SF 4157

as introduced - 93rd Legislature (2023 - 2024) Posted on 03/20/2024 04:03pm

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; repealing Minnesota Statutes 2022, section 58.08,
subdivision 3.

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

Section 1.

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. 2.

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. 3.

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. 4.

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. 5.

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. 6.

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. 7.

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. 8.

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. 9.

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. 10.

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. 11.

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. 12.

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

new text begin Subd. 5. new text end

new text begin Background checks. new text end

new text begin In connection with an application for a residential mortgage
loan originator or servicer license, any person in control of an applicant must, at a minimum,
provide the Nationwide Multistate Licensing System and Registry information concerning
the person's identity, including:
new text end

new text begin (1) fingerprints for submission to the Federal Bureau of Investigation and a governmental
agency or entity authorized to receive the information for a state, national, and international
criminal history background check; and
new text end

new text begin (2) personal history and experience in a form prescribed by the Nationwide Multistate
Licensing System and Registry, including the submission of authorization for the Nationwide
Multistate Licensing System and Registry and the commissioner to obtain:
new text end

new text begin (i) an independent credit report obtained from a consumer reporting agency described
in United States Code, title 15, section 1681a(p); and
new text end

new text begin (ii) information related to administrative, civil, or criminal findings by a governmental
jurisdiction.
new text end

Sec. 13.

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. 14.

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. 15.

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. 16.

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. 17.

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. 18.

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. 19.

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. 20.

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. 21. 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. 22. 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: 24-05491

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.