SF 4157

1st Engrossment - 93rd Legislature (2023 - 2024) Posted on 03/22/2024 09:35am

A bill for an act
relating to commerce; adding and modifying various provisions governing financial
institutions; making technical changes; amending Minnesota Statutes 2022, sections
47.20, subdivision 2; 47.54, subdivisions 2, 6; 48.24, subdivision 2; 58.02,
subdivisions 18, 21, by adding a subdivision; 58.04, subdivisions 1, 2; 58.05,
subdivisions 1, 3; 58.06, by adding subdivisions; 58.08, subdivisions 1a, 2; 58.10,
subdivision 3; 58.115; 58.13, subdivision 1; proposing coding for new law in
Minnesota Statutes, chapter 58; proposing coding for new law as Minnesota
Statutes, chapter 46A; repealing Minnesota Statutes 2022, section 58.08, subdivision
3.

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

Section 1.

new text begin [46A.01] DEFINITIONS.
new text end

new text begin Subdivision 1. new text end

new text begin Terms. new text end

new text begin For the purposes of this chapter, the terms defined in this section
have the meanings given them.
new text end

new text begin Subd. 2. new text end

new text begin Authorized user. new text end

new text begin "Authorized user" means any employee, contractor, agent,
or other person who: (1) participates in a financial institution's business operations; and (2)
is authorized to access and use any of the financial institution's information systems and
data.
new text end

new text begin Subd. 3. new text end

new text begin Commissioner. new text end

new text begin "Commissioner" means the commissioner of commerce.
new text end

new text begin Subd. 4. new text end

new text begin Consumer. new text end

new text begin (a) "Consumer" means an individual who obtains or has obtained
from a financial institution a financial product or service that is used primarily for personal,
family, or household purposes, or is used by the individual's legal representative. Consumer
includes but is not limited to an individual who:
new text end

new text begin (1) applies to a financial institution for credit for personal, family, or household purposes,
regardless of whether the credit is extended;
new text end

new text begin (2) provides nonpublic personal information to a financial institution in order to obtain
a determination whether the individual qualifies for a loan used primarily for personal,
family, or household purposes, regardless of whether the loan is extended;
new text end

new text begin (3) provides nonpublic personal information to a financial institution in connection with
obtaining or seeking to obtain financial, investment, or economic advisory services, regardless
of whether the financial institution establishes a continuing advisory relationship with the
individual; or
new text end

new text begin (4) has a loan for personal, family, or household purposes in which the financial institution
has ownership or servicing rights, even if the financial institution or one or more other
institutions that hold ownership or servicing rights in conjunction with the financial institution
hires an agent to collect on the loan.
new text end

new text begin (b) Consumer does not include an individual who:
new text end

new text begin (1) is a consumer of another financial institution that uses a different financial institution
to act solely as an agent for, or provide processing or other services to, the consumer's
financial institution;
new text end

new text begin (2) designates a financial institution solely for the purposes to act as a trustee for a trust;
new text end

new text begin (3) is the beneficiary of a trust for which the financial institution serves as trustee; or
new text end

new text begin (4) is a participant or a beneficiary of an employee benefit plan that the financial
institution sponsors or for which the financial institution acts as a trustee or fiduciary.
new text end

new text begin Subd. 5. new text end

new text begin Continuing relationship. new text end

new text begin (a) "Continuing relationship" means a consumer:
new text end

new text begin (1) has a credit or investment account with a financial institution;
new text end

new text begin (2) obtains a loan from a financial institution;
new text end

new text begin (3) purchases an insurance product from a financial institution;
new text end

new text begin (4) holds an investment product through a financial institution, including but not limited
to when the financial institution acts as a custodian for securities or for assets in an individual
retirement arrangement;
new text end

new text begin (5) enters into an agreement or understanding with a financial institution whereby the
financial institution undertakes to arrange or broker a home mortgage loan, or credit to
purchase a vehicle, for the consumer;
new text end

new text begin (6) enters into a lease of personal property on a nonoperating basis with a financial
institution;
new text end

new text begin (7) obtains financial, investment, or economic advisory services from a financial
institution for a fee;
new text end

new text begin (8) becomes a financial institution's client to obtain tax preparation or credit counseling
services from the financial institution;
new text end

new text begin (9) obtains career counseling while: (i) seeking employment with a financial institution
or the finance, accounting, or audit department of any company; or (ii) employed by a
financial institution or department of any company;
new text end

new text begin (10) is obligated on an account that a financial institution purchases from another financial
institution, regardless of whether the account is in default when purchased, unless the
financial institution does not locate the consumer or attempt to collect any amount from the
consumer on the account;
new text end

new text begin (11) obtains real estate settlement services from a financial institution; or
new text end

new text begin (12) has a loan for which a financial institution owns the servicing rights.
new text end

new text begin (b) Continuing relationship does not include situations where:
new text end

new text begin (1) the consumer obtains a financial product or service from a financial institution only
in isolated transactions, including but not limited to: (i) using a financial institution's
automated teller machine to withdraw cash from an account at another financial institution;
(ii) purchasing a money order from a financial institution; (iii) cashing a check with a
financial institution; or (iv) making a wire transfer through a financial institution;
new text end

new text begin (2) a financial institution sells the consumer's loan and does not retain the rights to service
the loan;
new text end

new text begin (3) a financial institution sells the consumer airline tickets, travel insurance, or traveler's
checks in isolated transactions;
new text end

new text begin (4) the consumer obtains onetime personal or real property appraisal services from a
financial institution; or
new text end

new text begin (5) the consumer purchases checks for a personal checking account from a financial
institution.
new text end

new text begin Subd. 6. new text end

new text begin Customer. new text end

new text begin "Customer" means a consumer who has a customer relationship
with a financial institution.
new text end

new text begin Subd. 7. new text end

new text begin Customer information. new text end

new text begin "Customer information" means any record containing
nonpublic personal information about a financial institution's customer, whether the record
is in paper, electronic, or another form, that is handled or maintained by or on behalf of the
financial institution or the financial institution's affiliates.
new text end

new text begin Subd. 8. new text end

new text begin Customer relationship. new text end

new text begin "Customer relationship" means a continuing relationship
between a consumer and a financial institution under which the financial institution provides
to the consumer one or more financial products or services that are used primarily for
personal, family, or household purposes.
new text end

new text begin Subd. 9. new text end

new text begin Encryption. new text end

new text begin "Encryption" means the transformation of data into a format that
results in a low probability of assigning meaning without the use of a protective process or
key, consistent with current cryptographic standards and accompanied by appropriate
safeguards for cryptographic key material.
new text end

new text begin Subd. 10. new text end

new text begin Federally insured depository financial institution. new text end

new text begin "Federally insured
depository financial institution" means a bank, credit union, savings and loan association,
trust company, savings association, savings bank, industrial bank, or industrial loan company
organized under the laws of the United States or any state of the United States, when the
bank, credit union, savings and loan association, trust company, savings association, savings
bank, industrial bank, or industrial loan company has federally insured deposits.
new text end

new text begin Subd. 11. new text end

new text begin Financial product or service. new text end

new text begin "Financial product or service" means any
product or service that a financial holding company could offer by engaging in a financial
activity under section 4(k) of the Bank Holding Company Act of 1956, United States Code,
title 12, section 1843(k). Financial product or service includes a financial institution's
evaluation or brokerage of information that the financial institution collects in connection
with a request or an application from a consumer for a financial product or service.
new text end

new text begin Subd. 12. new text end

new text begin Financial institution. new text end

new text begin "Financial institution" means a consumer small loan
lender under section 47.60, a person owning or maintaining electronic financial terminals
under section 47.62, a trust company under chapter 48A, a loan and thrift company under
chapter 53, a currency exchange under chapter 53A, a money transmitter under chapter 53B,
a sales finance company under chapter 53C, a regulated loan lender under chapter 56, a
residential mortgage originator or servicer under chapter 58, a student loan servicer under
chapter 58B, a credit service organization under section 332.54, a debt management service
provider or person providing debt management services under chapter 332A, or a debt
settlement service provider or person providing debt settlement services under chapter 332B.
new text end

new text begin Subd. 13. new text end

new text begin Information security program. new text end

new text begin "Information security program" means the
administrative, technical, or physical safeguards a financial institution uses to access, collect,
distribute, process, protect, store, use, transmit, dispose of, or otherwise handle customer
information.
new text end

new text begin Subd. 14. new text end

new text begin Information system. new text end

new text begin "Information system" means a discrete set of electronic
information resources organized to collect, process, maintain, use, share, disseminate, or
dispose of electronic information, as well as any specialized system, including but not
limited to industrial process controls systems, telephone switching and private branch
exchange systems, and environmental controls systems, that contains customer information
or that is connected to a system that contains customer information.
new text end

new text begin Subd. 15. new text end

new text begin Multifactor authentication. new text end

new text begin "Multifactor authentication" means authentication
through verification of at least two of the following factors:
new text end

new text begin (1) knowledge factors, including but not limited to a password;
new text end

new text begin (2) possession factors, including but not limited to a token; or
new text end

new text begin (3) inherence factors, including but not limited to biometric characteristics.
new text end

new text begin Subd. 16. new text end

new text begin Nonpublic personal information. new text end

new text begin (a) "Nonpublic personal information"
means:
new text end

new text begin (1) personally identifiable financial information; or
new text end

new text begin (2) any list, description, or other grouping of consumers, including publicly available
information pertaining to the list, description, or other grouping of consumers, that is derived
using personally identifiable financial information that is not publicly available.
new text end

new text begin (b) Nonpublic personal information includes but is not limited to any list of individuals'
names and street addresses that is derived in whole or in part using personally identifiable
financial information that is not publicly available, including account numbers.
new text end

new text begin (c) Nonpublic personal information does not include:
new text end

new text begin (1) publicly available information, except as included on a list described in paragraph
(a), clause (2);
new text end

new text begin (2) any list, description, or other grouping of consumers, including publicly available
information pertaining to the list, description, or other grouping of consumers, that is derived
without using any personally identifiable financial information that is not publicly available;
or
new text end

new text begin (3) any list of individuals' names and addresses that contains only publicly available
information, is not derived in whole or in part using personally identifiable financial
information that is not publicly available, and is not disclosed in a manner that indicates
that any individual on the list is the financial institution's consumer.
new text end

new text begin Subd. 17. new text end

new text begin Notification event. new text end

new text begin "Notification event" means the acquisition of unencrypted
customer information without the authorization of the individual to which the information
pertains. Customer information is considered unencrypted for this purpose if the encryption
key was accessed by an unauthorized person. Unauthorized acquisition is presumed to
include unauthorized access to unencrypted customer information unless the financial
institution has reliable evidence showing that there has not been, or could not reasonably
have been, unauthorized acquisition of customer information.
new text end

new text begin Subd. 18. new text end

new text begin Penetration testing. new text end

new text begin "Penetration testing" means a test methodology in which
assessors attempt to circumvent or defeat the security features of an information system by
attempting to penetrate databases or controls from outside or inside a financial institution's
information systems.
new text end

new text begin Subd. 19. new text end

new text begin Personally identifiable financial information. new text end

new text begin (a) "Personally identifiable
financial information" means any information:
new text end

new text begin (1) a consumer provides to a financial institution to obtain a financial product or service;
new text end

new text begin (2) about a consumer resulting from any transaction involving a financial product or
service between a financial institution and a consumer; or
new text end

new text begin (3) a financial institution otherwise obtains about a consumer in connection with providing
a financial product or service to the customer.
new text end

new text begin (b) Personally identifiable financial information includes:
new text end

new text begin (1) information a consumer provides to a financial institution on an application to obtain
a loan, credit card, or other financial product or service;
new text end

new text begin (2) account balance information, payment history, overdraft history, and credit or debit
card purchase information;
new text end

new text begin (3) the fact that an individual is or has been a financial institution's customer or has
obtained a financial product or service from the financial institution;
new text end

new text begin (4) any information about a financial institution's consumer, if the information is disclosed
in a manner that indicates that the individual is or has been the financial institution's
consumer;
new text end

new text begin (5) any information that a consumer provides to a financial institution or that a financial
institution or a financial institution's agent otherwise obtains in connection with collecting
on or servicing a credit account;
new text end

new text begin (6) any information a financial institution collects through an Internet information
collecting device from a web server; and
new text end

new text begin (7) information from a consumer report.
new text end

new text begin (c) Personally identifiable financial information does not include:
new text end

new text begin (1) a list of customer names and addresses for an entity that is not a financial institution;
and
new text end

new text begin (2) information that does not identify a consumer, including but not limited to aggregate
information or blind data that does not contain personal identifiers, including account
numbers, names, or addresses.
new text end

new text begin Subd. 20. new text end

new text begin Publicly available information. new text end

new text begin (a) "Publicly available information" means
any information that a financial institution has a reasonable basis to believe is lawfully made
available to the general public from:
new text end

new text begin (1) federal, state, or local government records;
new text end

new text begin (2) widely distributed media; or
new text end

new text begin (3) disclosures to the general public that are required under federal, state, or local law.
new text end

new text begin (b) Publicly available information includes but is not limited to:
new text end

new text begin (1) with respect to government records, information in government real estate records
and security interest filings; and
new text end

new text begin (2) with respect to widely distributed media, information from a telephone book, a
television or radio program, a newspaper, or a website that is available to the general public
on an unrestricted basis. A website is not restricted merely because an Internet service
provider or a site operator requires a fee or a password, provided that access is available to
the general public.
new text end

new text begin (c) For purposes of this subdivision, a financial institution has a reasonable basis to
believe that information is lawfully made available to the general public if the financial
institution has taken steps to determine: (1) that the information is of the type that is available
to the general public; and (2) whether an individual can direct that the information not be
made available to the general public and, if so, that the financial institution's consumer has
not directed that the information not be made available to the general public. A financial
institution has a reasonable basis to believe that mortgage information is lawfully made
available to the general public if the financial institution determines the information is of
the type included on the public record in the jurisdiction where the mortgage would be
recorded. A financial institution has a reasonable basis to believe that an individual's
telephone number is lawfully made available to the general public if the financial institution
has located the telephone number in the telephone book or the consumer has informed the
financial institution that the telephone number is not unlisted.
new text end

new text begin Subd. 21. new text end

new text begin Qualified individual. new text end

new text begin "Qualified individual" means the individual designated
by a financial institution to oversee, implement, and enforce the financial institution's
information security program.
new text end

new text begin Subd. 22. new text end

new text begin Security event. new text end

new text begin "Security event" means an event resulting in unauthorized
access to, or disruption or misuse of: (1) an information system or information stored on an
information system; or (2) customer information held in physical form.
new text end

new text begin Subd. 23. new text end

new text begin Service provider. new text end

new text begin "Service provider" means any person or entity that receives,
maintains, processes, or otherwise is permitted access to customer information through the
service provider's provision of services directly to a financial institution that is subject to
this chapter.
new text end

Sec. 2.

new text begin [46A.02] SAFEGUARDING CUSTOMER INFORMATION; STANDARDS.
new text end

new text begin Subdivision 1. new text end

new text begin Information security program. new text end

new text begin (a) A financial institution must develop,
implement, and maintain a comprehensive information security program.
new text end

new text begin (b) The information security program must: (1) be written in one or more readily
accessible parts; and (2) contain administrative, technical, and physical safeguards that are
appropriate to the financial institution's size and complexity, the nature and scope of the
financial institution's activities, and the sensitivity of any customer information at issue.
new text end

new text begin (c) The information security program must include the elements set forth in section
46A.03 and must be reasonably designed to achieve the objectives of this chapter, as
established under subdivision 2.
new text end

new text begin Subd. 2. new text end

new text begin Objectives. new text end

new text begin The objectives of this chapter are to:
new text end

new text begin (1) ensure the security and confidentiality of customer information;
new text end

new text begin (2) protect against any anticipated threats or hazards to the security or integrity of
customer information; and
new text end

new text begin (3) protect against unauthorized access to or use of customer information that might
result in substantial harm or inconvenience to a customer.
new text end

Sec. 3.

new text begin [46A.03] ELEMENTS.
new text end

new text begin Subdivision 1. new text end

new text begin Generally. new text end

new text begin In order to develop, implement, and maintain an information
security program, a financial institution must comply with this section.
new text end

new text begin Subd. 2. new text end

new text begin Qualified individual. new text end

new text begin (a) A financial institution must designate a qualified
individual responsible for overseeing, implementing, and enforcing the financial institution's
information security program. The qualified individual may be employed by the financial
institution, an affiliate, or a service provider.
new text end

new text begin (b) If a financial institution designates an individual employed by an affiliate or service
provider as the financial institution's qualified individual, the financial institution must:
new text end

new text begin (1) retain responsibility for complying with this chapter;
new text end

new text begin (2) designate a senior member of the financial institution's personnel to be responsible
for directing and overseeing the qualified individual's activities; and
new text end

new text begin (3) require the service provider or affiliate to maintain an information security program
that protects the financial institution in a manner that complies with the requirements of
this chapter.
new text end

new text begin Subd. 3. new text end

new text begin Security risk assessment. new text end

new text begin (a) A financial institution must base the financial
institution's information security program on a risk assessment that:
new text end

new text begin (1) identifies reasonably foreseeable internal and external risks to the security,
confidentiality, and integrity of customer information that might result in the unauthorized
disclosure, misuse, alteration, destruction, or other compromise of customer information;
and
new text end

new text begin (2) assesses the sufficiency of any safeguards in place to control the risks identified
under clause (1).
new text end

new text begin (b) The risk assessment must be made in writing and must include:
new text end

new text begin (1) criteria to evaluate and categorize identified security risks or threats the financial
institution faces;
new text end

new text begin (2) criteria to assess the confidentiality, integrity, and availability of the financial
institution's information systems and customer information, including the adequacy of
existing controls in the context of the identified risks or threats the financial institution
faces; and
new text end

new text begin (3) requirements describing how:
new text end

new text begin (i) identified risks are mitigated or accepted based on the risk assessment; and
new text end

new text begin (ii) the information security program addresses the risks.
new text end

new text begin (c) A financial institution must periodically perform additional risk assessments that:
new text end

new text begin (1) reexamine the reasonably foreseeable internal and external risks to the security,
confidentiality, and integrity of customer information that might result in the unauthorized
disclosure, misuse, alteration, destruction, or other compromise of customer information;
and
new text end

new text begin (2) reassess the sufficiency of any safeguards in place to control the risks identified
under clause (1).
new text end

new text begin Subd. 4. new text end

new text begin Risk control. new text end

new text begin A financial institution must design and implement safeguards to
control the risks the financial institution identifies through the risk assessment under
subdivision 3, including by:
new text end

new text begin (1) implementing and periodically reviewing access controls, including technical and,
as appropriate, physical controls to:
new text end

new text begin (i) authenticate and permit access only to authorized users to protect against the
unauthorized acquisition of customer information; and
new text end

new text begin (ii) limit an authorized user's access to only customer information that the authorized
user needs to perform the authorized user's duties and functions or, in the case of a customer,
to limit access to the customer's own information;
new text end

new text begin (2) identifying and managing the data, personnel, devices, systems, and facilities that
enable the financial institution to achieve business purposes in accordance with the business
purpose's relative importance to business objectives and the financial institution's risk
strategy;
new text end

new text begin (3) protecting by encryption all customer information held or transmitted by the financial
institution both in transit over external networks and at rest. To the extent a financial
institution determines that encryption of customer information either in transit over external
networks or at rest is infeasible, the financial institution may secure the customer information
using effective alternative compensating controls that have been reviewed and approved by
the financial institution's qualified individual;
new text end

new text begin (4) adopting: (i) secure development practices for in-house developed applications
utilized by the financial institution to transmit, access, or store customer information; and
(ii) procedures to evaluate, assess, or test the security of externally developed applications
the financial institution uses to transmit, access, or store customer information;
new text end

new text begin (5) implementing multifactor authentication for any individual that accesses any
information system, unless the financial institution's qualified individual has approved in
writing the use of a reasonably equivalent or more secure access control;
new text end

new text begin (6) developing, implementing, and maintaining procedures to securely dispose of
customer information in any format no later than two years after the last date the information
is used in connection with providing a product or service to the customer which relates,
unless the information is necessary for business operations or for other legitimate business
purposes, is otherwise required to be retained by law or regulation, or if targeted disposal
is not reasonably feasible due to the manner in which the information is maintained;
new text end

new text begin (7) periodically reviewing the financial institution's data retention policy to minimize
the unnecessary retention of data;
new text end

new text begin (8) adopting procedures for change management; and
new text end

new text begin (9) implementing policies, procedures, and controls designed to: (i) monitor and log the
activity of authorized users; and (ii) detect unauthorized access to, use of, or tampering with
customer information by authorized users.
new text end

new text begin Subd. 5. new text end

new text begin Testing and monitoring. new text end

new text begin (a) A financial institution must regularly test or
otherwise monitor the effectiveness of the safeguards' key controls, systems, and procedures,
including the controls, systems, and procedures that detect actual and attempted attacks on,
or intrusions into, information systems.
new text end

new text begin (b) For information systems, monitoring and testing must include continuous monitoring
or periodic penetration testing and vulnerability assessments. Absent effective continuous
monitoring or other systems to detect on an ongoing basis any changes in information
systems that may create vulnerabilities, a financial institution must conduct:
new text end

new text begin (1) annual penetration testing of the financial institution's information systems, based
on relevant identified risks in accordance with the risk assessment; and
new text end

new text begin (2) vulnerability assessments, including systemic scans or information systems reviews
that are reasonably designed to identify publicly known security vulnerabilities in the
financial institution's information systems based on the risk assessment, at least every six
months, whenever a material change to the financial institution's operations or business
arrangements occurs, and whenever the financial institution knows or has reason to know
circumstances exist that may have a material impact on the financial institution's information
security program.
new text end

new text begin Subd. 6. new text end

new text begin Internal policies and procedures. new text end

new text begin A financial institution must implement
policies and procedures to ensure that the financial institution's personnel are able to enact
the financial institution's information security program by:
new text end

new text begin (1) providing the financial institution's personnel with security awareness training that
is updated as necessary to reflect risks identified by the risk assessment;
new text end

new text begin (2) utilizing qualified information security personnel employed by the financial institution,
an affiliate, or a service provider sufficient to manage the financial institution's information
security risks and to perform or oversee the information security program;
new text end

new text begin (3) providing information security personnel with security updates and training sufficient
to address relevant security risks; and
new text end

new text begin (4) verifying that key information security personnel take steps to maintain current
knowledge of changing information security threats and countermeasures.
new text end

new text begin Subd. 7. new text end

new text begin Provider oversight. new text end

new text begin A financial institution must oversee service providers by:
new text end

new text begin (1) taking reasonable steps to select and retain service providers that are capable of
maintaining appropriate safeguards for the customer information at issue;
new text end

new text begin (2) requiring by contract the financial institution's service providers to implement and
maintain appropriate safeguards; and
new text end

new text begin (3) periodically assessing the financial institution's service providers based on the risk
the service providers present and the continued adequacy of the service providers' safeguards.
new text end

new text begin Subd. 8. new text end

new text begin Information security program; evaluation; adjustment. new text end

new text begin A financial institution
must evaluate and adjust the financial institution's information security program to reflect:
(1) the results of the testing and monitoring required under subdivision 5; (2) any material
changes to the financial institution's operations or business arrangements; (3) the results of
risk assessments performed under subdivision 3, paragraph (c); or (4) any other circumstances
that the financial institution knows or has reason to know may have a material impact on
the financial institution's information security program.
new text end

new text begin Subd. 9. new text end

new text begin Incident response plan. new text end

new text begin A financial institution must establish a written incident
response plan designed to promptly respond to and recover from any security event materially
affecting the confidentiality, integrity, or availability of customer information the financial
institution controls. An incident response plan must address:
new text end

new text begin (1) the goals of the incident response plan;
new text end

new text begin (2) the internal processes to respond to a security event;
new text end

new text begin (3) clear roles, responsibilities, and levels of decision-making authority;
new text end

new text begin (4) external and internal communications and information sharing;
new text end

new text begin (5) requirements to remediate any identified weaknesses in information systems and
associated controls;
new text end

new text begin (6) documentation and reporting regarding security events and related incident response
activities; and
new text end

new text begin (7) evaluation and revision of the incident response plan as necessary after a security
event.
new text end

new text begin Subd. 10. new text end

new text begin Annual report. new text end

new text begin (a) A financial institution must require the financial institution's
qualified individual to report at least annually in writing to the financial institution's board
of directors or equivalent governing body. If a board of directors or equivalent governing
body does not exist, the report under this subdivision must be presented in a timely manner
to a senior officer responsible for the financial institution's information security program.
new text end

new text begin (b) The report made under this subdivision must include the following information:
new text end

new text begin (1) the overall status of the financial institution's information security program, including
compliance with this chapter and associated administrative rules; and
new text end

new text begin (2) material matters related to the financial institution's information security program,
including but not limited to addressing issues pertaining to: (i) the risk assessment; (ii) risk
management and control decisions; (iii) service provider arrangements; (iv) testing results;
(v) security events or violations and management's responses to the security event or
violation; and (vi) recommendations for changes in the information security program.
new text end

new text begin Subd. 11. new text end

new text begin Business continuity; disaster recovery. new text end

new text begin A financial institution must establish
a written plan addressing business continuity and disaster recovery.
new text end

Sec. 4.

new text begin [46A.04] EXCEPTIONS AND EXEMPTIONS.
new text end

new text begin (a) The requirements under section 46A.03, subdivisions 3; 5, paragraph (a); 9; and 10,
do not apply to financial institutions that maintain customer information concerning fewer
than 5,000 consumers.
new text end

new text begin (b) This chapter does not apply to credit unions or federally insured depository
institutions.
new text end

Sec. 5.

new text begin [46A.05] ALTERATION OF FEDERAL REGULATION.
new text end

new text begin (a) If an amendment to Code of Federal Regulations, title 16, part 314, results in a
complete lack of federal regulations in the area, the version of the state requirements in
effect at the time of the amendment remain in effect for two years from the date the
amendment becomes effective.
new text end

new text begin (b) During the time period under paragraph (a), the department must adopt replacement
administrative rules as necessary and appropriate.
new text end

Sec. 6.

new text begin [46A.06] NOTIFICATION EVENT.
new text end

new text begin Subdivision 1. new text end

new text begin Notification requirement. new text end

new text begin (a) Upon discovering a notification event as
described in subdivision 2, if the notification event involves the information of at least 500
consumers, a financial institution must notify the commissioner as soon as possible, but no
later than 30 days after the date the event is discovered. The notice must be made (1) in a
format specified by the commissioner, and (2) electronically on a form located on the
department's website.
new text end

new text begin (b) The notice must include:
new text end

new text begin (1) the name and contact information of the reporting financial institution;
new text end

new text begin (2) a description of the types of information involved in the notification event;
new text end

new text begin (3) if possible to determine, the date or date range of the notification event;
new text end

new text begin (4) the number of consumers affected or potentially affected by the notification event;
new text end

new text begin (5) a general description of the notification event; and
new text end

new text begin (6) a statement (i) disclosing whether a law enforcement official has provided the financial
institution with a written determination indicating that providing notice to the public regarding
the breach would impede a criminal investigation or cause damage to national security, and
(ii) if a written determination described under item (i) was provided to the financial
institution, providing contact information that enables the commissioner to contact the law
enforcement official. A law enforcement official may request an initial delay of up to 30
days following the date that notice was provided to the commissioner. The delay may be
extended for an additional period of up to 60 days if the law enforcement official seeks an
extension in writing. An additional delay may be permitted only if the commissioner
determines that public disclosure of a security event continues to impede a criminal
investigation or cause damage to national security.
new text end

new text begin Subd. 2. new text end

new text begin Notification event treated as discovered. new text end

new text begin A notification event must be treated
as discovered on the first day when the event is known to a financial institution. A financial
institution is deemed to have knowledge of a notification event if the event is known to any
person, other than the person committing the breach, who is the financial institution's
employee, officer, or other agent.
new text end

Sec. 7.

new text begin [46A.07] COMMISSIONER'S POWERS.
new text end

new text begin (a) The commissioner has the power to examine and investigate the affairs of any covered
financial institution to determine whether the financial institution has been or is engaged in
any conduct that violates this chapter. This power is in addition to the powers granted to
the commissioner under section 46.01.
new text end

new text begin (b) If the commissioner has reason to believe that a financial institution has been or is
engaged in conduct in Minnesota that violates this chapter, the commissioner may take
action necessary or appropriate to enforce this chapter.
new text end

Sec. 8.

Minnesota Statutes 2022, section 47.20, subdivision 2, is amended to read:

Subd. 2.

Definitions.

For the purposes of this section the terms defined in this subdivision
have the meanings given them:

(1) "Actual closing costs" mean reasonable charges for or sums paid for the following,
whether or not retained by the mortgagee or lender:

(a) Any insurance premiums including but not limited to premiums for title insurance,
fire and extended coverage insurance, flood insurance, and private mortgage insurance, but
excluding any charges or sums retained by the mortgagee or lender as self-insured retention.

(b) Abstracting, title examination and search, and examination of public records.

(c) The preparation and recording of any or all documents required by law or custom
for closing a conventional or cooperative apartment loan.

(d) Appraisal and survey of real property securing a conventional loan or real property
owned by a cooperative apartment corporation of which a share or shares of stock or a
membership certificate or certificates are to secure a cooperative apartment loan.

(e) A single service charge, which includes any consideration, not otherwise specified
herein as an "actual closing cost" paid by the borrower and received and retained by the
lender for or related to the acquisition, making, refinancing or modification of a conventional
or cooperative apartment loan, and also includes any consideration received by the lender
for making a borrower's interest rate commitment or for making a borrower's loan
commitment, whether or not an actual loan follows the commitment. The term service charge
does not include forward commitment fees. The service charge shall not exceed one percent
of the original bona fide principal amount of the conventional or cooperative apartment
loan, except that in the case of a construction loan, the service charge shall not exceed two
percent of the original bona fide principal amount of the loan. That portion of the service
charge imposed because the loan is a construction loan shall be itemized and a copy of the
itemization furnished the borrower. A lender shall not collect from a borrower the additional
one percent service charge permitted for a construction loan if it does not perform the service
for which the charge is imposed or if third parties perform and charge the borrower for the
service for which the lender has imposed the charge.

(f) Charges and fees necessary for or related to the transfer of real or personal property
securing a conventional or cooperative apartment loan or the closing of a conventional or
cooperative apartment loan paid by the borrower and received by any party other than the
lender.

(2) "Contract for deed" means an executory contract for the conveyance of real estate,
the original principal amount of which is less than $300,000. A commitment for a contract
for deed shall include an executed purchase agreement or earnest money contract wherein
the seller agrees to finance any part or all of the purchase price by a contract for deed.

(3) "Conventional loan" means a loan or advance of credit, other than a loan or advance
of credit made by a credit union or made pursuant to section 334.011, to a noncorporate
borrower in an original principal amount of less than deleted text begin $100,000 deleted text end new text begin or equal to the conforming
loan limit established by the Federal Housing Finance Agency under the Housing and
Recovery Act of 2018, Public Law 110-289 new text end , secured by a mortgage upon real property
containing one or more residential units or upon which at the time the loan is made it is
intended that one or more residential units are to be constructed, and which is not insured
or guaranteed by the secretary of housing and urban development, by the administrator of
veterans affairs, or by the administrator of the Farmers Home Administration, and which
is not made pursuant to the authority granted in subdivision 1, clause (3) or (4). The term
mortgage does not include contracts for deed or installment land contracts.

(4) "Cooperative apartment loan" means a loan or advance of credit, other than a loan
or advance of credit made by a credit union or made pursuant to section 334.011, to a
noncorporate borrower in an original principal amount of less than $100,000, secured by a
security interest on a share or shares of stock or a membership certificate or certificates
issued to a stockholder or member by a cooperative apartment corporation, which may be
accompanied by an assignment by way of security of the borrower's interest in the proprietary
lease or occupancy agreement in property issued by the cooperative apartment corporation
and which is not insured or guaranteed by the secretary of housing and urban development,
by the administrator of veterans affairs, or by the administrator of the Farmers Home
Administration.

(5) "Cooperative apartment corporation" means a corporation or cooperative organized
under chapter 308A or 317A, the shareholders or members of which are entitled, solely by
reason of their ownership of stock or membership certificates in the corporation or
association, to occupy one or more residential units in a building owned or leased by the
corporation or association.

(6) "Forward commitment fee" means a fee or other consideration paid to a lender for
the purpose of securing a binding forward commitment by or through the lender to make
conventional loans to two or more credit worthy purchasers, including future purchasers,
of residential units, or a fee or other consideration paid to a lender for the purpose of securing
a binding forward commitment by or through the lender to make conventional loans to two
or more credit worthy purchasers, including future purchasers, of units to be created out of
existing structures pursuant to chapter 515B, or a fee or other consideration paid to a lender
for the purpose of securing a binding forward commitment by or through the lender to make
cooperative apartment loans to two or more credit worthy purchasers, including future
purchasers, of a share or shares of stock or a membership certificate or certificates in a
cooperative apartment corporation; provided, that the forward commitment rate of interest
does not exceed the maximum lawful rate of interest effective as of the date the forward
commitment is issued by the lender.

(7) "Borrower's interest rate commitment" means a binding commitment made by a
lender to a borrower wherein the lender agrees that, if a conventional or cooperative
apartment loan is made following issuance of and pursuant to the commitment, the
conventional or cooperative apartment loan shall be made at a rate of interest not in excess
of the rate of interest agreed to in the commitment, provided that the rate of interest agreed
to in the commitment is not in excess of the maximum lawful rate of interest effective as
of the date the commitment is issued by the lender to the borrower.

(8) "Borrower's loan commitment" means a binding commitment made by a lender to a
borrower wherein the lender agrees to make a conventional or cooperative apartment loan
pursuant to the provisions, including the interest rate, of the commitment, provided that the
commitment rate of interest does not exceed the maximum lawful rate of interest effective
as of the date the commitment is issued and the commitment when issued and agreed to
shall constitute a legally binding obligation on the part of the mortgagee or lender to make
a conventional or cooperative apartment loan within a specified time period in the future at
a rate of interest not exceeding the maximum lawful rate of interest effective as of the date
the commitment is issued by the lender to the borrower; provided that a lender who issues
a borrower's loan commitment pursuant to the provisions of a forward commitment is
authorized to issue the borrower's loan commitment at a rate of interest not to exceed the
maximum lawful rate of interest effective as of the date the forward commitment is issued
by the lender.

(9) "Finance charge" means the total cost of a conventional or cooperative apartment
loan including extensions or grant of credit regardless of the characterization of the same
and includes interest, finders fees, and other charges levied by a lender directly or indirectly
against the person obtaining the conventional or cooperative apartment loan or against a
seller of real property securing a conventional loan or a seller of a share or shares of stock
or a membership certificate or certificates in a cooperative apartment corporation securing
a cooperative apartment loan, or any other party to the transaction except any actual closing
costs and any forward commitment fee. The finance charges plus the actual closing costs
and any forward commitment fee, charged by a lender shall include all charges made by a
lender other than the principal of the conventional or cooperative apartment loan. The finance
charge, with respect to wraparound mortgages, shall be computed based upon the face
amount of the wraparound mortgage note, which face amount shall consist of the aggregate
of those funds actually advanced by the wraparound lender and the total outstanding principal
balances of the prior note or notes which have been made a part of the wraparound mortgage
note.

(10) "Lender" means any person making a conventional or cooperative apartment loan,
or any person arranging financing for a conventional or cooperative apartment loan. The
term also includes the holder or assignee at any time of a conventional or cooperative
apartment loan.

(11) "Loan yield" means the annual rate of return obtained by a lender over the term of
a conventional or cooperative apartment loan and shall be computed as the annual percentage
rate as computed in accordance with sections 226.5 (b), (c), and (d) of Regulation Z, Code
of Federal Regulations, title 12, part 226, but using the definition of finance charge provided
for in this subdivision. For purposes of this section, with respect to wraparound mortgages,
the rate of interest or loan yield shall be based upon the principal balance set forth in the
wraparound note and mortgage and shall not include any interest differential or yield
differential between the stated interest rate on the wraparound mortgage and the stated
interest rate on the one or more prior mortgages included in the stated loan amount on a
wraparound note and mortgage.

(12) "Person" means an individual, corporation, business trust, partnership or association
or any other legal entity.

(13) "Residential unit" means any structure used principally for residential purposes or
any portion thereof, and includes a unit in a common interest community, a nonowner
occupied residence, and any other type of residence regardless of whether the unit is used
as a principal residence, secondary residence, vacation residence, or residence of some other
denomination.

(14) "Vendor" means any person or persons who agree to sell real estate and finance
any part or all of the purchase price by a contract for deed. The term also includes the holder
or assignee at any time of the vendor's interest in a contract for deed.

Sec. 9.

Minnesota Statutes 2022, section 47.54, subdivision 2, is amended to read:

Subd. 2.

Approval deleted text begin order deleted text end .

new text begin (a) new text end If no objection is received by the commissioner within
15 days after the publication of the notice, the commissioner deleted text begin shall issue an order deleted text end new text begin must
provide written consent new text end approving the application without a hearing if deleted text begin it is found deleted text end new text begin the
commissioner finds new text end that deleted text begin (a) deleted text end new text begin : (1) new text end the applicant bank meets current industry standards of
capital adequacy, management quality, and asset condition deleted text begin , (b) deleted text end new text begin ; (2) new text end the establishment of the
proposed detached facility deleted text begin will improve deleted text end new text begin improves new text end the quality or increase the availability of
banking services in the community to be served deleted text begin , deleted text end new text begin ; new text end and deleted text begin (c) deleted text end new text begin (3) new text end the establishment of the proposed
detached facility deleted text begin will deleted text end new text begin does new text end not have an undue adverse effect upon the solvency of existing
financial institutions in the community to be served.

deleted text begin Otherwise, deleted text end new text begin (b) new text end The commissioner deleted text begin shall deleted text end new text begin must new text end deny deleted text begin the deleted text end new text begin an new text end application new text begin that does not meet
the criteria under paragraph (a), clauses (1) to (3) new text end .

new text begin (c) new text end Any proceedings for judicial review of deleted text begin an order of deleted text end new text begin written consent provided by new text end the
commissioner deleted text begin issued deleted text end under this subdivision without a contested case hearing shall be
conducted pursuant to the provisions of the Administrative Procedure Act relating to judicial
review of agency decisions, sections 14.63 to 14.69, and the scope of judicial review in
such proceedings shall be as provided therein. Nothing herein shall be construed as requiring
the commissioner to conduct a contested case hearing if no written objection is timely
received by the commissioner from a bank within three miles of the proposed location of
the detached facility.

Sec. 10.

Minnesota Statutes 2022, section 47.54, subdivision 6, is amended to read:

Subd. 6.

Expiration and extension of deleted text begin order deleted text end new text begin approval new text end .

If a facility is not activated
within 18 months from the date deleted text begin of the order deleted text end new text begin approval is granted under subdivision 2 new text end , the
approval deleted text begin order deleted text end automatically expires. Upon new text begin a new text end request deleted text begin of deleted text end new text begin made by new text end the applicant deleted text begin prior to deleted text end new text begin
before new text end the deleted text begin automatic expiration deleted text end date deleted text begin of deleted text end the deleted text begin order deleted text end new text begin approval expires new text end , the commissioner may
grant reasonable extensions of time to the applicant to activate the facility as the
commissioner deems necessary. The extensions of time shall not exceed a total of an
additional 12 months. If the commissioner's deleted text begin order deleted text end new text begin approval new text end is the subject of an appeal in
accordance with chapter 14, the time period referred to in this section deleted text begin for activation of deleted text end new text begin to
activate new text end the facility and any extensions deleted text begin shall begin deleted text end new text begin begins new text end when all appeals or rights of
appeal from the commissioner's deleted text begin order deleted text end new text begin approval new text end have concluded or expired.

Sec. 11.

Minnesota Statutes 2022, section 48.24, subdivision 2, is amended to read:

Subd. 2.

Loan liabilities.

Loans not exceeding 25 percent of such capital and surplus
made upon first mortgage security on improved real estate in any state in which the bank
or a deleted text begin branch established under section 49.411 deleted text end new text begin detached facility of the bank new text end is located, or in
any state adjoining a state in which the bank or a deleted text begin branch established under section 49.411 deleted text end new text begin
detached facility of the bank new text end is located, shall not constitute a liability of the maker of the
notes secured by such mortgages within the meaning of the foregoing provision limiting
liability, but shall be an actual liability of the maker. These mortgage loans shall be limited
to, and in no case exceed, 50 percent of the cash value of the security covered by the
mortgage, except mortgage loans guaranteed as provided by the Servicemen's Readjustment
Act of 1944, as now or hereafter amended, or for which there is a commitment to so guarantee
or for which a conditional guarantee has been issued, which loans shall in no case exceed
60 percent of the cash value of the security covered by such mortgage. For the purposes of
this subdivision, real estate is improved when substantial and permanent development or
construction has contributed substantially to its value, and agricultural land is improved
when farm crops are regularly raised on such land without further substantial improvements.

Sec. 12.

Minnesota Statutes 2022, section 58.02, is amended by adding a subdivision to
read:

new text begin Subd. 15a. new text end

new text begin Nationwide Multistate Licensing System and Registry. new text end

new text begin "Nationwide
Multistate Licensing System and Registry" has the meaning given in section 58A.02,
subdivision 8.
new text end

Sec. 13.

Minnesota Statutes 2022, section 58.02, subdivision 18, is amended to read:

Subd. 18.

Residential mortgage loan.

"Residential mortgage loan" means a loan secured
primarily by either: (1) a mortgage new text begin , deed of trust, or other equivalent security interest new text end on
residential real deleted text begin property deleted text end new text begin estate new text end ; or (2) certificates of stock or other evidence of ownership
interest in and proprietary lease from corporations, partnerships, or other forms of business
organizations formed for the purpose of cooperative ownership of residential real deleted text begin property deleted text end new text begin
estate new text end .

Sec. 14.

Minnesota Statutes 2022, section 58.02, subdivision 21, is amended to read:

Subd. 21.

Residential real estate.

"Residential real estate" means real property located
in Minnesota upon which a dwelling new text begin , as defined in United States Code, title 15, section
1602(w), new text end is constructed or is intended to be constructed, whether or not the owner occupies
the real property.

Sec. 15.

Minnesota Statutes 2022, section 58.04, subdivision 1, is amended to read:

Subdivision 1.

Residential mortgage originator licensing requirements.

(a) No person
shall act as a residential mortgage originator, or make residential mortgage loans without
first obtaining a license from the commissioner according to the licensing procedures
provided in this chapter.

(b) A licensee must be either a partnership, limited liability partnership, association,
limited liability company, corporation, or other form of business organization, and must
have and maintain a surety bond in the amounts prescribed under section 58.08.

(c) The following persons are exempt from the residential mortgage originator licensing
requirements:

(1) a person who is not in the business of making residential mortgage loans and who
makes no more than three such loans, with its own funds, during any 12-month period;

(2) a financial institution as defined in section 58.02, subdivision 10;

(3) an agency of the federal government, or of a state or municipal government;

(4) an employee or employer pension plan making loans only to its participants;

(5) a person acting in a fiduciary capacity, such as a trustee or receiver, as a result of a
specific order issued by a court of competent jurisdiction;

new text begin (6) a person who is a bona fide nonprofit organization that meets all the criteria required
by the federal Secure and Fair Enforcement Licensing Act in Regulation H, adopted pursuant
to Code of Federal Regulations, title 12, part 1008, subpart B, section 1008.103 (e)(7)(ii);
new text end

deleted text begin (6) deleted text end new text begin (7) new text end a person exempted by order of the commissioner; or

deleted text begin (7) deleted text end new text begin (8) new text end a manufactured home dealer, as defined in section 327B.01, subdivision 7 or 11b,
or a manufactured home salesperson, as defined in section 327B.01, subdivision 19, that:

(i) performs only clerical or support duties in connection with assisting a consumer in
filling out a residential mortgage loan application but does not in any way offer or negotiate
loan terms, or hold themselves out as a housing counselor;

(ii) does not receive any direct or indirect compensation or gain from any individual or
company for assisting consumers with a residential mortgage loan application, in excess of
the customary salary or commission from the employer in connection with the sales
transaction; and

(iii) discloses to the borrower in writing:

(A) if a corporate affiliation with a lender exists;

(B) if a corporate affiliation with a lender exists, that the lender cannot guarantee the
lowest or best terms available and the consumer has the right to choose their lender; and

(C) if a corporate affiliation with a lender exists, the name of at least one unaffiliated
lender.

(d) For the purposes of this subdivision, "housing counselor" means an individual who
provides assistance and guidance about residential mortgage loan terms including rates,
fees, or other costs.

(e) The disclosures required under paragraph (c), clause deleted text begin (7) deleted text end new text begin (8) new text end , item (iii), must be made
on a one-page form prescribed by the commissioner and developed in consultation with the
Manufactured and Modular Home Association. The form must be posted on the department's
website.

Sec. 16.

Minnesota Statutes 2022, section 58.04, subdivision 2, is amended to read:

Subd. 2.

Residential mortgage servicer licensing requirements.

(a) Beginning August
1, 1999, no person shall engage in activities or practices that fall within the definition of
"servicing a residential mortgage loan" under section 58.02, subdivision 22, without first
obtaining a license from the commissioner according to the licensing procedures provided
in this chapter.

(b) The following persons are exempt from the residential mortgage servicer licensing
requirements:

(1) a person licensed as a residential mortgage originator;

(2) an employee of one licensee or one person holding a certificate of exemption based
on an exemption under this subdivision;

(3) a person servicing loans made with its own funds, if no more than three such loans
are made in any 12-month period;

(4) a financial institution as defined in section 58.02, subdivision 10;

(5) an agency of the federal government, or of a state or municipal government;

(6) an employee or employer pension plan making loans only to its participants;

(7) a person acting in a fiduciary capacity, such as a trustee or receiver, as a result of a
specific order issued by a court of competent jurisdiction; deleted text begin or
deleted text end

new text begin (8) a person who is a bona fide nonprofit organization that meets all the criteria required
by the federal Secure and Fair Enforcement Licensing Act in Regulation H, Code of Federal
Regulations, title 12, part 1008, subpart B, section 1008.103 (e)(7)(ii); or
new text end

deleted text begin (8) deleted text end new text begin (9) new text end a person exempted by order of the commissioner.

Sec. 17.

Minnesota Statutes 2022, section 58.05, subdivision 1, is amended to read:

Subdivision 1.

Exempt person.

new text begin (a) new text end An exempt person new text begin , new text end as defined by section 58.04,
subdivision 1, paragraph (c), and subdivision 2, paragraph (b), is exempt from the licensing
requirements of this chapter, but is subject to all other provisions of this chapter.

new text begin (b) Paragraph (a) does not apply to an institution covered under section 58.04, subdivision
4, even if the institution is otherwise an exempt person.
new text end

Sec. 18.

Minnesota Statutes 2022, section 58.05, subdivision 3, is amended to read:

Subd. 3.

Certificate of exemption.

deleted text begin A person deleted text end new text begin (a) The following persons new text end must obtain a
certificate of exemption from the commissioner to qualify as an exempt person under section
58.04, subdivision 1, paragraph (c) deleted text begin , deleted text end new text begin : (1) new text end a financial institution under new text begin section 58.04,
subdivision 1, paragraph (c), new text end clause (2) deleted text begin , deleted text end new text begin ; (2) a bona fide nonprofit organization under section
58.04, subdivision 1, paragraph (c), clause (6); new text end or new text begin (3) a person exempted new text end by order of the
commissioner under new text begin section 58.04, subdivision 1, paragraph (c), new text end clause deleted text begin (6); or deleted text end new text begin (7).
new text end

new text begin (b) The following persons must obtain a certificate of exemption from the commissioner
to qualify as an exempt person new text end under section 58.04, subdivision 2, paragraph (b) deleted text begin , as deleted text end new text begin : (1) new text end a
financial institution under new text begin section 58.04, subdivision 2, paragraph (b), new text end clause (4) deleted text begin , deleted text end new text begin ; (2) a bona
fide nonprofit organization under section 58.04, subdivision 2, paragraph (b), clause (8); new text end or new text begin
(3) a person exempted new text end by order of the commissioner under clause deleted text begin (8) deleted text end new text begin (9) new text end .

Sec. 19.

Minnesota Statutes 2022, section 58.06, is amended by adding a subdivision to
read:

new text begin Subd. 6. new text end

new text begin Requesting and distributing criminal information; agency. new text end

new text begin For the purposes
of this section and in order to reduce the points of contact the Federal Bureau of Investigation
may have to maintain for purposes of subdivision 5, clauses (1) and (2), the commissioner
may use the Nationwide Multistate Licensing System and Registry as a channeling agent
to request information from and distribute information to the United States Department of
Justice or any governmental agency.
new text end

Sec. 20.

Minnesota Statutes 2022, section 58.06, is amended by adding a subdivision to
read:

new text begin Subd. 7. new text end

new text begin Requesting and distributing noncriminal information; agency. new text end

new text begin For the
purposes of this section and in order to reduce the points of contact the commissioner may
have to maintain for purposes of subdivision 5, clause (2), the commissioner may use the
Nationwide Multistate Licensing System and Registry as a channeling agent to request and
distribute information from and to any source, as directed by the commissioner.
new text end

Sec. 21.

Minnesota Statutes 2022, section 58.08, subdivision 1a, is amended to read:

Subd. 1a.

Residential mortgage originators.

(a) An applicant for a residential mortgage
originator license must file with the department a surety bond in the amount of deleted text begin $100,000 deleted text end new text begin
$125,000 new text end , issued by an insurance company authorized to do so in this state. The bond must
cover all mortgage loan originators who are employees or independent agents of the applicant.
The bond must be available for the recovery of expenses, fines, and fees levied by the
commissioner under this chapter and for losses incurred by borrowers as a result of a
licensee's noncompliance with the requirements of this chapter, sections 325D.43 to 325D.48,
and 325F.67 to 325F.69, or breach of contract relating to activities regulated by this chapter.

(b) The bond must be submitted with the originator's license application and evidence
of continued coverage must be submitted with each renewal. Any change in the bond must
be submitted for approval by the commissioner, within ten days of its execution. The bond
or a substitute bond shall remain in effect during all periods of licensing.

(c) Upon filing of the mortgage call report as required by section deleted text begin 58A.17 deleted text end new text begin 58.141 new text end , a
licensee shall maintain or increase deleted text begin its deleted text end new text begin the licensee's new text end surety bond to reflect the total dollar
amount of the closed residential mortgage loans originated in this state in the preceding
year according to the table in this paragraph. A licensee may decrease deleted text begin its deleted text end new text begin the licensee's new text end
surety bond according to the table in this paragraph if the surety bond required is less than
the amount of the surety bond on file with the department.

Dollar Amount of Closed Residential Mortgage Loans	Surety Bond Required
$0 to deleted text begin $5,000,000 deleted text end new text begin $10,000,000 new text end	deleted text begin $100,000 deleted text end new text begin $125,000 new text end
deleted text begin $5,000,000.01 deleted text end new text begin $10,000,000.01 new text end to deleted text begin $10,000,000 deleted text end new text begin $25,000,000 new text end	deleted text begin $125,000 deleted text end new text begin $150,000 new text end
deleted text begin $10,000,000.01 deleted text end new text begin $25,000,000.01 new text end to deleted text begin $25,000,000 deleted text end new text begin $100,000,000 new text end	deleted text begin $150,000 deleted text end new text begin $200,000 new text end
Over deleted text begin $25,000,000 deleted text end new text begin $100,000,000 new text end	deleted text begin $200,000 deleted text end new text begin $300,000 new text end

For purposes of this subdivision, "mortgage loan originator" has the meaning given the
term in section 58A.02, subdivision 7.

Sec. 22.

Minnesota Statutes 2022, section 58.08, subdivision 2, is amended to read:

Subd. 2.

Residential mortgage servicers.

new text begin (a) new text end A residential mortgage servicer licensee
shall continuously maintain a surety bond or irrevocable letter of credit in an amount not
less than deleted text begin $100,000 deleted text end new text begin $125,000 new text end in a form approved by the commissioner, issued by an insurance
company or bank authorized to do so in this state. The bond or irrevocable letter of credit
must be available for the recovery of expenses, fines, and fees levied by the commissioner
under this chapter, and for losses or damages incurred by borrowers or other aggrieved
parties as the result of a licensee's noncompliance with the requirements of this chapter,
sections 325D.43 to 325D.48, and 325F.67 to 325F.69, or breach of contract relating to
activities regulated by this chapter.

new text begin (b) new text end The bond or irrevocable letter of credit must be submitted with the servicer's license
application and evidence of continued coverage must be submitted with each renewal. Any
change in the bond or letter of credit must be submitted for approval by the commissioner,
within ten days of its execution. new text begin The bond or a substitute bond must remain in effect during
all periods of a license.
new text end

new text begin (c) Upon filing the mortgage call report under section 58.141, a licensee must maintain
or increase the licensee's surety bond to reflect the total dollar amount of unpaid principal
balance for residential mortgage loans serviced in Minnesota during the preceding quarter
according to the table in this paragraph. A licensee may decrease the licensee's surety bond
according to the table in this paragraph if the surety bond required is less than the amount
of the surety bond on file with the department.
new text end

new text begin Dollar Amount of Unpaid Principal Balance for Serviced Residential Mortgage Loans new text end	new text begin Surety Bond Required new text end
new text begin $0 to $10,000,000 new text end	new text begin $125,000 new text end
new text begin $10,000,000.01 to $50,000,000 new text end	new text begin $200,000 new text end
new text begin Over $50,000,000 new text end	new text begin $300,000 new text end

Sec. 23.

Minnesota Statutes 2022, section 58.10, subdivision 3, is amended to read:

Subd. 3.

Consumer education account; money credited and appropriated.

(a) The
consumer education account is created in the special revenue fund. Money credited to this
account may be appropriated to the commissioner deleted text begin for the purpose of making deleted text end new text begin to: (1) make new text end
grants to programs and campaigns designed to help consumers avoid being victimized by
unscrupulous lenders and mortgage brokers new text begin ; and (2) pay for expenses the commissioner
incurs to provide outreach and education related new text end new text begin to affordable housing and home ownership
education new text end . new text begin The commissioner must give new text end preference deleted text begin shall be given deleted text end new text begin for grants new text end to programs
and campaigns designed by coalitions of public sector, private sector, and nonprofit agencies,
institutions, companies, and organizations.

(b) A sum sufficient is appropriated annually from the consumer education account to
the commissioner to make the grants described in paragraph (a).

Sec. 24.

Minnesota Statutes 2022, section 58.115, is amended to read:

58.115 EXAMINATIONS.

The commissioner has under this chapter the same powers with respect to examinations
that the commissioner has under section 46.04. new text begin In addition to the powers under section
46.04, the commissioner may accept examination reports prepared by a state agency that
has comparable supervisory powers and examination procedures. The authority under section
49.411, subdivision 7, applies to examinations of institutions under this chapter.
new text end

Sec. 25.

Minnesota Statutes 2022, section 58.13, subdivision 1, is amended to read:

Subdivision 1.

Generally.

(a) No person acting as a residential mortgage originator or
servicer, including a person required to be licensed under this chapter, and no person exempt
from the licensing requirements of this chapter under section 58.04, except as otherwise
provided in paragraph (b), shall:

(1) fail to maintain a trust account to hold trust funds received in connection with a
residential mortgage loan;

(2) fail to deposit all trust funds into a trust account within three business days of receipt;
commingle trust funds with funds belonging to the licensee or exempt person; or use trust
account funds for any purpose other than that for which they are received;

(3) unreasonably delay the processing of a residential mortgage loan application, or the
closing of a residential mortgage loan. For purposes of this clause, evidence of unreasonable
delay includes but is not limited to those factors identified in section 47.206, subdivision
7, paragraph (d);

(4) fail to disburse funds according to its contractual or statutory obligations;

(5) fail to perform in conformance with its written agreements with borrowers, investors,
other licensees, or exempt persons;

(6) charge a fee for a product or service where the product or service is not actually
provided, or misrepresent the amount charged by or paid to a third party for a product or
service;

(7) fail to comply with sections 345.31 to 345.60, the Minnesota unclaimed property
law;

(8) violate any provision of any other applicable state or federal law regulating residential
mortgage loans including, without limitation, sections 47.20 to 47.208 and 47.58;

(9) make or cause to be made, directly or indirectly, any false, deceptive, or misleading
statement or representation in connection with a residential loan transaction including,
without limitation, a false, deceptive, or misleading statement or representation regarding
the borrower's ability to qualify for any mortgage product;

(10) conduct residential mortgage loan business under any name other than that under
which the license or certificate of exemption was issued;

(11) compensate, whether directly or indirectly, coerce or intimidate an appraiser for
the purpose of influencing the independent judgment of the appraiser with respect to the
value of real estate that is to be covered by a residential mortgage or is being offered as
security according to an application for a residential mortgage loan;

(12) issue any document indicating conditional qualification or conditional approval for
a residential mortgage loan, unless the document also clearly indicates that final qualification
or approval is not guaranteed, and may be subject to additional review;

(13) make or assist in making any residential mortgage loan with the intent that the loan
will not be repaid and that the residential mortgage originator will obtain title to the property
through foreclosure;

(14) provide or offer to provide for a borrower, any brokering or lending services under
an arrangement with a person other than a licensee or exempt person, provided that a person
may rely upon a written representation by the residential mortgage originator that it is in
compliance with the licensing requirements of this chapter;

(15) claim to represent a licensee or exempt person, unless the person is an employee
of the licensee or exempt person or unless the person has entered into a written agency
agreement with the licensee or exempt person;

(16) fail to comply with the record keeping and notification requirements identified in
section 58.14 or fail to abide by the affirmations made on the application for licensure;

(17) represent that the licensee or exempt person is acting as the borrower's agent after
providing the nonagency disclosure required by section 58.15, unless the disclosure is
retracted and the licensee or exempt person complies with all of the requirements of section
58.16;

(18) make, provide, or arrange for a residential mortgage loan that is of a lower investment
grade if the borrower's credit score or, if the originator does not utilize credit scoring or if
a credit score is unavailable, then comparable underwriting data, indicates that the borrower
may qualify for a residential mortgage loan, available from or through the originator, that
is of a higher investment grade, unless the borrower is informed that the borrower may
qualify for a higher investment grade loan with a lower interest rate and/or lower discount
points, and consents in writing to receipt of the lower investment grade loan;

For purposes of this section, "investment grade" refers to a system of categorizing
residential mortgage loans in which the loans are distinguished by interest rate or discount
points or both charged to the borrower, which vary according to the degree of perceived
risk of default based on factors such as the borrower's credit, including credit score and
credit patterns, income and employment history, debt ratio, loan-to-value ratio, and prior
bankruptcy or foreclosure;

(19) make, publish, disseminate, circulate, place before the public, or cause to be made,
directly or indirectly, any advertisement or marketing materials of any type, or any statement
or representation relating to the business of residential mortgage loans that is false, deceptive,
or misleading;

(20) advertise loan types or terms that are not available from or through the licensee or
exempt person on the date advertised, or on the date specified in the advertisement. For
purposes of this clause, advertisement includes, but is not limited to, a list of sample mortgage
terms, including interest rates, discount points, and closing costs provided by licensees or
exempt persons to a print or electronic medium that presents the information to the public;

(21) use or employ phrases, pictures, return addresses, geographic designations, or other
means that create the impression, directly or indirectly, that a licensee or other person is a
governmental agency, or is associated with, sponsored by, or in any manner connected to,
related to, or endorsed by a governmental agency, if that is not the case;

(22) violate section 82.77, relating to table funding;

(23) make, provide, or arrange for a residential mortgage loan all or a portion of the
proceeds of which are used to fully or partially pay off a "special mortgage" unless the
borrower has obtained a written certification from an authorized independent loan counselor
that the borrower has received counseling on the advisability of the loan transaction. For
purposes of this section, "special mortgage" means a residential mortgage loan originated,
subsidized, or guaranteed by or through a state, tribal, or local government, or nonprofit
organization, that bears one or more of the following nonstandard payment terms which
substantially benefit the borrower: (i) payments vary with income; (ii) payments of principal
or interest are not required or can be deferred under specified conditions; (iii) principal or
interest is forgivable under specified conditions; or (iv) where no interest or an annual
interest rate of two percent or less is charged in connection with the loan. For purposes of
this section, "authorized independent loan counselor" means a nonprofit, third-party
individual or organization providing home buyer education programs, foreclosure prevention
services, mortgage loan counseling, or credit counseling certified by the United States
Department of Housing and Urban Development, the Minnesota Home Ownership Center,
the Minnesota Mortgage Foreclosure Prevention Association, AARP, or NeighborWorks
America;

(24) make, provide, or arrange for a residential mortgage loan without verifying the
borrower's reasonable ability to pay the scheduled payments of the following, as applicable:
principal; interest; real estate taxes; homeowner's insurance, assessments, and mortgage
insurance premiums. For loans in which the interest rate may vary, the reasonable ability
to pay shall be determined based on a fully indexed rate and a repayment schedule which
achieves full amortization over the life of the loan. For all residential mortgage loans, the
borrower's income and financial resources must be verified by tax returns, payroll receipts,
bank records, or other similarly reliable documents.

Nothing in this section shall be construed to limit a mortgage originator's or exempt
person's ability to rely on criteria other than the borrower's income and financial resources
to establish the borrower's reasonable ability to repay the residential mortgage loan, including
criteria established by the United States Department of Veterans Affairs or the United States
Department of Housing and Urban Development for interest rate reduction refinancing loans
or streamline loans, or criteria authorized or promulgated by the Federal National Mortgage
Association or Federal Home Loan Mortgage Corporation; however, such other criteria
must be verified through reasonably reliable methods and documentation. The mortgage
originator's analysis of the borrower's reasonable ability to repay may include, but is not
limited to, consideration of the following items, if verified: (1) the borrower's current and
expected income; (2) current and expected cash flow; (3) net worth and other financial
resources other than the consumer's equity in the dwelling that secures the loan; (4) current
financial obligations; (5) property taxes and insurance; (6) assessments on the property; (7)
employment status; (8) credit history; (9) debt-to-income ratio; (10) credit scores; (11) tax
returns; (12) pension statements; and (13) employment payment records, provided that no
mortgage originator shall disregard facts and circumstances that indicate that the financial
or other information submitted by the consumer is inaccurate or incomplete. A statement
by the borrower to the residential mortgage originator or exempt person of the borrower's
income and resources or sole reliance on any single item listed above is not sufficient to
establish the existence of the income or resources when verifying the reasonable ability to
pay;

(25) engage in "churning." As used in this section, "churning" means knowingly or
intentionally making, providing, or arranging for a residential mortgage loan when the new
residential mortgage loan does not provide a reasonable, tangible net benefit to the borrower
considering all of the circumstances new text begin , new text end including the terms of both the new and refinanced
loans, the cost of the new loan, and the borrower's circumstances deleted text begin ; deleted text end new text begin . In order to demonstrate
a reasonable, tangible net benefit to the borrower, the circumstances must be documented
in writing and must be signed by the borrower and lender three days before the closing date.
The written analysis must, with respect to the prior loan and the new loan, document the:
(i) origination date; (ii) loan amount; (iii) loan balance; (iv) loan term; (v) loan program;
(vi) type of loan; (vii) interest rate; (viii) monthly amount of principal and interest paid; (ix)
monthly amount of private mortgage insurance paid; (x) loan purpose; (xi) loan origination
cost; (xii) cash to borrower, if applicable; and (xiii) time to recoup the loan cost, if applicable,
expressed in months;
new text end

(26) the first time a residential mortgage originator orally informs a borrower of the
anticipated or actual periodic payment amount for a first-lien residential mortgage loan
which does not include an amount for payment of property taxes and hazard insurance, the
residential mortgage originator must inform the borrower that an additional amount will be
due for taxes and insurance and, if known, disclose to the borrower the amount of the
anticipated or actual periodic payments for property taxes and hazard insurance. This same
oral disclosure must be made each time the residential mortgage originator orally informs
the borrower of a different anticipated or actual periodic payment amount change from the
amount previously disclosed. A residential mortgage originator need not make this disclosure
concerning a refinancing loan if the residential mortgage originator knows that the borrower's
existing loan that is anticipated to be refinanced does not have an escrow account; or

(27) make, provide, or arrange for a residential mortgage loan, other than a reverse
mortgage pursuant to United States Code, title 15, chapter 41, if the borrower's compliance
with any repayment option offered pursuant to the terms of the loan will result in negative
amortization during any six-month period.

(b) Paragraph (a), clauses (24) through (27), do not apply to a state or federally chartered
bank, savings bank, or credit union, an institution chartered by Congress under the Farm
Credit Act, or to a person making, providing, or arranging a residential mortgage loan
originated or purchased by a state agency or a tribal or local unit of government. This
paragraph supersedes any inconsistent provision of this chapter.

Sec. 26.

new text begin [58.141] REPORTS AND UNIQUE IDENTIFIER.
new text end

new text begin Subdivision 1. new text end

new text begin Mortgage call reports. new text end

new text begin A residential mortgage originator or servicer
must submit reports of condition to the Nationwide Multistate Licensing System and Registry.
Reports submitted under this subdivision must be in the form and contain the information
required by the Nationwide Multistate Licensing System and Registry.
new text end

new text begin Subd. 2. new text end

new text begin Report to Nationwide Multistate Licensing System and Registry. new text end

new text begin Subject
to section 58A.14, the commissioner must regularly report violations of this chapter, as well
as enforcement actions and other relevant information, to the Nationwide Multistate Licensing
System and Registry.
new text end

new text begin Subd. 3. new text end

new text begin Unique identifier; display. new text end

new text begin The unique identifier of any person originating a
residential mortgage loan must be clearly displayed on all residential mortgage loan
application forms, solicitations, or advertisements, including business cards or websites,
and any other documents the commissioner establishes by rule or order.
new text end

Sec. 27. new text begin RULEMAKING.
new text end

new text begin The commissioner of commerce must amend Minnesota Rules, part 2675.2170, to comply
with the changes made in this act. The commissioner of commerce may use the good cause
exemption under Minnesota Statutes, section 14.388, subdivision 1, clause (3), to amend
the rule under this section. Minnesota Statutes, section 14.386, does not apply, except as
provided under Minnesota Statutes, section 14.388.
new text end

Sec. 28. new text begin REPEALER.
new text end

new text begin Minnesota Statutes 2022, section 58.08, subdivision 3, new text end new text begin is repealed.
new text end

APPENDIX

Repealed Minnesota Statutes: S4157-1

58.08 BONDS; LETTERS OF CREDIT.

Subd. 3.

Exemption.

Subdivision 2 does not apply to mortgage originators or mortgage servicers who are approved as seller/servicers by the Federal National Mortgage Association or the Federal Home Loan Mortgage Corporation.