commissioner in writing immediately of 8.28 any bankruptcy petitions filed against or by the applicant or 8.29 licensee; 8.30 (4) is financially solvent and in compliance with net worth 8.31 requirements; 8.32 (5) complies with federal and state tax laws; 8.33 (6) complies with sections 345.31 to 345.60, the Minnesota 8.34 unclaimed property law; and 8.35 (7) is, or that a person in control of the license 8.36 applicant is, at least 18 years of age; 9.1 (b) information as to the mortgage lending, servicing, or 9.2 brokering experience of the applicant and persons in control of 9.3 the applicant; 9.4 (c) information as to criminal convictions, excluding 9.5 traffic violations, of persons in control of the license 9.6 applicant; 9.7 (d) whether a court of competent jurisdiction has found 9.8 that the applicant or persons in control of the applicant have 9.9 engaged in conduct evidencing gross negligence, fraud, 9.10 misrepresentation, or deceit in performing an act for which a 9.11 license is required under this chapter; 9.12 (e) whether the applicant or persons in control of the 9.13 applicant have been the subject of: an order of suspension or 9.14 revocation, cease and desist order, or injunctive order, or 9.15 order barring involvement in an industry or profession issued by 9.16 this or another state or federal regulatory agency or by the 9.17 Secretary of Housing and Urban Development within the ten-year 9.18 period immediately preceding submission of the application; and 9.19 (f) other information required by the commissioner. 9.20 Sec. 7. [58.07] [NET WORTH FOR ORIGINATORS AND SERVICERS.] 9.21 Subdivision 1. [REQUIREMENT.] A licensee who is issued a 9.22 residential mortgage originator license shall maintain a minimum 9.23 net worth of $25,000. A licensee who is issued a residential 9.24 mortgage servicer's license shall maintain a minimum net worth 9.25 of $250,000. 9.26 Subd. 2. [COMPUTATION.] Net worth must be computed 9.27 according to generally accepted accounting principles and must 9.28 reflect any adjustment to net worth required by the Governmental 9.29 National Mortgage Association. 9.30 Subd. 3. [CERTIFIED FINANCIALS.] The commissioner may 9.31 require the submission of financial data audited by an 9.32 independent certified accountant when it is considered necessary 9.33 for an investigation or examination. 9.34 Sec. 8. [58.08] [BONDS; LETTERS OF CREDIT.] 9.35 Subdivision 1. [REQUIREMENT OF RESIDENTIAL MORTGAGE 9.36 ORIGINATORS.] A residential mortgage originator licensee shall 10.1 continuously maintain a surety bond or irrevocable letter of 10.2 credit in an amount not less than $50,000 in a form approved by 10.3 the commissioner, issued by an insurance company or bank 10.4 authorized to do so in this state. The bond must be available 10.5 for the recovery of expenses, fines, and fees levied by the 10.6 commissioner under this chapter, and for losses or damages 10.7 incurred by borrowers as the result of a licensee's 10.8 noncompliance with the requirements of this chapter, sections 10.9 325D.43 to 325D.48, and 325F.67 to 325F.69, or breach of 10.10 contract. 10.11 The bond or irrevocable letter of credit must be submitted 10.12 with the originator's license application, and evidence of 10.13 continued coverage must be submitted with each renewal. Any 10.14 change in the bond or letter of credit must be submitted for 10.15 approval by the commissioner, within ten days of its execution. 10.16 Subd. 2. [REQUIREMENT OF RESIDENTIAL MORTGAGE 10.17 SERVICERS.] A residential mortgage servicer licensee shall 10.18 continuously maintain a surety bond or irrevocable letter of 10.19 credit in an amount not less than $100,000 in a form approved by 10.20 the commissioner, issued by an insurance company or bank 10.21 authorized to do so in this state. The bond must be available 10.22 for the recovery of expenses, fines, and fees levied by the 10.23 commissioner under this chapter, and for losses or damages 10.24 incurred by borrowers or other aggrieved parties as the result 10.25 of a licensee's noncompliance with the requirements of this 10.26 chapter, sections 325D.43 to 325D.48, and 325F.67 to 325F.69, or 10.27 breach of contract. 10.28 The bond or irrevocable letter of credit must be submitted 10.29 with the servicer's license application and evidence of 10.30 continued coverage must be submitted with each renewal. Any 10.31 change in the bond or letter of credit must be submitted for 10.32 approval by the commissioner, within ten days of its execution. 10.33 Subd. 3. [EXEMPTION.] Subdivisions 1 and 2 do not apply to 10.34 mortgage originators or mortgage servicers who are approved as 10.35 seller/servicers by the Federal National Mortgage Association or 10.36 the Federal Home Loan Mortgage Corporation. 11.1 Sec. 9. [58.09] [TERM OF LICENSE.] 11.2 Initial licenses for residential mortgage originators and 11.3 residential mortgage servicers issued under this chapter expire 11.4 on July 31, 2001, and are renewable on August 1, 2001, and on 11.5 August 1 of each odd-numbered year after that date. A new 11.6 licensee whose license expires less than 12 months from the date 11.7 of issuance shall pay a fee equal to one-half the applicable 11.8 initial license fee set forth in section 58.10, subdivision 1, 11.9 clause (1) or (3). 11.10 Sec. 10. [58.10] [FEES.] 11.11 Subdivision 1. [AMOUNTS.] The following fees must be paid 11.12 to the commissioner: 11.13 (1) for an initial residential mortgage originator license, 11.14 $800; 11.15 (2) for a renewal license, $400; 11.16 (3) for an initial residential mortgage servicer's license, 11.17 $1,000; 11.18 (4) for a renewal license, $500; 11.19 (5) license service fees as set forth in chapter 45; and 11.20 (6) for a certificate of exemption, $100. 11.21 Subd. 2. [FORFEITURE.] All fees are nonrefundable except 11.22 that an overpayment of a fee must be refunded upon proper 11.23 application. 11.24 Sec. 11. [58.11] [LICENSE RENEWAL.] 11.25 Subdivision 1. [TERM.] Licenses are renewable on August 1, 11.26 2001, and on August 1 of each odd-numbered year after that date. 11.27 Subd. 2. [TIMELY RENEWAL.] (a) A person whose application 11.28 is properly and timely filed who has not received notice of 11.29 denial of renewal is considered approved for renewal and the 11.30 person may continue to transact business as a residential 11.31 mortgage originator or servicer whether or not the renewed 11.32 license has been received on or before August 1 of the renewal 11.33 year. Application for renewal of a license is considered timely 11.34 filed if received by the commissioner by, or mailed with proper 11.35 postage and postmarked by, July 15 of the renewal year. An 11.36 application for renewal is considered properly filed if made 12.1 upon forms duly executed and sworn to, accompanied by fees 12.2 prescribed by this chapter, and contain any information that the 12.3 commissioner requires. 12.4 (b) A person who fails to make a timely application for 12.5 renewal of a license and who has not received the renewal 12.6 license as of August 1 of the renewal year is unlicensed until 12.7 the renewal license has been issued by the commissioner and is 12.8 received by the person. 12.9 Subd. 3. [CONTENTS OF RENEWAL APPLICATION.] Application 12.10 for the renewal of an existing license must contain the 12.11 information specified in section 58.06, subdivision 2; however, 12.12 only the requested information having changed from the most 12.13 recent prior application need be submitted. 12.14 Subd. 4. [CANCELLATION.] A licensee ceasing an activity or 12.15 activities regulated by this chapter and desiring to no longer 12.16 be licensed shall so inform the commissioner in writing and, at 12.17 the same time, surrender the license and all other symbols or 12.18 indicia of licensure. The licensee shall include a plan for the 12.19 withdrawal from regulated business, including a timetable for 12.20 the disposition of the business. 12.21 Sec. 12. [58.12] [DENIAL, SUSPENSION, REVOCATION OF 12.22 LICENSES.] 12.23 Subdivision 1. [POWERS OF COMMISSIONER.] (a) The 12.24 commissioner may by order take any or all of the following 12.25 actions: 12.26 (1) bar a person from engaging in residential mortgage 12.27 origination or servicing; 12.28 (2) deny, suspend, or revoke a residential mortgage 12.29 originator or a servicer license; 12.30 (3) censure a licensee; 12.31 (4) impose a civil penalty as provided for in section 12.32 45.027, subdivision 6; or 12.33 (5) revoke an exemption or certificate of exemption. 12.34 (b) In order to take the action in paragraph (a), the 12.35 commissioner must find: 12.36 (1) that the order is in the public interest; and 13.1 (2) that the originator, servicer, applicant, or other 13.2 person, an officer, director, partner, employee, or agent or any 13.3 person occupying a similar status or performing similar 13.4 functions, or a person in control of the originator, servicer, 13.5 applicant, or other person has: 13.6 (i) violated any provision of this chapter or rule or order 13.7 under this chapter; 13.8 (ii) filed an application for a license that is incomplete 13.9 in any material respect or contains a statement that, in light 13.10 of the circumstances under which it is made, is false or 13.11 misleading with respect to a material fact; 13.12 (iii) failed to maintain compliance with the affirmations 13.13 made under section 58.06, subdivision 2; 13.14 (iv) violated a standard of conduct or engaged in a 13.15 fraudulent, coercive, deceptive, or dishonest act or practice, 13.16 whether or not the act or practice involves the residential 13.17 mortgage lending business; 13.18 (v) engaged in an act or practice, whether or not the act 13.19 or practice involves the business of making a residential 13.20 mortgage loan, that demonstrates untrustworthiness, financial 13.21 irresponsibility, or incompetence; 13.22 (vi) pled guilty, with or without explicitly admitting 13.23 guilt, pled nolo contendere, or been convicted of a felony, 13.24 gross misdemeanor, or a misdemeanor involving moral turpitude; 13.25 (vii) paid a civil penalty or been the subject of 13.26 disciplinary action by the commissioner, or an order of 13.27 suspension or revocation, cease and desist order or injunction 13.28 order or order barring involvement in an industry or profession 13.29 issued by this or any other state or federal regulatory agency 13.30 or by the Secretary of Housing and Urban Development; 13.31 (viii) been found by a court of competent jurisdiction to 13.32 have engaged in conduct evidencing gross negligence, fraud, 13.33 misrepresentation, or deceit; 13.34 (ix) refused to cooperate with an investigation or 13.35 examination by the commissioner; 13.36 (x) failed to pay any fee or assessment imposed by the 14.1 commissioner; or 14.2 (xi) failed to comply with state and federal tax 14.3 obligations. 14.4 Subd. 2. [ORDERS OF THE COMMISSIONER.] To begin a 14.5 proceeding under this section, the commissioner shall issue an 14.6 order requiring the subject of the proceeding to show cause why 14.7 action should not be taken against the person according to this 14.8 section. The order must be calculated to give reasonable notice 14.9 of the time and place for the hearing and must state the reasons 14.10 for entry of the order. The commissioner may by order summarily 14.11 suspend a license or exemption or summarily bar a person from 14.12 engaging in residential mortgage origination or servicing, 14.13 pending a final determination of an order to show cause. If a 14.14 license or exemption is summarily suspended or if the person is 14.15 summarily barred from any involvement in the residential 14.16 mortgage loan business, pending final determination of an order 14.17 to show cause, a hearing on the merits must be held within 30 14.18 days of the issuance of the order of summary suspension or bar. 14.19 All hearings must be conducted under chapter 14. After the 14.20 hearing, the commissioner shall enter an order disposing of the 14.21 matter as the facts require. If the subject of the order fails 14.22 to appear at a hearing after having been duly notified of it, 14.23 the person is considered in default, and the proceeding may be 14.24 determined against the subject of the order upon consideration 14.25 of the order to show cause, the allegations of which may be 14.26 considered to be true. 14.27 Subd. 3. [ACTIONS AGAINST LAPSED LICENSE.] If a license or 14.28 certificate of exemption lapses, is surrendered, withdrawn, 14.29 terminated, or otherwise becomes ineffective, the commissioner 14.30 may institute a proceeding under this subdivision within two 14.31 years after the license or certificate of exemption was last 14.32 effective and enter a revocation or suspension order as of the 14.33 last date on which the license or certificate of exemption was 14.34 in effect, and may impose a civil penalty as provided for in 14.35 this section or section 45.027, subdivision 6. 14.36 Sec. 13. [58.13] [STANDARDS OF CONDUCT.] 15.1 Subdivision 1. [GENERALLY.] No person acting as a 15.2 residential mortgage originator or servicer, including a person 15.3 required to be licensed under this chapter, and no person exempt 15.4 from the licensing requirements of this chapter under section 15.5 58.04, shall: 15.6 (1) fail to maintain a trust account to hold trust funds 15.7 received in connection with a residential mortgage loan; 15.8 (2) fail to deposit all trust funds into a trust account 15.9 within three business days of receipt; commingle trust funds 15.10 with funds belonging to the licensee or exempt person; or use 15.11 trust account funds for any purpose other than that for which 15.12 they are received; 15.13 (3) fail to make a good-faith effort to effect closings in 15.14 a timely manner; or delay closing of a residential mortgage loan 15.15 for the purpose of increasing interest, costs, fees, or charges 15.16 payable by the borrower; 15.17 (4) fail to disburse funds according to its contractual or 15.18 statutory obligations; 15.19 (5) fail to perform in conformance with written agreements 15.20 with borrowers, investors, other licensees, or exempt persons; 15.21 (6) charge a fee for a product or service where the product 15.22 or service is not actually provided, or misrepresent the amount 15.23 charged by or paid to a third party for a product or service; 15.24 (7) fail to comply with sections 345.31 to 345.60, the 15.25 Minnesota unclaimed property law; 15.26 (8) violate any provision of any other state or federal law 15.27 regulating residential mortgage loans; 15.28 (9) make or cause to be made, directly or indirectly, any 15.29 false, deceptive, or misleading statement or representation in 15.30 connection with a residential loan transaction; 15.31 (10) conduct residential mortgage loan business under any 15.32 name other than that under which the license or certificate of 15.33 exemption was issued; 15.34 (11) compensate, whether directly or indirectly, coerce or 15.35 intimidate an appraiser for the purpose of influencing the 15.36 independent judgment of the appraiser with respect to the value 16.1 of real estate that is to be covered by a residential mortgage 16.2 or is being offered as security according to an application for 16.3 a residential mortgage loan; 16.4 (12) issue any document indicating conditional 16.5 qualification or conditional approval for a residential mortgage 16.6 loan, unless the document also clearly indicates that final 16.7 qualification or approval is not guaranteed, and may be subject 16.8 to additional review; 16.9 (13) make, directly or indirectly, any residential mortgage 16.10 loan with the intent that the loan will not be repaid and that 16.11 the residential mortgage originator will obtain title to the 16.12 property through foreclosure. For purposes of this clause, 16.13 there is a presumption that a person has made a residential 16.14 mortgage loan with the intent that the loan will not be repaid 16.15 and to obtain title to the borrowers property through 16.16 foreclosure if the following circumstances can be demonstrated: 16.17 (i) lack of substantial benefit to the borrower; 16.18 (ii) lack of probability of full payment of the loan by the 16.19 borrower; and 16.20 (iii) a significant proportion of similarly foreclosed 16.21 loans by the person; 16.22 (14) provide or offer to provide for a borrower, any 16.23 brokering or lending services under an arrangement with a person 16.24 other than a licensee or exempt person; 16.25 (15) represent itself as the agent of a licensee or exempt 16.26 person, unless it has entered into a written agreement with the 16.27 licensee or exempt person; 16.28 (16) fail to comply with the recordkeeping and notification 16.29 requirements identified in section 58.14 or fail to abide by the 16.30 affirmations made on the application for licensure; 16.31 (17) represent that the licensee or exempt person is acting 16.32 as its agent after providing the agency disclosure required by 16.33 section 58.15, unless the disclosure is retracted and the 16.34 licensee or exempt person complies with all of the requirements 16.35 of section 58.16; 16.36 (18) mislead a borrower into accepting a higher cost 17.1 residential mortgage loan by intentionally misrepresenting or 17.2 omitting information about the borrower's eligibility for a 17.3 lower cost residential mortgage loan; 17.4 (19) make, publish, disseminate, circulate, place before 17.5 the public, or cause to be made, directly or indirectly, any 17.6 advertisement or marketing materials of any type, or any 17.7 statement or representation relating to the business of 17.8 residential mortgage loans that is false, deceptive, or 17.9 misleading; 17.10 (20) advertise loan types or terms that are not available 17.11 from the licensee or exempt person on the date advertised, or on 17.12 the date specified in the advertisement. For purposes of this 17.13 clause, advertisement includes, but is not limited to, a list of 17.14 sample mortgage terms, including interest rates, discount 17.15 points, and closing costs provided by licensees or exempt 17.16 persons to a print or electronic medium that presents the 17.17 information to the public; and 17.18 (21) use or employ phrases, pictures, return addresses, 17.19 geographic designations, or other means that create the 17.20 impression, directly or indirectly, that a licensee or other 17.21 person is a governmental agency, or is associated with, 17.22 sponsored by, or in any manner connected to, related to, or 17.23 endorsed by a governmental agency, if that is not the case. 17.24 Subd. 2. [STATEMENTS, REPRESENTATIONS, OR ADVERTISING.] A 17.25 statement, representation, or advertisement is deceptive or 17.26 misleading if it has the capacity or tendency to deceive or 17.27 mislead a borrower or potential borrower. The commissioner 17.28 shall consider the following factors in deciding whether a 17.29 statement, representation, or advertisement is deceptive or 17.30 misleading: the overall impression that the statement, 17.31 representation, or advertisement reasonably creates; the 17.32 particular type of audience to which it is directed; and whether 17.33 it may be reasonably comprehended by the segment of the public 17.34 to which it is directed. 17.35 Sec. 14. [58.14] [RECORDKEEPING AND NOTIFICATION 17.36 REQUIREMENTS.] 18.1 Subdivision 1. [CHANGE IN LICENSING DATA.] A licensee must 18.2 advise the commissioner of any material changes to the 18.3 information submitted in the most recent license application 18.4 within ten days of the change. 18.5 Subd. 2. [NOTICE OF BANKRUPTCY PETITIONS.] A licensee or 18.6 person who has been issued a certificate of exemption must 18.7 advise the commissioner in writing immediately of any bankruptcy 18.8 petitions filed against or by the licensee. 18.9 Subd. 3. [DOCUMENTATION AND RESOLUTION OF COMPLAINTS.] A 18.10 licensee or exempt person must investigate and attempt to 18.11 resolve complaints made regarding acts or practices subject to 18.12 the provisions of this chapter. If a complaint is received in 18.13 writing, the licensee or exempt person must maintain a file 18.14 containing all materials relating to the complaint and 18.15 subsequent investigation for a period of 26 months. 18.16 Subd. 4. [TRUST ACCOUNT RECORDS FOR MORTGAGE ORIGINATORS.] 18.17 A residential mortgage originator shall keep and maintain for 26 18.18 months a record of all trust funds, sufficient to identify the 18.19 transaction, date and source of receipt, and date and 18.20 identification of disbursement. 18.21 Subd. 5. [RECORD RETENTION.] A licensee or exempt person 18.22 must keep and maintain for 26 months the business records 18.23 regarding residential mortgage loans applied for, originated, or 18.24 serviced in the course of its business. 18.25 Sec. 15. [58.15] [DISCLOSURE REQUIREMENTS FOR RESIDENTIAL 18.26 MORTGAGE ORIGINATORS.] 18.27 Subdivision 1. [AGENCY DISCLOSURE.] If a residential 18.28 mortgage originator or exempt person does not contract or offer 18.29 to contract to act as an agent of a borrower, or accept an 18.30 advance fee, it must, within 72 hours of accepting an 18.31 application for a residential mortgage loan, provide the 18.32 borrower with a written disclosure as provided in subdivision 2. 18.33 Subd. 2. [FORM AND CONTENT REQUIREMENTS.] The disclosure 18.34 must be a separate document, 8-1/2 inches by 11 inches, must be 18.35 signed by the borrower and must contain the following statement 18.36 in 14-point boldface print: 19.1 [ORIGINATOR] IS NOT ACTING AS YOUR AGENT IN CONNECTION WITH 19.2 OBTAINING A RESIDENTIAL MORTGAGE LOAN. WHILE WE SEEK TO 19.3 ASSIST YOU IN MEETING YOUR FINANCIAL NEEDS, WE CANNOT 19.4 GUARANTEE THE LOWEST OR BEST TERMS AVAILABLE IN THE MARKET. 19.5 Subd. 3. [ELECTRONIC APPLICATION DISCLOSURE REQUIREMENT.] 19.6 In case of an electronic residential mortgage application, the 19.7 disclosure requirements of this section may be satisfied by 19.8 providing the disclosure statement as a separate screen if the 19.9 disclosure must be acknowledged by the borrower before an 19.10 application is accepted. 19.11 Subd. 4. [EXEMPTION FROM DISCLOSURE REQUIREMENT.] If the 19.12 Department of Housing and Urban Development adopts and 19.13 implements a disclosure requirement for persons offering 19.14 mortgage origination services that the commissioner determines 19.15 to be substantially similar to the disclosure required in 19.16 subdivision 2, licensees and exempt persons complying with the 19.17 HUD disclosure shall be considered to have complied with the 19.18 requirements of subdivisions 1 and 2. 19.19 Sec. 16. [58.16] [RESIDENTIAL MORTGAGE ORIGINATORS; 19.20 STANDARDS OF CONDUCT FOR AGENCY OR ADVANCE FEE TRANSACTIONS.] 19.21 Subdivision 1. [COMPLIANCE.] Residential mortgage 19.22 originators who solicit or receive an advance fee in exchange 19.23 for assisting a borrower located in this state in obtaining a 19.24 loan secured by a lien on residential real estate, or who offer 19.25 to act as an agent of the borrower located in this state in 19.26 obtaining a loan secured by a lien on residential real estate 19.27 shall be considered to have created a fiduciary relationship 19.28 with the borrower and shall comply with the requirements of 19.29 subdivisions 2 to 7. 19.30 Subd. 2. [CONTRACT PROVISIONS.] A residential mortgage 19.31 originator who engages in the activities described in 19.32 subdivision 1 shall enter into a written contract with each 19.33 borrower and shall provide a copy of the written contract to 19.34 each borrower at or before the time of receipt of any fee or 19.35 valuable consideration paid for mortgage origination services. 19.36 The written contract must: 20.1 (1) specifically describe the services to be provided by 20.2 the residential mortgage originator and if the originator 20.3 collects an advance fee, the dates by which the services will be 20.4 performed; 20.5 (2) specifically identify whether the residential mortgage 20.6 originator may receive compensation from sources other than the 20.7 borrower in connection with the loan transaction; 20.8 (3) state the total amount of commission or compensation 20.9 that the borrower agrees to pay for the residential mortgage 20.10 originator's services, or the basis on which the compensation 20.11 will be computed; 20.12 (4) state the maximum rate of interest to be charged on any 20.13 residential mortgage loan obtained; 20.14 (5) contain a statement that notifies the borrower of the 20.15 right to cancel the contract according to subdivision 3; and 20.16 (6) disclose, with respect to the 12-month period ending 20.17 ten business days before the date of the contract in question, 20.18 the percentage of the mortgage originator's customers for whom 20.19 loans have actually been funded as a result of the residential 20.20 mortgage originator's services. 20.21 (c) If an advance fee is solicited or received the contract 20.22 must also: 20.23 (1) identify the trust account into which the fees or 20.24 consideration will be deposited; 20.25 (2) set forth the circumstances under which the residential 20.26 mortgage originator will be entitled to disbursement from the 20.27 trust account; and 20.28 (3) set forth the circumstances under which the borrower 20.29 will be entitled to a refund of all or part of the fee. 20.30 Subd. 3. [CANCELLATION.] A borrower who pays an advance 20.31 fee, or who enters into a contract for residential mortgage 20.32 services as set forth in subdivisions 1 and 2, has an 20.33 unconditional right to rescind the contract for residential 20.34 mortgage origination services at any time until midnight of the 20.35 third business day after the day on which the contract is 20.36 signed. Cancellation is evidenced by the borrower giving 21.1 written notice of cancellation to the residential mortgage 21.2 originator at the address stated in the contract. Notice of 21.3 cancellation, if given by mail, is effective upon deposit in a 21.4 mailbox properly addressed to the originator with postage 21.5 prepaid. Notice of cancellation need not take a particular form 21.6 and is sufficient if it indicates by any form of written 21.7 expression the intention of the borrower not be bound by the 21.8 contract. No act of a borrower or a residential mortgage 21.9 originator is effective to waive the right to rescind as 21.10 provided in this subdivision. 21.11 Subd. 4. [TRUST ACCOUNT.] The residential mortgage 21.12 originator shall deposit in a trust account within three 21.13 business days all fees received before the time a loan is 21.14 actually funded. The trust account must be in a financial 21.15 institution located within the state of Minnesota. 21.16 Subd. 5. [RECORDS.] The residential mortgage originator 21.17 shall maintain a separate record of all fees received for 21.18 services performed or to be performed as a residential mortgage 21.19 originator. Each record must set forth the date the funds are 21.20 received; the person from whom the funds are received; the 21.21 amount received; the date of deposit in the escrow account, the 21.22 account number, the date the funds are disbursed and the check 21.23 number of the disbursement, and a description of each 21.24 disbursement and the justification for the disbursement. 21.25 Subd. 6. [MONTHLY STATEMENT.] The residential mortgage 21.26 originator shall provide to each borrower at least monthly a 21.27 detailed written accounting of all disbursements of the 21.28 borrower's funds from the trust account. 21.29 Subd. 7. [DISCLOSURE OF LENDERS.] The residential mortgage 21.30 originator shall provide to each borrower at the expiration of 21.31 the contract a list of the lenders or loan sources to whom loan 21.32 applications were submitted on behalf of the borrower. 21.33 Sec. 17. [58.17] [SCOPE OF CHAPTER.] 21.34 Subdivision 1. [RESIDENTIAL MORTGAGE ORIGINATOR SERVICES.] 21.35 This chapter applies when an offer of residential mortgage 21.36 origination services is made to a borrower in this state or when 22.1 the residential mortgage originator is located in this state. 22.2 Subd. 2. [RESIDENTIAL MORTGAGE SERVICING.] The provisions 22.3 of this chapter regarding residential mortgage servicing apply 22.4 when the borrower is a resident of this state. 22.5 Sec. 18. [REPEALER.] 22.6 Minnesota Statutes 1996, section 82.175, is repealed. 22.7 ARTICLE 2 22.8 CONFORMING CHANGES 22.9 Section 1. Minnesota Statutes 1996, section 47.206, 22.10 subdivision 1, is amended to read: 22.11 Subdivision 1. [DEFINITIONS.] For the purposes of this 22.12 section, the terms defined in this subdivision have the meanings 22.13 given them. 22.14 (a) "Lender" means a person or entity referred to in 22.15 section 47.20, subdivision 1, a credit union, or a person making 22.16 a conventional loan as defined under section 47.20, subdivision 22.17 2, clause (3), or cooperative apartment loan as defined under 22.18 section 47.20, subdivision 2, clause (4), except that 22.19 conventional loans or cooperative apartment loans include any 22.20 loan or advance of credit in an original principal balance of 22.21 less than $200,000. "Lender" also means a mortgage broker as 22.22 defined in paragraph (e). 22.23 (b) "Loan" means loans and advances of credit authorized 22.24 under section 47.20, subdivision 1, clauses (1) to (4), and 22.25 conventional loans as defined under section 47.20, subdivision 22.26 2, clause (3), or cooperative apartment loans as defined under 22.27 section 47.20, subdivision 2, clause (4), except that 22.28 conventional loans or cooperative apartment loans also include 22.29 all loans and advances of credit in an original principal 22.30 balance of less than $200,000. "Loan" does not include a loan 22.31 or advance of credit secured by a mortgage upon real property 22.32 containing more than one residential unit or secured by a 22.33 security interest in shares of more than one residential unit in 22.34 a building owned or leased by a cooperative apartment 22.35 corporation. 22.36 (c) "Borrower" means a natural person who has submitted an 23.1 application for a loan to a lender. 23.2 (d) "Interest rate or discount point agreement" or 23.3 "agreement" means a contract between a lender and a borrower 23.4 under which the lender agrees, subject to the lender's 23.5 underwriting and approval requirements, to make a loan at a 23.6 specified interest rate or number of discount points, or both, 23.7 and the borrower agrees to make a loan on those terms. The term 23.8 also includes an offer by a lender that is accepted by a 23.9 borrower under which the lender promises to guarantee or lock in 23.10 an interest rate or number of discount points, or both, for a 23.11 specific period of time. 23.12 (e) "Mortgage broker" includes: 23.13 (1) a person whonegotiates mortgage loans as described in23.14section 82.17, subdivision 4, clause (b), if the person does not23.15qualify for the exception set forth in section 82.18, clause23.16(o);performs or offers to perform the activities of "mortgage 23.17 brokering" or "soliciting, placing, or negotiating a residential 23.18 mortgage loan" as defined by chapter 58; or 23.19 (2) the employees ofthea person; or23.20(3) any person or firm which holds itself out to the public23.21as a mortgage broker, regardless of whether the person or firm23.22holds a limited broker's license pursuant to section 82.20,23.23subdivision 13described in clause (1). 23.24 Sec. 2. Minnesota Statutes 1996, section 82.17, 23.25 subdivision 4, is amended to read: 23.26 Subd. 4. "Real estate broker" or "broker" means any person 23.27 who: 23.28 (a) for another and for commission, fee, or other valuable 23.29 consideration or with the intention or expectation of receiving 23.30 the same directly or indirectly lists, sells, exchanges, buys or 23.31 rents, manages, or offers or attempts to negotiate a sale, 23.32 option, exchange, purchase or rental of an interest or estate in 23.33 real estate, or advertises or holds out as engaged in these 23.34 activities; 23.35 (b) for another and for commission, fee, or other valuable 23.36 consideration or with the intention or expectation of receiving 24.1 the same directly or indirectly negotiates or offers or attempts 24.2 to negotiate a loan, secured or to be secured by a mortgage or 24.3 other encumbrance on real estate, which is not a residential 24.4 mortgage loan as defined by section 58.02, subdivision 18; 24.5 (c) for another and for commission, fee, or other valuable 24.6 consideration or with the intention or expectation of receiving 24.7 the same directly or indirectly lists, sells, exchanges, buys, 24.8 rents, manages, offers or attempts to negotiate a sale, option, 24.9 exchange, purchase or rental of any business opportunity or 24.10 business, or its good will, inventory, or fixtures, or any 24.11 interest therein; 24.12 (d) for another and for commission, fee, or other valuable 24.13 consideration or with the intention or expectation of receiving 24.14 the same directly or indirectly offers, sells or attempts to 24.15 negotiate the sale of property that is subject to the 24.16 registration requirements of chapter 83, concerning subdivided 24.17 land; 24.18 (e) for another and for commission, fee, or other valuable 24.19 consideration or with the intention or expectation of receiving 24.20 the same, promotes the sale of real estate by advertising it in 24.21 a publication issued primarily for this purpose, if the person: 24.22 (1) negotiates on behalf of any party to a transaction; 24.23 (2) disseminates any information regarding the property to 24.24 any party or potential party to a transaction subsequent to the 24.25 publication of the advertisement, except that in response to an 24.26 initial inquiry from a potential purchaser, the person may 24.27 forward additional written information regarding the property 24.28 which has been prepared prior to the publication by the seller 24.29 or broker or a representative of either; 24.30 (3) counsels, advises, or offers suggestions to the seller 24.31 or a representative of the seller with regard to the marketing, 24.32 offer, sale, or lease of the real estate, whether prior to or 24.33 subsequent to the publication of the advertisement; 24.34 (4) counsels, advises, or offers suggestions to a potential 24.35 buyer or a representative of the seller with regard to the 24.36 purchase or rental of any advertised real estate; or 25.1 (5) engages in any other activity otherwise subject to 25.2 licensure under this chapter; 25.3 (f) engages wholly or in part in the business of selling 25.4 real estate to the extent that a pattern of real estate sales is 25.5 established, whether or not the real estate is owned by the 25.6 person. A person shall be presumed to be engaged in the 25.7 business of selling real estate if the person engages as 25.8 principal in five or more transactions during any 12-month 25.9 period, unless the person is represented by a licensed real 25.10 estate broker or salesperson;. 25.11(g) offers or makes more than five loans secured by real25.12estate during any 12-month period and who is not a bank, savings25.13bank, mutual savings bank, or savings association organized25.14under the laws of this state or the United States, trust25.15company, trust company acting as a fiduciary, or other financial25.16institution subject to the supervision of the commissioner of25.17commerce, or mortgagee or lender approved or certified by the25.18secretary of housing and urban development or approved or25.19certified by the administrator of veterans affairs, or approved25.20or certified by the administrator of the Farmers Home25.21Administration, or approved or certified by the Federal Home25.22Loan Mortgage Corporation, or approved or certified by the25.23Federal National Mortgage Association.25.24 Sec. 3. Minnesota Statutes 1996, section 82.18, is amended 25.25 to read: 25.26 82.18 [EXCEPTIONS.] 25.27 Unless a person is licensed or otherwise required to be 25.28 licensed under this chapter, the term real estate broker does 25.29 not include: 25.30 (a) a licensed practicing attorney if the attorney complies 25.31 in all respects with the trust account provisions of this 25.32 chapter; 25.33 (b) a receiver, trustee, administrator, guardian, executor, 25.34 or other person appointed by or acting under the judgment or 25.35 order of any court; 25.36 (c) any person owning and operating a cemetery and selling 26.1 lots therein solely for use as burial plots; 26.2 (d) any custodian, janitor, or employee of the owner or 26.3 manager of a residential building who leases residential units 26.4 in the building; 26.5 (e) any bank, trust company, savings association, 26.6 industrial loan and thrift company, regulated lender under 26.7 chapter 56, public utility, or land mortgage or farm loan 26.8 association organized under the laws of this state or the United 26.9 States, when engaged in the transaction of business within the 26.10 scope of its corporate powers as provided by law; 26.11 (f) public officers while performing their official duties; 26.12 (g) employees of persons enumerated in clauses (b), (e), 26.13 and (f), when engaged in the specific performance of their 26.14 duties; 26.15 (h) any person who acts as an auctioneer bonded in 26.16 conformity with section 330.02, when that person is engaged in 26.17 the specific performance of duties as an auctioneer, and when 26.18 that person has been employed to auction real estate by a person 26.19 licensed under this chapter or when the auctioneer has engaged a 26.20 licensed attorney to supervise the real estate transaction; 26.21 (i) any person who acquires real estate for the purpose of 26.22 engaging in and does engage in, or who is engaged in the 26.23 business of constructing residential, commercial or industrial 26.24 buildings for the purpose of resale if no more than 25 such 26.25 transactions occur in any 12-month period and the person 26.26 complies with section 82.24; 26.27 (j) any person who is licensed as a securities 26.28 broker-dealer or is licensed as a securities agent representing 26.29 a broker-dealer pursuant to chapter 80A and who offers to sell 26.30 or sells an interest or estate in real estate which is a 26.31 security as defined in section 80A.14, subdivision 18, and is 26.32 registered or exempt from registration or part of a transaction 26.33 exempt from registration pursuant to chapter 80A, when acting 26.34 solely as an incident to the sale of these securities; 26.35 (k) any person who offers to sell or sells a business 26.36 opportunity which is a franchise registered pursuant to chapter 27.1 80C, when acting solely to sell the franchise; 27.2 (l) any person who contracts with or solicits on behalf of 27.3 a provider a contract with a resident or prospective resident to 27.4 provide continuing care in a facility, pursuant to the 27.5 Continuing Care Facility Disclosure and Rehabilitation Act 27.6 (chapter 80D), when acting solely as incident to the contract; 27.7 (m) any broker-dealer or agent of a broker-dealer when 27.8 participating in a transaction in which all or part of a 27.9 business opportunity or business, including any interest 27.10 therein, is conveyed or acquired pursuant to an asset purchase, 27.11 merger, exchange of securities, or other business combination, 27.12 if the agent or broker-dealer is licensed pursuant to chapter 27.13 80A; 27.14 (n) an accountant acting incident to the practice of the 27.15 accounting profession if the accountant complies in all respects 27.16 with the trust account provisions of this chapter;. 27.17(o) a person who negotiates mortgage loans as described in27.18section 82.17, subdivision 4, clause (b), if the person is the27.19actual lender on at least 80 percent of all mortgage lending and27.20brokering transactions conducted by the person and if the person27.21is also a lender: (1) approved or certified by the secretary of27.22housing and urban development; (2) approved or certified by the27.23administrator of Veterans Affairs; (3) approved or certified by27.24the Administrator of the Farmers Home Administration; (4)27.25approved or certified by the Federal Home Loan Mortgage27.26Corporation; or (5) approved or certified by the Federal27.27National Mortgage Association.27.28 Sec. 4. Minnesota Statutes 1996, section 82.27, 27.29 subdivision 1, is amended to read: 27.30 Subdivision 1. The commissioner may by order deny, suspend 27.31 or revoke any license or may censure a licensee if the 27.32 commissioner finds (1) that the order is in the public interest, 27.33 and (2) that the applicant or licensee or, in the case of a 27.34 broker, any officer, director, partner, employee or agent or any 27.35 person occupying a similar status or performing similar 27.36 functions, or any person directly or indirectly controlling the 28.1 broker or closing agent or controlled by the broker or closing 28.2 agent: 28.3 (a) has filed an application for a license which is 28.4 incomplete in any material respect or contains any statement 28.5 which, in light of the circumstances under which it is made, is 28.6 false or misleading with respect to any material fact; 28.7 (b) has engaged in a fraudulent, deceptive, or dishonest 28.8 practice; 28.9 (c) is permanently or temporarily enjoined by any court of 28.10 competent jurisdiction from engaging in or continuing any 28.11 conduct or practice involving any aspect of the real estate 28.12 business; 28.13 (d) has failed to reasonably supervise brokers, 28.14 salespersons, or closing agents so as to cause injury or harm to 28.15 the public; 28.16 (e) has violated or failed to comply with any provision of 28.17 this chapter or any rule or order under this chapter; 28.18 (f) has, in the conduct of the licensee's affairs under the 28.19 license, been shown to be incompetent, untrustworthy, or 28.20 financially irresponsible;or28.21 (g) has acted on behalf of any party to a transaction, 28.22 where the licensee has a conflict of interest that may affect 28.23 the licensee's ability to represent that party, without the 28.24 knowledge and consent of the party; or 28.25 (h) has, while performing residential mortgage activities 28.26 regulated under chapter 58 violated any provision of chapter 58.