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Minnesota Legislature

Office of the Revisor of Statutes

Key: (1) language to be deleted (2) new language

 

                         Laws of Minnesota 1985 

                          CHAPTER 1-H.F.No. 8 
           An act relating to commerce; authorizing industrial 
          loan and thrifts to sell certain evidences of 
          indebtedness; authorizing the FDIC to act as receiver 
          or liquidator of a closed financial institution and 
          providing a right of subrogation; establishing 
          different certificate of authorization requirements 
          for corporations that will and will not sell or issue 
          thrift certificates; modifying certain application and 
          examination duties of the department of commerce; 
          providing simplified requirements for the issuance of 
          more than one certificate of authorization to the same 
          corporation; clarifying the right of industrial loan 
          and thrifts to collect certain additional loan 
          charges; exempting certain mortgage purchasers and 
          assignees from licensing as regulated lenders; 
          prohibiting industrial loan and thrifts from using the 
          words "savings and loan" in their corporate names; 
          authorizing regulated lenders to make loans up to ten 
          percent of capital; modifying the licensing provisions 
          governing regulated lenders; providing for changes in 
          business locations of regulated lenders; increasing 
          the minimum default charge that may be charged; 
          providing for the determination of interest; and 
          providing alternative loan disclosure requirements; 
          providing an inflation adjustment for amounts exempt 
          from creditors; providing penalties; amending 
          Minnesota Statutes 1984, sections 48.151; 49.05, by 
          adding subdivisions; 53.03, subdivisions 1, 2, 2a, 3a, 
          5, 7, 8, and by adding a subdivision; 53.04, 
          subdivision 3a; 53.05; 56.01; 56.04; 56.07; 56.12; 
          56.125, subdivision 4; 56.131, subdivisions 1, 2, and 
          4; 56.19, subdivision 4, and by adding a subdivision; 
          and 550.37, subdivision 4a; repealing Minnesota 
          Statutes 1984, section 53.03, subdivision 4. 
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
    Section 1.  Minnesota Statutes 1984, section 48.151, is 
amended to read: 
    48.151 [ADDITIONAL POWERS.] 
    Any bank, savings bank, or trust company organized under 
the laws of this state, or any national banking association 
doing business in this state, shall have the power to advertise 
for sale and sell for a fee money orders, traveler's checks, 
cashier's checks, drafts, registered checks, and certified 
checks and no other person, firm, or corporation, either 
directly or through agents, shall advertise for sale or shall 
sell for a fee any evidence of indebtedness on which there 
appears the words, "money order," "traveler's check," "cashier's 
check," "draft," "registered check," "certified check," or other 
words or symbols whether of the same or different character 
which tend to lead the purchaser to believe that such evidence 
of indebtedness is other than a personal check, unless such 
evidence of indebtedness is issued by a person, firm or 
corporation which is a savings and loan association, or 
telegraph company, or, in the case of cashier's checks, is 
issued by an industrial loan and thrift company with deposit 
liabilities, provided that these instruments are issued in 
conformity with the Uniform Commercial Code, or is issued by a 
person, firm, or corporation that has on file in the office of 
the secretary of state a surety bond in the principal sum of 
$5,000 issued by a bonding or insurance company authorized to do 
business in this state, which surety bond shall run to the state 
of Minnesota and shall be for the benefit of any creditor for 
any liability insured on account of the sale or issuance by it 
or its agent of any such evidence of indebtedness, or has 
deposited with the secretary of state securities or cash of the 
value of $5,000; provided, however, that the aggregate liability 
of the surety to all such creditors shall, in no event, exceed 
the sum of such bond or deposit.  Any person, firm or 
corporation who shall violate any provision of this section 
shall be guilty of a misdemeanor.  
    Sec. 2.  Minnesota Statutes 1984, section 49.05, is amended 
by adding a subdivision to read: 
    Subd. 5.  [FEDERAL DEPOSIT INSURANCE CORPORATION AS 
RECEIVER OR LIQUIDATOR.] The Federal Deposit Insurance 
Corporation created by Section 12B of the Federal Reserve Act, 
as amended, upon appointment by the commissioner, may act 
without bond as receiver or liquidator of a financial 
institution, the deposits in which are to any extent insured by 
this corporation, and that has been closed pursuant to section 
49.04, subdivision 1. 
    Notwithstanding any other provision of law the appropriate 
state authority having the right to appoint a receiver or 
liquidator of a financial institution may, in the event of the 
closing, tender to the corporation the appointment as receiver 
or liquidator of the financial institution; and, if the 
corporation accepts the appointment, the corporation shall have 
and possess all the powers and privileges provided by the laws 
of this state with respect to a receiver or liquidator, 
respectively, of a financial institution, its depositors, and 
other creditors.  
    Sec. 3.  Minnesota Statutes 1984, section 49.05, is amended 
by adding a subdivision to read: 
    Subd. 6.  [RIGHT OF SUBROGATION.] When a financial 
institution has been closed, and the federal deposit insurance 
corporation has paid or made available for payment the insured 
deposit liabilities of the closed institution, the corporation, 
whether or not it has or shall thereafter become a liquidating 
agent of the closed institution is subrogated, by operation of 
law with like force and effect as if the closed institution were 
a national bank, to all rights of the owners of these deposits 
against the closed financial institution in the same manner and 
to the same extent as now or hereafter necessary to enable the 
federal deposit insurance corporation under federal law to make 
insurance payments available to depositors of closed insured 
banks; provided, that the rights of depositors and other 
creditors of the closed institution shall be determined in 
accordance with the laws of this state.  The commissioner may, 
in his or her discretion, in the event of the closing of any 
financial institution pursuant to section 49.04, subdivision 1, 
the deposits of which banking institution are to any extent 
insured by the corporation, tender to the corporation the 
appointment as liquidating agent of this financial institution 
and, if the corporation accepts the appointment, it shall have 
and possess all the powers and privileges provided by the laws 
of this state with respect to a special deputy examiner of the 
department of commerce in the management and liquidation of this 
institution, and be subject to all of the duties of the special 
deputy examiner; provided, that nothing contained in this 
subdivision shall be construed as a surrender of the right of 
the commissioner to liquidate financial institutions under his 
or her supervision pursuant to the statute in such case made and 
provided; and the commissioner may waive the filing of a bond by 
the corporation as the special deputy examiner. 
    Sec. 4.  Minnesota Statutes 1984, section 53.03, 
subdivision 1, is amended to read: 
    Subdivision 1.  [APPLICATION, FEE, NOTICE.] Any corporation 
hereafter organized as an industrial loan and thrift company, 
shall, after compliance with the requirements set forth in 
sections 53.01 and 53.02, file a written application with the 
department of commerce for a certificate of authorization.  A 
corporation that will not sell or issue thrift certificates for 
investment as permitted by this chapter need not comply with 
subdivision 2b.  The application, in duplicate, must be in the 
form prescribed by the department of commerce.  The application 
must be made in the name of the corporation, executed and 
acknowledged by two of its officers an officer designated by the 
board of directors of the corporation for that purpose, 
requesting a certificate authorizing the corporation to transact 
business as an industrial loan and thrift company, at the place 
and in the name stated in the application.  At the time of 
filing the application the applicant shall pay a $1,000 filing 
fee and a $500 investigation fee.  The fees must be turned over 
by the commissioner to the state treasurer and credited to the 
general fund.  The applicant shall also submit a copy of the 
bylaws of the corporation, its articles of incorporation and all 
amendments thereto at that time.  If the application is 
contested, 50 percent of an additional fee equal to the actual 
costs incurred by the department of commerce in approving or 
disapproving the application, payable to the state treasurer and 
credited to the general fund shall be paid by the applicant and 
50 percent equally by the intervening parties.  A notice of the 
filing of the application must be published once within 30 days 
of the receipt of the form prescribed by the department of 
commerce, at the expense of the applicant, in a newspaper 
published in the municipality in which the proposed industrial 
loan and thrift company is to be located, or, if there be none, 
in a newspaper published at the county seat of the county in 
which the company is proposed to be located.  If the department 
of commerce receives a written objection to the application from 
any person within 20 days of the notice having been fully 
published a contested case hearing must be conducted on the 
application.  The department of commerce may without cause order 
a contested case hearing on the application.  Notice of a 
hearing in connection with this section must be published once 
in the form prescribed by the department of commerce, at the 
expense of the applicant, in the same manner as a notice of 
application. 
    Sec. 5.  Minnesota Statutes 1984, section 53.03, 
subdivision 2, is amended to read: 
    Subd. 2.  [DEPARTMENT OF COMMERCE; DUTIES.] Upon receiving 
an application the department of commerce shall make, or cause 
to be made, an examination to ascertain whether the assets of 
such corporation, over and above all its liabilities, have an 
actual value of not less than the par value of all of its 
capital represented by shares of common stock, which shall not 
be less than the amount prescribed by section 53.02.  If upon 
its investigation or hearing provided for in subdivision 1 those 
facts appear and it further appears that the bylaws and articles 
of incorporation and amendments thereto are in accordance with 
law; that the shareholders of the corporation are of good moral 
character and financial integrity; that there is a reasonable 
public demand for that company that the company reasonably 
anticipates public demand for the loans it proposes to make in 
the location specified in the application, and that the probable 
volume of business in that location is sufficient to insure and 
maintain the solvency of such company and the solvency of any 
then existing industrial loan and thrift companies or banks in 
that locality, without endangering the safety of any such 
company or bank in the locality as a place for investing or 
depositing public and private money, and that the proposed 
company will be properly and safely managed, the application 
shall be granted; otherwise it shall be denied. 
    Sec. 6.  Minnesota Statutes 1984, section 53.03, 
subdivision 2a, is amended to read:  
    Subd. 2a.  [SELECTION, CHANGE OF NAME.] Before filing 
the certificate articles of incorporation or an amendment to it 
them, the proposed name of the industrial loan and thrift 
company shall be submitted to the commissioner, who shall 
compare it with those of other corporations operating in the 
state.  If it is likely to be mistaken for any of them, or to 
confuse the public as to the character of its business, or is 
otherwise objectionable, additional names shall be submitted.  
When a satisfactory name is selected, the commissioner shall 
give written approval of it and issue an amended certificate of 
authorization. 
    Sec. 7.  Minnesota Statutes 1984, section 53.03, is amended 
by adding a subdivision to read: 
    Subd. 2b.  [ADDITIONAL DUTIES; THRIFT CERTIFICATES FOR 
INVESTMENT.] If an application includes the right to issue 
thrift certificates for investment, the department of commerce 
must, in addition to the duties in subdivision 2, make a 
determination that there is a reasonable public demand for that 
company and that the probable volume of business in that 
location is sufficient to insure the solvency of any then 
existing industrial loan and thrift companies or banks in that 
locality, without endangering the safety of the company or bank 
in the locality as a place for investing or depositing public 
and private money. 
    Sec. 8.  Minnesota Statutes 1984, section 53.03, 
subdivision 3a, is amended to read: 
    Subd. 3a.  If the application be granted without hearing 
the department of commerce shall, not later than 60 days after 
the notice of application has been fully published accepted, 
issue a certificate authorizing the corporation to transact 
business as an industrial loan and thrift company as provided in 
this chapter.  If the application be denied without hearing the 
department of commerce shall, not later than 60 days after 
the notice of application has been fully published accepted, 
notify the corporation of the denial and the reasons for the 
denial.  The applicant may request within 30 days of receiving 
the notice of denial, and shall be granted, a contested case 
hearing on the application which shall then be conducted as if 
no order of denial had been issued.  If the commission 
commissioner approves the application after a hearing 
the commission commissioner shall, not later than 30 days after 
a hearing, issue a certificate authorizing the corporation to 
transact business as an industrial loan and thrift company as 
provided in this chapter.  If the application be denied after a 
hearing the commission commissioner shall, not later than 30 
days after a hearing, notify the corporation of the denial. 
    Sec. 9.  Minnesota Statutes 1984, section 53.03, 
subdivision 5, is amended to read: 
    Subd. 5.  [PLACE OF BUSINESS.] Not more than one place of 
business may be maintained under any certificate of 
authorization issued subsequent to the enactment of Laws 1943, 
chapter 67, pursuant to the provisions of this chapter, but the 
department of commerce may issue more than one certificate of 
authorization to the same corporation upon compliance with all 
the provisions of this chapter governing an original issuance of 
a certificate of authorization.  To the extent that previously 
filed applicable information remains unchanged, the applicant 
need not refile this information, unless requested.  The filing 
fee for a branch application shall be $500 and the investigation 
fee $250.  If a corporation has been issued more than one 
certificate of authorization, the corporation shall allocate a 
portion of contributed capital to each office for which a 
certificate has been issued, in order to comply with the capital 
requirements of section 53.02 and section 53.05, clause (2), 
which sections are applicable to each office and the capital 
allocated thereto in the same manner as if each certificate had 
been issued to a separate corporation.  Each additional 
certificate of authorization issued pursuant to the provisions 
of this subdivision must be filed with the secretary of state.  
A An industrial loan and thrift corporation with deposit 
liabilities may change one or more of its locations upon the 
written approval of the commissioner of commerce.  A fee of $100 
must accompany each application to the commissioner for approval 
to change the location of an established office.  An industrial 
loan and thrift corporation that does not sell and issue thrift 
certificates for investment may change one or more locations by 
giving 30 days' written notice to the department of commerce 
which shall promptly amend the certificate of authorization 
accordingly. 
    Sec. 10.  Minnesota Statutes 1984, section 53.03, 
subdivision 7, is amended to read: 
    Subd. 7.  [OBJECTION TO APPLICATION.] Upon receiving 
written objection to the application from any person within 20 
days of the notice having been fully published, the department 
of commerce shall order a contested case hearing to be conducted 
on the application.  The department of commerce may without 
cause order a contested case hearing to be conducted on the 
application.  
    Sec. 11.  Minnesota Statutes 1984, section 53.03, 
subdivision 8, is amended to read:  
    Subd. 8.  [INVESTIGATION.] Upon receiving an application, 
the department of commerce shall make or cause to be made, an 
investigation of the application to determine that the 
corporation is in a solvent condition, meets current thrift 
industry standards of management quality and asset condition, is 
in compliance with the requirements of this chapter and that the 
approval of the application will not have an adverse effect upon 
the solvency of any existing industrial loan and thrift company 
selling and issuing certificates for investment or banks in the 
locality, or endanger the safety of any company or bank in the 
locality as a place for investing or depositing public and 
private money.  If upon completion of its investigation and any 
hearing provided for in subdivision 7, it appears to the 
department of commerce that the requirements for approval 
contained in this subdivision have been met, the application 
shall be approved.  In all other cases, the application shall be 
denied.  As a condition of approval, the capital funds of the 
applicant corporation shall not be less than the total amount 
which the department of commerce considers necessary having in 
mind the potential for the issuance of certificates for 
investment by the applicant.  The procedure in subdivision 3a 
shall be followed in decisions, notice, and hearing of 
applications for consent to sell and issue thrift certificates 
for investment by issuance of an amended certificate of 
authorization.  
    Sec. 12.  Minnesota Statutes 1984, section 53.04, 
subdivision 3a, is amended to read: 
    Subd. 3a.  (a) The right to make loans, secured or 
unsecured, at the rates and on the terms and other conditions 
permitted licensees under chapter 56.  Loans made under the 
authority of section 56.125 must be in amounts in compliance 
with section 53.05, clause (7).  All other loans made under the 
authority of chapter 56 must be in amounts in compliance with 
section 53.05, clause (7), or 56.131, subdivision 1, paragraph 
(a), whichever is less.  The right to extend credit or lend 
money and to collect and receive charges therefor as provided by 
chapter 334, or in lieu thereof to charge, collect, and receive 
interest at the rate of 21.75 percent per annum, including the 
right to contract for, charge, and collect all other charges 
including discount points, fees, late payment charges, and 
insurance premiums on the loans to the same extent permitted on 
loans made under the authority of chapter 56, regardless of the 
amount of the loan.  The provisions of sections 47.20 and 47.21 
do not apply to loans made under this subdivision, except as 
specifically provided in this subdivision.  Nothing in this 
subdivision is deemed to supersede, repeal, or amend any 
provision of section 53.05.  A licensee making a loan under this 
chapter secured by a lien on real estate shall comply with the 
requirements of section 47.20, subdivision 8.  
    (b) Loans made under this subdivision at a rate of interest 
not in excess of that provided for in paragraph (a) may be 
secured by real or personal property, or both.  If the proceeds 
of a loan made after August 1, 1987 are used in whole or in part 
to satisfy the balance owed on a contract for deed, the rate of 
interest charged on the loan must not exceed the rate provided 
in section 47.20, subdivision 4a.  If the proceeds of a loan 
secured by a first lien on the borrower's primary residence are 
used to finance the purchase of the borrower's primary 
residence, the loan must comply with the provisions of section 
47.20.  
     (c) A loan made under this subdivision that is secured by 
real estate and that is in a principal amount of $7,500 or more 
and a maturity of 60 months or more may contain a provision 
permitting discount points, if the loan does not provide a loan 
yield in excess of the maximum rate of interest permitted by 
this subdivision.  Loan yield means the annual rate of return 
obtained by a licensee computed as the annual percentage rate is 
computed under Federal Regulation Z.  If the loan is prepaid in 
full, the licensee must make a refund to the borrower to the 
extent that the loan yield will exceed the maximum rate of 
interest provided by this subdivision when the prepayment is 
taken into account.  
    (d) An agency or instrumentality of the United States 
government or a corporation otherwise created by an act of the 
United States Congress or a lender approved or certified by the 
secretary of housing and urban development, or approved or 
certified by the administrator of veterans affairs, or approved 
or certified by the administrator of the farmers home 
administration, or approved or certified by the federal home 
loan mortgage corporation, or approved or certified by the 
federal national mortgage association, that engages in the 
business of purchasing or taking assignments of mortgage loans 
and undertakes direct collection of payments from or enforcement 
of rights against borrowers arising from mortgage loans, is not 
required to obtain a certificate of authorization under this 
chapter in order to purchase or take assignments of mortgage 
loans from persons holding a certificate of authorization under 
this chapter. 
    Sec. 13.  Minnesota Statutes 1984, section 53.05, is 
amended to read: 
    53.05 [POWERS, LIMITATION.] 
    No industrial loan and thrift company may do any of the 
following: 
    (1) carry commercial or demand banking accounts; use the 
word "savings" unless the institution's investment certificates, 
savings accounts, and savings deposits are insured by the 
federal deposit insurance corporation and then only if the word 
is not followed by the words "and loan" in its corporate name; 
use the word "bank" or "banking" in its corporate name; operate 
as a savings bank; 
    (2) have outstanding at any one time certificates of 
indebtedness, savings accounts, and savings deposits, exclusive 
of those held by the company, as security for loans made by it 
of more than seven times the sum of the contributed capital and 
appropriated reserves of the company until July 1, 1985, or the 
date an industrial loan and thrift company obtains a commitment 
for insurance or guarantee of accounts acceptable to the 
commissioner as required by section 53.10, whichever is earlier, 
and thereafter 15 times the sum of contributed capital and 
appropriated reserves of the company; 
    (3) accept trusts, except as provided in section 47.75, 
subdivision 1, or act as guardian, administrator, or judicial 
trustee in any form;  
    (4) deposit any of its funds in any banking corporation, 
unless that corporation has been designated by vote of a 
majority of directors or of the executive committee present at a 
meeting duly called, at which a quorum was in attendance;  
    (5) change any allocation of capital made pursuant to 
section 53.03 or reduce or withdraw in any way any portion of 
the contributed capital and appropriated reserves without prior 
written approval of the commissioner of commerce;  
    (6) take any instrument in which blanks are left to be 
filled in after execution; or 
    (7) lend money in excess of ten percent of its contributed 
capital and appropriated reserves to a person primarily liable. 
"Contributed capital and appropriated reserves" means the total 
of the company's contributed capital and appropriated reserves 
at all its authorized locations.  
    If a loan has been made to a person primarily liable and 
payments have been made on a certificate of indebtedness 
securing it, the amount of the payments may be added to the 
limitation contained in this clause for the purpose of 
determining whether additional loans may be made to that person; 
or 
    (8) issue cashier's checks pursuant to section 48.151, 
unless and at all times the aggregate liability to all creditors 
on these instruments is protected by a special fund in cash or 
due from banks to be used solely for payment of the cashier's 
checks. 
    Sec. 14.  Minnesota Statutes 1984, section 56.01, is 
amended to read: 
    56.01 [NECESSITY OF LICENSE.] 
    (a) Except as authorized by this chapter and without first 
obtaining a license from the commissioner, no person shall 
engage in the business of making loans of money, credit, goods, 
or things in action, in the an amount or of the a value of 
$35,000 or less not exceeding that specified in section 56.131, 
subdivision 1, and charge, contract for, or receive on the loan 
a greater rate of interest, discount, or consideration than the 
lender would be permitted by law to charge if he were not a 
licensee under this chapter. 
    (b) An agency or instrumentality of the United States 
government or a corporation otherwise created by an act of the 
United States Congress or a lender approved or certified by the 
secretary of housing and urban development, or approved or 
certified by the administrator of veterans affairs, or approved 
or certified by the administrator of the farmers home 
administration, or approved or certified by the federal home 
loan mortgage corporation, or approved or certified by the 
federal national mortgage association, that engages in the 
business of purchasing or taking assignments of mortgage loans 
and undertakes direct collection of payments from or enforcement 
of rights against borrowers arising from mortgage loans, is not 
required to be licensed under this chapter in order to purchase 
or take assignments of mortgage loans from licensees under this 
chapter. 
    Sec. 15.  Minnesota Statutes 1984, section 56.04, is 
amended to read: 
    56.04 [INVESTIGATION; ISSUANCE OF LICENSE; DENIAL; 
REFUNDS.] 
    Upon the filing of the application and payment of these 
fees, the commissioner shall investigate the facts, and if he 
shall find (1) that the financial responsibility, experience, 
character, and general fitness of the applicant, and of the 
members thereof if the applicant be a copartnership or 
association, and of the officers and directors thereof if the 
applicant be a corporation, the person with direct 
responsibility for the operation and management of the proposed 
office are such as to command the confidence of the community 
and to warrant belief that the business will be operated 
honestly, fairly, and efficiently within the purposes of this 
chapter, and (2) that allowing the applicant to engage in 
business will promote the convenience and advantage of the 
community in which the business of the applicant is to be 
conducted, and (3) that the applicant has available for the 
operation of the business, at the specified location, liquid 
assets of at least $50,000 (the foregoing facts being conditions 
precedent to the issuance of a license under this chapter), he 
shall thereupon issue and deliver a license to the applicant to 
make loans, in accordance with the provisions of this chapter, 
at the location specified in the application.  If the 
commissioner shall not so find, he shall not issue a license and 
he shall notify the applicant of the denial and return to the 
applicant the sum paid by the applicant as a license fee, 
retaining the $250 investigation fee to cover the costs of 
investigating the application.  The commissioner shall approve 
or deny every application for license hereunder within 60 days 
from the filing thereof with the fees. 
    If the application is denied, the commissioner shall, 
within 20 days thereafter, file in his office a written decision 
and findings with respect thereto containing the evidence and 
the reasons supporting the denial, and forthwith serve upon the 
applicant a copy thereof. 
    There is hereby appropriated to such persons as are 
entitled to such refund, from the fund or account in the state 
treasury to which the money was credited, an amount sufficient 
to make the refund and payment. 
    Should substantially all of a licensee's outstanding loan 
accounts subject to this chapter be sold, the purchaser of the 
accounts, if otherwise fully qualified, may obtain a license, 
without establishing convenience and advantage, in the same 
municipality upon surrender of the seller's license to the 
commissioner.  
    Sec. 16.  Minnesota Statutes 1984, section 56.07, is 
amended to read: 
    56.07 [CONTROL OVER LOCATION.] 
    Not more than one place of business shall be maintained 
under the same license, but the commissioner may issue more than 
one license to the same licensee upon compliance with all the 
provisions of this chapter governing an original issuance of a 
license, for each such new license.  To the extent that 
previously filed applicable information remains substantially 
unchanged, the applicant need not refile this information, 
unless requested. 
    When a licensee shall wish to change his place of business 
to a street address in the same municipality designated in his 
license, he shall give written notice thereof 30 days in advance 
to the commissioner, who shall within 30 days of receipt of such 
notice, issue an amended license approving the change.  No 
change in the place of business of a licensee to a location 
outside of the original municipality shall be permitted under 
the same license. 
    A licensed place of business shall be open during regular 
business hours each weekday, except for legal holidays and for 
any weekday the commissioner grants approval to the licensee to 
remain closed.  A licensed place of business may be open on 
Saturday, but shall be closed on Sunday.  
    Sec. 17.  Minnesota Statutes 1984, section 56.12, is 
amended to read:  
    56.12 [ADVERTISING; TAKING OF SECURITY; PLACE OF BUSINESS.] 
    No licensee shall advertise, print, display, publish, 
distribute, or broadcast, or cause or permit to be advertised, 
printed, displayed, published, distributed, or broadcast, in any 
manner any statement or representation with regard to the rates, 
terms, or conditions for the lending of money, credit, goods, or 
things in action which is false, misleading, or deceptive.  The 
commissioner may order any licensee to desist from any conduct 
which he shall find to be a violation of the foregoing 
provisions. 
    The commissioner may require that rates of charge, if 
stated by a licensee, be stated fully and clearly in such manner 
as he may deem necessary to prevent misunderstanding thereof by 
prospective borrowers.  A statement of rates of charge that 
meets the requirements of the federal Truth-in-Lending Act and 
regulations thereunder shall be deemed full compliance with this 
section In lieu of the disclosure requirements of this section 
and section 56.14, a licensee may give the disclosures required 
by the federal Truth-in-Lending Act. 
    A licensee may take a lien upon real estate as security for 
any loan exceeding $2,700 in principal amount made under this 
chapter.  The provisions of sections 47.20 and 47.21 do not 
apply to loans made under this chapter, except as provided in 
this section.  No loan secured by a first lien on a borrower's 
primary residence shall be made pursuant to this section if the 
proceeds of the loan are used to finance the purchase of the 
borrower's primary residence, unless:  
    (1) the proceeds of the loan are used to finance the 
purchase of a manufactured home; or 
     (2) the proceeds of the loan are used in whole or in part 
to satisfy the balance owed on a contract for deed.  The rate of 
interest charged on such a loan made after August 1, 1987, shall 
not exceed the rate provided in section 47.20, subdivision 4a.  
     If the proceeds of the loan are used to finance the 
purchase of the borrower's primary residence, the licensee shall 
consent to the subsequent transfer of the real estate if the 
existing borrower continues after transfer to be obligated for 
repayment of the entire remaining indebtedness.  The licensee 
shall release the existing borrower from all obligations under 
the loan instruments, if the transferee (1) meets the standards 
of credit worthiness normally used by persons in the business of 
making loans, including but not limited to the ability of the 
transferee to make the loan payments and satisfactorily maintain 
the property used as collateral, and (2) executes an agreement 
in writing with the licensee whereby the transferee assumes the 
obligations of the existing borrower under the loan 
instruments.  Any such agreement shall not affect the priority, 
validity or enforceability of any loan instrument.  A licensee 
may charge a fee not in excess of one-tenth of one percent of 
the remaining unpaid principal balance in the event the loan is 
assumed by the transferee and the existing borrower continues 
after the transfer to be obligated for repayment of the entire 
assumed indebtedness.  A licensee may charge a fee not in excess 
of one percent of the remaining unpaid principal balance in the 
event the remaining indebtedness is assumed by the transferee 
and the existing borrower is released from all obligations under 
the loan instruments, but in no event shall the fee exceed $150. 
    A licensee making a loan under this chapter secured by a 
lien on real estate shall comply with the requirements of 
section 47.20, subdivision 8.  
    No licensee shall conduct the business of making loans 
under this chapter within any office, room, or place of business 
in which any other business is solicited or engaged in, or in 
association or conjunction therewith, if the commissioner finds 
that the character of the other business is such that it would 
facilitate evasions of this chapter or of the rules and 
regulations lawfully made hereunder.  The commissioner may 
promulgate rules dealing with such other businesses. 
    No licensee shall transact the business or make any loan 
provided for by this chapter under any other name or at any 
other place of business than that named in the license.  No 
licensee shall take any confession of judgment or any power of 
attorney.  No licensee shall take any note or promise to pay 
that does not accurately disclose the principal amount of the 
loan, the time for which it is made, and the agreed rate or 
amount of charge, nor any instrument in which blanks are left to 
be filled in after execution.  Nothing herein is deemed to 
prohibit the making of loans by mail. 
    Sec. 18.  Minnesota Statutes 1984, section 56.125, 
subdivision 4, is amended to read:  
    Subd. 4.  [ALTERNATIVE COMPLIANCE.] Compliance by a 
licensee making open-end loans pursuant to this section with the 
open-end credit provisions of the federal Truth-in-Lending Act 
and regulations issued thereunder is required, and the 
disclosure requirements in sections 56.12 and 56.14 do not apply 
with respect to open-end loans made pursuant to this section. In 
addition, Prior to any licensee taking a lien upon the 
borrower's homestead, as defined in chapter 510, as security for 
any open-end loan pursuant to subdivision 2, the borrower shall 
be provided with a statement in substantially the following 
form, in bold face type of a minimum size of 12 points, signed 
and dated by the borrower at the time of the execution of the 
contract surrendering the homestead exemption, immediately 
adjacent to a listing of the homestead property:  "I understand 
that some or all of the above real estate is normally protected 
by law from the claims of creditors, and I voluntarily give up 
my right to that protection for the above listed property with 
respect to claims arising out of this contract."  
    Sec. 19.  Minnesota Statutes 1984, section 56.131, 
subdivision 1, is amended to read: 
    Subdivision 1.  [INTEREST RATES AND CHARGES.] (a) On any 
loan in the a principal amount of not exceeding $35,000 
or less ten percent of a corporate licensee's contributed 
capital and appropriated reserves as defined in section 53.015, 
if greater, a licensee may contract for and receive interest, 
calculated according to the actuarial method, not exceeding the 
equivalent of the greater of any of the following: 
    (1) the total of:  (i) 33 percent per year on that part of 
the unpaid balance of the principal amount not exceeding $350;  
and (ii) 19 percent per year on that part of the unpaid balance 
of the principal amount exceeding $350; or 
    (2) 21.75 percent per year on the unpaid balance of the 
principal amount. 
    (b) On any loan where interest has been calculated 
according to the method provided for in paragraph (a), clause 
(1), interest must be contracted for and earned as provided in 
that provision or at the single annual percentage rate computed 
to the nearest one hundredth of one percent that would earn the 
same total interest at maturity of the contract as would be 
earned by the application of the graduated rates provided in 
paragraph (a), clause (1), when the debt is paid according to 
the agreed terms and the calculations are made according to the 
actuarial method.  
    (c) Loans may be interest-bearing or precomputed. 
    (d) To compute time on interest-bearing and precomputed 
loans, including, but not limited to the calculation of 
interest, a day is considered 1/30 of a month when calculation 
is made for a fraction of a calendar month.  A year is 12 
calendar months.  A calendar month is that period from a given 
date in one month to the same numbered date in the following 
month, and if there is no same numbered date, to the last day of 
the following month.  When a period of time includes a whole 
month and a fraction of a month, the fraction of a month is 
considered to follow the whole month.  
     In the alternative, for interest-bearing loans, a licensee 
may charge interest at the rate of 1/365 of the agreed annual 
rate for each actual day elapsed.  
     (e) With respect to interest-bearing loans: 
     (1) Interest must be computed on unpaid principal balances 
outstanding from time to time, for the time outstanding.  Each 
payment must be applied first to the accumulated interest and 
the remainder of the payment applied to the unpaid principal 
balance; provided however, that if the amount of the payment is 
insufficient to pay the accumulated interest, the unpaid 
interest continues to accumulate to be paid from the proceeds of 
subsequent payments and is not added to the principal balance. 
     (2) Interest must not be payable in advance or compounded.  
However, if part or all of the consideration for a new loan 
contract is the unpaid principal balance of a prior loan, then 
the principal amount payable under the new loan contract may 
include any unpaid interest which has accrued.  The unpaid 
principal balance of a precomputed loan is the balance due after 
refund or credit of unearned interest as provided in paragraph 
(f), clause (3).  The resulting loan contract is deemed a new 
and separate loan transaction for all purposes. 
     (f) With respect to precomputed loans: 
     (1) Loans must be repayable in substantially equal and 
consecutive monthly installments of principal and interest 
combined, except that the first installment period may be more 
or less than one month by not more than 15 days, and the first 
installment payment amount may be larger than the remaining 
payments by the amount of interest charged for the extra days 
and must be reduced by the amount of interest for the number of 
days less than one month to the first installment payment; and 
monthly installment payment dates may be omitted to accommodate 
borrowers with seasonal income. 
     (2) Payments may be applied to the combined total of 
principal and precomputed interest until the loan is fully 
paid.  Payments must be applied in the order in which they 
become due. 
     (3) When any loan contract is paid in full by cash, renewal 
or refinancing, or a new loan, one month or more before the 
final installment due date, a licensee shall refund or credit 
the borrower with the total of the applicable charges for all 
fully unexpired installment periods, as originally scheduled or 
as deferred, which follow the day of prepayment; if the 
prepayment is made other than on a scheduled payment date, the 
nearest scheduled installment payment date must be used in the 
computation; provided further, if the prepayment occurs prior to 
the first installment due date, the licensee may retain 1/30 of 
the applicable charge for a first installment period of one 
month for each day from the date of the loan to the date of 
prepayment, and shall refund or credit the borrower with the 
balance of the total interest contracted for.  If the maturity 
of the loan is accelerated for any reason and judgment is 
entered, the licensee shall credit the borrower with the same 
refund as if prepayment in full had been made on the date the 
judgment is entered. 
    (4) If an installment, other than the final installment, is 
not paid in full within ten days of its scheduled due date, a 
licensee may contract for and receive a default charge not 
exceeding five percent of the amount of the installment, but not 
less than $2 $4. 
    A default charge under this subdivision may not be 
collected on an installment paid in full within ten days of its 
scheduled due date, or deferred installment due date with 
respect to deferred installments, even though a default or 
deferral charge on an earlier installment has not been paid in 
full.  A default charge may be collected at the time it accrues 
or at any time thereafter. 
    (5) If the parties agree in writing, either in the loan 
contract or in a subsequent agreement, to a deferment of wholly 
unpaid installments, a licensee may grant a deferment and may 
collect a deferment charge as provided in this section.  A 
deferment postpones the scheduled due date of the earliest 
unpaid installment and all subsequent installments as originally 
scheduled, or as previously deferred, for a period equal to the 
deferment period.  The deferment period is that period during 
which no installment is scheduled to be paid by reason of the 
deferment.  The deferment charge for a one-month period may not 
exceed the applicable charge for the installment period 
immediately following the due date of the last undeferred 
payment.  A proportionate charge may be made for deferment for 
periods of more or less than one month.  A deferment charge is 
earned pro rata during the deferment period and is fully earned 
on the last day of the deferment period.  Should a loan be 
prepaid in full during a deferment period, the licensee shall 
make or credit to the borrower a refund of the unearned 
deferment charge in addition to any other refund or credit made 
for prepayment of the loan in full. 
      (6) If two or more installments are delinquent one full 
month or more on any due date, and if the contract so provides, 
the licensee may reduce the unpaid balance by the refund credit 
which would be required for prepayment in full on the due date 
of the most recent maturing installment in default.  Thereafter, 
and in lieu of any other default or deferment charges, the 
single annual percentage rate permitted by this subdivision may 
be charged on the unpaid balance until fully paid. 
      (7) Following the final installment as originally scheduled 
or deferred, the licensee, for any loan contract which has not 
previously been converted to interest-bearing under paragraph 
(f), clause (6), may charge interest on any balance remaining 
unpaid, including unpaid default or deferment charges, at the 
single annual percentage rate permitted by this subdivision 
until fully paid.  
    Sec. 20.  Minnesota Statutes 1984, section 56.131, 
subdivision 2, is amended to read: 
    Subd. 2.  [ADDITIONAL CHARGES.] In addition to the charges 
provided for by this section and section 56.155, no further or 
other amount whatsoever, shall be directly or indirectly 
charged, contracted for, or received for the loan made, except 
actual out of pocket expenses of the licensee to realize on a 
security after default, and except for the following additional 
charges which may be included in the principal amount of the 
loan:  
    (a) Lawful fees and taxes paid to any public officer to 
record, file, or release security;  
    (b) With respect to a loan secured by an interest in real 
estate, the following closing costs, if they are bona fide, 
reasonable in amount, and not for the purpose of circumvention 
or evasion of this section; provided the costs do not exceed one 
percent of the principal amount or $250, whichever is greater: 
    (1) fees or premiums for title examination, abstract of 
title, title insurance, surveys, or similar purposes;  
    (2) An amount not to exceed $150 fees, if not paid to the 
licensee, an employee of the licensee, or a person related to 
the licensee, for fees for preparation of a mortgage, settlement 
statement, or other documents, fees for notarizing mortgages and 
other documents, and appraisal fees;  
    (c) The premium for insurance in lieu of perfecting and 
releasing a security interest to the extent that the premium 
does not exceed the fees described in paragraph (a). 
    Sec. 21.  Minnesota Statutes 1984, section 56.131, 
subdivision 4, is amended to read:  
     Subd. 4.  [ADJUSTMENT OF DOLLAR AMOUNTS.] (a) The dollar 
amounts in this section, sections 56.01 and 56.12 shall change 
periodically, as provided in this section, according to and to 
the extent of changes in the implicit price deflator for the 
gross national product, 1972 = 100, compiled by the United 
States department of commerce, and hereafter referred to as the 
index.  The index for December, 1980 is the reference base index 
for adjustments of dollar amounts, except that the index for 
December, 1984 is the reference base index for the minimum 
default charge of $4. 
    (b) The designated dollar amounts shall change on July 1 of 
each even-numbered year if the percentage of change, calculated 
to the nearest whole percentage point, between the index for 
December of the preceding year and the reference base index is 
ten percent or more, but;  
    (1) the portion of the percentage change in the index in 
excess of a multiple of ten percent shall be disregarded and the 
dollar amounts shall change only in multiples of ten percent of 
the amounts appearing in Laws 1981, Chapter 258 on the date of 
enactment; and 
    (2) the dollar amounts shall not change if the amounts 
required by this section are those currently in effect pursuant 
to Laws 1981, Chapter 258 as a result of earlier application of 
this section.  
    (c) If the index is revised, the percentage of change 
pursuant to this section shall be calculated on the basis of the 
revised index.  If a revision of the index changes the reference 
base index, a revised reference base index shall be determined 
by multiplying the reference base index then applicable by the 
rebasing factor furnished by the department of commerce.  If the 
index is superseded, the index referred to in this section is 
the one represented by the department of commerce as reflecting 
most accurately changes in the purchasing power of the dollar 
for consumers.  
    (d) The commissioner shall announce and publish:  
    (1) on or before April 30 of each year in which dollar 
amounts are to change, the changes in dollar amounts required by 
paragraph (b); and 
    (2) promptly after the changes occur, changes in the index 
required by paragraph (c) including, if applicable, the 
numerical equivalent of the reference base index under a revised 
reference base index and the designation or title of any index 
superseding the index.  
    (e) A person does not violate this chapter with respect to 
a transaction otherwise complying with this chapter if he relies 
on dollar amounts either determined according to paragraph (b), 
clause (2) or appearing in the last publication of the 
commissioner announcing the then current dollar amounts.  
    (f) The adjustments provided in this section shall not be 
affected unless explicitly provided otherwise by law.  
    Sec. 22.  Minnesota Statutes 1984, section 56.19, 
subdivision 4, is amended to read: 
    Subd. 4.  [REMEDIES EXCLUSIVE.] The remedies set forth in 
this section and section 48.196 are exclusive and, except as 
otherwise provided in this chapter,.  A violation of any 
provision of this chapter does not impair rights on a debt. 
    Sec. 23.  Minnesota Statutes 1984, section 56.19, is 
amended by adding a subdivision to read: 
    Subd. 2a.  [PENALTY FOR INTENTIONAL VIOLATIONS.] Any lender 
intentionally violating this chapter, when the violation does 
not also constitute a violation of any other provision of state 
or federal law for which there is a remedy, shall be liable to 
the consumer in an amount not to exceed $100 for each violation. 
    Sec. 24.  Minnesota Statutes 1984, section 550.37, 
subdivision 4a, is amended to read: 
    Subd. 4a.  [ADJUSTMENT OF DOLLAR AMOUNTS.] (a) The dollar 
amounts in subdivision 4 this section shall change periodically 
as provided in this subdivision to the extent of changes in the 
implicit price deflator for the gross national product, 1972 = 
100, compiled by the United States department of commerce, and 
hereafter referred to as the index.  The index for December, 
1982 1980, is the reference base index.  
    (b) The designated dollar amounts shall change on July 1 of 
each even-numbered year if the percentage of change, calculated 
to the nearest whole percentage point, between the index for 
December of the preceding year and the reference base index is 
ten percent or more.  The portion of the percentage change in 
the index in excess of a multiple of ten percent shall be 
disregarded and the dollar amounts shall change only in 
multiples of ten percent of the amounts stated in subdivision 4 
this section. 
    (c) If the index is revised, the percentage of change 
pursuant to this section shall be calculated on the basis of the 
revised index.  If a revision of the index changes the reference 
base index, a revised reference base index shall be determined 
by multiplying the reference base index then applicable by the 
rebasing factor furnished by the department of commerce.  If the 
index is superseded, the index referred to in this section is 
the one represented by the department of commerce as reflecting 
most accurately changes in the purchasing power of the dollar 
for consumers.  
    (d) The commissioner of commerce shall announce and publish:
    (1) on or before April 30 of each year in which dollar 
amounts are to change, the changes in dollar amounts required by 
paragraph (b); and 
    (2) promptly after the changes occur, changes in the index 
required by paragraph (c) including, if applicable, the 
numerical equivalent of the reference base index under a revised 
reference base index and the designation or title of any index 
superseding the index.  
    (e) A person does not violate this chapter with respect to 
a transaction otherwise complying with this chapter if he relies 
on dollar amounts either determined according to paragraph (b) 
or appearing in the last publication of the commissioner 
announcing the then current dollar amounts. 
    Sec. 25.  [REPEALER.] 
    Minnesota Statutes 1984, section 53.03, subdivision 4, is 
repealed. 
    Sec. 26.  [APPLICATION.] 
    Sections 1 to 25 do not affect the adjustments to dollar 
amounts made pursuant to Minnesota Statutes, section 56.131, 
subdivision 4, on July 1, 1984, or thereafter unless otherwise 
specifically provided. 
    Sec. 27.  [EFFECTIVE DATE.] 
    Sections 1 to 23 and 25 are effective the day following 
final enactment.  Section 24 is effective July 1, 1986. 
    Approved June 24, 1985