SF 3444

as introduced - 90th Legislature (2017 - 2018) Posted on 03/16/2018 08:40am

A bill for an act
relating to financial institutions; prohibiting lenders from issuing loans for new
and remodeled construction without verification that the work is done by a licensed
contractor; amending Minnesota Statutes 2016, section 47.20, subdivision 6a.

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

Section 1.

Minnesota Statutes 2016, section 47.20, subdivision 6a, is amended to read:

Subd. 6a.

Loan assumptions.

new text begin (a) new text end If the purpose of a conventional loan, or loan made
pursuant to the authority granted in subdivision 1, clause (3) or (4), is to enable a borrower
to purchase a one to four family dwelling for the borrower's primary residence, the lender
shall consent to the subsequent transfer of the real estate and shall release the existing
borrower from all obligations under the loan instruments, if the transferee (1) meets the
standards of credit worthiness normally used by persons in the business of making
conventional loans, including but not limited to the ability of the transferee to make the loan
payments and satisfactorily maintain the real estate used as collateral, (2) executes an
agreement in writing with the lender whereby the transferee assumes the obligations of the
existing borrower under the loan instruments, and (3) executes an agreement in writing to
pay interest on the remaining obligation at a new interest rate not to exceed the lender's
current market rate of interest on similar loans at the time of the transfer, the most recently
published monthly index of the Federal Home Loan Mortgage Corporation auction yields
or the existing interest rate provided for by the terms of the note, whichever is greater. Any
such agreement shall not affect the priority, validity or enforceability of any loan instrument.

new text begin (b) If the purpose of a conventional loan is to enable a borrower to purchase a newly
constructed home or for a home improvement project, the borrower must provide the lender
with the current license number of the residential building contractor or residential remodeler
under section 326B.802, subdivisions 11 and 12. The lender must verify the license number
on the commissioner of labor and industry's contractor license verification Web site under
section 326B.701, subdivision 4.
new text end