1.1                          A bill for an act 
  1.2             relating to financial institutions; regulating 
  1.3             detached facilities, certain charges and fees, and 
  1.4             mortgage prepayment penalties; amending Minnesota 
  1.5             Statutes 2000, sections 47.20, subdivision 5; 47.204, 
  1.6             subdivision 1; 47.21; 47.52; 47.54, subdivisions 1, 2; 
  1.7             47.59, subdivision 1; 52.05, subdivision 2; 52.06, 
  1.8             subdivision 1; 58.04, subdivision 4; 334.01, 
  1.9             subdivision 2; proposing coding for new law in 
  1.10            Minnesota Statutes, chapters 58; 334; repealing 
  1.11            Minnesota Statutes 2000, sections 52.17, subdivision 
  1.12            1; 334.021; Minnesota Rules, part 2675.6400. 
  1.13  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.14     Section 1.  Minnesota Statutes 2000, section 47.20, 
  1.15  subdivision 5, is amended to read: 
  1.16     Subd. 5.  [PREPAYMENT PENALTY PRECOMPUTED LOAN REFUNDS.] (a)
  1.17  Unless the mortgagor waives its right to prepay the mortgage 
  1.18  loan without penalty, in a uniform written disclosure waiver 
  1.19  approved by the commissioner and signed by the mortgagor, no 
  1.20  conventional loan or loan authorized in subdivision 1 shall 
  1.21  contain a provision requiring or permitting the imposition of a 
  1.22  penalty in the event the loan or advance of credit is prepaid.  
  1.23  The prepayment penalty shall not exceed the lesser of two 
  1.24  percent of the unpaid principal balance or 60 days interest on 
  1.25  the unpaid principal balance.  A lender that offers a mortgage 
  1.26  loan with a prepayment penalty shall also offer a mortgage loan 
  1.27  without a prepayment penalty. 
  1.28     This section does not permit the imposition of a prepayment 
  1.29  penalty in the event that the property securing the mortgage 
  2.1   loan is sold or the mortgage loan is prepaid in part.  No 
  2.2   prepayment penalty may be enforced after 42 months from the date 
  2.3   of the mortgage loan. 
  2.4      (b) A precomputed conventional loan or precomputed loan 
  2.5   authorized in subdivision 1 shall provide for a refund of the 
  2.6   precomputed finance charge according to the actuarial method if 
  2.7   the loan is paid in full by cash, renewal or refinancing, or a 
  2.8   new loan, one month or more before the final installment due 
  2.9   date.  The actuarial method for the purpose of this section is 
  2.10  the amount of interest attributable to each fully unexpired 
  2.11  monthly installment period of the loan contract following the 
  2.12  date of prepayment in full, calculated as if the loan was made 
  2.13  on an interest-bearing basis at the rate of interest provided 
  2.14  for in the note based on the assumption that all payments were 
  2.15  made according to schedule.  A precomputed loan for the purpose 
  2.16  of this section means a loan for which the debt is expressed as 
  2.17  a sum comprised of the principal amount and the amount of 
  2.18  interest for the entire term of the loan computed actuarially in 
  2.19  advance on the assumption that all scheduled payments will be 
  2.20  made when due, and does not include a loan for which interest is 
  2.21  computed from time to time by application of a rate to the 
  2.22  unpaid principal balance, interest-bearing loans, or 
  2.23  simple-interest loans.  For the purpose of calculating a refund 
  2.24  for precomputed loans under this section, any portion of the 
  2.25  finance charge for extending the first payment period beyond one 
  2.26  month may be ignored.  Nothing in this section shall be 
  2.27  considered a limitation on discount points or other finance 
  2.28  charges charged or collected in advance, and nothing in this 
  2.29  section shall require a refund of the charges in the event of 
  2.30  prepayment.  Nothing in this section shall be considered to 
  2.31  supersede section 47.204. 
  2.32     Sec. 2.  Minnesota Statutes 2000, section 47.204, 
  2.33  subdivision 1, is amended to read: 
  2.34     Subdivision 1.  [NO USURY LIMITS ON INTEREST AND OTHER 
  2.35  CHARGES.] Notwithstanding any law to the contrary, except as 
  2.36  stated in section 58.137, no limitation on the rate or amount of 
  3.1   interest, discount points, finance charges, fees, or other 
  3.2   charges shall apply applies to a loan, mortgage, credit sale, or 
  3.3   advance which would have been exempt from the laws of this state 
  3.4   pursuant to Public Law Number 96-221, title V, part A, section 
  3.5   501 (as described in United States Code, title 12, section 
  3.6   1735f-7a), as amended as of June 2, 1981, but for section 47.203 
  3.7   and which is made in this state after June 2, 1981. 
  3.8      Sec. 3.  Minnesota Statutes 2000, section 47.21, is amended 
  3.9   to read: 
  3.10     47.21 [INAPPLICABLE LAWS PRESCRIBING TYPE OF SECURITY NOT 
  3.11  TO APPLY; AUTHORIZED INVESTMENTS.] 
  3.12     Subdivision 1.  [LIMITS ON INTEREST AND OTHER 
  3.13  CHARGES.] Notwithstanding any law to the contrary, except as 
  3.14  stated in section 58.137, no limitation on the rate or amount of 
  3.15  interest, points, finance charges, fees, or other charges 
  3.16  applies to a loan, mortgage, credit sale, or advance described 
  3.17  in section 47.20, subdivision 1. 
  3.18     Subd. 2.  [OTHER LIMITS.] No other law in this state 
  3.19  prescribing the nature, amount or form of security or requiring 
  3.20  security upon which loans, mortgages, credit sales, or 
  3.21  advances of credit may be made, or prescribing or limiting 
  3.22  interest rates upon loans or advances of credit, or prescribing 
  3.23  or limiting the period for which loans, mortgages, credit sales, 
  3.24  or advances of credit may be made, shall be deemed to 
  3.25  apply applies to loans, advances of credit or purchases made 
  3.26  pursuant to any loan, mortgage, credit sale, or advance 
  3.27  described in section 47.20, subdivisions subdivision 1, 3 and, 
  3.28  or 4a. 
  3.29     (1) Such Subd. 3.  [INVESTMENTS.] (a) The institutions 
  3.30  described in section 47.20, subdivision 1, may invest in notes 
  3.31  or bonds secured by mortgage or trust deed mortgages, trust 
  3.32  deeds, or security interests insured pursuant to or guaranteed 
  3.33  as described in section 47.20, subdivision 1, clause (2), and in 
  3.34  securities issued by national mortgage associations;. 
  3.35     (2) (b) The notes, bonds, and other securities herein made 
  3.36  eligible for investment described in paragraph (a) may be used 
  4.1   wherever, by statute, collateral is required as security is 
  4.2   required by statute or rule for the deposit of public funds or 
  4.3   other funds; or wherever deposits are required by statute or 
  4.4   rule to be made with any public official or public department; 
  4.5   or wherever an investment of capital or surplus, or a reserve or 
  4.6   other fund, is required by statute or rule to be maintained 
  4.7   consisting of designated securities. 
  4.8      Sec. 4.  Minnesota Statutes 2000, section 47.52, is amended 
  4.9   to read: 
  4.10     47.52 [AUTHORIZATION.] 
  4.11     (a) With the prior approval of the commissioner, any bank 
  4.12  doing business in this state may establish and maintain detached 
  4.13  facilities provided the facilities are located within:  (1) the 
  4.14  municipality in which the principal office of the applicant bank 
  4.15  is located; or (2) 5,000 feet of its principal office measured 
  4.16  in a straight line from the closest points of the closest 
  4.17  structures involved; or (3) a municipality in which no bank is 
  4.18  located at the time of application; or (4) a municipality having 
  4.19  a population of more than 10,000 5,000; or (5) a municipality 
  4.20  having a population of 10,000 5,000 or less, as determined by 
  4.21  the commissioner from the latest available data from the state 
  4.22  demographer, or for municipalities located in the seven-county 
  4.23  metropolitan area from the metropolitan council, and all the 
  4.24  banks having a principal office in the municipality have 
  4.25  consented in writing to the establishment of the facility. 
  4.26     (b) A detached facility shall not be closer than 50 feet to 
  4.27  a detached facility operated by any other bank and shall not be 
  4.28  closer than 100 feet to the principal office of any other bank, 
  4.29  the measurement to be made in the same manner as provided 
  4.30  above.  This paragraph shall not be applicable if the proximity 
  4.31  to the facility or the bank is waived in writing by the other 
  4.32  bank and filed with the application to establish a detached 
  4.33  facility. 
  4.34     (c) A bank is allowed, in addition to other facilities, 
  4.35  part-time deposit-taking locations at elementary and secondary 
  4.36  schools located within the municipality in which the main 
  5.1   banking house or a detached facility is located if they are 
  5.2   established in connection with student education programs 
  5.3   approved by the school administration and consistent with safe, 
  5.4   sound banking practices. 
  5.5      (d) In addition to other facilities, a bank may operate 
  5.6   part-time locations at nursing homes and senior citizen housing 
  5.7   facilities located within the municipality in which the main 
  5.8   banking house or a detached facility is located, or within the 
  5.9   seven-county metropolitan area if the bank's main banking 
  5.10  facility or a detached facility is located within the 
  5.11  seven-county metropolitan area, if they are operated in a manner 
  5.12  consistent with safe, sound banking practices. 
  5.13     Sec. 5.  Minnesota Statutes 2000, section 47.54, 
  5.14  subdivision 1, is amended to read: 
  5.15     Subdivision 1.  [APPLICATION.] Any bank desiring to 
  5.16  establish a detached facility shall execute and acknowledge a 
  5.17  written application in the form prescribed by the commissioner 
  5.18  and shall file the application in the commissioner's office with 
  5.19  a fee of $500.  The applicant shall within 30 days of the 
  5.20  receipt of the form prescribed by the commissioner publish a 
  5.21  notice of the filing of the application in a qualified newspaper 
  5.22  published in the municipality in which the proposed detached 
  5.23  facility is to be located, and if there is no such newspaper, 
  5.24  then in a qualified newspaper likely to give notice in the 
  5.25  municipality in which the proposed detached facility is to be 
  5.26  located.  In addition to the publication, the applicant must 
  5.27  mail a copy of the notice by certified mail to every bank 
  5.28  located within three miles of the proposed location of the 
  5.29  detached facility, measured in the manner provided in section 
  5.30  47.52. 
  5.31     Sec. 6.  Minnesota Statutes 2000, section 47.54, 
  5.32  subdivision 2, is amended to read: 
  5.33     Subd. 2.  [APPROVAL ORDER.] If no objection is received by 
  5.34  the commissioner within 15 days after the publication and 
  5.35  mailing of the notices notice, the commissioner shall issue an 
  5.36  order approving the application without a hearing if it is found 
  6.1   that (a) the applicant bank meets current industry standards of 
  6.2   capital adequacy, management quality, and asset condition, (b) 
  6.3   the establishment of the proposed detached facility will improve 
  6.4   the quality or increase the availability of banking services in 
  6.5   the community to be served, and (c) the establishment of the 
  6.6   proposed detached facility will not have an undue adverse effect 
  6.7   upon the solvency of existing financial institutions in the 
  6.8   community to be served.  Otherwise, the commissioner shall deny 
  6.9   the application.  Any proceedings for judicial review of an 
  6.10  order of the commissioner issued under this subdivision without 
  6.11  a contested case hearing shall be conducted pursuant to the 
  6.12  provisions of the Administrative Procedure Act relating to 
  6.13  judicial review of agency decisions, sections 14.63 to 14.69, 
  6.14  and the scope of judicial review in such proceedings shall be as 
  6.15  provided therein.  Nothing herein shall be construed as 
  6.16  requiring the commissioner to conduct a contested case hearing 
  6.17  if no written objection is timely received by the commissioner 
  6.18  from a bank within three miles of the proposed location of the 
  6.19  detached facility.  
  6.20     Sec. 7.  Minnesota Statutes 2000, section 47.59, 
  6.21  subdivision 1, is amended to read: 
  6.22     Subdivision 1.  [DEFINITIONS.] For purposes of this 
  6.23  section, the following definitions shall apply. 
  6.24     (a) "Actuarial method" has the meaning given the term in 
  6.25  the Code of Federal Regulations, title 12, part 226, and 
  6.26  appendix J thereto. 
  6.27     (b) "Annual percentage rate" has the meaning given the term 
  6.28  in the Code of Federal Regulations, title 12, part 226, but 
  6.29  using the definition of "finance charge" used in this section. 
  6.30     (c) "Borrower" means a debtor under a loan or a purchaser 
  6.31  or debtor under a credit sale contract. 
  6.32     (d) "Business purpose" means a purpose other than a 
  6.33  personal, family, household, or agricultural purpose. 
  6.34     (e) "Cardholder" means a person to whom a credit card is 
  6.35  issued or who has agreed with the financial institution to pay 
  6.36  obligations arising from the issuance to or use of the card by 
  7.1   another person. 
  7.2      (f) "Consumer loan" means a loan made by a financial 
  7.3   institution in which: 
  7.4      (1) the debtor is a person other than an organization; 
  7.5      (2) the debt is incurred primarily for a personal, family, 
  7.6   or household purpose; and 
  7.7      (3) the debt is payable in installments or a finance charge 
  7.8   is made. 
  7.9      (g) "Credit" means the right granted by a financial 
  7.10  institution to a borrower to defer payment of a debt, to incur 
  7.11  debt and defer its payment, or to purchase property or services 
  7.12  and defer payment. 
  7.13     (h) "Credit card" means a card or device issued under an 
  7.14  arrangement pursuant to which a financial institution gives to a 
  7.15  cardholder the privilege of obtaining credit from the financial 
  7.16  institution or other person in purchasing or leasing property or 
  7.17  services, obtaining loans, or otherwise.  A transaction is 
  7.18  "pursuant to a credit card" only if credit is obtained according 
  7.19  to the terms of the arrangement by transmitting information 
  7.20  contained on the card or device orally, in writing, by 
  7.21  mechanical or electronic methods, or in any other manner.  A 
  7.22  transaction is not "pursuant to a credit card" if the card or 
  7.23  device is used solely in that transaction to: 
  7.24     (1) identify the cardholder or evidence the cardholder's 
  7.25  creditworthiness and credit is not obtained according to the 
  7.26  terms of the arrangement; 
  7.27     (2) obtain a guarantee of payment from the cardholder's 
  7.28  deposit account, whether or not the payment results in a credit 
  7.29  extension to the cardholder by the financial institution; or 
  7.30     (3) effect an immediate transfer of funds from the 
  7.31  cardholder's deposit account by electronic or other means, 
  7.32  whether or not the transfer results in a credit extension to the 
  7.33  cardholder by the financial institution. 
  7.34     (i) "Credit sale contract" means a contract evidencing a 
  7.35  credit sale.  "Credit sale" means a sale of goods or services, 
  7.36  or an interest in land, in which: 
  8.1      (1) credit is granted by a seller who regularly engages as 
  8.2   a seller in credit transactions of the same kind; and 
  8.3      (2) the debt is payable in installments or a finance charge 
  8.4   is made. 
  8.5      (j) "Finance charge" has the meaning given in the Code of 
  8.6   Federal Regulations, title 12, part 226, except that the 
  8.7   following will not in any event be considered a finance charge: 
  8.8      (1) a charge as a result of default or delinquency under 
  8.9   subdivision 6 if made for actual unanticipated late payment, 
  8.10  delinquency, default, or other similar occurrence, and a charge 
  8.11  made for an extension or deferment under subdivision 5, unless 
  8.12  the parties agree that these charges are finance charges; 
  8.13     (2) an additional charge under subdivision 6; 
  8.14     (3) a discount, if a financial institution purchases a loan 
  8.15  at less than the face amount of the obligation or purchases or 
  8.16  satisfies obligations of a cardholder pursuant to a credit card 
  8.17  and the purchase or satisfaction is made at less than the face 
  8.18  amount of the obligation; 
  8.19     (4) fees paid by a borrower to a broker, provided the 
  8.20  financial institution or a person described in subdivision 4 
  8.21  does not require use of the broker to obtain credit; or 
  8.22     (5) a commission, expense reimbursement, or other sum 
  8.23  received by a financial institution or a person described in 
  8.24  subdivision 4 in connection with insurance described in 
  8.25  subdivision 6. 
  8.26     (k) "Financial institution" means a state or federally 
  8.27  chartered bank, a state or federally chartered bank and trust, a 
  8.28  trust company with banking powers, a state or federally 
  8.29  chartered saving bank, a state or federally chartered savings 
  8.30  association, an industrial loan and thrift company organized 
  8.31  under chapter 53, a regulated lender organized under chapter 56, 
  8.32  or an operating subsidiary of any such institution. 
  8.33     (l) "Loan" means: 
  8.34     (1) the creation of debt by the financial institution's 
  8.35  payment of money to the borrower or a third person for the 
  8.36  account of the borrower; 
  9.1      (2) the creation of debt pursuant to a credit card in any 
  9.2   manner, including a cash advance or the financial institution's 
  9.3   honoring a draft or similar order for the payment of money drawn 
  9.4   or accepted by the borrower, paying or agreeing to pay the 
  9.5   borrower's obligation, or purchasing or otherwise acquiring the 
  9.6   borrower's obligation from the obligee or the borrower's 
  9.7   assignee; 
  9.8      (3) the creation of debt by a cash advance to a borrower 
  9.9   pursuant to an overdraft line of credit arrangement; 
  9.10     (4) the creation of debt by a credit to an account with the 
  9.11  financial institution upon which the borrower is entitled to 
  9.12  draw immediately; 
  9.13     (5) the forbearance of debt arising from a loan; and 
  9.14     (6) the creation of debt pursuant to open-end credit. 
  9.15     "Loan" does not include the forbearance of debt arising 
  9.16  from a sale or lease, a credit sale contract, or an overdraft 
  9.17  from a person's deposit account with a financial institution 
  9.18  which is not pursuant to a written agreement to pay overdrafts 
  9.19  with the right to defer repayment thereof. 
  9.20     (m) "Official fees" means: 
  9.21     (1) fees and charges which actually are or will be paid to 
  9.22  public officials for determining the existence of or for 
  9.23  perfecting, releasing, terminating, or satisfying a security 
  9.24  interest or mortgage relating to a loan or credit sale, and any 
  9.25  separate fees or charges which actually are or will be paid to 
  9.26  public officials for recording a notice described in section 
  9.27  580.032, subdivision 1; and 
  9.28     (2) premiums payable for insurance in lieu of perfecting a 
  9.29  security interest or mortgage otherwise required by a financial 
  9.30  institution in connection with a loan or credit sale, if the 
  9.31  premium does not exceed the fees and charges described in clause 
  9.32  (1), which would otherwise be payable. 
  9.33     (n) "Organization" means a corporation, government, 
  9.34  government subdivision or agency, trust, estate, partnership, 
  9.35  joint venture, cooperative, limited liability company, limited 
  9.36  liability partnership, or association. 
 10.1      (o) "Person" means a natural person or an organization. 
 10.2      (p) "Principal" means the total of: 
 10.3      (1) the amount paid to, received by, or paid or repayable 
 10.4   for the account of, the borrower; and 
 10.5      (2) to the extent that payment is deferred: 
 10.6      (i) the amount actually paid or to be paid by the financial 
 10.7   institution for additional charges permitted under this section; 
 10.8   and 
 10.9      (ii) prepaid finance charges. 
 10.10     Sec. 8.  Minnesota Statutes 2000, section 52.05, 
 10.11  subdivision 2, is amended to read: 
 10.12     Subd. 2.  [APPLICATION.] Any 15 persons representing a 
 10.13  group may apply to the commissioner, advising the commissioner 
 10.14  of the common bond of the group and its number of potential 
 10.15  members, for a determination whether it is feasible for the 
 10.16  group to form a credit union.  Upon a determination that it is 
 10.17  not feasible to organize because the number of potential members 
 10.18  is too small, the applicants will be certified by the 
 10.19  commissioner as eligible to petition for membership in an 
 10.20  existing credit union capable of serving the group.  If the 
 10.21  credit union so petitioned resolves to accept the group into 
 10.22  membership, it shall follow the bylaw amendment and approval 
 10.23  procedure set forth in section 52.02.  
 10.24     The commissioner shall may adopt rules to implement this 
 10.25  subdivision.  If adopted, these rules must provide that: 
 10.26     (1) for the purpose of this subdivision, groups with a 
 10.27  potential membership of less than 1,500 3,000 will be considered 
 10.28  too small to be feasible as a separate credit union, unless 
 10.29  there are compelling reasons to the contrary, relevant to the 
 10.30  objectives of this subdivision; 
 10.31     (2) groups with a potential membership in excess of 1,500 
 10.32  3,000 will be considered in light of all circumstances relevant 
 10.33  to the objectives of this subdivision; and 
 10.34     (3) all group applications, except for applications from 
 10.35  groups made up of members of existing credit unions or groups 
 10.36  made up of people who have a common employer which qualifies 
 11.1   them for membership in an existing credit union, will be 
 11.2   considered separately from any consideration of the membership 
 11.3   provisions of existing credit unions; except that, groups made 
 11.4   up of members of an existing credit union may be certified under 
 11.5   this subdivision with the agreement of the credit union. 
 11.6      Sec. 9.  Minnesota Statutes 2000, section 52.06, 
 11.7   subdivision 1, is amended to read: 
 11.8      Subdivision 1.  [REPORT AND AUDIT SCHEDULE.] Credit unions 
 11.9   shall be under the supervision of the commissioner of commerce.  
 11.10  Each credit union shall annually, on or before January 25, file 
 11.11  a report with the commissioner of commerce on forms supplied by 
 11.12  the commissioner for that purpose giving such relevant 
 11.13  information as the commissioner may require concerning the 
 11.14  operations during the preceding calendar year.  Additional 
 11.15  reports may be required.  Credit unions shall be examined, at 
 11.16  least once every 18 24 calendar months, by the commissioner of 
 11.17  commerce.  Further, in lieu of this examination the commissioner 
 11.18  may accept any examination made by the National Credit Union 
 11.19  Administration, provided a copy of the examination is furnished 
 11.20  to the commissioner.  A report of the examination by the 
 11.21  commissioner of commerce shall be forwarded to the president, or 
 11.22  the chair of the board if the position is so designated pursuant 
 11.23  to section 52.09, subdivision 4, of the examined credit union 
 11.24  within 60 days after completion of the examination.  Within 60 
 11.25  days of the receipt of such report, a general meeting of the 
 11.26  directors and committees shall be called to consider matters 
 11.27  contained in the report.  For failure to file reports when due, 
 11.28  unless excused for cause, the credit union shall pay to the 
 11.29  state treasurer $5 for each day of its delinquency. 
 11.30     Sec. 10.  Minnesota Statutes 2000, section 58.04, 
 11.31  subdivision 4, is amended to read: 
 11.32     Subd. 4.  [APPLICABILITY TO BANKS AND CREDIT UNIONS.] 
 11.33  Except for section sections 58.13 and 58.137, subdivision 3, 
 11.34  this chapter does not apply to a bank, savings bank, savings 
 11.35  association, or credit union subject to supervision by either a 
 11.36  federal regulatory agency or the commissioner. 
 12.1      Sec. 11.  [58.137] [INTEREST, POINTS, FINANCE CHARGES, 
 12.2   FEES, AND OTHER CHARGES.] 
 12.3      Subdivision 1.  [FINANCED INTEREST, POINTS, FINANCE 
 12.4   CHARGES, FEES, AND OTHER CHARGES.] (a) A residential mortgage 
 12.5   originator making or modifying a residential mortgage loan to a 
 12.6   borrower located in this state shall not finance all or any 
 12.7   portion of the interest, points, finance charges, fees, or other 
 12.8   charges payable to the residential mortgage originator or to any 
 12.9   third party in an aggregate amount exceeding three percent of 
 12.10  the loan amount. 
 12.11     "Loan amount" means:  (1) for a line of credit, the maximum 
 12.12  principal amount of the line of credit; and (2) for any other 
 12.13  residential mortgage loan, the principal amount of the 
 12.14  residential mortgage loan excluding all interest, points, 
 12.15  finance charges, fees, and other charges.  A residential 
 12.16  mortgage originator shall not charge, receive, or collect any 
 12.17  excess financed interest, points, finance charges, fees, or 
 12.18  other charges described in this subdivision, or any interest, 
 12.19  points, finance charges, fees, or other charges with respect to 
 12.20  this excess. 
 12.21     (b) Upon any violation of this subdivision by any 
 12.22  residential mortgage originator, the residential mortgage 
 12.23  originator shall pay to the borrower, in cash or by cashier's 
 12.24  check, twice the amount of the excess financed interest, points, 
 12.25  finance charges, fees, and other charges.  The residential 
 12.26  mortgage originator is also liable to the borrower for any other 
 12.27  amounts unlawfully received or collected by the residential 
 12.28  mortgage originator.  All excess financed interest, points, 
 12.29  finance charges, fees, and other charges under this subdivision 
 12.30  constitute unearned interest for purposes of United States Code, 
 12.31  title 15, section 1615. 
 12.32     Subd. 2.  [PREPAYMENT PENALTIES.] (a) A residential 
 12.33  mortgage originator making a residential mortgage loan to a 
 12.34  borrower located in this state shall not charge, receive, or 
 12.35  collect any prepayment penalty, fee, premium, or other charge: 
 12.36     (1) for any partial prepayment of the residential mortgage 
 13.1   loan; or 
 13.2      (2) for any prepayment of the residential mortgage loan 
 13.3   upon the sale of any residential real property, or the sale of 
 13.4   any stock, interest, or lease relating to cooperative ownership 
 13.5   of residential real property, securing the loan; or 
 13.6      (3) for any prepayment of the residential mortgage loan if 
 13.7   the prepayment is made more than 42 months after the date of the 
 13.8   note or other agreement for the residential mortgage loan; or 
 13.9      (4) for any prepayment of the residential mortgage loan if 
 13.10  the aggregate amount of all prepayment penalties, fees, 
 13.11  premiums, and other charges exceeds the lesser of (i) an amount 
 13.12  equal to two percent of the unpaid principal balance of the 
 13.13  residential mortgage loan at the time of prepayment, or (ii) an 
 13.14  amount equal to 60 days' interest, at the interest rate in 
 13.15  effect on the residential mortgage loan at the time of 
 13.16  prepayment, on the unpaid principal balance of the residential 
 13.17  mortgage loan at the time of prepayment. 
 13.18     (b) If a residential mortgage originator offers or makes 
 13.19  residential mortgage loans to any borrowers located in this 
 13.20  state with prepayment penalties, fees, premiums, or other 
 13.21  charges exceeding the maximum amount under clause (4), then the 
 13.22  residential mortgage originator shall provide the following 
 13.23  disclosure to each prospective borrower located in this state 
 13.24  that requests a residential mortgage loan from the residential 
 13.25  mortgage originator, whether or not the prospective borrower 
 13.26  receives a residential mortgage loan: 
 13.27                      THIS IS VERY IMPORTANT 
 13.28  THIS LENDER CHARGES YOU A SUBSTANTIAL PENALTY IF YOU PAY OFF OR 
 13.29  REFINANCE YOUR LOAN BEFORE MATURITY.  ASK THE LENDER HOW MUCH 
 13.30  THE PENALTY WILL BE FOR YOUR LOAN. 
 13.31     The residential mortgage originator shall read the 
 13.32  disclosure to the prospective borrower when the prospective 
 13.33  borrower requests a residential mortgage loan, and again within 
 13.34  three days before the borrower signs the note or other agreement 
 13.35  for the residential mortgage loan.  The residential mortgage 
 13.36  originator also shall provide the disclosure to the prospective 
 14.1   borrower in writing so that it is received by the prospective 
 14.2   borrower within five days after the residential mortgage 
 14.3   originator receives the prospective borrower's request for a 
 14.4   residential mortgage loan, and again within three days before 
 14.5   the prospective borrower signs the note or other agreement for 
 14.6   the residential mortgage loan.  The written disclosure must be 
 14.7   stated in at least 16-point capitalized bold face type on a 
 14.8   single sheet of paper that contains only the disclosure, the 
 14.9   date on which the disclosure form is sent or provided, the name, 
 14.10  address, and telephone number of the residential mortgage 
 14.11  originator, the name and address of the prospective borrower, 
 14.12  and, at the option of the residential mortgage originator, the 
 14.13  prospective borrower's dated and signed acknowledgment of 
 14.14  receipt of the disclosure form.  The provisions of the 
 14.15  disclosure form, other than the disclosure in this subdivision, 
 14.16  are not required to be in at least 16-point capitalized bold 
 14.17  face type.  The prospective borrower shall be permitted to keep 
 14.18  a copy of each written disclosure form.  When a prospective 
 14.19  borrower asks a residential mortgage originator for information 
 14.20  about a prepayment penalty, the residential mortgage originator 
 14.21  shall give the prospective borrower the requested information, 
 14.22  and shall tell the borrower the highest aggregate amount of the 
 14.23  prepayment penalties, fees, premiums, and other charges that the 
 14.24  residential mortgage originator would charge to the prospective 
 14.25  borrower for prepayment of the residential mortgage loan one 
 14.26  year after it is funded, based on a hypothetical unpaid 
 14.27  principal balance of $100,000 and also based on the highest 
 14.28  interest rate that the residential mortgage originator would 
 14.29  charge to the prospective borrower. 
 14.30     Subd. 3.  [VIOLATION OF PREPAYMENT PENALTY 
 14.31  PROVISIONS.] Upon any violation of subdivision 2 by a 
 14.32  residential mortgage originator, the residential mortgage 
 14.33  originator shall pay to the prospective borrower or borrower, in 
 14.34  cash or by cashier's check: 
 14.35     (1) if the residential mortgage originator makes a 
 14.36  residential mortgage loan to the borrower, an amount equal to 
 15.1   the prepayment penalties, fees, premiums, and other charges for 
 15.2   prepayment of the residential mortgage loan, based on a 
 15.3   hypothetical immediate prepayment equal to the initial principal 
 15.4   amount of the loan or, for a line of credit, the maximum 
 15.5   principal amount of the line of credit; or 
 15.6      (2) if the residential mortgage originator does not make a 
 15.7   residential mortgage loan to the prospective borrower, an amount 
 15.8   equal to the prepayment penalty which was to be disclosed by the 
 15.9   residential mortgage originator to the prospective borrower 
 15.10  under subdivision 2. 
 15.11     Subd. 4.  [OTHER PAYMENTS TO BORROWER.] Upon any violation 
 15.12  of this section by a residential mortgage originator, the 
 15.13  residential mortgage originator shall pay to the borrower or 
 15.14  prospective borrower the reasonable attorneys' fees, reasonable 
 15.15  legal expenses, and costs of the borrower or prospective 
 15.16  borrower in attempting to collect any amount from the 
 15.17  residential mortgage originator or pursue any other right or 
 15.18  remedy against the residential mortgage originator under this 
 15.19  section, whether or not any litigation, arbitration, or other 
 15.20  proceeding is commenced, plus any other damages of the borrower 
 15.21  or prospective borrower arising from the violation. 
 15.22     Subd. 5.  [OTHER REMEDIES.] The attorney general or any 
 15.23  county attorney may institute a civil action in the name of the 
 15.24  state in the district court for an injunction prohibiting any 
 15.25  violation of this section.  The court, upon proper proof that 
 15.26  defendant has violated this section, may enjoin future 
 15.27  violations of this section.  It is no defense to an action under 
 15.28  this subdivision that the state may have adequate remedies at 
 15.29  law.  The attorney general or county attorney also may commence 
 15.30  any other action at law or equity for violation of this 
 15.31  section.  Section 8.31 applies to this section. 
 15.32     Subd. 6.  [APPLICATION.] This section applies to 
 15.33  residential mortgage originators located in this state and 
 15.34  residential mortgage originators located outside this state. 
 15.35     Sec. 12.  Minnesota Statutes 2000, section 334.01, 
 15.36  subdivision 2, is amended to read: 
 16.1      Subd. 2.  [CONTRACTS OF $100,000 OR MORE.] A contract for 
 16.2   the loan or forbearance of money, goods, or things in action, in 
 16.3   the amount of $100,000 or more, and any extensions, including 
 16.4   extensions of installments and related changes in the terms 
 16.5   thereof, shall be exempt from the provisions of this chapter and 
 16.6   the interest for the indebtedness shall be at the rate of $6 
 16.7   upon $100 for a year, unless a different rate is contracted for 
 16.8   in writing.  Notwithstanding any law to the contrary, except as 
 16.9   stated in section 58.137, no limitation on the rate or amount of 
 16.10  interest, points, finance charges, fees, or other charges 
 16.11  applies to a loan, mortgage, credit sale, or advance made under 
 16.12  a written contract, signed by the debtor, for the extension of 
 16.13  credit to the debtor in the amount of $100,000 or more, or any 
 16.14  written extension and other written modification of the written 
 16.15  contract.  The written contract, written extension, and written 
 16.16  modification are exempt from the other provisions of this 
 16.17  chapter. 
 16.18     Sec. 13.  [334.022] [CREDIT TO ORGANIZATIONS.] 
 16.19     Notwithstanding any law to the contrary, no limitation on 
 16.20  the rate or amount of interest, points, finance charges, fees, 
 16.21  or other charges applies to an extension of credit to an 
 16.22  organization, and any such extension of credit is exempt from 
 16.23  the other provisions of this chapter.  "Organization" means a 
 16.24  corporation, government, government subdivision or agency, 
 16.25  trust, estate, partnership, joint venture, cooperative, limited 
 16.26  liability company, or association. 
 16.27     Sec. 14.  [REPEALER.] 
 16.28     (a) Minnesota Statutes 2000, sections 52.17, subdivision 1; 
 16.29  and 334.021, are repealed. 
 16.30     (b) Minnesota Rules, part 2675.6400, is repealed.