Minnesota Session Laws - 1994, Regular Session

                            CHAPTER 382-H.F.No. 1885 
                  An act relating to financial institutions; regulating 
                  administrative hearings on bank applications, certain 
                  bank mergers, certain emergency notices, certain 
                  credit union accounts, and motor vehicle sales finance 
                  contracts; regulating maximum interest rates; making 
                  technical and clarifying changes; amending Minnesota 
                  Statutes 1992, sections 46.041, subdivision 4; 
                  47.0153, subdivision 1; 47.0154; 48.47; 48.70; 52.191; 
                  52.24, subdivision 2; 59A.03, subdivision 1; and 
                  168.69; Minnesota Statutes 1993 Supplement, sections 
                  47.20, subdivision 4a; 47.54, subdivision 4; and 
                  56.155, subdivision 1; proposing coding for new law in 
                  Minnesota Statutes, chapters 48; and 52; repealing 
                  Minnesota Statutes 1992, sections 48.26; and 48.88, 
                  subdivision 2; Laws 1982, chapter 429, section 6.  
        BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
           Section 1.  Minnesota Statutes 1992, section 46.041, 
        subdivision 4, is amended to read: 
           Subd. 4.  [HEARING.] In any case in which the commissioner 
        grants a request for a hearing or makes the independent 
        determination that a hearing is warranted on the basis of the 
        conditions in subdivision 3, the commissioner shall fix a time 
        for a hearing conducted pursuant to chapter 14 to decide whether 
        or not the application will be granted.  A notice of the hearing 
        must be published by the applicant in the form prescribed by the 
        commissioner in a newspaper published in the municipality in 
        which the proposed bank is to be located, and if there is no 
        such newspaper, then at the county seat of the county in which 
        the bank is proposed to be located.  The notice must be 
        published once, at the expense of the applicants, not less than 
        30 days prior to the date of the hearing.  At the hearing the 
        commissioner shall consider the application and hear the 
        applicants and witnesses that appear in favor of or against the 
        granting of the application of the proposed bank.  If an 
        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 
        department of commerce to be deposited in the general fund, must 
        be paid by the applicant and 50 percent equally by the 
        intervening parties. 
           Sec. 2.  Minnesota Statutes 1992, section 47.0153, 
        subdivision 1, is amended to read: 
           Subdivision 1.  When the officers of a financial 
        institution are of the opinion that an emergency exists, or is 
        impending, which affects, or may affect, a financial 
        institution's offices, they shall have the authority, in the 
        reasonable exercise of their discretion, to determine not to 
        open any of its offices on any business day or, if having 
        opened, to close an office during the continuation of the 
        emergency, even if the commissioner does not issue a 
        proclamation of emergency.  The office closed shall remain 
        closed until the time that the officers determine the emergency 
        has ended, and for the further time reasonably necessary to 
        reopen.  No financial institution office shall remain closed for 
        more then 48 consecutive hours, excluding other legal holidays, 
        without the prior approval of the commissioner, or in the case 
        of a national bank, the comptroller of the currency. 
           Sec. 3.  Minnesota Statutes 1992, section 47.0154, is 
        amended to read: 
           47.0154 [NOTICE TO COMMISSIONER.] 
           A financial institution closing an office or offices 
        pursuant to the authority granted under section 47.0153, 
        subdivision 1, shall give as prompt notice of its action, as 
        conditions will permit and by any means available, to the 
        commissioner, and in the case of a national bank, to the 
        comptroller of the currency and in case of federal savings and 
        loans, to the federal home loan bank board.  
           Sec. 4.  Minnesota Statutes 1993 Supplement, section 47.20, 
        subdivision 4a, is amended to read: 
           Subd. 4a.  [MAXIMUM INTEREST RATE.] (a) No conventional or 
        cooperative apartment loan or contract for deed shall be made at 
        a rate of interest or loan yield in excess of a maximum lawful 
        interest rate in an amount equal to the Federal National 
        Mortgage Association posted yields on 30-year mortgage 
        commitments for delivery within 60 days on standard conventional 
        fixed-rate mortgages published in the Wall Street Journal for 
        the last business day of the second preceding month plus four 
        percentage points. 
           (b) The maximum lawful interest rate applicable to a 
        cooperative apartment loan or contract for deed at the time the 
        loan or contract is made is the maximum lawful interest rate for 
        the term of the cooperative apartment loan or contract for 
        deed.  Notwithstanding the provisions of section 334.01, a 
        cooperative apartment loan or contract for deed may provide, at 
        the time the loan or contract is made, for the application of 
        specified different consecutive periodic interest rates to the 
        unpaid principal balance, if no interest rate exceeds the 
        maximum lawful interest rate applicable to the loan or contract 
        at the time the loan or contract is made.  
           (c) The maximum interest rate that can be charged on a 
        conventional loan or a contract for deed, with a duration of ten 
        years or less, for the purchase of real estate described in 
        section 83.20, subdivision 13 subdivisions 11 and 13, is three 
        percentage points above the rate permitted under paragraph (a) 
        or 15.75 percent per year, whichever is less.  This paragraph is 
        effective August 1, 1992. 
           (d) Contracts for deed executed pursuant to a commitment 
        for a contract for deed, or conventional or cooperative 
        apartment loans made pursuant to a borrower's interest rate 
        commitment or made pursuant to a borrower's loan commitment, or 
        made pursuant to a commitment for conventional or cooperative 
        apartment loans made upon payment of a forward commitment fee 
        including a borrower's loan commitment issued pursuant to a 
        forward commitment, which commitment provides for consummation 
        within some future time following the issuance of the commitment 
        may be consummated pursuant to the provisions, including the 
        interest rate, of the commitment notwithstanding the fact that 
        the maximum lawful rate of interest at the time the contract for 
        deed or conventional or cooperative apartment loan is actually 
        executed or made is less than the commitment rate of interest, 
        provided the commitment rate of interest does not exceed the 
        maximum lawful interest rate in effect on the date the 
        commitment was issued.  The refinancing of:  (1) an existing 
        conventional or cooperative apartment loan, (2) a loan insured 
        or guaranteed by the secretary of housing and urban development, 
        the administrator of veterans affairs, or the administrator of 
        the farmers home administration, or (3) a contract for deed by 
        making a conventional or cooperative apartment loan is deemed to 
        be a new conventional or cooperative apartment loan for purposes 
        of determining the maximum lawful rate of interest under this 
        subdivision.  The renegotiation of a conventional or cooperative 
        apartment loan or a contract for deed is deemed to be a new loan 
        or contract for deed for purposes of paragraph (b) and for 
        purposes of determining the maximum lawful rate of interest 
        under this subdivision.  A borrower's interest rate commitment 
        or a borrower's loan commitment is deemed to be issued on the 
        date the commitment is hand delivered by the lender to, or 
        mailed to the borrower.  A forward commitment is deemed to be 
        issued on the date the forward commitment is hand delivered by 
        the lender to, or mailed to the person paying the forward 
        commitment fee to the lender, or to any one of them if there 
        should be more than one.  A commitment for a contract for deed 
        is deemed to be issued on the date the commitment is initially 
        executed by the contract for deed vendor or the vendor's 
        authorized agent. 
           (e) A contract for deed executed pursuant to a commitment 
        for a contract for deed, or a loan made pursuant to a borrower's 
        interest rate commitment, or made pursuant to a borrower's loan 
        commitment, or made pursuant to a forward commitment for 
        conventional or cooperative apartment loans made upon payment of 
        a forward commitment fee including a borrower's loan commitment 
        issued pursuant to a forward commitment at a rate of interest 
        not in excess of the rate of interest authorized by this 
        subdivision at the time the commitment was made continues to be 
        enforceable in accordance with its terms until the indebtedness 
        is fully satisfied. 
           Sec. 5.  Minnesota Statutes 1993 Supplement, section 47.54, 
        subdivision 4, is amended to read: 
           Subd. 4.  [HEARING.] In any case in which the commissioner 
        grants a request for a hearing, or makes the independent 
        determination that a hearing is warranted on the basis of the 
        conditions in subdivision 3, the commissioner shall fix a time 
        for a hearing conducted pursuant to chapter 14 to decide whether 
        or not the application will be granted.  A notice of the hearing 
        must be published by the applicant in the form prescribed by the 
        commissioner in a qualified newspaper published in the 
        municipality in which the proposed detached facility is to be 
        located, and if there is no such newspaper, then in a qualified 
        newspaper likely to give notice in the municipality in which the 
        proposed detached facility is to be located.  The notice must be 
        published once, at the expense of the applicants, not less than 
        30 days prior to the date of the hearing.  At the hearing the 
        commissioner shall consider the application and hear the 
        applicants and witnesses that appear in favor of or against the 
        granting of the application of the proposed detached facility.  
        If an application is contested and a hearing is granted, 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 commissioner of commerce to be 
        deposited in the general fund, must be paid by the applicant and 
        50 percent equally by the intervening parties. 
           Sec. 6.  Minnesota Statutes 1992, section 48.47, is amended 
        to read: 
           48.47 [BANKING AND TRUST COMPANY BUSINESS.] 
           After the application of the corporation shall have been 
        favorably acted on by the department in compliance with section 
        45.03 sections 46.041 to 46.044, and upon compliance with the 
        terms hereof and the issuance of such certificates, the bank may 
        commence the transaction of banking and trust company business 
        and may exercise, in addition to all the powers and privileges 
        conferred by law on state banks, the powers and privileges set 
        forth in section 48.38, and the bank shall thereafter comply 
        with and be subject to all of the provisions of law relating to 
        state banks exercising such fiduciary powers and privileges.  
           Sec. 7.  [48.611] [MERGER WITH SUBSIDIARIES.] 
           Subdivision 1.  [AUTHORITY.] Notwithstanding any other law 
        to the contrary, a bank may merge a subsidiary authorized and 
        established pursuant to section 48.61, subdivision 1, into 
        itself provided it owns 100 percent of the outstanding voting 
        stock.  
           Subd. 2.  [PROCEDURE.] A merger of a subsidiary authorized 
        by subdivision 1 must conform to the procedures in section 
        302A.621.  
           Subd. 3.  [APPROVAL.] Before filing the articles of merger 
        with the secretary of state, the merger plan must be filed with 
        and approved in writing by the commissioner who shall determine 
        that:  
           (1) the provisions of section 302A.621 are followed; and 
           (2) the effect of the merger will not have an undue adverse 
        effect on the safety and soundness of the bank. 
           Sec. 8.  Minnesota Statutes 1992, section 48.70, is amended 
        to read: 
           48.70 [CERTIFICATES TO BE AMENDED.] 
           In order to exercise such powers as may be granted in 
        sections 48.69 to 48.73, any such trust company may amend its 
        certificate of incorporation so as to assume the additional 
        powers of a state banking corporation.  This amendment may 
        include the change of the corporate name of the trust company so 
        as to include the words "state bank" therein.  Such trust 
        company shall display in its place of business, the certificate 
        of such authorization issued by the commissioner of commerce.  
           Sec. 9.  [52.137] [INDIVIDUAL RETIREMENT ACCOUNTS.] 
           Notwithstanding sections 52.04, subdivision 1, clause (1), 
        and 52.05, a credit union may receive payment as deposits to 
        establish an individual retirement account for the spouse of a 
        blood or adoptive relative of a regularly qualified member if 
        the blood or adoptive relative is a member of the credit union. 
           Sec. 10.  Minnesota Statutes 1992, section 52.191, is 
        amended to read: 
           52.191 [INACTIVE ACCOUNTS.] 
           Whenever a member's share or deposit balance is not more 
        less than $25 and the member has not transacted any business 
        with the credit union for a period of at least seven three 
        years, the board of directors, after giving 30 days written 
        notice by certified mail to the last known address of the 
        member, may transfer the balance to the operating reserve fund 
        of the credit union.  Thereafter, subject to the law governing 
        abandoned funds, the member may recover the funds in the account 
        at the time of the transfer by making application to the credit 
        union for such funds, but the credit union shall have no 
        obligation to the member for the payment of dividends or 
        interest on the funds after the transfer to the operating 
        reserve.  
           Sec. 11.  Minnesota Statutes 1992, section 52.24, 
        subdivision 2, is amended to read: 
           Subd. 2.  [CERTIFICATE OF APPROVAL.] No credit union shall 
        be granted a certificate of approval by the commissioner of 
        commerce unless the credit union has obtained a commitment for 
        insurance of its member share and deposit accounts under the 
        provisions of title II of the National Credit Union Act, or from 
        a legally constituted credit union share insurance corporation. 
           Sec. 12.  Minnesota Statutes 1993 Supplement, section 
        56.155, subdivision 1, is amended to read: 
           Subdivision 1.  [AUTHORIZATION.] No licensee shall, 
        directly or indirectly, sell or offer for sale any insurance in 
        connection with any loan made under this chapter except as and 
        to the extent authorized by this section.  The sale of credit 
        life, credit accident and health, and credit involuntary 
        unemployment insurance is subject to the provisions of chapter 
        62B, except that the term of the insurance may exceed 60 months 
        if the term of the loan exceeds 60 months.  Life, accident, 
        health, and involuntary unemployment insurance, or any of them, 
        may be written upon or in connection with any loan but must not 
        be required as additional security for the indebtedness.  If the 
        debtor chooses to procure credit life insurance, credit accident 
        and health insurance, or credit involuntary unemployment 
        insurance as security for the indebtedness, the debtor shall 
        have the option of furnishing this security through existing 
        policies of insurance that the debtor owns or controls, or of 
        furnishing the coverage through any insurer authorized to 
        transact business in this state.  A statement in substantially 
        the following form must be made orally, except for loans by mail 
        pursuant to section 56.12, and provided in writing in bold face 
        type of a minimum size of 12 points to the borrower before the 
        transaction is completed for each credit life, accident and 
        health, and involuntary unemployment insurance coverage sold: 
           CREDIT LIFE INSURANCE, CREDIT DISABILITY INSURANCE, AND 
           CREDIT INVOLUNTARY UNEMPLOYMENT INSURANCE ARE NOT REQUIRED 
           TO OBTAIN CREDIT.  YOU MAY BUY ANY INSURANCE FROM ANYONE 
           YOU CHOOSE OR YOU MAY USE EXISTING INSURANCE.  
           The licensee shall disclose whether or not the benefits 
        commence as of the first day of disability or involuntary 
        unemployment and shall further disclose the number of days that 
        an insured obligor must be disabled or involuntarily unemployed, 
        as defined in the policy, before benefits, whether retroactive 
        or nonretroactive, commence.  In case there are multiple 
        obligors under a transaction subject to this chapter, no policy 
        or certificate of insurance providing credit accident and health 
        or credit unemployment benefits may be procured by or through a 
        licensee upon more than one of the obligors.  In case there are 
        multiple obligors under a transaction subject to this chapter, 
        no policy or certificate of insurance providing credit accident 
        and health or credit life insurance may be procured by or 
        through a licensee upon more than two of the obligors in which 
        case they shall be insured jointly.  The premium or identifiable 
        charge for the insurance must not exceed that filed by the 
        insurer with the department of commerce.  The charge, computed 
        at the time the loan is made for a period not to exceed the full 
        term of the loan contract on an amount not to exceed the total 
        amount required to pay principal and charges, may be deducted 
        from the proceeds or may be included as part of the principal of 
        any loan.  If a borrower procures insurance by or through a 
        licensee, the statement required by section 56.14 must disclose 
        the cost to the borrower and the type of insurance, and the 
        licensee shall cause to be delivered to the borrower a copy of 
        the policy, certificate, or other evidence thereof, within a 
        reasonable time.  No licensee shall decline new or existing 
        insurance which meets the standards set out in this section nor 
        prevent any obligor from obtaining this insurance coverage from 
        other sources.  Notwithstanding any other provision of this 
        chapter, any gain or advantage to the licensee or to any 
        employee, affiliate, or associate of the licensee from this 
        insurance or the sale or provision thereof is not an additional 
        or further charge in connection with the loan; nor are any of 
        the provisions pertaining to insurance contained in this section 
        prohibited by any other provision of this chapter. 
           Sec. 13.  Minnesota Statutes 1992, section 59A.03, 
        subdivision 1, is amended to read: 
           Subdivision 1.  No person other than a savings and loan 
        association, bank, savings bank, trust company, small loan 
        company regulated lender, industrial loan and thrift company, 
        credit union or resident insurance agent who, within 15 days 
        after entering into an insurance premium finance agreement, 
        transfers such agreement to a licensee or to any of the 
        organizations exempt under this subdivision may engage in the 
        business of entering into, acquiring or holding insurance 
        premium finance agreements unless licensed to do so by the 
        commissioner.  A violation of this subdivision is a misdemeanor. 
           Sec. 14.  Minnesota Statutes 1992, section 168.69, is 
        amended to read: 
           168.69 [COMPLAINTS ALLEGING VIOLATION.] 
           Any retail buyer having reason to believe that sections 
        168.66 to 168.77 relating to the buyer's retail installment 
        contract has been violated may file with the administrator a 
        written complaint setting forth the details of such alleged 
        violation and the administrator, upon receipt of such complaint, 
        may inspect the pertinent books, records, letters and contracts 
        of the licensee, assignee of the licensee, and of the retail 
        seller involved, relating to such specific written complaint.  
           Sec. 15.  [REPEALER.] 
           Minnesota Statutes 1992, sections 48.26; and 48.88, 
        subdivision 2, are repealed.  Laws 1982, chapter 429, section 6, 
        is repealed.  
           Sec. 16.  [EFFECTIVE DATE.] 
           Sections 1 to 15 are effective the day following final 
        enactment. 
           Presented to the governor March 24, 1994 
           Signed by the governor March 28, 1994, 11:22 a.m.