1st Engrossment - 80th Legislature (1997 - 1998) Posted on 12/15/2009 12:00am
1.1 A bill for an act 1.2 relating to financial institutions; authorizing 1.3 facsimile or electronic filings and certifications; 1.4 regulating the powers and structure of certain 1.5 institutions; regulating consumer credit; modifying 1.6 lending authority; regulating fees and charges; making 1.7 technical and conforming changes; amending Minnesota 1.8 Statutes 1996, sections 46.04, by adding a 1.9 subdivision; 46.044, by adding a subdivision; 46.046, 1.10 by adding a subdivision; 46.047, subdivision 2; 46.07, 1.11 subdivision 2; 46.131, subdivision 2; 47.20, 1.12 subdivisions 9 and 14; 47.206, subdivision 6; 47.55, 1.13 subdivision 1; 47.56; 47.59, subdivisions 1, 4, 5, 6, 1.14 and 12; 47.61, subdivision 3; 47.75, subdivision 1; 1.15 48.01, subdivision 2; 48.09, by adding a subdivision; 1.16 48.15, subdivisions 2 and 4; 48.24, subdivision 2, and 1.17 by adding a subdivision; 48.512, by adding a 1.18 subdivision; 48.61, subdivision 7, and by adding a 1.19 subdivision; 49.215, subdivision 3; 49.33; 49.36, 1.20 subdivision 4; 49.42; 50.245; 51A.38, subdivision 1; 1.21 52.04, subdivision 2a, and by adding a subdivision; 1.22 52.062, subdivision 1, and by adding a subdivision; 1.23 52.063; 52.064, by adding a subdivision; 52.13; 1.24 52.201; 53.04, by adding a subdivision; 53.05; 53.09, 1.25 subdivision 2a; 55.06, subdivision 1; 56.07; 56.10, 1.26 subdivision 1; 56.131, subdivisions 1 and 4; 59A.08, 1.27 subdivision 3, and by adding a subdivision; 59A.11, 1.28 subdivisions 2 and 3; 62B.04, subdivision 1; 300.20, 1.29 subdivision 2; 303.02, subdivision 4; 303.25, 1.30 subdivision 5; 325F.68, subdivision 2; 332.21; 332.23, 1.31 subdivisions 1, 2, and 5; and 332.50, subdivisions 1 1.32 and 2; Laws 1996, chapter 414, article 1, section 45; 1.33 proposing coding for new law in Minnesota Statutes, 1.34 chapter 48; repealing Minnesota Statutes 1996, 1.35 sections 13.99, subdivision 13; 47.29; 47.31; 47.32; 1.36 49.47; 49.48; 50.03; 50.23; and 59A.14. 1.37 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 1.38 Section 1. Minnesota Statutes 1996, section 46.04, is 1.39 amended by adding a subdivision to read: 1.40 Subd. 4. [APPLICATIONS, FACSIMILE OR ELECTRONIC MEDIA.] (a) 1.41 The commissioner when providing forms and procedural guidance to 2.1 persons governed by or seeking approval to operate under the 2.2 chapters referred to in this section may prescribe alternatives 2.3 to paper forms and delivery in person or by mail. In 2.4 considering accepting filings by facsimile or electronic media, 2.5 the commissioner may accept fees and reimbursement for costs 2.6 associated with the applications and notices by wire transfer 2.7 and debit card. 2.8 (b) Certifications required to authenticate, officiate, or 2.9 establish standing of the application or notice as a matter of 2.10 law, rule, or sound business practice may be authenticated in an 2.11 alternative to paper-based original signatures or notarial seals 2.12 on facsimile or electronic media submissions in a technically 2.13 competent means at the discretion of the commissioner, including 2.14 but not limited to, document imaging meeting the standard in 2.15 subdivision 3, bar coding, personal identification numbers, or 2.16 other reliable communicated verification technique. 2.17 Sec. 2. Minnesota Statutes 1996, section 46.044, is 2.18 amended by adding a subdivision to read: 2.19 Subd. 3. [SPECIAL PURPOSE BANKS, EXCEPTIONS.] For purposes 2.20 of applications to organize and operate special purpose banks as 2.21 defined in section 46.046, subdivision 5, the conditions in 2.22 subdivision 1, clauses (2) and (4), do not apply. 2.23 Sec. 3. Minnesota Statutes 1996, section 46.046, is 2.24 amended by adding a subdivision to read: 2.25 Subd. 5. [SPECIAL PURPOSE BANK.] Special purpose bank 2.26 means a bank as defined in subdivision 2 that: 2.27 (1) engages only in credit card operations as authorized in 2.28 section 47.59; 2.29 (2) does not accept demand deposits or deposits that the 2.30 depositor may withdraw by check or similar means for payment to 2.31 third parties or others; 2.32 (3) does not accept savings or time deposits of less than 2.33 $100,000; 2.34 (4) maintains only one office that accepts deposits; and 2.35 (5) does not engage in the business of making commercial 2.36 loans. 3.1 Sec. 4. Minnesota Statutes 1996, section 46.047, 3.2 subdivision 2, is amended to read: 3.3 Subd. 2. [BANKING INSTITUTION.] The term "banking 3.4 institution" means a bank, trust company, bank and trust 3.5 company, savings bank, or industrial loan and thriftinstitution3.6 operating under section 53.04, subdivision 5, that is organized 3.7 under the laws of this state, or a holding company which owns or 3.8 otherwise controls the banking institution. 3.9 Sec. 5. Minnesota Statutes 1996, section 46.07, 3.10 subdivision 2, is amended to read: 3.11 Subd. 2. [CONFIDENTIAL RECORDS.] The commissioner shall 3.12 divulge facts and information obtained in the course of 3.13 examining financial institutions under the commissioner's 3.14 supervision only when and to the extent required or permitted by 3.15 law to report upon or take special action regarding the affairs 3.16 of an institution, or ordered by a court of law to testify or 3.17 produce evidence in a civil or criminal proceeding, except that 3.18 the commissioner may furnish information as to matters of mutual 3.19 interest to an official or examiner of the federal reserve 3.20 system, the Federal Deposit Insurance Corporation, the Federal 3.21 Office of Thrift Supervision, the Federal Home Loan Bank System, 3.22 the National Credit Union Administration, comptroller of the 3.23 currency,a legally constituted state credit union share3.24insurance corporation approved under section 52.24other state 3.25 bank supervisory agencies subject to cooperative agreements 3.26 authorized by section 49.411, subdivision 7, the United States 3.27 Small Business Administration, for purposes of sections 53.09, 3.28 subdivision 2a, and 56.10, subdivision 1, or state and federal 3.29 law enforcement agencies. The commissioner shall not be 3.30 required to disclose the name of a debtor of a financial 3.31 institution under the commissioner's supervision, or anything 3.32 relative to the private accounts, ownership, or transactions of 3.33 an institution, or any fact obtained in the course of an 3.34 examination thereof, except as herein provided. For purposes of 3.35 this subdivision, a subpoena is not an order of a court of law. 3.36 These records are classified confidential or protected nonpublic 4.1 for purposes of the Minnesota government data practices act and 4.2 their destruction, as prescribed in section 46.21, is exempt 4.3 from the provisions of chapter 138 and Laws 1971, chapter 529, 4.4 so far as their deposit with the state archives. 4.5 Sec. 6. Minnesota Statutes 1996, section 46.131, 4.6 subdivision 2, is amended to read: 4.7 Subd. 2. Each bank, trust company, savings bank, savings 4.8 association,small loan companyregulated lender, industrial 4.9 loan and thrift company, credit union, motor vehicle sales 4.10 finance company, debt prorating agency and insurance premium 4.11 finance company organized under the laws of this state or 4.12 required to be administered by the commissioner of commerce 4.13 shall pay into the state treasury its proportionate share of the 4.14 cost of maintaining the department of commerce. 4.15 Sec. 7. Minnesota Statutes 1996, section 47.20, 4.16 subdivision 9, is amended to read: 4.17 Subd. 9. For purposes of this subdivision the term 4.18 "mortgagee" shall mean all state banks and trust companies, 4.19 national banking associations, state and federally chartered 4.20 savings associations, mortgage banks, savings banks, insurance 4.21 companies, credit unions or assignees of the above. 4.22 (a) Each mortgagee requiring funds of a mortgagor to be 4.23 paid into an escrow, agency or similar account for the payment 4.24 of taxes or homeowners insurance premiums with respect to a 4.25 mortgaged one-to-four family, owner occupied residence located 4.26 in this state, unless the account is required by federal law or 4.27 regulation or maintained in connection with a conventional loan 4.28 in an original principal amount in excess of 80 percent of the 4.29 lender's appraised value of the residential unit at the time the 4.30 loan is made or maintained in connection with loans insured or 4.31 guaranteed by the secretary of housing and urban development, by 4.32 the administrator of veterans affairs, or by the administrator 4.33 of the farmers home administration or any successor, shall 4.34 calculate interest on such funds at a rate of not less than 4.35 three percent per annum. Such interest shall be computed on the 4.36 average monthly balance in such account on the first of each 5.1 month for the immediately preceding 12 months of the calendar 5.2 year or such other fiscal year as may be uniformly adopted by 5.3 the mortgagee for such purposes and shall be annually credited 5.4 to the remaining principal balance on the mortgage, or at the 5.5 election of the mortgagee, paid to the mortgagor or credited to 5.6 the mortgagor's account. If the interest exceeds the remaining 5.7 balance, the excess shall be paid to the mortgagor or vendee. 5.8 The requirement to pay interest shall apply to such accounts 5.9 created in conjunction with mortgage loans made prior to July 1, 5.10 1996. 5.11 (b) Unless the account is exempt from the requirements of 5.12 paragraph (a), a mortgagee shall allow a mortgagor to elect to 5.13 discontinuethe escrow accountescrowing for taxes and 5.14 homeowners insurance after theseventhfifth anniversary of the 5.15 date of the mortgage, unless the mortgagor has been more than 30 5.16 days delinquent in the previous 12 months. This paragraph shall 5.17 apply to accounts created prior to July 1, 1996, as well as to 5.18 accounts created on or after July 1, 1996. The mortgagor's 5.19 election shall be in writing. If the escrow account has a 5.20 negative balance or a shortage at the time the mortgagor 5.21 requests discontinuance, the mortgagee is not obligated to allow 5.22 discontinuance until the escrow account is balanced or the 5.23 shortage has been repaid. 5.24 (c) The mortgagee shall notify the mortgagor within 60 days 5.25 after theseventhfifth anniversary of the date of the mortgage 5.26 if the right to discontinue the escrow account is in accordance 5.27 with paragraph (b). For mortgage loans entered into, on or 5.28 prior to July 1, 1989, the notice required by this paragraph 5.29 shall be provided to the mortgagor by January 1, 1997. 5.30 (d) A mortgagee may require the mortgagor to reestablish 5.31 the escrow account if the mortgagor has failed to make timely 5.32 payments for two consecutive payment periods at any time during 5.33 the remaining term of the mortgage, or if the mortgagor has 5.34 failed to pay taxes or insurance premiums when due. A payment 5.35 received during a grace period shall be deemed timely. 5.36 (e) The mortgagee shall, subject to paragraph (b), return 6.1 any funds remaining in the account to the mortgagor within 60 6.2 days after receipt of the mortgagor's written notice of election 6.3 to discontinue the escrow account. 6.4 (f) The mortgagee shall not charge a direct fee for the 6.5 administration of the escrow account, nor shall the mortgagee 6.6 charge a fee or other consideration for allowing the mortgagor 6.7 to discontinue the escrow account. 6.8 Sec. 8. Minnesota Statutes 1996, section 47.20, 6.9 subdivision 14, is amended to read: 6.10 Subd. 14. (a) A lender requiring or offering private 6.11 mortgage insurance shall make available to the borrower or other 6.12 person paying the insurance premium the same premium payment 6.13 plans as are available to the lender in paying the private 6.14 mortgage insurance premium. 6.15 (b) Any refund or rebate for unearned private mortgage 6.16 insurance premiums shall be paid to the borrower or other person 6.17 actually providing the funds for payment of the premium. 6.18 (c) With regard to first mortgage loans made before, on, or 6.19 after January 1, 1997, the mortgagor shall have the right to 6.20 elect, in writing, to cancel borrower-purchased private mortgage 6.21 insurance if all of the following terms and conditions have been 6.22 met: 6.23 (1) if the current unpaid principal balance of a first 6.24 mortgage is 75 percent or less of the current fair market 6.25 appraised value of the property. "Current fair market appraised 6.26 value" shall be based upon a current appraisal by a real estate 6.27 appraiser licensed or certified by the appropriate state or 6.28 federal agency and reasonably acceptable to the lender. The 6.29 lender may require the mortgagor to pay for the appraisal; 6.30 (2) the mortgagor's monthly installments of principal, 6.31 interest, and escrow obligations have not been more than 30 days 6.32 past due over the 24-month period immediately preceding the 6.33 request for cancellation and all accrued late charges have been 6.34 paid; 6.35 (3) the mortgage was made at least 24 months prior to the 6.36 receipt of a request for cancellation of private mortgage 7.1 insurance; 7.2 (4) the property securing the mortgage is owner-occupied; 7.3 and 7.4 (5) the mortgage has not been pooled with other mortgages 7.5 in order to constitute, in whole or in part, collateral for 7.6 bonds issued by the state of Minnesota or any political 7.7 subdivision of the state of Minnesota or of any agency of any 7.8 political subdivision of the state of Minnesota. 7.9 (d) Other than the appraisal fee allowed pursuant to 7.10 paragraph (c), clause (1), the lender shall not charge the 7.11 borrower a fee or other consideration for cancellation of the 7.12 private mortgage insurance. 7.13 (e) A lender requiring private mortgage insurance shall, 7.14 after the payment of the 24th monthly premium installment of 7.15 private mortgage insurance, provide an annual written notice to 7.16 each mortgagor currently paying premiums for private mortgage 7.17 insurance. The notice may be included in the annual statement 7.18 or may be included in other regular mailings to the mortgagor. 7.19 For mortgage loans made prior to January 1, 1997, the first 7.20 required annual notice must be provided no later than January 1, 7.21 1998. The annual notice shall be on its own page, unless 7.22 included in a private mortgage insurance notice required under 7.23 the federal Real Estate Settlement Procedures Act, and shall 7.24 appear substantially as follows: 7.25 "NOTICE OF RIGHT TO CANCEL PRIVATE MORTGAGE INSURANCE 7.26 If you currently pay private mortgage insurance premiums, 7.27 you may have the right to cancel the insurance and cease paying 7.28 premiums. This would permit you to make a lower total monthly 7.29 mortgage payment. In most cases, you have the right to cancel 7.30 private mortgage insurance if the principal balance of your loan 7.31 is 80 percent or less of the current fair market appraised value 7.32 of your home. If you wish to learn whether you are eligible to 7.33 cancel this insurance, please contact us at (address/phone)." 7.34 (f) If a mortgage loan governed by paragraph (c) is 7.35 serviced in accordance with the guidelines of either the Federal 7.36 National Mortgage Association or the Federal Home Loan Mortgage 8.1 Corporation, the lender shall cancel private mortgage insurance 8.2 in accordance with the cancellation guidelines of the applicable 8.3 entity in effect at the time the request for cancellation is 8.4 received. 8.5 Sec. 9. Minnesota Statutes 1996, section 47.206, 8.6 subdivision 6, is amended to read: 8.7 Subd. 6. [PROHIBITED ACTS.] A person, including a lender, 8.8 may not advise, encourage, or induce a borrower or third party 8.9 to misrepresent information that is the subject of a loan 8.10 application or to violate the terms of the agreement. Neither a 8.11 mortgage lender nor a mortgage broker shall advertise mortgage 8.12 terms, including interest rate and discount points, which were 8.13 not available from the lender or broker on the date or dates 8.14 specified in the advertisement. For purposes of this section, 8.15 "advertisement" shall include a list or sampler of mortgage 8.16 terms compiled, with or without charge to the lender or broker, 8.17 by a newspaper, and shall also include advertising on the 8.18 Internet. 8.19 Sec. 10. Minnesota Statutes 1996, section 47.55, 8.20 subdivision 1, is amended to read: 8.21 Subdivision 1. [BANKING FACILITIES IN OPERATION PRIOR TO 8.22 MAY 1, 1971.] A bank may retain and operate one detached 8.23 facility as it may have had in operation prior to May 1, 1971 8.24 without requirement of approval hereunder, provided that its8.25function is limited as provided in section 47.53 and its8.26location conforms with the provisions of section 47.52. A bank8.27having such a retained detached facility shall be limited to8.28operating five additional detached facilities. 8.29 Sec. 11. Minnesota Statutes 1996, section 47.56, is 8.30 amended to read: 8.31 47.56 [TRANSFER OF LOCATION.] 8.32 The location of a detached facility transferred to another 8.33 location outside of a radius of three miles measured in a 8.34 straight line is subject to the same procedures and approval as 8.35 required hereunder for establishing a new detached facility,8.36except that. The location of a detached facility transferred to 9.1 another location within the lesser of a radius of three miles 9.2 measured in a straight line from the existing location or the 9.3 municipality, as defined in section 47.51, in which it is 9.4 located is subject to the same procedures and approval as are 9.5 required in section 47.101, subdivision 2. The relocation of a 9.6 detached facility within a municipality of 10,000 or less 9.7 population shall not require consent of other banks required in 9.8 section 47.52. 9.9 Sec. 12. Minnesota Statutes 1996, section 47.59, 9.10 subdivision 1, is amended to read: 9.11 Subdivision 1. [DEFINITIONS.] For purposes of this 9.12 section, the following definitions shall apply. 9.13 (a) "Actuarial method" has the meaning given the term in 9.14 the Code of Federal Regulations, title 12, part 226, and 9.15 appendix J thereto. 9.16 (b) "Annual percentage rate" has the meaning given the term 9.17 in the Code of Federal Regulations, title 12, part 226, but 9.18 using the definition of "finance charge" used in this section. 9.19 (c) "Borrower" means a debtor under a loan or a purchaser 9.20 or debtor under a credit sale contract. 9.21 (d) "Business purpose" means a purpose other than a 9.22 personal, family, household, or agricultural purpose. 9.23 (e) "Cardholder" means a person to whom a credit card is 9.24 issued or who has agreed with the financial institution to pay 9.25 obligations arising from the issuance to or use of the card by 9.26 another person. 9.27 (f) "Consumer loan" means a loan made by a financial 9.28 institution in which: 9.29 (1) the debtor is a person other than an organization; 9.30 (2) the debt is incurred primarily for a personal, family, 9.31 or household purpose; and 9.32 (3) the debt is payable in installments or a finance charge 9.33 is made. 9.34 (g) "Credit" means the right granted by a financial 9.35 institution to a borrower to defer payment of a debt, to incur 9.36 debt and defer its payment, or to purchase property or services 10.1 and defer payment. 10.2 (h) "Credit card" means a card or device issued under an 10.3 arrangement pursuant to which a financial institution gives to a 10.4 cardholder the privilege of obtaining credit from the financial 10.5 institution or other person in purchasing or leasing property or 10.6 services, obtaining loans, or otherwise. A transaction is 10.7 "pursuant to a credit card" only if credit is obtained according 10.8 to the terms of the arrangement by transmitting information 10.9 contained on the card or device orally, in writing, by 10.10 mechanical or electronic methods, or in any other manner. A 10.11 transaction is not "pursuant to a credit card" if the card or 10.12 device is used solely in that transaction to: 10.13 (1) identify the cardholder or evidence the cardholder's 10.14 creditworthiness and credit is not obtained according to the 10.15 terms of the arrangement; 10.16 (2) obtain a guarantee of payment from the cardholder's 10.17 deposit account, whether or not the payment results in a credit 10.18 extension to the cardholder by the financial institution; or 10.19 (3) effect an immediate transfer of funds from the 10.20 cardholder's deposit account by electronic or other means, 10.21 whether or not the transfer results in a credit extension to the 10.22 cardholder by the financial institution. 10.23 (i) "Credit sale contract" means a contract evidencing a 10.24 credit sale. "Credit sale" means a sale of goods or services, 10.25 or an interest in land, in which: 10.26 (1) credit is granted by a seller who regularly engages as 10.27 a seller in credit transactions of the same kind; and 10.28 (2) the debt is payable in installments or a finance charge 10.29 is made. 10.30 (j) "Finance charge" has the meaning given in the Code of 10.31 Federal Regulations, title 12, part 226, except that the 10.32 following will not in any event be considered a finance charge: 10.33 (1) a charge as a result of default or delinquency under 10.34 subdivision 6 if made for actual unanticipated late payment, 10.35 delinquency, default, or other similar occurrence, and a charge 10.36 made for an extension or deferment under subdivision 5, unless 11.1 the parties agree that these charges are finance charges; 11.2 (2) an additional charge under subdivision 6;or11.3 (3) a discount, if a financial institution purchases a loan 11.4 at less than the face amount of the obligation or purchases or 11.5 satisfies obligations of a cardholder pursuant to a credit card 11.6 and the purchase or satisfaction is made at less than the face 11.7 amount of the obligation; 11.8 (4) fees paid by a borrower or person described in 11.9 subdivision 4 to a broker, provided the financial institution or 11.10 seller under a credit sale contract does not require use of the 11.11 broker to obtain credit; or 11.12 (5) any commission, expense reimbursement, or other sum 11.13 received by a financial institution or seller under a credit 11.14 sale contract in connection with insurance described in 11.15 subdivision 6. 11.16 (k) "Financial institution" means a state or federally 11.17 chartered bank, a state or federally chartered bank and trust, a 11.18 trust company with banking powers, a state or federally 11.19 chartered saving bank, a state or federally chartered savings 11.20 association, an industrial loan and thrift company, or a 11.21 regulated lender. 11.22 (l) "Loan" means: 11.23 (1) the creation of debt by the financial institution's 11.24 payment of money to the borrower or a third person for the 11.25 account of the borrower; 11.26 (2) the creation of debt pursuant to a credit card in any 11.27 manner, including a cash advance or the financial institution's 11.28 honoring a draft or similar order for the payment of money drawn 11.29 or accepted by the borrower, paying or agreeing to pay the 11.30 borrower's obligation, or purchasing or otherwise acquiring the 11.31 borrower's obligation from the obligee or the borrower's 11.32 assignee; 11.33 (3) the creation of debt by a cash advance to a borrower 11.34 pursuant to an overdraft line of credit arrangement; 11.35 (4) the creation of debt by a credit to an account with the 11.36 financial institution upon which the borrower is entitled to 12.1 draw immediately; 12.2 (5) the forbearance of debt arising from a loan; and 12.3 (6) the creation of debt pursuant to open-end credit. 12.4 "Loan" does not include the forbearance of debt arising 12.5 from a sale or lease, a credit sale contract, or an overdraft 12.6 from a person's deposit account with a financial institution 12.7 which is not pursuant to a written agreement to pay overdrafts 12.8 with the right to defer repayment thereof. 12.9 (m) "Official fees" means: 12.10 (1) fees and charges which actually are or will be paid to 12.11 public officials for determining the existence of or for 12.12 perfecting, releasing, terminating, or satisfying a security 12.13 interest or mortgage relating to a loan or credit sale, and any 12.14 separate fees or charges which actually are or will be paid to 12.15 public officials for recording a notice described in section 12.16 580.032, subdivision 1; and 12.17 (2) premiums payable for insurance in lieu of perfecting a 12.18 security interest or mortgage otherwise required by a financial 12.19 institution in connection with a loan or credit sale, if the 12.20 premium does not exceed the fees and charges described in clause 12.21 (1), which would otherwise be payable. 12.22 (n) "Organization" means a corporation, government, 12.23 government subdivision or agency, trust, estate, partnership, 12.24 joint venture, cooperative, limited liability company, limited 12.25 liability partnership, or association. 12.26 (o) "Person" means a natural person or an organization. 12.27 (p) "Principal" means the total of: 12.28 (1) the amount paid to, received by, or paid or repayable 12.29 for the account of, the borrower; and 12.30 (2) to the extent that payment is deferred: 12.31 (i) the amount actually paid or to be paid by the financial 12.32 institution for additional charges permitted under this section; 12.33 and 12.34 (ii) prepaid finance charges. 12.35 Sec. 13. Minnesota Statutes 1996, section 47.59, 12.36 subdivision 4, is amended to read: 13.1 Subd. 4. [FINANCE CHARGE FOR CREDIT SALES MADE BY A THIRD 13.2 PARTY.] (a) A person may enter into a credit sale contract for 13.3 sale to a financial institution and a financial institution may 13.4 purchase and enforce the contract, if the annual percentage rate 13.5 provided for in the contract does not exceed that permitted in 13.6 this section, or, in the case ofcontracts governed by sections13.7168.66 to 168.77motor vehicle installment sales as defined in 13.8 section 168.66, the annual percentage rates permitted by 13.9 subdivision 4a. 13.10 (b) The annual percentage rate may not exceed the 13.11 equivalent of the greater of either of the following: 13.12 (1) the total of: 13.13 (i) 36 percent per year on that part of the unpaid balances 13.14 of the amount financed that is $300 or less; 13.15 (ii) 21 percent per year on that part of the unpaid 13.16 balances of the amount financed which exceeds $300 but does not 13.17 exceed $1,000; and 13.18 (iii) 15 percent per year on that part of the unpaid 13.19 balances of the amount financed which exceeds $1,000; or 13.20 (2) 19 percent per year on the unpaid balances of the 13.21 amount financed. 13.22 (c) This subdivision does not limit or restrict the manner 13.23 of calculating the finance charge whether by way of add-on, 13.24 discount, discount points, single annual percentage rate, 13.25 precomputed charges, variable rate, interest in advance, 13.26 compounding, or otherwise, if the annual percentage rate 13.27 calculated under paragraph (d) does not exceed that permitted by 13.28 this section. The finance charge may be contracted for and 13.29 earned at the single annual percentage rate that would earn the 13.30 same finance charge as the graduated rates when the debt is paid 13.31 according to the agreed terms and the finance charge is 13.32 calculated under paragraph (d). If the finance charge is 13.33 calculated and collected in advance, or included in the 13.34 principal amount of the contract, and the borrower prepays the 13.35 contract in full, the financial institution shall credit the 13.36 borrower with a refund of the charge to the extent the annual 14.1 percentage rate yield on the contract would exceed the annual 14.2 percentage rate on the contract as originally determined under 14.3 paragraph (d) and taking into account the prepayment. For the 14.4 purpose of calculating the refund under this subdivision, the 14.5 financial institution may assume that the contract was paid 14.6 before the date of prepayment according to the schedule of 14.7 payments under the contract and that all payments were paid on 14.8 their due dates. For contracts repayable in substantially equal 14.9 successive monthly installments, the financial institution may 14.10 calculate the refund as the portion of the finance charge 14.11 allocable on an actuarial basis to all wholly unexpired payment 14.12 periods following the date of prepayment, based on the annual 14.13 percentage rate on the contract as originally determined under 14.14 paragraph (d), and for the purpose of calculating the refund may 14.15 assume that all payments are made on the due date. 14.16 (d) The annual percentage rate must be calculated in 14.17 accordance with Code of Federal Regulations, title 12, part 226, 14.18 except that the following will not in any event be considered a 14.19 finance charge: 14.20 (1) a charge as a result of delinquency or default under 14.21 subdivision 6 if made for actual unanticipated late payment, 14.22 delinquency, default, or other similar occurrence, and a charge 14.23 made for an extension or deferment under subdivision 5, unless 14.24 the parties agree that these charges are finance charges; 14.25 (2) an additional charge under subdivision 6; or 14.26 (3) a discount, if a financial institution purchases a 14.27 contract evidencing a credit sale at less than the face amount 14.28 of the obligation or purchases or satisfies obligations of a 14.29 cardholder according to a credit card and the purchase or 14.30 satisfaction is made at less than the face amount of the 14.31 obligation. 14.32 Sec. 14. Minnesota Statutes 1996, section 47.59, 14.33 subdivision 5, is amended to read: 14.34 Subd. 5. [EXTENSIONS, DEFERMENTS, AND CONVERSION TO 14.35 INTEREST BEARING.] (a) The parties may agree in writing, either 14.36 in the loan contract or credit sale contract or in a subsequent 15.1 agreement, to a deferment of wholly unpaid installments. For 15.2 precomputed loans and credit sale contracts, the manner of 15.3 deferment charge shall be determined as provided for in this 15.4 section. A deferment postpones the scheduled due date of the 15.5 earliest unpaid installment and all subsequent installments as 15.6 originally scheduled, or as previously deferred, for a period 15.7 equal to the deferment period. The deferment period is that 15.8 period during which no installment is scheduled to be paid by 15.9 reason of the deferment. The deferment charge for a one-month 15.10 period may not exceed the applicable charge for the installment 15.11 period immediately following the due date of the last undeferred 15.12 payment. A proportionate charge may be made for deferment 15.13 periods of more or less than one month. A deferment charge is 15.14 earned pro rata during the deferment period and is fully earned 15.15 on the last day of the deferment period. If a loan or credit 15.16 sale is prepaid in full during a deferment period, the financial 15.17 institution shall make or credit to the borrower a refund of the 15.18 unearned deferment charge in addition to any other refund or 15.19 credit made for prepayment of the loan or credit sale in full. 15.20 For the purpose of this subdivision, "applicable charge" 15.21 means the amount of finance charge attributable to each monthly 15.22 installment period for the loan or credit sale contract. The 15.23 applicable charge is computed as if each installment period were 15.24 one month and any charge for extending the first installment 15.25 period beyond the one month, or reduction in charge for a first 15.26 installment less than one month, is ignored. The applicable 15.27 charge for any installment period is that which would have been 15.28 made for the period had the loan been made on an 15.29 interest-bearing basis at the single annual percentage rate 15.30 provided for in the contract based upon the assumption that all 15.31 payments were made according to schedule. For convenience in 15.32 computation, the financial institution may round the single 15.33 annual rate to the nearest one quarter of one percent. 15.34 (b) Subject to a refund of unearned finance or deferment 15.35 charge required by this section, a financial institution may 15.36 convert a loan or credit sale contract to an interest bearing 16.1 balance, if: 16.2 (1) the loan contract or credit sale contract so provides 16.3 and is subject to a change of the terms of the written agreement 16.4 between the parties; or 16.5 (2) the loan contract so provides and two or more 16.6 installments are delinquent one full month or more on any due 16.7 date. 16.8 Thereafter,and in lieu of any other default, extension, or16.9deferment charges, the single annual percentage rate must be16.10determined under the applicable charge provisions of this16.11subdivisionthe single annual percentage rate and other charges 16.12 must be determined as provided under this section for 16.13 interest-bearing transactions. 16.14 Sec. 15. Minnesota Statutes 1996, section 47.59, 16.15 subdivision 6, is amended to read: 16.16 Subd. 6. [ADDITIONAL CHARGES.] (a) In addition to the 16.17 finance charges permitted by this section, a financial 16.18 institution or seller in a credit sale contract may contract for 16.19 and receive the following additional charges that may be 16.20 included in the principal amount of the loan or credit sale 16.21 unpaid balances: 16.22 (1) official fees and taxes; 16.23 (2) charges for insurance as described in paragraph (b); 16.24 (3) with respect to a loan or credit sale contract secured 16.25 by real estate, the following "closing costs," if they are bona 16.26 fide, reasonable in amount, and not for the purpose of 16.27 circumvention or evasion of this section: 16.28 (i) fees or premiums for title examination, abstract of 16.29 title, title insurance, surveys, or similar purposes; 16.30 (ii) fees for preparation of a deed, mortgage, settlement 16.31 statement, or other documents, if not paid to the financial 16.32 institution; 16.33 (iii) escrows for future payments of taxes, including 16.34 assessments for improvements, insurance, and water, sewer, and 16.35 land rents; 16.36 (iv) fees for notarizing deeds and other documents; 17.1 (v) appraisal and credit report fees; and 17.2 (vi) fees for determining whether any portion of the 17.3 property is located in a flood zone and fees for ongoing 17.4 monitoring of the property to determine changes, if any, in 17.5 flood zone status; 17.6 (4) a delinquency charge on a payment, including the 17.7 minimum payment due in connection withtheopen-end credit, not 17.8 paid in full on or before the tenth day after its due date in an 17.9 amount not to exceed five percent of the amount of the payment 17.10 or $5.20, whichever is greater; 17.11 (5) for a returned check or returned automatic payment 17.12 withdrawal request, an amount not in excess of the service 17.13 charge limitation in section 332.50; and 17.14 (6) charges for other benefits, including insurance, 17.15 conferred on the borrower that are of a type that is not for 17.16 credit. 17.17 (b) An additional charge may be made for insurance written 17.18 in connection with the loan or credit sale contract, which may 17.19 be included in the principal amount of the loan or credit sale 17.20 unpaid balances: 17.21 (1) with respect to insurance against loss of or damage to 17.22 property, or against liability arising out of the ownership or 17.23 use of property, if the financial institution furnishes a clear, 17.24 conspicuous, and specific statement in writing to the borrower 17.25 setting forth the cost of the insurance if obtained from or 17.26 through the financial institution and stating that the borrower 17.27 may choose the person through whom the insurance is to be 17.28 obtained; 17.29 (2) with respect to credit insurance or mortgage insurance 17.30 providing life, accident, health, or unemployment coverage, if 17.31 the insurance coverage is not required by the financial 17.32 institution, and this fact is clearly and conspicuously 17.33 disclosed in writing to the borrower, and the borrower gives 17.34 specific, dated, and separately signed affirmative written 17.35 indication of the borrower's desire to do so after written 17.36 disclosure to the borrower of the cost of the insurance; and 18.1 (3) with respect to the vendor's single interest insurance, 18.2 but only (i) to the extent that the insurer has no right of 18.3 subrogation against the borrower; and (ii) to the extent that 18.4 the insurance does not duplicate the coverage of other insurance 18.5 under which loss is payable to the financial institution as its 18.6 interest may appear, against loss of or damage to property for 18.7 which a separate charge is made to the borrower according to 18.8 clause (1); and (iii) if a clear, conspicuous, and specific 18.9 statement in writing is furnished by the financial institution 18.10 to the borrower setting forth the cost of the insurance if 18.11 obtained from or through the financial institution and stating 18.12 that the borrower may choose the person through whom the 18.13 insurance is to be obtained. 18.14 (c) In addition to the finance charges and other additional 18.15 charges permitted by this section, a financial institution may 18.16 contract for and receive the following additional charges in 18.17 connection with open-end credit, which may be included in the 18.18 principal amount of the loan or balance upon which the finance 18.19 charge is computed: 18.20 (1) annual charges, not to exceed $50 per annum, payable in 18.21 advance, for the privilege of opening and maintaining open-end 18.22 credit; 18.23 (2) charges for the use of an automated teller machine; 18.24 (3) charges for any monthly or other periodic payment 18.25 period in which the borrower has exceeded or, except for the 18.26 financial institution's dishonor would have exceeded, the 18.27 maximum approved credit limit, in an amount not in excess of the 18.28 service charge permitted in section 332.50; 18.29 (4) charges for obtaining a cash advance in an amount not 18.30 to exceed the service charge permitted in section 332.50; and 18.31 (5) charges for check and draft copies and for the 18.32 replacement of lost or stolen credit cards. 18.33 (d) In addition to the finance charges and other additional 18.34 charges permitted by this section, a financial institution may 18.35 contract for and receive a one-time loan administrative fee not 18.36 exceeding $25 in connection with closed-end credit, which may be 19.1 included in the principal balance upon which the finance charge 19.2 is computed. This paragraph applies only to closed-end credit 19.3 in an original principal amount of $4,320 or less. The 19.4 determination of an original principal amount must exclude the 19.5 administrative fee contracted for and received according to this 19.6 paragraph. 19.7 Sec. 16. Minnesota Statutes 1996, section 47.59, 19.8 subdivision 12, is amended to read: 19.9 Subd. 12. [CONSUMER PROTECTIONS.] (a) Financial 19.10 institutions shall comply with the requirements of the federal 19.11 Truth in Lending Act, United States Code, title 15, sections 19.12 1601 to 1693, in connection with a consumer loan or credit sale 19.13 for a consumer purpose where the federal Truth in Lending Act is 19.14 applicable. A financial institution shall give the following 19.15 disclosure to the borrower in writing at the time an open-end 19.16 credit account is established if the financial institution 19.17 imposes a loan fee, points, or similar charge that relates to 19.18 the opening of the account which is not included in the annual 19.19 percentage rate given pursuant to the federal Truth in Lending 19.20 Act: "YOU HAVE BEEN ASSESSED FINANCE CHARGES, OR POINTS, WHICH 19.21 ARE NOT INCLUDED IN THE ANNUAL PERCENTAGE RATE. THESE CHARGES 19.22 MAY BE REFUNDED, IN WHOLE OR IN PART, IF YOU DO NOT USE YOUR 19.23 LINE OF CREDIT OR IF YOU REPAY YOUR LINE OF CREDIT EARLY. THESE 19.24 CHARGES INCREASE THE COST OF YOUR CREDIT." 19.25 (b) Financial institutions shall comply with the following 19.26 consumer protection provisions in connection with a consumer 19.27 loan or credit sale for a consumer purpose: sections 325G.02 to 19.28 325G.05; 325G.06 to 325G.11; 325G.15 to 325G.22; and 325G.29 to 19.29 325G.36, and Code of Federal Regulations, title 12, part 535, 19.30 where those statutes or regulations are applicable. 19.31 (c) An assignment of a consumer's earnings by the consumer 19.32 to a financial institution as payment or as security for payment 19.33 of a debt arising out of a consumer loan or consumer credit sale 19.34 is unenforceable by the financial institutionand revocable by19.35the consumerexcept where the assignment: (1) by its terms is 19.36 revocable at the will of the consumer; (2) is a payroll 20.1 deduction plan or preauthorized payment plan, beginning at the 20.2 time of the transaction, in which the consumer authorizes a 20.3 series of wage deductions as a method of making each payment; or 20.4 (3) applies only to wages or other earnings already earned at 20.5 the time of the assignment. 20.6 Sec. 17. Minnesota Statutes 1996, section 47.61, 20.7 subdivision 3, is amended to read: 20.8 Subd. 3. (a) "Electronic financial terminal" means an 20.9 electronic information processing device that is established to 20.10 do either or both of the following: 20.11 (1) capture the data necessary to initiate financial 20.12 transactions; or 20.13 (2) through its attendant support system, store or initiate 20.14 the transmission of the information necessary to consummate a 20.15 financial transaction. 20.16 (b) "Electronic financial terminal" does not include: 20.17 (1) a telephone; 20.18 (2) an electronic information processing device that is 20.19 used internally by a financial institution to conduct the 20.20 business activities of the institution;or20.21 (3) an electronic point-of-sale terminal operated by a 20.22 retailer that is used to process payments for the purchase of 20.23 goods and services by consumers, and which also may be used to 20.24 obtain cash advances or cash back not to exceed $25 and only if 20.25 incidental to the retail sale transactions, through the use of 20.26 credit cards or debit cards, provided that the payment 20.27 transactions using debit cards are subject to the federal 20.28 Electronic Funds Transfer Act, United States Code, title 12, 20.29 sections 1693 et seq., and Regulation E of the Federal Reserve 20.30 Board, Code of Federal Regulations, title 12, subpart 205.2; 20.31 this clause does not exempt the retailer from liability for 20.32 negligent conduct or intentional misconduct of the operator 20.33 under section 47.69, subdivision 5; 20.34 (4) stored-value cards to only process transactions other 20.35 than those authorized by this section. Stored-value cards are 20.36 transaction cards having magnetic stripes or computer chips that 21.1 enable electronic value to be added or deducted as needed; or 21.2 (5) a personal computer possessed by and operated 21.3 exclusively by the account holder. 21.4 Sec. 18. Minnesota Statutes 1996, section 47.75, 21.5 subdivision 1, is amended to read: 21.6 Subdivision 1. [RETIREMENT AND MEDICAL SAVINGS ACCOUNTS.] 21.7 A commercial bank, savings bank, savings association, credit 21.8 union, or industrial loan and thrift company may act as trustee 21.9 or custodian under the Federal Self-Employed Individual Tax 21.10 Retirement Act of 1962, as amended, of a medical savings account 21.11 under the Federal Health Insurance Portability and 21.12 Accountability Act of 1996, as amended, and also under the 21.13 Federal Employee Retirement Income Security Act of 1974, as 21.14 amended. The trustee or custodian may accept the trust funds if 21.15 the funds are invested only in savings accounts or time deposits 21.16 in the commercial bank, savings bank, savings association, 21.17 credit union, or industrial loan and thrift company. All funds 21.18 held in the fiduciary capacity may be commingled by the 21.19 financial institution in the conduct of its business, but 21.20 individual records shall be maintained by the fiduciary for each 21.21 participant and shall show in detail all transactions engaged 21.22 under authority of this subdivision. 21.23 Sec. 19. Minnesota Statutes 1996, section 48.01, 21.24 subdivision 2, is amended to read: 21.25 Subd. 2. [BANKING INSTITUTION.] The term "banking 21.26 institution" means any bank, trust company, bank and trust 21.27 company, or savings bank which is now or may hereafter be 21.28 organized under the laws of this state. For purposes of 21.29 sections 48.38, 48.84, and501B.10501B.151, subdivision611, 21.30 and to the extent permitted by federal law, "banking 21.31 institution" includes any national banking association or 21.32 affiliate exercising trust powers in this state. 21.33 Sec. 20. Minnesota Statutes 1996, section 48.09, is 21.34 amended by adding a subdivision to read: 21.35 Subd. 3. [QUALIFIED SUBCHAPTER S SUBSIDIARY.] A bank that 21.36 has met the eligibility requirements under title I, subtitle C 22.1 of the Small Business Job Protection Act of 1996 or related 22.2 state of Minnesota tax law may apply to the commissioner for 22.3 approval of a plan and agreement for a distribution of earnings 22.4 to the shareholder(s) of the bank on a basis other than a 22.5 dividend under subdivisions 1 and 2. Approval of a plan of 22.6 distribution under this subdivision may be rescinded by the 22.7 commissioner upon 90-day prior notice to the bank. Failure to 22.8 comply with this notice or qualification of a distribution under 22.9 subdivisions 1 and 2 is considered a violation subject to the 22.10 commissioner's action under section 45.027 or 46.24. 22.11 Sec. 21. Minnesota Statutes 1996, section 48.15, 22.12 subdivision 2, is amended to read: 22.13 Subd. 2. The commissioner of commerce may authorize banks, 22.14 bank and trust companies, or trust companies organized under the 22.15 laws of this state to engage in any banking or trust activity in 22.16 which banks subject to the jurisdiction of the federal 22.17 government may hereafter be authorized to engage by federal 22.18 legislation, ruling, or regulation and those activities 22.19 authorized in section 48.61, subdivision 7, paragraph (a), 22.20 clause (3). The commissioner may not authorize state banks as 22.21 defined by section 48.01, to engage in anybankingactivity 22.22 prohibited by the laws of this state. 22.23 Sec. 22. Minnesota Statutes 1996, section 48.15, 22.24 subdivision 4, is amended to read: 22.25 Subd. 4. [RETIREMENT AND MEDICAL SAVINGS ACCOUNTS.] A 22.26 state bank may act as trustee or custodian of a self-employed 22.27 retirement plan under the Federal Self-Employed Individual Tax 22.28 Retirement Act of 1962, as amended, of a medical savings account 22.29 under the Federal Health Insurance Portability and 22.30 Accountability Act of 1996, as amended, and of an individual 22.31 retirement account under the Federal Employee Retirement Income 22.32 Security Act of 1974, as amended, if the bank's duties as 22.33 trustee or custodian are essentially ministerial or custodial in 22.34 nature and the funds are invested only (1) in the bank's own 22.35 savings or time deposits; or (2) in any other assets at the 22.36 direction of the customer if the bank does not exercise any 23.1 investment discretion, invest the funds in collective investment 23.2 funds administered by it, or provide any investment advice with 23.3 respect to those account assets. 23.4 Affiliated discount brokers may be utilized by the bank 23.5 acting as trustee or custodian for self-directed IRAs, if 23.6 specifically authorized and directed in appropriate documents. 23.7 The relationship between the affiliated broker and the bank must 23.8 be fully disclosed. Brokerage commissions to be charged to the 23.9 IRA by the affiliated broker should be accurately disclosed. 23.10 Provisions should be made for disclosure of any changes in 23.11 commission rates prior to their becoming effective. The 23.12 affiliated broker may not provide investment advice to the 23.13 customer. All funds held in the fiduciary capacity may be 23.14 commingled by the financial institution in the conduct of its 23.15 business, but individual records shall be maintained by the 23.16 fiduciary for each participant and shall show in detail all 23.17 transactions engaged under authority of this subdivision. The 23.18 authority granted by this section is in addition to, and not 23.19 limited by, section 47.75. 23.20 Sec. 23. Minnesota Statutes 1996, section 48.24, 23.21 subdivision 2, is amended to read: 23.22 Subd. 2. Loans not exceeding 25 percent of such capital 23.23 and surplus made upon first mortgage security on improved real 23.24 estate in the state or in an adjoining statewithin 20 miles of23.25the placewhere the bank or a branch of the bank established 23.26 according to section 49.411 is located, shall not constitute a 23.27 liability of the maker of the notes secured by such mortgages 23.28 within the meaning of the foregoing provision limiting 23.29 liability, but shall be an actual liability of the maker. These 23.30 mortgage loans shall be limited to, and in no case exceed, 50 23.31 percent of the cash value of the security covered by the 23.32 mortgage, except mortgage loans guaranteed as provided by the 23.33 servicemen's readjustment act of 1944, as now or hereafter 23.34 amended, or for which there is a commitment to so guarantee or 23.35 for which a conditional guarantee has been issued, which loans 23.36 shall in no case exceed 60 percent of the cash value of the 24.1 security covered by such mortgage. For the purposes of this 24.2 subdivision, real estate is improved when substantial and 24.3 permanent development or construction has contributed 24.4 substantially to its value, and agricultural land is improved 24.5 when farm crops are regularly raised on such land without 24.6 further substantial improvements. 24.7 Sec. 24. Minnesota Statutes 1996, section 48.24, is 24.8 amended by adding a subdivision to read: 24.9 Subd. 9. [RIGHT TO ACT TO AVOID LOSS.] This section does 24.10 not prohibit the bank from advancing funds that may be 24.11 reasonably necessary to avoid loss on a loan or investment made 24.12 subject to this section or an obligation created in good faith. 24.13 The rights under this subdivision are in addition to and not 24.14 inconsistent with section 48.21. 24.15 Sec. 25. [48.476] [REPRESENTATIVE TRUST OFFICE.] 24.16 Subdivision 1. [DEFINITIONS.] For purposes of this 24.17 section, the terms in this subdivision have the meanings given. 24.18 (a) "Representative trust office" means an office at which 24.19 a trust company or bank with trust powers has been authorized by 24.20 the commissioner to engage in a trust business other than acting 24.21 as a fiduciary. 24.22 (b) "Acting as a fiduciary" means to: 24.23 (1) accept or execute trusts, including to: 24.24 (i) act as trustee under a written agreement; 24.25 (ii) receive money or other property in its capacity as a 24.26 trustee for investment in real or personal property; 24.27 (iii) act as trustee and perform the fiduciary duties 24.28 committed or transferred to it by order of court of competent 24.29 jurisdiction; 24.30 (iv) act as trustee of the estate of a deceased person; or 24.31 (v) act as trustee for a minor or incapacitated person; 24.32 (2) administer in any other fiduciary capacity real or 24.33 personal property; or 24.34 (3) act according to order of court of competent 24.35 jurisdiction as executor or administrator of the estate of a 24.36 deceased person or as a guardian or conservator for a minor or 25.1 incapacitated person. 25.2 Subd. 2. [AUTHORITY FOR REPRESENTATIVE TRUST OFFICES; 25.3 PRIOR WRITTEN NOTICE.] (a) A state trust institution may 25.4 establish or acquire and maintain representative trust offices 25.5 anywhere in this state. A state trust institution desiring to 25.6 establish or acquire and maintain such an office shall file a 25.7 written notice with the commissioner setting forth the name of 25.8 the state trust institution and the location of the proposed 25.9 additional office and furnish a copy of the resolution adopted 25.10 by the board authorizing the additional office. 25.11 (b) The state trust institution may begin business at the 25.12 additional office on the 31st day after the date the 25.13 commissioner receives the notice, unless the commissioner 25.14 specifies an earlier or later date. 25.15 (c) The 30-day period of review may be extended by the 25.16 commissioner on a determination that the written notice raises 25.17 issues that require additional information or additional time 25.18 for analysis. If the period of review is extended, the state 25.19 trust institution may establish the additional office only on 25.20 prior written approval by the commissioner. 25.21 (d) The commissioner may deny approval of the additional 25.22 office if the commissioner finds that the state trust 25.23 institution lacks sufficient financial resources to undertake 25.24 the proposed expansion without adversely affecting its safety or 25.25 soundness or that the proposed office would be contrary to the 25.26 public interest. 25.27 Subd. 3. [AUTHORITY FOR OUT-OF-STATE TRUST OFFICES; PRIOR 25.28 WRITTEN NOTICE.] (a) A state trust institution may establish and 25.29 maintain representative trust office or acquire and maintain an 25.30 office in a state other than this state. A state trust 25.31 institution desiring to establish or acquire and maintain an 25.32 office in another state under this section shall file a notice 25.33 on a form prescribed by the commissioner, which shall set forth 25.34 the name of the state trust institution, the location of the 25.35 proposed office, and whether the laws of the jurisdiction where 25.36 the office will be located permit the office to be maintained by 26.1 the state trust institution; and furnish a copy of the 26.2 resolution adopted by the board authorizing the out-of-state 26.3 office. 26.4 (b) The state trust institution may begin business at the 26.5 additional office on the 31st day after the date the 26.6 commissioner receives the notice, unless the commissioner 26.7 specifies an earlier or later date. 26.8 (c) The 30-day period of review may be extended by the 26.9 commissioner on a determination that the written notice raises 26.10 issues that require additional information or additional time 26.11 for analysis. If the period of review is extended, the state 26.12 trust institution may establish the additional office only on 26.13 prior written approval by the commissioner. 26.14 (d) The commissioner may deny approval of the additional 26.15 office if the commissioner finds that the state trust 26.16 institution lacks sufficient financial resources to undertake 26.17 the proposed expansion without adversely affecting its safety or 26.18 soundness or that the proposed office would be contrary to the 26.19 public interest. In acting on the notice, the commissioner 26.20 shall consider the views of the appropriate bank supervisory 26.21 agencies. 26.22 Sec. 26. Minnesota Statutes 1996, section 48.512, is 26.23 amended by adding a subdivision to read: 26.24 Subd. 4a. [IDENTIFICATION NOT REQUIRED FOR DEBIT CARD 26.25 TRANSACTIONS.] The identification requirements of subdivision 4 26.26 do not apply to a transaction account that is accessible 26.27 exclusively by debit card. A debit card activates a transaction 26.28 account at a financial intermediary by means of an electronic 26.29 information processing device and contemporaneously completes 26.30 the debt to the account only on the condition that funds are 26.31 available and confirmed. 26.32 Sec. 27. Minnesota Statutes 1996, section 48.61, 26.33 subdivision 7, is amended to read: 26.34 Subd. 7. [SUBSIDIARIES.] (a) A state bank or trust company 26.35 may organize, acquire, or invest in a subsidiary located in this 26.36 state for the purposes of engaging in one or more of the 27.1 following activities, subject to the prior written approval of 27.2 the commissioner: 27.3 (1) any activity, not including receiving deposits or 27.4 paying checks, that a state bank is authorized to engage in 27.5 under state law or rule or under federal law or regulation 27.6 unless the activity is prohibited by the laws of this state; 27.7 (2) any activity that a bank clerical service corporation 27.8 is authorized to engage in under section 48.89; and 27.9 (3) any other activity authorized for a national bank, a 27.10 bank holding company, or a subsidiary of a national bank or bank 27.11 holding company under federal law or regulation of general 27.12 applicability, and approved by the commissionerby rule. 27.13 (b) A bank or trust company subsidiary may engage in an 27.14 activity under this section only upon application together with 27.15 a filing fee of $250 and with the prior written approval of the 27.16 commissioner. In approving or denying a proposed activity, the 27.17 commissioner shall consider the financial and management 27.18 strength of the bank or trust company, the current written 27.19 operating plan and policies of the proposed subsidiary 27.20 corporation, the bank or trust company's community reinvestment 27.21 record, and whether the proposed activity should be conducted 27.22 through a subsidiary of the bank or trust company. 27.23 (c) The aggregate amount of funds invested in either an 27.24 equity or loan capacity in all of the subsidiaries of the bank 27.25 or trust company authorized under this subdivision shall not 27.26 exceed 25 percent of the capital stock and paid in surplus of 27.27 the bank or trust company. 27.28 (d) A subsidiary organized or acquired under this 27.29 subdivision is subject to the examination and enforcement 27.30 authority of the commissioner under chapters 45 and 46 to the 27.31 same extent as a state bank or trust company. 27.32 (e) For the purposes of this section, "subsidiary" means a 27.33 corporation of which more than 50 percent of the voting shares 27.34 are owned or controlled by the bank or trust company. 27.35 Sec. 28. Minnesota Statutes 1996, section 48.61, is 27.36 amended by adding a subdivision to read: 28.1 Subd. 10. [SUBSIDIARIES ORGANIZED FOR PURPOSES OF 28.2 CORPORATE REORGANIZATION.] A subsidiary may be organized solely 28.3 for purposes of liquidating assets in a reorganization subject 28.4 to the following conditions: 28.5 (1) the subsidiary must be a bank holding company whose 28.6 assets and liabilities and subsidiary bank control have been 28.7 removed; and 28.8 (2) the operations of the subsidiary must be limited to the 28.9 time period reasonably related to the completion of the 28.10 reorganization. 28.11 Sec. 29. Minnesota Statutes 1996, section 49.215, 28.12 subdivision 3, is amended to read: 28.13 Subd. 3. [CERTIFICATE OF LIQUIDATION.] Upon compliance 28.14 with the foregoing and upon filing with the commissioner an 28.15 affidavit of the president and cashier or vice president 28.16 conducting the duties of cashier of said financial institution 28.17 that the provisions of subdivision 4 have been complied with and 28.18 that all depositors and other creditors have been paid in full, 28.19 or, if any dividends or any moneys set apart for the payment of 28.20 claims remain unpaid and the places of residence of the 28.21 depositors or other creditors are unknown to the persons making 28.22 the affidavit, that sufficient funds have been turned over to 28.23 the commissioner for payment into the state treasury to pay said 28.24 depositors and other creditors, in the manner provided by 28.25 subdivision 5, the commissioner shall issue a certificate of 28.26 liquidation, and, upon the filing for record of said certificate 28.27 of liquidation in the office of the secretary of state and in 28.28 the office of the county recorder of the county of the principal 28.29 place of business of such financial institution immediately 28.30 prior to its voluntary liquidation, the liquidation of said 28.31 financial institution shall be complete, and its corporate 28.32 existence shall thereupon terminate. 28.33 Sec. 30. Minnesota Statutes 1996, section 49.33, is 28.34 amended to read: 28.35 49.33 [CONSOLIDATION AND MERGER, WHEN AUTHORIZED.] 28.36 Subject to the provisions of sections 49.33 to 49.41, with 29.1 the written consent of the commissioner of commerce, any bankof29.2discount and deposit, savings bank, or trust company may effect 29.3 a transfer of its assets and liabilities to another bank, 29.4 savings bank, or trust company for the purpose of consolidating 29.5 or merging, but the same shall be without prejudice to the 29.6 creditors of either. 29.7 Sec. 31. Minnesota Statutes 1996, section 49.36, 29.8 subdivision 4, is amended to read: 29.9 Subd. 4. [NOTICE OF PROPOSED ACQUISITION.] The successor 29.10 bank shall give reasonable notice of the acquisition to each of 29.11 the depositors and creditors of an acquired bank or savings 29.12 associationwithin 30 days after the order is activatedat a 29.13 time and in a form determined in the discretion of the 29.14 commissioner. This notice may be coordinated to include federal 29.15 regulator concerns for impact on depositors insurance of 29.16 accounts and information designed to alert depositors and 29.17 creditors of any changes in procedures or practices. If 29.18 detached facilities are to be closed as a result of transactions 29.19 authorized by this section, adequate notice shall be provided by 29.20 the bank prior to closing, unless the commissioner has acted to 29.21 prevent the probable failure of the bank or savings association, 29.22 and then as soon as practicable after the acquisition date. 29.23 Sec. 32. Minnesota Statutes 1996, section 49.42, is 29.24 amended to read: 29.25 49.42 [STATE BANK.] 29.26 As used in sections 49.42 to 49.46: 29.27 "State bank" means any bank, savings bank, trust company, 29.28 or bank and trust company which is now or may hereafter be 29.29 organized under the laws of this state. 29.30 "National banking association" means a bank, savings bank, 29.31 bank and trust company, or bank exclusively exercising trust 29.32 powers organized under the laws of the United States. 29.33 Sec. 33. Minnesota Statutes 1996, section 50.245, is 29.34 amended to read: 29.35 50.245 [BRANCHES; ACQUISITIONS.] 29.36 Subdivision 1. [AUTHORITY FOR BRANCH OFFICES.] A savings 30.1 bank may establish any number of detached facilities as may be 30.2 approved by the commissioner of commerce pursuant to sections 30.3 47.51 to 47.57. The savings bank shall not change the location 30.4 of a detached facility without prior written approval of the 30.5 commissioner of commerce. A savings bank may establish a loan 30.6 production office, without restriction as to geographical 30.7 location, upon written notice to the commissioner of commerce. 30.8 Subd. 2. [AUTHORITY FOR BRANCH OFFICES IN OTHER STATES.] 30.9 The authorization contained in subdivision 1 is in addition to 30.10 the authority granted savings banks in section 47.52. A savings 30.11 bank chartered in this state, whether or not the subsidiary of a 30.12 savings bank holding company,may, by acquisition, merger,30.13purchase, and assumption of some or all assets and liabilities,30.14consolidation, or de novo formation, establish or operate30.15detached facilities in another state on the same terms and30.16conditions and subject to the same limitations and restrictions30.17as are applicable to the establishment of branches by national30.18banks located in Minnesota, except that approval of the30.19comptroller of the currency shall not be required for such30.20detached facilitieshas the same authority as a bank to conduct 30.21 interstate mergers affecting interstate branching under section 30.22 49.411. The merger may be between banks and with other banks or 30.23 savings banks. 30.24 Subd. 3. [RECIPROCATING STATEINTERSTATE ACQUISITIONS.] A 30.25 savings bank chartered in this state and a savings bank holding 30.26 company with its principal offices in this state may acquire 30.27 control of a financial institution chartered ina reciprocating30.28state or, subject to applicable federal law,any other state or 30.29 a financial institution holding company with principal offices 30.30 ina reciprocating state or, subject to applicable federal law,30.31 any other state. A savings bank chartered ina reciprocating30.32state or, subject to applicable federal law,any other state and 30.33 a savings bank holding company with principal offices ina30.34reciprocating state or, subject to applicable federal law,any 30.35 other state may acquire control of a savings bank chartered in 30.36 this state or a savings bank holding company with principal 31.1 offices in this state. 31.2 Subd. 4. [PROCEDURAL REQUIREMENTS.] Procedural 31.3 requirementsequivalent to thosecontained in sections 48.90 to 31.448.99548.99 apply toreciprocalinterstatebranching and31.5 acquisitions by savings banks and savings bank holding companies. 31.6 Subd. 5. [DEFINITIONS.] For the purpose of this section, 31.7 the terms defined in this subdivision have the meanings given 31.8 them. 31.9 (a) "Financial institution" means a bank, savings bank, 31.10 savings association, or trust company,or credit union,whether 31.11 chartered under the laws of this state, another state or 31.12 territory, or under the laws of the United States. 31.13 (b) "Loan production office" means a place of business at 31.14 which a savings bank provides lending if the loans are approved 31.15 at the main office or detached facility of the savings bank, but 31.16 at which a savings bank may not accept deposits except through a 31.17 remote service unit. 31.18 (c)"Reciprocating state" means a state that authorizes the31.19acquisition of control of financial institutions chartered in31.20that state and financial institution holding companies with31.21principal offices in that state by a savings bank chartered in31.22this state or savings bank holding company with principal31.23offices in this state under conditions substantially similar to31.24those imposed by the laws of Minnesota, as determined by the31.25commissioner of commerce.31.26(d)"Remote service unit" means an electronic financial 31.27 terminal as defined in section 47.61. 31.28Subd. 6. [COMMISSIONER'S AUTHORITY.] The authority of the31.29commissioner of commerce to approve a transaction under this31.30section is in addition to that provided for in section 49.48.31.31 Sec. 34. Minnesota Statutes 1996, section 51A.38, 31.32 subdivision 1, is amended to read: 31.33 Subdivision 1. [GENERALLY.] Real estate loans and other 31.34 loans secured by a mortgage on real estate that are eligible for 31.35 investment by an association under sections 51A.01 to 51A.57 may 31.36 be written according to this section and section 32.151A.38551A.386, or upon any other plan approved by the 32.2 commissioner. 32.3 Sec. 35. Minnesota Statutes 1996, section 52.04, 32.4 subdivision 2a, is amended to read: 32.5 Subd. 2a. [CREDIT SALES OR SERVICE CONTRACTS.] A person 32.6 may enter into a credit sale or service contract for sale to a 32.7 state or federal credit union doing business in this state, and 32.8 a credit union may purchase and enforce the contract under the 32.9 terms and conditions set forth in section 47.59, subdivisions 32.10 4and 6to 14. 32.11 Sec. 36. Minnesota Statutes 1996, section 52.04, is 32.12 amended by adding a subdivision to read: 32.13 Subd. 3. [COMPARABILITY WITH FEDERAL CREDIT UNIONS.] The 32.14 commissioner of commerce may authorize credit union activity in 32.15 which credit unions subject to the jurisdiction of the federal 32.16 government may be authorized to engage by federal legislation, 32.17 ruling, or regulation. The commissioner may not authorize state 32.18 credit unions subject to this chapter to engage in credit union 32.19 activity prohibited by the laws of this state. 32.20 Sec. 37. Minnesota Statutes 1996, section 52.062, 32.21 subdivision 1, is amended to read: 32.22 Subdivision 1. [REASONS FOR COMMISSIONER'S ACTION.] 32.23 Whenever the commissioner of commerce shall find that a credit 32.24 union is engaged in unsafe or unsound practices in conducting 32.25 its business or that the shares of the members are impaired or 32.26 are in immediate danger of becoming impaired, or that such 32.27 credit union has knowingly or negligently permitted any of its 32.28 officers, directors, committee members, or employees to violate 32.29 any material provision of any law, bylaw, or rule to which the 32.30 credit union is subject, the commissioner of commerce may 32.31 proceed in the manner provided byeithersubdivision 2or, 3, or 32.32 4. 32.33 Sec. 38. Minnesota Statutes 1996, section 52.062, is 32.34 amended by adding a subdivision to read: 32.35 Subd. 4. [CONSENT CEASE AND DESIST ORDER.] In lieu of 32.36 suspension of the operation of the credit union, the 33.1 commissioner of commerce and the board of directors of the 33.2 credit union may agree to execute a consent cease and desist 33.3 order in which the parties agree to waive the right to a hearing 33.4 and agree that the credit union shall cease and desist from 33.5 unsafe or unsound practices, or violations. The order must 33.6 specify whether credit union operation may continue, and if 33.7 operation may continue, the conditions under which operation may 33.8 continue. 33.9 Sec. 39. Minnesota Statutes 1996, section 52.063, is 33.10 amended to read: 33.11 52.063 [PROCEEDINGS FOLLOWING SUSPENSIONOR, CONTINUATION 33.12 OF SUSPENSION, OR CONSENT CEASE AND DESIST ORDER; APPOINTMENT OF 33.13 NATIONAL CREDIT UNION ADMINISTRATION BOARD AS RECEIVER.] 33.14 Subdivision 1. [PROCEEDINGS FOLLOWING SUSPENSION OR 33.15 CONTINUATION OF SUSPENSION.] Upon receipt of the suspension 33.16 notice or the notice of the continuation of suspension under 33.17 section 52.062, subdivision 2 or 3, the credit union shall 33.18 immediately cease or continue cessation of all operations except 33.19 those operations specifically authorized by the commissioner of 33.20 commerce. If the notice is given pursuant to determination by 33.21 the commissioner of commerce after a hearing, the board of 33.22 directors shall have 60 days from the receipt of said notice in 33.23 which to file with the commissioner of commerce a proposed plan 33.24 of corrective actions or to request that a receiver be appointed 33.25 for the credit union. The commissioner of commerce shall have 33.26 30 days from the receipt of the proposed plan of corrective 33.27 actions to determine if the proposed corrective actions are 33.28 sufficient to correct the deficiencies which formed the basis 33.29 for the suspension. If the commissioner of commerce determines 33.30 that the proposed corrective actions are sufficient, the 33.31 suspension shall be lifted and the credit union returned to 33.32 normal operations under its board of directors. If the 33.33 commissioner of commerce believes the proposed corrective 33.34 actions insufficient, or if the board has failed to answer the 33.35 suspension notice, or has requested that a receiver be 33.36 appointed, then the commissioner of commerce shall apply to the 34.1 district court for appointment of a receiver. The credit union 34.2 shall have the right, within six months of the receipt of any 34.3 notice of suspension or continuation of suspension pursuant to a 34.4 determination by the commissioner of commerce after hearing, to 34.5 appeal to the district court for a ruling as to the validity of 34.6 such notice. 34.7 Subd. 2. [PROCEEDINGS FOLLOWING CONSENT CEASE AND DESIST 34.8 ORDER.] If the commissioner of commerce and the board of 34.9 directors of the credit union execute a consent cease and desist 34.10 order in lieu of a suspension under section 52.062, subdivision 34.11 4, the board of directors of the credit union may request that 34.12 the commissioner of commerce seek court appointment of a 34.13 receiver for the credit union. The consent cease and desist 34.14 order must state that the credit union has requested that the 34.15 commissioner seek appointment of a receiver. 34.16 Subd. 3. [APPOINTMENT OF NATIONAL CREDIT UNION 34.17 ADMINISTRATION BOARD AS RECEIVER.] Upon a request by the 34.18 commissioner of commerce, the court may appoint the National 34.19 Credit Union Administration Board, created by section 3 of the 34.20 Federal Credit Union Act, as amended, as receiver of a credit 34.21 union, without bond, when the deposits of the credit union are 34.22 to any extent insured by the National Credit Union 34.23 Administration Board, and the credit union has had its 34.24 operations suspended or has executed a consent cease and desist 34.25 order with the commissioner in lieu of a suspension under 34.26 section 52.062. Notwithstanding any other provisions of law, 34.27 the commissioner of commerce may, in the event of the suspension 34.28 or consent cease and desist order, tender to the National Credit 34.29 Union Administration Board the proposed appointment as receiver 34.30 of the credit union. If the National Credit Union 34.31 Administration Board accepts the proposed appointment and the 34.32 court appoints the National Credit Union Administration Board as 34.33 receiver upon a request by the commissioner, the National Credit 34.34 Union Administration Board shall have and possess all the powers 34.35 and privileges provided by the laws of this state and section 34.36 207 of the Federal Credit Union Act, as amended, with respect to 35.1 a receiver of a credit union, the board of directors of the 35.2 credit union, and its members. 35.3 Sec. 40. Minnesota Statutes 1996, section 52.064, is 35.4 amended by adding a subdivision to read: 35.5 Subd. 3. [WAIVER WHEN CREDIT UNION REQUESTS APPOINTMENT OF 35.6 NATIONAL CREDIT UNION ADMINISTRATION BOARD AS RECEIVER.] If the 35.7 board of directors of the credit union has made a request to the 35.8 commissioner of commerce to seek court appointment of the 35.9 National Credit Union Administration Board as its receiver, and 35.10 the commissioner elects to seek this appointment, then the board 35.11 of directors of the credit union may waive the right to apply to 35.12 the court for permission to file, and the right to file, a plan 35.13 of reorganization, merger, or consolidation for the credit union 35.14 within 90 days of the appointment of the receiver under 35.15 subdivision 1. The board of directors of the credit union may 35.16 waive this right on behalf of itself, and on behalf of the 35.17 members of the credit union, when the board of directors of the 35.18 credit union determines that such action is in the best 35.19 interests of the credit union and its members, so that the 35.20 deposit insurer may proceed expeditiously to wind up the affairs 35.21 of the credit union upon appointment as receiver. 35.22 Sec. 41. Minnesota Statutes 1996, section 52.13, is 35.23 amended to read: 35.24 52.13 [DEPOSITS IN NAME OF MINOR.] 35.25 Any deposit made in the name of a minor, or shares issued 35.26 in a minor's name, shall be held for the exclusive right and 35.27 benefit of the minor, free from the control or lien of all other 35.28 persons except creditors, and together with the dividends or 35.29 interest thereon shall be paid to the minor; and the minor's 35.30 receipt, check, or acquittance in any form shall be a sufficient 35.31 release and discharge of the depository for the deposits or 35.32 shares, or any part thereof, until a conservator or guardian 35.33 appointed for the minor shall have delivered a certificate of 35.34 appointment to the depository. Deposits may be accepted 35.35 pursuant to the authority set forth in chapter 527, provided 35.36 that either the custodian or the minor is a member of the credit 36.1 union accepting the deposit. 36.2 Sec. 42. Minnesota Statutes 1996, section 52.201, is 36.3 amended to read: 36.4 52.201 [REORGANIZING FEDERAL CREDIT UNION INTO STATE CREDIT 36.5 UNION.] 36.6 When any federal credit union authorized to convert to a 36.7 state charter has taken the necessary steps under the federal 36.8 law for that purpose, seven or more members, upon authority of 36.9 two-thirds of the members present and entitled to vote and who 36.10 shall have voted for such conversion at a regular or special 36.11 meeting upon 14 days mailed written notice to each member at the 36.12 member's last known address clearly stating that such conversion 36.13 is to be acted upon, and upon approval of the commissioner of 36.14 commerce, may execute a certificate of incorporation under the 36.15 provisions of the state credit union act, which, in addition to 36.16 the other requirements of law, shall state the authority derived 36.17 from the shareholders of such federal credit union; and upon 36.18 recording such certificate as required by law, it shall become a 36.19 legal state credit union and the members of the federal credit 36.20 union shall without further action be members of the state 36.21 credit union. This includes members of the federal credit union 36.22 on the basis of acceptance of small employer groups provided the 36.23 commissioner may require contemporaneous filing of applications 36.24 under section 52.05, subdivision 2. Thereupon the assets of the 36.25 federal credit union, subject to its liabilities not liquidated 36.26 under the federal law before such incorporation, shall vest in 36.27 and become the property of such state credit union and the 36.28 members upon request shall be entitled to a new passbook showing 36.29 existing share and loan balances. The commissioner of commerce 36.30 shall approve or disapprove of the conversion within 60 days of 36.31 the date the proposal is presented. 36.32 Sec. 43. Minnesota Statutes 1996, section 53.04, is 36.33 amended by adding a subdivision to read: 36.34 Subd. 5b. [NEGOTIABLE ORDER OF WITHDRAWAL 36.35 ACCOUNTS.] Notwithstanding section 53.05, clause (1), and 36.36 consistent with United States Code, title 12, section 1832, 37.1 issue negotiable order of withdrawal accounts, which may not be 37.2 referred to as checking accounts and may include the following 37.3 transactions: 37.4 (1) automatic (preauthorized) transfers for the purpose of 37.5 paying loans at the same institution; 37.6 (2) transfers or withdrawals made by mail, messenger, 37.7 automated teller machine, or in person as withdrawals or 37.8 transfers to another account of the depositor at the same 37.9 institution; 37.10 (3) withdrawals initiated by telephone and consummated by 37.11 an official check mailed to the depository; 37.12 (4) automated clearinghouse debits; 37.13 (5) transfers from a customer's account under a 37.14 preauthorized agreement to cover overdrafts on another 37.15 transaction account; 37.16 (6) drafts payable to third parties; and 37.17 (7) debit card transactions. 37.18 Agreements establishing negotiable order of withdrawal 37.19 accounts must include a prominent disclosure of the following: 37.20 "We reserve the right to at any time require not less than 37.21 seven days' notice in writing before each withdrawal from this 37.22 account." 37.23 A negotiable order of withdrawal account may be with or 37.24 without interest and is considered a transaction account for 37.25 purposes of section 48.512. 37.26 Before exercising this power, the company must submit a 37.27 plan to the commissioner detailing implementation of the power. 37.28 Sec. 44. Minnesota Statutes 1996, section 53.05, is 37.29 amended to read: 37.30 53.05 [POWERS, LIMITATION.] 37.31 No industrial loan and thrift company may do any of the 37.32 following: 37.33 (1) carry demand banking accounts; use the word "savings" 37.34 unless the institution's investment certificates, savings 37.35 accounts, and savings deposits are insured by the Federal 37.36 Deposit Insurance Corporation and then only if the word is not 38.1 followed by the words "and loan" in its corporate name; use the 38.2 word "bank" or "banking" in its corporate name; operate as a 38.3 savings bank; 38.4 (2) have outstanding at any one time certificates of 38.5 indebtedness, savings accounts, and savings deposits 30 times 38.6 the sum of capital stock and surplus of the company; 38.7 (3) accept trusts, except as provided in section 47.75, 38.8 subdivision 1, or act as guardian, administrator, or judicial 38.9 trustee in any form; 38.10 (4) deposit any of its funds in any banking corporation, 38.11 unless that corporation has been designated by vote of a 38.12 majority of directors or of the executive committee present at a 38.13 meeting duly called, at which a quorum was in attendance; 38.14 (5) change any allocation of capital made pursuant to 38.15 section 53.03 or reduce or withdraw in any way any portion of 38.16 the capital stock and surplus without prior written approval of 38.17 the commissioner of commerce; 38.18 (6) take any instrument in which blanks are left to be 38.19 filled in after execution; 38.20 (7) lend money in excess of 20 percent of the total of its 38.21 capital stock and surplus at all its authorized locations to a 38.22 person primarily liable. Companies not issuing investment 38.23 certificates of indebtedness under section 53.04 need not comply 38.24 with the requirement if the amount of money lent does not exceed 38.25 $100,000 of principal as defined by section 47.59, subdivision 38.26 1, paragraph (p). 38.27 However, industrial loan and thrift companies with deposit 38.28 liabilities must comply with the provisions of section 48.24; or 38.29 (8) issue cashier's checks pursuant to section 48.151, 38.30 unless and at all times the aggregate liability to all creditors 38.31 on these instruments is protected by a special fund in cash or 38.32 due from banks to be used solely for payment of the cashier's 38.33 checks. 38.34 Sec. 45. Minnesota Statutes 1996, section 53.09, 38.35 subdivision 2a, is amended to read: 38.36 Subd. 2a. [COMPLIANCE EXAMINATIONS.] For the purpose of 39.1 discovering violations of this chapter or securing information 39.2 lawfully required by the commissioner under this chapter, the 39.3 commissioner may, at any time, either personally or by a person 39.4 or persons duly designated, investigate the loans and business, 39.5 and examine the books, accounts, records, and files used in the 39.6 business, of every licensee and of every person engaged in the 39.7 business whether or not the person acts or claims to act as 39.8 principal or agent, or under the authority of this chapter. For 39.9 the purposes of this subdivision, the commissioner and duly 39.10 designated representatives have free access to the offices and 39.11 places of business, books, accounts, papers, records, files, 39.12 safes, and vaults of all these persons. The commissioner and 39.13 all persons duly designated may require the attendance of and 39.14 examine, under oath, all persons whose testimony the 39.15 commissioner may require relative to the loans or business or to 39.16 the subject matter of an examination, investigation, or 39.17 hearing. Upon written agreement with the company, the 39.18 commissioner may conduct examinations applying the procedures 39.19 for purposes of subdivision 1, and section 46.04, subdivision 1, 39.20 to facilitate the qualifications of the company to participate 39.21 in the United States Small Business Administration loan 39.22 guarantee or similar programs. 39.23 Each licensee shall pay to the commissioner the amount 39.24 required under section 46.131, and the commissioner may maintain 39.25 an action for the recovery of the costs in a court of competent 39.26 jurisdiction. 39.27 Sec. 46. Minnesota Statutes 1996, section 55.06, 39.28 subdivision 1, is amended to read: 39.29 Subdivision 1. [PROHIBITION.] No person except a bank, a 39.30 savings bank, a credit union, a savings association, industrial 39.31 loan and thrift company issuing investment certificates of 39.32 indebtedness, or a trust company may let out or rent as lessor, 39.33 for hire, safe deposit boxes or take or receive valuable 39.34 personal property for safekeeping and storage, as bailee, for 39.35 hire, without procuring a license and giving a bond, as required 39.36 by this chapter, except as otherwise authorized by law so to do. 40.1 Sec. 47. Minnesota Statutes 1996, section 56.07, is 40.2 amended to read: 40.3 56.07 [CONTROL OVER LOCATION.] 40.4 Subdivision 1. [GENERAL.] Not more than one place of 40.5 business shall be maintained under the same license, but the 40.6 commissioner may issue more than one license to the same 40.7 licensee upon compliance with all the provisions of this chapter 40.8 governing an original issuance of a license, for each such new 40.9 license. To the extent that previously filed applicable 40.10 information remains substantially unchanged, the applicant need 40.11 not refile this information, unless requested. 40.12 When a licensee shall wish to change a place of business, 40.13 the licensee shall give written notice thereof 30 days in 40.14 advance to the commissioner, who shall within 30 days of receipt 40.15 of such notice, issue an amended license approving the change. 40.16 No change in the place of business of a licensee to a location 40.17 outside of its current trade area or more than 25 miles from its 40.18 present location, whichever distance is greater, shall be 40.19 permitted under the same license unless all of the requirements 40.20 of section 56.04 have been met. 40.21A licensed place of business shall be open during regular40.22business hours each weekday, except for legal holidays and for40.23any weekday the commissioner grants approval to the licensee to40.24remain closed. A licensed place of business may be open on40.25Saturday, but shall be closed on Sunday.A licensed location 40.26 must be open for business and examination purposes on a schedule 40.27 provided to and approved by the commissioner. This schedule of 40.28 regular business must be conspicuously posted at the licensed 40.29 location. 40.30 Subd. 2. [INTERACTIVE KIOSK LOCATIONS.] Licensed locations 40.31 providing limited services on an interactive telephone-customer 40.32 service communications terminal are required to comply with 40.33 paragraphs (a) to (c). 40.34 (a) The licensee must maintain business books, accounts, 40.35 and records on a suitable alternative system of maintenance 40.36 approved by the commissioner. 41.1 (b) The license required to be posted under section 56.05 41.2 may be displayed on the customer service communications terminal 41.3 screen for a period of no less than 15 seconds. 41.4 (c) The full and accurate schedule of charges required by 41.5 section 56.14, clause (5), may be displayed on the customer 41.6 service communications terminal screen for no less than 20 41.7 seconds. 41.8 Sec. 48. Minnesota Statutes 1996, section 56.10, 41.9 subdivision 1, is amended to read: 41.10 Subdivision 1. For the purpose of discovering violations 41.11 of this chapter or securing information lawfully required by the 41.12 commissioner hereunder, the commissioner may, at any time, 41.13 either personally or by a person or persons duly designated, 41.14 investigate the loans and business and examine the books, 41.15 accounts, records, and files used therein, of every licensee and 41.16 of every person who shall be engaged in the business described 41.17 in section 56.01, whether the person shall act or claim to act 41.18 as principal or agent, or under or without the authority of this 41.19 chapter. For that purpose the commissioner and a duly 41.20 designated representative shall have free access to the offices 41.21 and places of business, books, accounts, papers, records, files, 41.22 safes, and vaults of all such persons. The commissioner and all 41.23 persons duly designated shall have authority to require the 41.24 attendance of and to examine, under oath, all persons whomsoever 41.25 whose testimony the commissioner may require relative to the 41.26 loan or the business or to the subject matter of any 41.27 examination, investigation, or hearing. Upon written agreement 41.28 with the licensee, the commissioner may conduct examinations 41.29 applying the procedures for purposes of this subdivision and 41.30 section 46.04, subdivision 1, to facilitate the qualifications 41.31 of the licensee to participate in the United States Small 41.32 Business Administration loan guarantee or similar programs. 41.33 Each licensee shall pay to the commissioner such amount as 41.34 may be required under section 46.131, and the commissioner may 41.35 maintain an action for the recovery of such costs in any court 41.36 of competent jurisdiction. 42.1 Sec. 49. Minnesota Statutes 1996, section 56.131, 42.2 subdivision 1, is amended to read: 42.3 Subdivision 1. [INTEREST RATES AND CHARGES.] (a) On any 42.4 loan in a principal amount not exceeding$56,000$100,000 or 15 42.5 percent of a Minnesota corporate licensee's capital stock and 42.6 surplus as defined in section 53.015, if greater, a licensee may 42.7 contract for and receive interest, finance charges, and other 42.8 charges as provided in section 47.59. 42.9 (b) Loans may be interest-bearing or precomputed. 42.10 (c) Notwithstanding section 47.59 to the contrary, to 42.11 compute time on interest-bearing and precomputed loans, 42.12 including, but not limited to the calculation of interest, a day 42.13 is considered 1/30 of a month when calculation is made for a 42.14 fraction of a calendar month. A year is 12 calendar months. A 42.15 calendar month is that period from a given date in one month to 42.16 the same numbered date in the following month, and if there is 42.17 no same numbered date, to the last day of the following month. 42.18 When a period of time includes a whole month and a fraction of a 42.19 month, the fraction of a month is considered to follow the whole 42.20 month. 42.21 In the alternative, for interest-bearing loans, a licensee 42.22 may charge interest at the rate of 1/365 of the agreed annual 42.23 rate for each actual day elapsed. 42.24 (d) With respect to interest-bearing loans and 42.25 notwithstanding section 47.59: 42.26 (1) Interest must be computed on unpaid principal balances 42.27 outstanding from time to time, for the time outstanding. Each 42.28 payment must be applied first to the accumulated interest and 42.29 the remainder of the payment applied to the unpaid principal 42.30 balance; provided however, that if the amount of the payment is 42.31 insufficient to pay the accumulated interest, the unpaid 42.32 interest continues to accumulate to be paid from the proceeds of 42.33 subsequent payments and is not added to the principal balance. 42.34 (2) Interest must not be payable in advance or compounded. 42.35 However, if part or all of the consideration for a new loan 42.36 contract is the unpaid principal balance of a prior loan, then 43.1 the principal amount payable under the new loan contract may 43.2 include any unpaid interest which has accrued. The unpaid 43.3 principal balance of a precomputed loan is the balance due after 43.4 refund or credit of unearned interest as provided in paragraph 43.5 (e), clause (3). The resulting loan contract is deemed a new 43.6 and separate loan transaction for all purposes. 43.7 (e) With respect to precomputed loans and notwithstanding 43.8 section 47.59 to the contrary: 43.9 (1) Loans must be repayable in substantially equal and 43.10 consecutive monthly installments of principal and interest 43.11 combined, except that the first installment period may be more 43.12 or less than one month by not more than 15 days, and the first 43.13 installment payment amount may be larger than the remaining 43.14 payments by the amount of interest charged for the extra days 43.15 and must be reduced by the amount of interest for the number of 43.16 days less than one month to the first installment payment; and 43.17 monthly installment payment dates may be omitted to accommodate 43.18 borrowers with seasonal income. 43.19 (2) Payments may be applied to the combined total of 43.20 principal and precomputed interest until the loan is fully 43.21 paid. Payments must be applied in the order in which they 43.22 become due. 43.23 (3) If the maturity of the loan is accelerated for any 43.24 reason and judgment is entered, the licensee shall credit the 43.25 borrower with the same refund as if prepayment in full had been 43.26 made on the date the judgment is entered. 43.27 (4)If two or more installments are delinquent one full43.28month or more on any due date, and if the contract so provides,43.29the licensee may reduce the unpaid balance by the refund credit43.30which would be required for prepayment in full on the due date43.31of the most recent maturing installment in default. Thereafter,43.32and in lieu of any other default or deferment charges, the43.33single annual percentage rate permitted by this subdivision may43.34be charged on the unpaid balance until fully paid.43.35(5)Following the final installment as originally scheduled 43.36 or deferred, the licensee, for any loan contract which has not 44.1 previously been converted to interest-bearing under 44.2 clause(4)(7), may charge interest on any balance remaining 44.3 unpaid, including unpaid default or deferment charges, at the 44.4 single annual percentage rate permitted by this subdivision 44.5 until fully paid. 44.6(6)(5) With respect to a loan secured by an interest in 44.7 real estate, and having a maturity of more than 60 months, the 44.8 original schedule of installment payments must fully amortize 44.9 the principal and interest on the loan. The original schedule 44.10 of installment payments for any other loan secured by an 44.11 interest in real estate must provide for payment amounts that 44.12 are sufficient to pay all interest scheduled to be due on the 44.13 loan. 44.14 (6) A delinquency charge as provided for in section 47.59, 44.15 subdivision 6, paragraph (a), clause (4). 44.16 (7) Grant extensions, deferments, or conversions to 44.17 interest-bearing as provided in section 47.59, subdivision 5. 44.18 Sec. 50. Minnesota Statutes 1996, section 56.131, 44.19 subdivision 4, is amended to read: 44.20 Subd. 4. [ADJUSTMENT OF DOLLAR AMOUNTS.] The dollar 44.21 amounts inthis sectionsubdivision 2, sections 53.04, 44.22 subdivision 3a, paragraph (c), 56.01, 56.12, and 56.125 shall 44.23 change periodically, as provided in section 47.59, subdivision 3. 44.24 Sec. 51. Minnesota Statutes 1996, section 59A.08, 44.25 subdivision 3, is amended to read: 44.26 Subd. 3.The information required by subdivision 1 shall44.27only be required in the initial insurance premium finance44.28agreement entered into if said agreement is open end. An44.29insurance premium finance agreement is open end if it provides44.30that additional or subsequent insurance premiums may be financed44.31and added to the initial insurance premium finance agreement44.32from time to time.44.33 Additional or subsequent premiums may be added to anopen44.34endinsurance premium finance agreement from time to time, 44.35 provided that: 44.36 (a) The additional or subsequent insurance premium to be 45.1 added results from additional premiums required under policies 45.2 presently being financed under theopen endinsurance premium 45.3 finance agreement or from a renewal of a policy or from other 45.4 policies owned or purchased by the insured. 45.5 (b) The insurance premium finance company receives written 45.6 notice or advice from an insurer authorized to do business in 45.7 this state or from an insurance agent licensed in this state 45.8 acknowledging that the premium on an existing financed policy 45.9 has been increased or that a policy has been renewed or that 45.10 additional policies have or will be issued to the insured. The 45.11 notice or advice shall contain the amount of the additional 45.12 premium, the down payment collected by the insurer or agent, if 45.13 any, and the amount of premium to be added to theopen end45.14 insurance premium finance agreement. 45.15 (c) If the additional premiums to be added to theopen end45.16 insurance premium finance agreement result from additional 45.17 premiums required on policies presently financed under the 45.18 agreementwhich are to be financed beyond the scheduled maturity45.19of the original financing, the renewal of a policy or from an45.20additional policy owned or purchased by the insured, the45.21insurance premium finance company shall mail a notice to the45.22insured at the address shown in the policy. Said notice shall45.23contain:45.24(1) The information required by subdivision 1,45.25notwithstanding that the notice is not signed by, nor on behalf45.26of the insured;45.27(2) A conspicuous statement to the insured stating that the45.28insured may tender the premiums in full or disaffirm the45.29financing of the premium on the renewal or additional policies45.30by mailing to the insurance premium finance company notice of45.31intention to do so within ten days after the insurance premium45.32finance company mails to the insured the notice required by this45.33subdivision;45.34(3) A conspicuous statement to the insured that the45.35insurance premium finance company may, in event of default in45.36payment of the additional premium, or any installment thereof,46.1cause the insured's insurance contract or contracts to be46.2canceled as provided in section 59A.11.46.3(d) At the time the notice of additional premium to be46.4added to the open end insurance premium finance agreement is46.5mailed to the insured as provided in clause (c), an employee of46.6the insurance premium finance company shall prepare and sign a46.7certificate or affidavit of mailing setting forth the following:46.8(1) The name of the employee who mailed the notice of the46.9additional premium to be financed.46.10(2) That the employee mailing the notice is over 18 years46.11of age.46.12(3) The date and place of the deposit of the notice in the46.13mail.46.14(4) The name and address of the person to whom the notice46.15was mailed as shown on the envelope containing the notice.46.16(5) That the envelope containing the notice was sealed and46.17deposited in the mail with the proper postage thereon.46.18A certificate or affidavit of mailing, prepared and signed46.19as prescribed in this subdivision shall raise rebuttable46.20presumption that the notice was mailed to the insured at the46.21address shown in the certificate or affidavit of mailing.46.22(e) The insurance premium finance company may make a46.23finance charge in accordance with section 59A.09 for additional46.24premiums financed and added to an open end insurance premium46.25finance agreement; however, only one flat rate service fee may46.26be made or charged for each insurance premium finance agreement46.27entered into and no additional flat service fee may be made or46.28charged for adding additional or subsequent premiums to an open46.29end insurance premium finance agreement for which a flat service46.30fee was previously made or charged.or from a renewal of a 46.31 policy or from other policies owned or purchased by the insured, 46.32 a written notice must be mailed, faxed, or delivered to the 46.33 insured outlining any changes to the information required by 46.34 subdivision 1 along with a conspicuous statement to the insured 46.35 that the insured may tender the premiums in full or affirm the 46.36 proposed changes by tendering either an additional down payment 47.1 or tendering the proposed revised installment amount, or 47.2 disaffirm the financing of the additional premium by continuing 47.3 the original payment amount as agreed to in the initial 47.4 agreement. 47.5 If the proposed revisions in paragraph (c) are affirmed by 47.6 the insured, the finance company may make an additional finance 47.7 charge according to section 59A.09 for the additional premium 47.8 financed and added to the open-end agreement; however, no 47.9 additional flat service fee may be made or charged for adding 47.10 additional or subsequent premiums to an open-end insurance 47.11 premium finance agreement for which a flat service fee was 47.12 previously made or charged. 47.13 Sec. 52. Minnesota Statutes 1996, section 59A.08, is 47.14 amended by adding a subdivision to read: 47.15 Subd. 5. [COMPETITIVE EQUALITY.] No insurance agent, 47.16 insurance broker, or insurer may require a person to use a 47.17 particular insurance premium finance company or other 47.18 installment payment plan for which a finance charge or other fee 47.19 in connection with an installment payment has been or will be 47.20 imposed or refuse to accept premium payment from a company 47.21 licensed under sections 59A.01 to 59A.15. 47.22 Sec. 53. Minnesota Statutes 1996, section 59A.11, 47.23 subdivision 2, is amended to read: 47.24 Subd. 2. Not less than ten days' written notice shall be 47.25 mailed to the insured setting forth the intent of the insurance 47.26 premium finance company to cancel the insurance contract unless 47.27 the default is cured prior to the date stated in the notice. 47.28 The insurance agent or insurance broker indicated on the premium 47.29 finance agreement shall also bemailedgiven ten days' notice of 47.30 this action in a manner agreed upon between the insurance 47.31 premium finance company and insurance agent or insurance broker. 47.32 Sec. 54. Minnesota Statutes 1996, section 59A.11, 47.33 subdivision 3, is amended to read: 47.34 Subd. 3. (a) Pursuant to the power of attorney or other 47.35 authority referred to above, the insurance premium finance 47.36 company may cancel on behalf of the insured by mailing to the 48.1 insurer written notice stating when thereafter the cancellation 48.2 shall be effective, and the insurance contract shall be canceled 48.3 as if such notice of cancellation had been submitted by the 48.4 insured personally, but without requiring the return of the 48.5 insurance contract. In the event that the insurer or its agent 48.6 does not provide the insurance premium finance company with a 48.7 specific mailing address for the purposes of receipt of the 48.8 above notice, then mailing by the insurance premium finance 48.9 company to the insurer at the address which is on file and of 48.10 record with the commissioner of commerce pursuant to the 48.11 provisions of chapters 60A and 72A shall be considered 48.12 sufficient notice under this section. The notice requirements 48.13 of this paragraph only apply if an insurance premium finance 48.14 company and an insurer have not agreed on a method of providing 48.15 notice of cancellation. 48.16 (b) The insurance premium finance company shall also mail a 48.17 notice of cancellation to the insured at the insured's last 48.18 known addressand. 48.19 (c) Written notice of the cancellation must also be given 48.20 to the insurance agent or insurance broker indicated on the 48.21 premium finance agreement. Written notice to the insurance 48.22 agent or broker required by this paragraph may be given in a 48.23 manner agreed upon between the insurance premium finance 48.24 company, insurer, agent, or broker. 48.25 Sec. 55. Minnesota Statutes 1996, section 62B.04, 48.26 subdivision 1, is amended to read: 48.27 Subdivision 1. [CREDIT LIFE INSURANCE.] (1) The initial 48.28 amount of credit life insurance shall not exceed the amount of 48.29 principal repayable under the contract of indebtedness plus an 48.30 amount equal to one monthly payment. Thereafter, if the 48.31 indebtedness is repayable in substantially equal installments 48.32 according to a predetermined schedule, the amount of insurance 48.33on which the premium is calculatedshallbe equal tonot exceed 48.34 the scheduled indebtedness plus one monthly payment or actual 48.35 amount of indebtedness, whichever is greater. If the contract 48.36 of indebtedness provides for a variable rate of finance charge 49.1 or interest, the initial rate or the scheduled rates based on 49.2 the initial index must be used in determining the scheduled 49.3 amount of indebtedness and subsequent changes to the rate must 49.4 be disregarded in determining whether the contract is repayable 49.5 in substantially equal installments according to a predetermined 49.6 schedule. 49.7 (2) Notwithstanding clause (1), the amount of credit life 49.8 insurance written in connection with credit transactions 49.9 repayable over a specified term exceeding 63 months shall not 49.10 exceed the greater of: (i) the actual amount of unpaid 49.11 indebtedness as it exists from time to time; or (ii) where an 49.12 indebtedness is repayable in substantially equal installments 49.13 according to a predetermined schedule, the scheduled amount of 49.14 unpaid indebtedness, less any unearned interest or finance 49.15 charges, plus an amount equal to two monthly payments. If the 49.16 credit transaction provides for a variable rate of finance 49.17 charge or interest, the initial rate or the scheduled rates 49.18 based on the initial index must be used in determining the 49.19 scheduled amount of unpaid indebtedness and subsequent changes 49.20 in the rate must be disregarded in determining whether the 49.21 contract is repayable in substantially equal installments 49.22 according to a predetermined schedule. 49.23 (3) Notwithstanding clauses (1) and (2), insurance on 49.24 educational, agricultural, and horticultural credit transaction 49.25 commitments may be written on a nondecreasing or level term plan 49.26 for the amount of the loan commitment. 49.27 (4) If the contract of indebtedness provides for a variable 49.28 rate of finance charge or interest, the initial rate or the 49.29 scheduled rates based on the initial index shall be used in 49.30 determining the scheduled amount of indebtedness, and subsequent 49.31 changes to the rate shall be disregarded in determining whether 49.32 the contract is repayable in substantially equal installments 49.33 according to a predetermined schedule. 49.34 Sec. 56. Minnesota Statutes 1996, section 300.20, 49.35 subdivision 2, is amended to read: 49.36 Subd. 2. [VACANCIES.] If the certificate of incorporation 50.1 or the bylaws so provides, a vacancy in the board of directors 50.2 may be filled by the remaining directors. Not more than 50.3 one-third of the members of the board may be so filled in any 50.4 one year except any number may be appointed to provide for at 50.5 leastthreefive directors until any subsequent meeting of the 50.6 stockholders. 50.7 Sec. 57. Minnesota Statutes 1996, section 303.02, 50.8 subdivision 4, is amended to read: 50.9 Subd. 4. [FOREIGN CORPORATION.] "Foreign corporation" does 50.10 not include any corporation which, under the constitution and 50.11 statutes of the United States, may transact business in this 50.12 state without first obtaining a certificate of authority so to 50.13 do, insurance companies as defined by section 60A.02, and any 50.14 banking or trust association or corporation or national banking 50.15 association acting in this state as an executor, administrator, 50.16 trustee,orguardian, or conservator under section 303.25. 50.17 Sec. 58. Minnesota Statutes 1996, section 303.25, 50.18 subdivision 5, is amended to read: 50.19 Subd. 5. [SOLICITATION OF BUSINESS.] A foreign trust 50.20 association may not maintain an office within this state, but it 50.21 may solicit business within this state if banking or trust 50.22 associations or corporations organized under the laws of this 50.23 state or national banking associations maintaining their 50.24 principal offices in this state may solicit business in the 50.25 state in which the foreign trust association maintains its 50.26 principal office. For purposes of this subdivision, 50.27 solicitation of business includes the activities authorized for 50.28 state or national banking associations exercising fiduciary 50.29 powers maintaining their principal offices in this state 50.30 considered a representative trust office established under 50.31 section 48.476. 50.32 Sec. 59. Minnesota Statutes 1996, section 325F.68, 50.33 subdivision 2, is amended to read: 50.34 Subd. 2. "Merchandise" means any objects, wares, goods, 50.35 commodities, intangibles, real estate, loans, or services. 50.36 Sec. 60. Minnesota Statutes 1996, section 332.21, is 51.1 amended to read: 51.2 332.21 [CONTRACTS.] 51.3 (a) Each contract entered into by the licensee and the 51.4 debtor shall be in writing and signed by both parties. The 51.5 licensee shall furnish the debtor with a copy of the signed 51.6 contract. Each such contract shall set forth: 51.7 (1) the dollar charges agreed upon for the services of the 51.8 licensee, clearly disclosing to such debtor the total amount 51.9 which may be retained by licensee for services if the contract 51.10 is fully performed, which maximum amount would be the 51.11 origination fee together with 15 percent of the amount scheduled 51.12 to be liquidated by such contract,. This disclosure must state 51.13 that if the amount of debt owed is increased by interest, late 51.14 fees, over the limit fees, and other amounts imposed by the 51.15 creditor or by reason of the events under paragraph (c), the 51.16 length of the contract would be extended and remain in force and 51.17 that the total dollar charges agreed upon may increase at the 51.18 rate agreed upon in the original contract; 51.19 (2) the terms upon which the debtor may cancel the contract 51.20 as set out in section 332.23,; 51.21 (3) all debts which are to be managed by the licensee, 51.22 including the name of the creditor and the amount of the debt,; 51.23 and 51.24 (4) such other matter as the commissioner may require by 51.25 rule. 51.26 (b) A contract shall not be effective until a payment has 51.27 been made to the licensee for distribution to creditors or until 51.28 three business days after the signing thereof, whichever is 51.29 later. Within such period an individual may disaffirm said 51.30 contract and upon such disaffirmance said contract shall be null 51.31 and void. 51.32 (c) Total fees contained in the contract may be exceeded in 51.33 relation to creditors under open-end agreements if it is agreed 51.34 to in the contract and the additional debts so contracted to be 51.35 prorated do not exceed ten percent of the original debts in the 51.36 contract or written revisions to the original contract. 52.1 Sec. 61. Minnesota Statutes 1996, section 332.23, 52.2 subdivision 1, is amended to read: 52.3 Subdivision 1. [ORIGINATION FEE, CREDIT BACKGROUND REPORT 52.4 COST.] The licensee may charge an origination fee of not more 52.5 than $25 and collect from the debtor the actual cost of a credit 52.6 background report obtained from a credit reporting agency not 52.7 related to or affiliated with the licensee or if affiliated, the 52.8 total cost of the report may not exceed $8. The costs to the 52.9 debtor of said origination fee and credit background report may 52.10 be made from the originating amount paid by the debtor to the 52.11 licensee. The cost of only one credit background report may be 52.12 collected from the debtor in any 12-month period. 52.13 Sec. 62. Minnesota Statutes 1996, section 332.23, 52.14 subdivision 2, is amended to read: 52.15 Subd. 2. [WITHDRAWAL OF FEE.] The licensee may withdraw 52.16 and retain as partial payment of the licensee's total fee not 52.17 more than 15 percent of any sum deposited with the licensee by 52.18 the debtor for distribution. The remaining 85 percent must be 52.19 disbursed to listed creditors pursuant to and in accordance with 52.20 the contract between the debtor and the licensee within 35 days 52.21 after receipt unless the reasonable payment of one or more of 52.22 the debtor's obligations requires that the funds be held for a 52.23 longer period so as to accumulate a sum certain or where the 52.24 debtor's payment is returned for nonsufficient funds, then no 52.25 longer than 42 days. Total payment to licensee for services 52.26 rendered, excluding the origination fee and any credit 52.27 background report, shall not exceed 15 percent of funds 52.28 deposited with licensee by debtor for distribution. 52.29 Sec. 63. Minnesota Statutes 1996, section 332.23, 52.30 subdivision 5, is amended to read: 52.31 Subd. 5. [ADVANCE PAYMENTS.] Notwithstanding anything 52.32 herein to the contrary no fees or charges shall be received or 52.33 retained for any payments by the debtor made more than the 52.34 following number of days in advance of the date specified in the 52.35 contract on which they are due: (a)3042 days in the case of 52.36 contracts requiring monthly payments; (b) 15 days in the case of 53.1 contracts requiring biweekly payments; or (c) seven days in the 53.2 case of contracts requiring weekly payments. For those 53.3 contracts which do not require payments in specified amounts, a 53.4 payment shall be deemed an advance payment to the extent it 53.5 exceeds twice the average regular payment theretofore made by 53.6 the debtor pursuant to that contract. This subdivision shall 53.7 not apply when it is the intention of the debtor to use such 53.8 advance payments to satisfy future payment of obligations due 53.9 within 30 days under the contract. 53.10 Sec. 64. Minnesota Statutes 1996, section 332.50, 53.11 subdivision 1, is amended to read: 53.12 Subdivision 1. [DEFINITIONS.] "Check" means a check, 53.13 draft, order of withdrawal, or similar negotiable or 53.14 nonnegotiable instrument. 53.15 "Credit" means an arrangement or understanding with the 53.16 drawee for the payment of the check. 53.17 "Dishonor" has the meaning given in section 336.3-502, but 53.18 does not include dishonor due to a stop payment order requested 53.19 by an issuer who has a good faith defense to payment on the 53.20 check. "Dishonor" does include a stop payment order requested 53.21 by an issuer if the account did not have sufficient funds for 53.22 payment of the check at the time of issuance, except for stop 53.23 payment orders on a check found to be stolen. 53.24 Sec. 65. Minnesota Statutes 1996, section 332.50, 53.25 subdivision 2, is amended to read: 53.26 Subd. 2. [ACTS CONSTITUTING.](a)Whoever issues any check 53.27 that is dishonoredand is not paid within 30 days after mailing53.28a notice of dishonor that includes a citation to this section53.29and section 609.535, and a description of the penalties53.30contained in these sections, in compliance with subdivision 3,53.31 is liableto the payee, holder, or agent of the holderfor the 53.32 following penalties:(1) the amount of the check plus a civil53.33penalty of up to $100 or up to 100 percent of the value of the53.34check, whichever is greater; (2) interest at the rate payable on53.35judgments pursuant to section 549.09 on the face amount of the53.36check from the date of dishonor; and (3) reasonable attorney54.1fees if the aggregate amount of dishonored checks issued by the54.2issuer to all payees within a six-month period is over $1,250.54.3(b) If the amount of the dishonored check plus any service54.4charges that have been incurred under paragraph (d) or (e) have54.5not been paid within 30 days after having mailed a notice of54.6dishonor in compliance with subdivision 3 but before bringing an54.7action, a payee, holder, or agent of the holder may make a54.8written demand for payment for the liability imposed by54.9paragraph (a) by sending a copy of this section and a54.10description of the liability contained in this section to the54.11issuer's last known address.54.12(c) After notice has been sent but before an action under54.13this section is heard by the court, the plaintiff shall settle54.14the claim if the defendant gives the plaintiff the amount of the54.15check plus court costs, any service charge owed under paragraph54.16(d), and reasonable attorney fees if provided for under54.17paragraph (a), clause (3).54.18(d) A service charge may be imposed immediately on any54.19dishonored check, regardless of mailing a notice of dishonor, if54.20written notice of the service charge was conspicuously displayed54.21on the premises when the check was issued. The service charge54.22may not exceed $20, except that if the payee uses the services54.23of a law enforcement agency to obtain payment of a dishonored54.24check, a service charge of up to $25 may be imposed if the54.25service charge is used to reimburse the law enforcement agency54.26for its expenses. A payee may impose only one service charge54.27under this paragraph for each dishonored check.54.28(e) This subdivision prevails over any provision of law54.29limiting, prohibiting, or otherwise regulating service charges54.30authorized by this subdivision, but does not nullify charges for54.31dishonored checks, which do not exceed the charges in paragraph54.32(d) or the actual cost of collection, but in no case more than54.33$30, or terms or conditions for imposing the charges which have54.34been agreed to by the parties to an express contract.54.35 (a) A service charge of up to $20, or actual costs of 54.36 collection not to exceed $30, may be imposed immediately on any 55.1 dishonored check, regardless of mailing a notice of dishonor, if 55.2 notice of the service charge was conspicuously displayed on the 55.3 premises when the check was issued. If a law enforcement agency 55.4 obtains payment of a dishonored check, a service charge not to 55.5 exceed $50 may be imposed if the service charge is retained by 55.6 the law enforcement agency for its expenses. Only one service 55.7 charge may be imposed under this paragraph for each dishonored 55.8 check. 55.9 (b) If the amount of the dishonored check is not paid 55.10 within 30 days after payee or holder having mailed notice of 55.11 dishonor pursuant to section 609.535, whoever issues the 55.12 dishonored check is liable to the payee or holder of the check 55.13 for: 55.14 (1) the amount of the check, the service charge as provided 55.15 in paragraph (a), plus a civil penalty of up to $100 or the 55.16 value of the check, whichever is greater. The civil penalty may 55.17 not be imposed until 30 days following the mailing of the notice 55.18 of dishonor. A payee or holder of the check may make a written 55.19 demand for payment of the civil liability by sending a copy of 55.20 this section and a description of the liability contained in 55.21 this section to the issuer's last known address. Notice as 55.22 provided in paragraph (a) must also include notification that 55.23 additional civil penalties will be imposed for dishonored checks 55.24 for nonpayment after 30 days; 55.25 (2) interest at the rate payable on judgments pursuant to 55.26 section 549.09 on the face amount of the check from the date of 55.27 dishonor; and 55.28 (3) reasonable attorney fees if the aggregate amount of 55.29 dishonored checks issued by the issuer to all payees within a 55.30 six-month period is over $1,250. 55.31 (c) This subdivision prevails over any provision of law 55.32 limiting, prohibiting, or otherwise regulating service charges 55.33 authorized by this subdivision, but does not nullify charges for 55.34 dishonored checks, which do not exceed the charges in paragraph 55.35 (a) or terms or conditions for imposing the charges which have 55.36 been agreed to by the parties in an express contract. 56.1 (d) A sight draft may not be used as a means of collecting 56.2 the civil penalties provided in this section without prior 56.3 consent of the issuer. 56.4 Sec. 66. Laws 1996, chapter 414, article 1, section 45, is 56.5 amended to read: 56.6 Sec. 45. [EFFECTIVE DATE.] 56.7 Sections 1 to 5, 7 to 9, 11, 12, 16, 20 to 27, 30, 33, 35, 56.8 42, 43, and 44, paragraphs (b) and (c), are effective the day 56.9 following final enactment. Section 44, paragraph (a), is 56.10 effective July 1,19981999. 56.11 Sections 10, 14, 15, 19, and 36 are effective on the 56.12 effective date of the repeals in section 44, paragraph (a). 56.13 Sec. 67. [TOWN OF HASSAN; DETACHED BANKING FACILITY.] 56.14 With the prior approval of the commissioner of commerce, a 56.15 bank operating its main banking office within six miles of the 56.16 town of Hassan may establish and maintain not more than one 56.17 detached facility in the town of Hassan. A bank desiring to 56.18 establish a detached facility must follow the approval procedure 56.19 prescribed in Minnesota Statutes, section 47.54. The 56.20 establishment of a detached facility according to this section 56.21 is subject to the provisions of Minnesota Statutes, sections 56.22 47.51 to 47.57, except to the extent those sections are 56.23 inconsistent with this section. 56.24 Sec. 68. [TOWN OF THOMSON; DETACHED BANKING FACILITY.] 56.25 With the prior approval of the commissioner of commerce, a 56.26 bank operating its main office within 20 miles of the town of 56.27 Thomson may establish and maintain not more than one detached 56.28 facility in the town of Thomson. A bank desiring to establish a 56.29 detached facility must follow the approval procedure prescribed 56.30 in Minnesota Statutes, section 47.54. The establishment of a 56.31 detached facility pursuant to this section is subject to the 56.32 provisions of Minnesota Statutes, sections 47.51 to 47.57, 56.33 except to the extent those sections are inconsistent with this 56.34 section. 56.35 Sec. 69. [TRANSACTION ACCOUNT CUSTOMER INFORMATION; 56.36 INFORMAL WORKING GROUP.] 57.1 The commissioner of commerce shall select and convene an 57.2 informal working group to make recommendation to financial 57.3 intermediaries for notices to transaction account customers 57.4 regarding: 57.5 (1) risks and effects of account closing due to misuse by 57.6 customers as a means to enforce the deterrence objectives of 57.7 Minnesota Statutes, section 48.512, subdivision 7; 57.8 (2) risks related to providing account identification to 57.9 third parties for purposes of or resulting in their issuance of 57.10 sight drafts; and 57.11 (3) informing the customers of the privacy terms related to 57.12 the financial intermediaries' use of customer information. 57.13 The informal working group must include persons representing 57.14 financial intermediaries, transaction account clearing 57.15 organizations, retailers, and consumers. The commissioner shall 57.16 accept recommendations from the working group for distribution 57.17 to financial intermediaries' to effect voluntary implementation 57.18 of transaction account customer information notices prior to 57.19 September 1, 1997. 57.20 Sec. 70. [REPEALER.] 57.21 Minnesota Statutes 1996, sections 13.99, subdivision 13; 57.22 47.29; 47.31; 47.32; 49.47; 49.48; 50.03; 50.23; and 59A.14, are 57.23 repealed. 57.24 Sec. 71. [EFFECTIVE DATE; APPLICABILITY.] 57.25 Sections 1, 4 to 6, 10, 11, 17, 19 to 21, 23, 24, 27 to 30, 57.26 32 to 55, 58, 60, 62, 63, and 70 are effective the day following 57.27 final enactment. 57.28 Section 67 takes effect the day after compliance by the 57.29 town board of the town of Hassan with Minnesota Statutes, 57.30 section 645.021, subdivision 3. 57.31 Section 68 takes effect the day after compliance by the 57.32 town board of the town of Thomson with Minnesota Statutes, 57.33 section 645.021, subdivision 3. 57.34 Section 69 is effective June 1, 1997.