Minnesota Legislature
Office of the Revisor of Statutes
Minnesota Session Laws - 1995, Regular Session
Key: (1) language to be deleted (2) new language
CHAPTER 202-S.F.No. 1134
An act relating to financial institutions; regulating
notices, electronic financial terminals, mergers with
subsidiaries, the powers and duties of the
commissioner of commerce, reporting and records
requirements, lending powers, the powers and duties of
institutions, detached facilities, and interstate
banking; making technical changes; amending Minnesota
Statutes 1994, sections 46.04, subdivision 1, and by
adding a subdivision; 46.041, subdivision 4; 46.046,
subdivision 1; 46.048, subdivision 1, and by adding
subdivisions; 47.10, subdivision 3; 47.11; 47.20,
subdivisions 5 and 10; 47.28, subdivision 1; 47.52;
47.56; 47.58, subdivision 2; 47.61, subdivision 3;
47.62, subdivisions 2, 3, and by adding subdivisions;
47.67; 47.69, subdivisions 3 and 5; 47.78; 48.16;
48.194; 48.24, subdivision 5; 48.475, subdivision 3;
48.48, subdivisions 1 and 2; 48.49; 48.61, subdivision
7, and by adding a subdivision; 48.65; 48.90,
subdivision 1; 48.91; 48.92, subdivisions 1, 2, 6, 7,
8, 9, and by adding a subdivision; 48.93, subdivisions
1, 3, and 4; 48.96; 48.99, subdivision 1; 49.01,
subdivision 3; 51A.02, subdivisions 6, 26, and 40;
51A.19, subdivision 9; 51A.50; 51A.58; 52.04,
subdivision 2a; 52.05, subdivision 2; 53.015,
subdivision 4; 53.04, subdivisions 3a, 3c, 4a, and 5a;
53.09, subdivisions 1, 2, and by adding a subdivision;
56.11; 56.12; 56.125, subdivisions 1, 2, and 3;
56.131, subdivisions 1, 2, 4, and 6; 56.132; 56.14;
56.155, subdivision 1; 56.17; 59A.06, subdivision 2;
62B.04, subdivision 1; 62B.08, subdivision 2; 300.20,
subdivision 1; 327B.04, subdivision 1; 327B.09,
subdivision 1; 332.23, subdivisions 1 and 2; and
334.011, by adding a subdivision; proposing coding for
new law in Minnesota Statutes, chapters 45; 47; 48;
51A; 52; and 334; repealing Minnesota Statutes 1994,
sections 46.03; 47.80; 47.81; 47.82; 47.83; 47.84;
47.85; 47.95; 47.98; 48.1585; 48.512, subdivision 6;
48.611; 48.97; 48.991; 51A.385; and 325F.91,
subdivision 2.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
ARTICLE 1
FINANCIAL INSTITUTIONS TECHNICAL CORRECTIONS
Section 1. [45.014] [SEAL OF DEPARTMENT OF COMMERCE.]
The commissioner of commerce shall devise a seal for
official use as the seal of the department of commerce. The
seal must be capable of being legibly reproduced under
photographic methods. A description of the seal, and a copy of
it, must be filed in the office of the secretary of state.
Sec. 2. Minnesota Statutes 1994, section 46.04,
subdivision 1, is amended to read:
Subdivision 1. The commissioner of commerce, referred to
in chapters 46 to 59 59A, and sections 332.12 to 332.29, as the
commissioner, is vested with all the powers, authority, and
privileges which, prior to the enactment of Laws 1909, chapter
201, were conferred by law upon the public examiner, and shall
take over all duties in relation to state banks, savings banks,
trust companies, savings associations, and other financial
institutions within the state which, prior to the enactment of
chapter 201, were imposed upon the public examiner. The
commissioner of commerce shall exercise a constant supervision,
either personally or through the examiners herein provided for,
over the books and affairs of all state banks, savings banks,
trust companies, savings associations, credit unions, industrial
loan and thrift companies, and other financial institutions
doing business within this state; and shall, through examiners,
examine each financial institution at least once every 18
calendar months. In satisfying this examination requirement,
the commissioner may accept reports of examination prepared by a
federal agency having comparable supervisory powers and
examination procedures. With the exception of industrial loan
and thrift companies which do not have deposit liabilities and
licensed regulated lenders, it shall be the principal purpose of
these examinations to inspect and verify the assets and
liabilities of each and so far investigate the character and
value of the assets of each institution as to determine with
reasonable certainty that the values are correctly carried on
its books. Assets and liabilities shall be verified in
accordance with methods of procedure which the commissioner may
determine to be adequate to carry out the intentions of this
section. It shall be the further purpose of these examinations
to assess the adequacy of capital protection and the capacity of
the institution to meet usual and reasonably anticipated deposit
withdrawals and other cash commitments without resorting to
excessive borrowing or sale of assets at a significant loss, and
to investigate each institution's compliance with applicable
laws and rules. Based on the examination findings, the
commissioner shall make a determination as to whether the
institution is being operated in a safe and sound manner. None
of the above provisions limits the commissioner in making
additional examinations as deemed necessary or advisable. The
commissioner shall investigate the methods of operation and
conduct of these institutions and their systems of accounting,
to ascertain whether these methods and systems are in accordance
with law and sound banking principles. The commissioner may
make requirements as to records as deemed necessary to
facilitate the carrying out of the commissioner's duties and to
properly protect the public interest. The commissioner may
examine, or cause to be examined by these examiners, on oath,
any officer, director, trustee, owner, agent, clerk, customer,
or depositor of any financial institution touching the affairs
and business thereof, and may issue, or cause to be issued by
the examiners, subpoenas, and administer, or cause to be
administered by the examiners, oaths. In case of any refusal to
obey any subpoena issued under the commissioner's direction, the
refusal may at once be reported to the district court of the
district in which the bank or other financial institution is
located, and this court shall enforce obedience to these
subpoenas in the manner provided by law for enforcing obedience
to subpoenas of the court. In all matters relating to official
duties, the commissioner of commerce has the power possessed by
courts of law to issue subpoenas and cause them to be served and
enforced, and all officers, directors, trustees, and employees
of state banks, savings banks, trust companies, savings
associations, and other financial institutions within the state,
and all persons having dealings with or knowledge of the affairs
or methods of these institutions, shall afford reasonable
facilities for these examinations, make returns and reports to
the commissioner of commerce as the commissioner may require;
attend and answer, under oath, the commissioner's lawful
inquiries; produce and exhibit any books, accounts, documents,
and property as the commissioner may desire to inspect, and in
all things aid the commissioner in the performance of duties.
Sec. 3. Minnesota Statutes 1994, 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 a
qualified newspaper likely to give notice in the municipality 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. 4. Minnesota Statutes 1994, section 46.046,
subdivision 1, is amended to read:
Subdivision 1. [WORDS, TERMS, AND PHRASES.] Unless the
language or context clearly indicates that a different meaning
is intended, the word defined in subdivision 2, for the purposes
of sections 46.041 to 46.044, shall be given the meaning
subjoined to it; and the word defined in subdivision 3, for the
purposes of chapters 46 to 77 83, shall be given the meaning
subjoined to it.
Sec. 5. Minnesota Statutes 1994, section 47.11, is amended
to read:
47.11 [SELECTION OF NAME.]
Before execution of the certificate of incorporation of any
such corporation or conduct of business under an assumed name,
its proposed name or proposed assumed name shall be submitted to
the commissioner of commerce, who shall compare it with those of
corporations operating in the state, and 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 until a satisfactory one is
selected, whereupon the commissioner shall issue a certificate
of approval thereof.
Sec. 6. Minnesota Statutes 1994, section 47.28,
subdivision 1, is amended to read:
Subdivision 1. Any savings bank organized and existing
under and by virtue of the law of this state may amend its
articles of incorporation so as to convert itself into a
savings, building and loan association, by complying with the
following requirements and procedure:
The savings bank by a two-thirds vote of the entire board
of trustees, at any regular or special meeting of said board
duly called for that purpose, shall (a) pass a resolution
declaring their intention to convert the savings bank into a
savings, building and loan association, and (b) cause an
application in writing to be executed, by such persons as the
trustees may direct, in the form prescribed by the department of
commerce, requesting a certificate of authorization (charter) as
a savings, building and loan association to transact business at
the place and in the name stated in the application. The
amendments proposed to the articles of incorporation and bylaws
shall be included as part of the application.
The application shall be submitted to, considered and acted
upon by the department of commerce in the same manner and by the
same standards as applications are submitted, considered and
acted upon under section 51.08 chapter 51A.
Sec. 7. Minnesota Statutes 1994, section 47.58,
subdivision 2, is amended to read:
Subd. 2. [AUTHORIZATION.] Pursuant to rules which the
commissioner of commerce or commissioner of insurance may find
to be necessary and proper, if any, and subject to federal laws
and regulations, lenders may make investments in reverse
mortgage loans and purchases of obligations representing reverse
mortgage loans, provided the aggregate total of committed
principal of the investment in reverse mortgage loans by any
bank, savings bank, or savings and loan association, does not
exceed five percent of that lender's total deposits and savings
accounts. This limitation shall be determined at each June 30
and December 31 for the following six-month period. Any decline
in the total of deposits and savings accounts subsequent to a
determination may be disregarded. Security for loans made under
this section shall be a first lien on residential property (a)
which the borrower occupies as principal residence and which
qualifies for homestead classification pursuant to section
273.13, and (b) to which the borrower alone has title.
Sec. 8. Minnesota Statutes 1994, section 47.62,
subdivision 3, is amended to read:
Subd. 3. Application for authorization shall be made in
the manner prescribed by rule. The commissioner shall grant
authorization for the establishment of an electronic financial
terminal if the commissioner finds that:
(a) There is reason to believe that the terminal will be
properly and safely managed;
(b) The applicant is financially sound;
(c) The proposed charges for making the services of the
terminal available to financial institutions are fair,
equitable, and nondiscriminatory;
(d) The applicant has furnished all of the information
required by rule;
(e) The terminal applicant will not gain an unfair
competitive advantage because the terminal is not operationally
available to other financial institutions or their data
processors within a reasonable period of time; and.
(f) The location and placement of the electronic financial
terminal is not designed to give or promote an unfair
competitive advantage to any financial institution.
If the commissioner has not denied the application within
45 days of its submission, the authorization shall be deemed to
be granted.
Sec. 9. Minnesota Statutes 1994, section 48.475,
subdivision 3, is amended to read:
Subd. 3. [GENERAL REQUIREMENTS.] If the bank at which a
trust service office is to be established has exercised trust
powers, then the trust company or bank which is establishing the
trust service office shall enter into an agreement respecting
those fiduciary powers to which the trust company or bank shall
succeed and shall file the agreement with the commissioner. The
trust company or bank which is establishing a trust service
office under subdivision 1 shall publish a notice of the filing
in the form prescribed by the commissioner in a newspaper
published in the municipality in which the trust service office
is to be located, and if there is no such newspaper, then at the
county seat of the county in which the trust service office is
to be located. The notice shall be published once in a
qualified newspaper in the municipality in which the proposed
trust service office 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 trust service office
is to be located, and proof of publication shall be filed with
the commissioner immediately after publication of the notice of
filing. After filing and publication, the trust company or bank
establishing the trust service office shall, as of the date the
office first opens for business, and without further
authorization of any kind, succeed to and be substituted for the
bank at which the trust service office is located as to all
fiduciary powers, rights, duties, privileges, and liabilities of
the bank in its capacity as fiduciary for all estates, trusts,
conservatorships, guardianships, and other fiduciary
relationships of which the bank is then serving as fiduciary,
except as may be otherwise specified in the agreement between
the bank and the trust company or bank which has established the
trust service office. The trust company or bank which has
established the trust service office shall also be deemed named
as fiduciary in all writings, including, but not limited to,
wills, trusts, court orders, and similar documents and
instruments, naming the bank at which the trust service office
is located signed before the date the trust service office first
opens for business, unless expressly negated by the writing or
otherwise specified in the agreement between the trust company
or bank and the bank at which the trust service office is
located. On the effective date of the substitution, the bank at
which the trust service office has been established shall be
released and absolved from all fiduciary duties and obligations
under the writings and shall discontinue its exercise of trust
powers on all matters not specifically retained by the
agreement. This subdivision does not absolve the bank from
liabilities arising out of any breach of fiduciary duty or
obligation occurring prior to the date the trust service office
first opens for business. This subdivision does not affect the
authority, duties, or obligations of a bank with respect to
relationships which may be established without trust powers,
whether the relationships arise before or after the
establishment of the trust service office.
Sec. 10. Minnesota Statutes 1994, section 48.61, is
amended by adding a subdivision to read:
Subd. 9. [MERGER WITH SUBSIDIARIES; AUTHORITY.] (a)
Notwithstanding any other law to the contrary, a bank may merge
a subsidiary authorized and established according to this
section into itself if it owns 100 percent of the outstanding
voting stock.
(b) A merger of a subsidiary authorized by subdivision 1
must conform to the procedures in section 302A.621.
(c) 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 merger will not have an undue adverse effect on the
safety and soundness of the bank.
Sec. 11. Minnesota Statutes 1994, section 48.65, is
amended to read:
48.65 [TRUST COMPANIES TO COMPLY WITH CERTAIN LAWS.]
No trust company of this state shall conduct a banking
business, as defined in section 47.02, without fully complying
with the provisions of section 48.22 48.221 relating to the
reserve requirements of the state banks.
Sec. 12. Minnesota Statutes 1994, section 48.92,
subdivision 1, is amended to read:
Subdivision 1. [TERMS.] When used in sections 48.90 to
48.991 48.99, the terms defined in this section have the
meanings given them, unless their context requires a different
meaning.
Sec. 13. Minnesota Statutes 1994, section 49.01,
subdivision 3, is amended to read:
Subd. 3. [INVESTMENT COMPANY.] "Investment company" means
any person, copartnership, association, or corporation referred
to in sections 54.26 to 54.29 54.297.
Sec. 14. Minnesota Statutes 1994, section 51A.58, is
amended to read:
51A.58 [INTERSTATE BRANCHING.]
An association, whether or not the subsidiary of a savings
and loan holding company, may, by acquisition, merger, purchase
and assumption of some or all of the assets and liabilities, or
consolidation, establish or operate branch offices in any
reciprocating state, and a savings and loan association
chartered in any reciprocating state may establish or operate
branch offices in this state by acquisition, merger, purchase,
and assumption of some or all of the assets or liabilities or
consolidation. A savings and loan holding company with its
headquarters in this state may acquire by direct or indirect
ownership or control the voting shares of a savings and loan
holding company, savings and loan association, or savings bank
located in any reciprocating state, and a savings and loan
holding company with its headquarters in a reciprocating state,
may acquire by direct or indirect ownership or control the
voting shares of a savings and loan holding company, a savings
and loan association, or savings bank located in this state, and
may acquire and merge with a savings and loan holding company
with its headquarters in this state. For the purposes of this
section, "reciprocating state" is a state that authorizes the
establishment of branch offices in that state by an association
located in this state, and the acquisition of savings and loan
associations and savings banks located in that state by a
savings and loan holding company with its headquarters in this
state, under conditions no more restrictive than those imposed
by the laws of Minnesota as determined by the commissioner of
commerce.
The commissioner of commerce shall adopt rules to provide
that procedural requirements equivalent to those contained in
sections 48.90 to 48.991 48.99 apply to reciprocal interstate
branching and acquisitions by savings and loan associations.
Sec. 15. Minnesota Statutes 1994, 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 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 $12,000
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. 16. Minnesota Statutes 1994, section 53.09,
subdivision 1, is amended to read:
Subdivision 1. [FREQUENCY AND EXPENSE.] The commissioner
shall make examinations for the purposes set forth in section
46.04, subdivision 1, at least once every 18 calendar months, of
each authorized place of business of every industrial loan and
thrift company with the right to issue thrift certificates for
investment organized or operating under this chapter to satisfy
the commissioner that the corporation is in a solvent condition
and is complying with the requirements of this chapter and
operating according to sound business principles. In order to
enforce actions in this connection, the commissioner is hereby
vested with the same authority as in the examination and
regulation of state banks. The corporation so examined shall
pay to the commissioner such fees as may be required under
section 46.131. The commissioner may maintain an action for the
recovery of such costs in any court of competent jurisdiction.
Sec. 17. Minnesota Statutes 1994, section 53.09,
subdivision 2, is amended to read:
Subd. 2. [REPORT TO COMMISSIONER.] (1) Each industrial
loan and thrift company shall annually on or before the first
day of February March file a report with the commissioner
stating in detail, under appropriate heads, its assets and
liabilities at the close of business on the last day of the
preceding calendar year. This report shall be made under oath
in the form prescribed by the commissioner.
(2) Each industrial loan and thrift company which holds
authority to accept accounts pursuant to section 53.04,
subdivision 5, shall in place of the requirement in clause (1)
submit the reports and make the publication required of state
banks pursuant to section 48.48.
(3) Within 30 days following a change in controlling
ownership of the capital stock of an industrial loan and thrift
company, it shall file a written report with the commissioner
stating in detail the nature of such change in ownership.
Sec. 18. Minnesota Statutes 1994, section 53.09, is
amended by adding a subdivision to read:
Subd. 2a. [COMPLIANCE EXAMINATIONS.] For the purpose of
discovering violations of this chapter or securing information
lawfully required by the commissioner under this chapter, the
commissioner may, at any time, either personally or by a person
or persons duly designated, investigate the loans and business,
and examine the books, accounts, records, and files used in the
business, of every licensee and of every person engaged in the
business whether or not the person acts or claims to act as
principal or agent, or under the authority of this chapter. For
the purposes of this subdivision, the commissioner and duly
designated representatives have free access to the offices and
places of business, books, accounts, papers, records, files,
safes, and vaults of all these persons. The commissioner and
all persons duly designated may require the attendance of and
examine, under oath, all persons whose testimony the
commissioner may require relative to the loans or business or to
the subject matter of an examination, investigation, or hearing.
Each licensee shall pay to the commissioner the amount
required under section 46.131, and the commissioner may maintain
an action for the recovery of the costs in a court of competent
jurisdiction.
Sec. 19. Minnesota Statutes 1994, section 56.11, is
amended to read:
56.11 [BOOKS OF ACCOUNT; ANNUAL REPORT.]
The licensee shall keep and use in the licensee's business
such books, accounts, and records as will enable the
commissioner to determine whether the licensee is complying with
the provisions of this chapter and with the rules lawfully made
by the commissioner hereunder. Every licensee shall preserve
such books, accounts, and records, including cards used in the
card system, if any, for at least two years after making the
final entry on any loan recorded therein. Accounting systems
maintained in whole or in part by mechanical or electronic data
processing methods which provide information equivalent to that
otherwise required are acceptable for this purpose.
Each licensee shall annually on or before the fifteenth day
of March, except in odd numbered years and then on or before the
seventh first day of February March, file a report with the
commissioner giving such relevant information as the
commissioner reasonably may require concerning the business and
operations during the preceding calendar year of each licensed
place of business, conducted by such licensee within the state.
Such report shall be made under oath and shall be in the form
prescribed by the commissioner, who shall make and publish
annually an analysis and recapitulation of such reports.
Sec. 20. Minnesota Statutes 1994, 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 the commissioner 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 the commissioner may deem necessary to prevent
misunderstanding thereof by prospective borrowers. 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 $4,320 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 a prefabricated building; or
(2) the proceeds of the loan are used in whole or in part
to satisfy the balance owed on a contract for deed.
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 $240.
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 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 or arranging for settlement
and closing of real estate secured loans by an unrelated
qualified closing agent at a location other than the licensed
location.
Sec. 21. Minnesota Statutes 1994, section 56.125,
subdivision 2, is amended to read:
Subd. 2. [REAL ESTATE AS SECURITY.] A licensee may take a
lien upon real estate as security for any open-end loan at or
after such time as the outstanding balance first exceeds
$2,700 $4,320. A subsequent reduction in the balance
below $2,700 $4,320 has no effect on the lien. A licensee may
retain the security interest until it terminates the open-end
account. If there is no outstanding balance in the account and
there is no commitment by the licensee to a line of credit in
excess of $2,700 $4,320, the licensee shall, within 20 days
following written demand by the borrower, deliver to the
borrower a release of the mortgage on any real property taken as
security for the open-end loan agreement. A real estate
mortgage authorized for a financial institution secures all
advances and obligations thereunder from the date of recording.
Sec. 22. Minnesota Statutes 1994, section 56.131,
subdivision 4, is amended to read:
Subd. 4. [ADJUSTMENT OF DOLLAR AMOUNTS.] (a) The dollar
amounts in this section, sections 53.04, subdivision 3a,
paragraph (c), 56.01, 56.12, and 56.125 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 domestic product, 1972 1987 = 100, compiled by
the United States Department of Commerce, and hereafter referred
to as the index. The index for December 1980 1991 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. The reference base index for
subdivision 1, paragraph (a), clause (1), and subdivision 2,
paragraph (d), is December 1990.
(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 this act, 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 this act, 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 that
person 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. 23. Minnesota Statutes 1994, section 56.131,
subdivision 6, is amended to read:
Subd. 6. [DISCOUNT POINTS.] A loan made under this section
that is secured by real estate and that is in a principal amount
of $7,500 $12,000 or more and has 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 section. 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 section when the
prepayment is taken into account.
Sec. 24. Minnesota Statutes 1994, section 56.17, is
amended to read:
56.17 [LIMITATION; ASSIGNMENT OF WAGES; SECURITY
AGREEMENT.]
No assignment of, or order for payment of, any salary,
wages, commissions, or other compensation for services earned or
to be earned, given to secure any loan made by any licensee
under this chapter, shall be valid unless the principal amount
of the loan is $1,200 or less and is paid to the borrower
simultaneously with its execution; nor shall any assignment or
order, or any security agreement or other lien on household
furniture then in the possession and use of the borrower, be
valid unless it is in writing, signed in person by the borrower,
nor if the borrower is married, unless it is signed in person by
both husband and wife; provided, that written assent of a spouse
shall not be required when husband and wife have been living
separate and apart for a period of at least five months prior to
the making of the assignment, order, security agreement, or
lien. If the borrower is married, an assignment, order,
security agreement, or other lien is not valid without the
spouse's written consent, if the spouse's consent would be
necessary under applicable law to make the property offered as
security available to satisfy the debt in the event of default.
Under any assignment or order for the payment of future
salary, wages, commissions, or other compensation for services,
given as security for a loan made by any licensee under this
chapter, a sum not to exceed ten percent of the borrower's
salary, wages, commissions, or other compensation for services
shall be collectible from the employer of the borrower by the
licensee at the time for each payment to the borrower of salary,
wages, commissions, or other compensation for services, from the
time that a copy of the assignment, verified by the oath of the
licensee or the licensee's agent, together with a similarly
verified statement of the amount unpaid upon the loan and a
printed copy of this section is served upon the employer;
provided, that this section shall not be construed as giving the
assignee any greater rights than those under section 181.05.
This section shall control, with respect to licensees,
notwithstanding anything in section 47.59, subdivision 12,
clause (c), to the contrary.
Sec. 25. [REVISOR INSTRUCTION.]
The revisor of statutes shall change the term "building and
loan association" or "savings, building and loan association" or
"savings and loan association" or similar term to "savings
association" or similar term in Minnesota Statutes and Minnesota
Rules.
Sec. 26. [REPEALER.]
Minnesota Statutes 1994, sections 46.03; 48.611; and 48.97,
subdivisions 2, 3, and 4, are repealed.
Sec. 27. [EFFECTIVE DATE.]
Sections 1 to 21 and 23 to 26 are effective the day
following final enactment.
ARTICLE 2
REGULATORY IMPROVEMENT
Section 1. Minnesota Statutes 1994, section 46.04, is
amended by adding a subdivision to read:
Subd. 3. [FINANCIAL INSTITUTIONS AND LICENSEE RECORDS.]
For purposes of examination and regulation of those entities
referred to in subdivisions 1 and 2, records may be maintained
on optical image storage systems acceptable to the
commissioner. Electronically maintained and stored records must
meet the following minimum standards:
(1) a document or record may be transferred to and stored
on a nonerasable imaging system and retained only in that format
if all documents and records preserved on nonerasable optical
imaging systems meet nationally recognized standards for
permanent records and are available for retrieval for as long as
applicable law requires;
(2) a backup copy of the record is created and stored at a
site other than the site where the original is kept. The backup
copy must be preserved either: (i) on a nonerasable optical
imaging system; or (ii) by another reproduction method approved
by the commissioner; and
(3) all contracts for third-party maintenance and storage
of those records must include assurance of access by the
commissioner consistent with the purposes of this section.
Sec. 2. Minnesota Statutes 1994, section 47.10,
subdivision 3, is amended to read:
Subd. 3. [LEASEHOLD PLACE OF BUSINESS; APPROVAL OF CERTAIN
LEASE AGREEMENTS.] No bank, trust company, savings bank, or
building and loan savings association may acquire real property
and improvements of any nature to it for its place of business
by lease agreement if the lessor has an existing direct or
indirect interest in the management or ownership of the bank,
trust company, savings bank, or building and loan savings
association without prior written approval by the commissioner.
This includes subsequent amendments and associated leasehold
improvements. A lessee's expenditures to maintain the leasehold
premises consistent with ordinary business conditions and within
the preapproved lease agreement does not constitute an amendment
requiring prior written approval.
Sec. 3. Minnesota Statutes 1994, section 47.20,
subdivision 5, is amended to read:
Subd. 5. [PREPAYMENT PENALTY.] (a) Unless the mortgagor
waives its right to prepay the mortgage loan without penalty, in
a uniform written disclosure waiver approved by the commissioner
and signed by the mortgagor, no conventional loan or loan
authorized in subdivision 1 made on or after the effective date
of Laws 1977, chapter 350 shall contain a provision requiring or
permitting the imposition of a penalty in the event the loan or
advance of credit is prepaid. The prepayment penalty shall not
exceed the lesser of two percent of the unpaid principal balance
or 60 days interest on the unpaid principal balance. A lender
that offers a mortgage loan with a prepayment penalty shall also
offer a mortgage loan without a prepayment penalty.
This section does not permit the imposition of a prepayment
penalty in the event that the property securing the mortgage
loan is sold or the mortgage loan is prepaid in part. No
prepayment penalty may be enforced after 42 months from the date
of the mortgage loan.
(b) A precomputed conventional loan or precomputed loan
authorized in subdivision 1 shall provide for a refund of the
precomputed finance charge according to the actuarial method if
the loan is paid in full by cash, renewal or refinancing, or a
new loan, one month or more before the final installment due
date. The actuarial method for the purpose of this section is
the amount of interest attributable to each fully unexpired
monthly installment period of the loan contract following the
date of prepayment in full, calculated as if the loan was made
on an interest-bearing basis at the rate of interest provided
for in the note based on the assumption that all payments were
made according to schedule. A precomputed loan for the purpose
of this section means a loan for which the debt is expressed as
a sum comprised of the principal amount and the amount of
interest for the entire term of the loan computed actuarially in
advance on the assumption that all scheduled payments will be
made when due, and does not include a loan for which interest is
computed from time to time by application of a rate to the
unpaid principal balance, interest-bearing loans, or
simple-interest loans. For the purpose of calculating a refund
for precomputed loans under this section, any portion of the
finance charge for extending the first payment period beyond one
month may be ignored. Nothing in this section shall be
considered a limitation on discount points or other finance
charges charged or collected in advance, and nothing in this
section shall require a refund of the charges in the event of
prepayment. Nothing in this section shall be considered to
supersede section 47.204.
Sec. 4. Minnesota Statutes 1994, section 47.20,
subdivision 10, is amended to read:
Subd. 10. [WAIVER.] Notwithstanding any other law Except
as provided in subdivision 5, the provisions of this section may
not be waived by any oral or written agreement executed by any
person.
Sec. 5. Minnesota Statutes 1994, section 47.52, is amended
to read:
47.52 [AUTHORIZATION.]
(a) With the prior approval of the commissioner, any bank
doing business in this state may establish and maintain not more
than five detached facilities provided the facilities are
located within the municipality in which the principal office of
the applicant bank is located; or within 5,000 feet of its
principal office measured in a straight line from the closest
points of the closest structures involved; or within 100 miles
of its principal office measured in a straight line from the
closest points of the closest structures involved, if the
detached facility is within any municipality in which no bank is
located at the time of application or if the detached facility
is in a municipality having a population of more than 10,000, or
if the detached facility is located in a municipality having a
population of 10,000 or less, as determined by the commissioner
from the latest available data from the state demographer, or
for municipalities located in the seven-county metropolitan area
from the metropolitan council, and all the banks having a
principal office in the municipality have consented in writing
to the establishment of the facility.
(b) A detached facility shall not be closer than 50 feet to
a detached facility operated by any other bank and shall not be
closer than 100 feet to the principal office of any other bank,
the measurement to be made in the same manner as provided
above. This paragraph shall not be applicable if the proximity
to the facility or the bank is waived in writing by the other
bank and filed with the application to establish a detached
facility.
(c) Any bank is allowed, in addition to other facilities,
one drive-in or walk-up facility located between 150 to 1,500
feet of the main banking house or within 1,500 feet from a
detached facility. The drive-in or walk-up facility permitted
by this clause is subject to paragraph (b) and section 47.53.
(d) A bank is allowed, in addition to other facilities,
part-time deposit-taking locations at elementary and secondary
schools located within the municipality in which the main
banking house or a detached facility is located if they are
established in connection with student education programs
approved by the school administration and consistent with safe,
sound banking practices.
Sec. 6. Minnesota Statutes 1994, section 47.56, is amended
to read:
47.56 [TRANSFER OF LOCATION.]
The location of a detached facility may be transferred to
another location, outside of a radius of three miles measured in
a straight line is subject to the same procedures and approval
as required hereunder for establishing a new detached facility,
except that the relocation of a detached facility within a
municipality of 10,000 or less population shall not require
consent of other banks required in section 47.52.
Sec. 7. Minnesota Statutes 1994, section 47.61,
subdivision 3, is amended to read:
Subd. 3. (a) "Electronic financial terminal" means an
electronic information processing device, that is established to
do either or both of the following:
(1) capture the data necessary to initiate financial
transactions; or
(2) through its attendant support system, store or initiate
the transmission of the information necessary to consummate a
financial transaction. other than
(b) "Electronic financial terminal" does not include:
(1) a telephone or;
(2) an electronic information processing device that is
used internally by a financial institution to conduct the
business activities of the institution, that is established to
do either or both of the following:
(a) capture the data necessary to initiate financial
transactions; or
(b) through its attendant support system, store or initiate
the transmission of the information necessary to consummate a
financial transaction.; or
(3) an electronic point-of-sale terminal operated by a
retailer that is used to process payments for the purchase of
goods and services by consumers through the use of credit cards
or debit cards, provided that the payment transactions using
debit cards are subject to the federal Electronic Funds Transfer
Act, United States Code, title 12, sections 1693 et seq., and
Regulation E of the Federal Reserve Board, Code of Federal
Regulations, title 12, subpart 205.2; this clause does not
exempt the retailer from liability for negligent conduct or
intentional misconduct of the operator under section 47.69,
subdivision 5.
Sec. 8. Minnesota Statutes 1994, section 47.62,
subdivision 2, is amended to read:
Subd. 2. [APPROVAL REQUIRED.] No electronic financial
terminal shall be established by a person other than a state or
federal savings and loan association, state or federal savings
bank, state or federal credit union, or state bank or national
banking association unless the commissioner has approved the
establishment of the terminal.
Sec. 9. Minnesota Statutes 1994, section 47.62, is amended
by adding a subdivision to read:
Subd. 5. [ESTABLISHMENT BY NOTICE.] A bank, savings bank,
savings association, or credit union organized under the laws of
this state may, after completing the notification procedure
required by this subdivision, establish and maintain one or more
electronic financial terminals. The filing must be on forms
provided by the commissioner. No electronic financial terminal
may be established under sections 47.61 to 47.74 if disallowed
by order of the commissioner within 15 days of the filing of a
complete and acceptable notification of the intent to establish
an electronic financial terminal.
Sec. 10. Minnesota Statutes 1994, section 47.62, is
amended by adding a subdivision to read:
Subd. 6. [RELOCATION; PROCEDURE.] An application or
notification to relocate an existing financial terminal outside
a radius of three miles measured in a straight line must be
approved by, or a notification must be filed with, the
commissioner of commerce as provided for in this section.
Sec. 11. Minnesota Statutes 1994, section 47.67, is
amended to read:
47.67 [ADVERTISING.]
No advertisement by a person which relates to an electronic
financial terminal may be inaccurate or misleading with respect
to such a terminal. Except with respect to direct mailings by
financial institutions to their customers, the advertising of
rate of interest paid on accounts in connection with electronic
financial terminals is prohibited. Any advertisement, either on
or off the site of an electronic financial terminal, promoting
the use or identifying the location of an electronic financial
terminal, which identifies any financial institution, group or
combination of financial institutions, or third parties as
owning or providing for the use of its services is prohibited.
The following shall be expressly permitted:
(a) a simple directory listing placed at the site of an
electronic financial terminal identifying the particular
financial institutions using its services;
(b) the use of a generic name, either on or off the site of
an electronic financial terminal, which does not promote or
identify any particular financial institution, group or
combination of financial institutions, or any third parties;
(c) media advertising or direct mailing of information by a
financial institution or retailer identifying locations of
electronic financial terminals and promoting their usage; and
(d) any advertising, whether on or off the site, relating
to electronic financial terminals, or the services performed at
the electronic financial terminals located on the premises of
the main office, or any office or detached facility of any
financial institution;
(e) a coupon or other promotional advertising that is
printed upon the reverse side of the receipt or record of each
transaction required under section 47.69, subdivision 6; and
(f) promotional advertising displayed on the electronic
screen.
Sec. 12. Minnesota Statutes 1994, section 47.69,
subdivision 3, is amended to read:
Subd. 3. Every financial institution using an electronic
financial terminal shall maintain reasonable procedures to
minimize losses from unauthorized withdrawals from its
customers' accounts by use of an electronic financial terminal.
After a customer makes a bona fide deposit or payment at an
electronic financial terminal and has received a receipt, any
loss due to theft or other reason shall not be borne by the
customer; provided, loss due to the nonpayment or dishonor of a
check, or other order for payment, deposited at an electronic
financial terminal shall be governed by the applicable
provisions of chapter 336. A financial institution shall be
liable for all unauthorized withdrawals unless the unauthorized
withdrawal was (1) due to the negligent conduct or the
intentional misconduct of the operator of an electronic
financial terminal or that operator's agent in which case the
operator of an electronic financial terminal or the agent shall
be liable, or (2) due to the loss or theft of the customer
machine readable card in which case the customer shall be
liable, subject to a maximum liability of $50, for those
unauthorized withdrawals made prior to the time the financial
institution is notified of the loss or theft. The limitation on
liability contained in clause (2) is effective only if the
issuer is notified of unauthorized charges contained in a bill
within 60 days of receipt of the bill by the person in whose
name the card is issued. For purposes of this subdivision,
"unauthorized withdrawal" means a withdrawal by a person other
than the customer who does not have actual, implied, or apparent
authority for such withdrawal, and from which withdrawal the
customer or a member of the customer's family or household
receives no benefit. without actual authority to initiate the
withdrawal and from which the customer receives no benefit. The
term does not include any withdrawal that is: (1) initiated by
a person who was furnished with the card by the customer, unless
the customer has notified the financial institution involved
that transfers by that person are no longer authorized; (2)
initiated with fraudulent intent by the customer or any person
acting in concert with the customer; or (3) initiated by the
financial institution or its employee.
Sec. 13. Minnesota Statutes 1994, section 47.69,
subdivision 5, is amended to read:
Subd. 5. Any customer of a financial institution may bring
a civil action against any person violating any subdivision of
this section in the district court in the county of the alleged
violator's residence or principal place of business or in the
county wherein the alleged violation occurred. Upon adverse
adjudication, the defendant shall be liable for actual damages,
or $500, whichever is greater, punitive damages when applicable,
together with the court costs and reasonable attorneys' fees
incurred by the plaintiff. The court may provide such equitable
relief as it deems necessary or proper, including enjoining the
defendant from further violations. If the unauthorized
withdrawal was due to the negligent conduct or the intentional
misconduct of an operator or person establishing and maintaining
an electronic financial terminal other than a financial
institution or agent of a financial institution, that operator
or person establishing and maintaining an electronic financial
terminal or its agent is liable and subject to a civil action
under this subdivision by the financial institution considered
liable under subdivision 3 that has reimbursed the customer.
Sec. 14. Minnesota Statutes 1994, section 48.16, is
amended to read:
48.16 [BANKS MAY NOT PLEDGE ASSETS; EXCEPTIONS.]
No bank or trust company shall pledge, hypothecate, assign,
transfer, or create a lien upon or charge against any of its
assets except as follows:
(1) to the state;
(2) to secure public deposits;
(3) to secure funds of trustees in bankruptcy;
(4) to secure money borrowed in good faith from other
banks, trust companies, or a financial agency created by act of
Congress, or the state in programs specifically authorizing
state banks to participate as an eligible local lender;
(5) to finance the acquisition of real estate to be carried
as an asset as provided for in section 47.10;
(6) to secure a liability that arises from a transfer of a
direct obligation of, or obligations that are fully guaranteed
as to principal and interest by, the United States government or
an agency thereof that the bank or trust company is obligated to
repurchase.
This section shall not be construed to permit the use of
assets as security for public deposits other than the securities
made eligible by law for that purpose.
Sec. 15. Minnesota Statutes 1994, section 48.24,
subdivision 5, is amended to read:
Subd. 5. Loans or obligations shall not be subject under
this section to any limitation based upon such capital and
surplus to the extent that they are secured or covered by
guarantees, or by commitments or agreements to take over or to
purchase the same, made by:
(1) the commissioner of agriculture on the purchase of
agricultural land;
(2) any Federal Reserve bank;
(3) the United States or any department, bureau, board,
commission, or establishment of the United States, including any
corporation wholly owned directly or indirectly by the United
States;
(4) the Minnesota energy and economic development
authority; or
(5) the Minnesota export finance authority; or
(6) a municipality or political subdivision within
Minnesota to the extent that the guarantee or collateral is a
valid and enforceable general obligation of that political body.
Sec. 16. Minnesota Statutes 1994, section 48.48,
subdivision 1, is amended to read:
Subdivision 1. [SUBMISSION AND PUBLICATION.] At least four
times in each year, and at any other time when so requested by
the commissioner, every bank or trust company shall, within 30
days of the date of notice, make and transmit to the
commissioner or to the commissioner's designee, in a form the
commissioner prescribes, a report, verified by its president or
vice-president and by its cashier or treasurer, and attested by
at least two to in the official minutes of its directors,
stating in detail, under appropriate heads, as required by the
commissioner, its assets and liabilities at the close of
business on the day specified in the request. The commissioner
may accept a report made to a federal authority having
supervision of banks or trust companies in fulfilling this
requirement. This statement shall be published once at the
expense of the bank or trust company in a qualified newspaper in
the municipality or town in which the bank or trust company is
located, and if there is no such newspaper, then in a qualified
newspaper likely to give notice in the municipality or town in
which the bank or trust company is located. Proof of
publication shall be filed with the commissioner immediately
after publication of the report, but no later than 60 days
following the date of the notice. That portion of the report
constituting the statement of assets, liabilities, and capital
and statement of income and expenses must be made available to
the public within 45 days of the notice at every location of the
bank or trust company including detached facilities and trust
service offices.
Sec. 17. Minnesota Statutes 1994, section 48.48,
subdivision 2, is amended to read:
Subd. 2. [PENALTIES FOR LATE SUBMISSION.] For failure to
send these reports to the commissioner or to the commissioner's
designee in the time specified, a bank or trust company shall
forfeit to the state the sum of $25 for each day of delay and
shall pay the accumulated sum to the commissioner upon a formal
demand for payment by the commissioner. If it appears that a
report was mailed transmitted by a bank or trust company on or
before the end of the 30-day period, or proof of publication
mailed on or before the end of the 60-day period, the
commissioner shall waive any forfeit. In the event it does not
appear that a report was timely mailed transmitted, the
commissioner may nevertheless waive forfeit upon a showing by
the bank or trust company to the satisfaction of the
commissioner that failure to send the reports was the result of
causes beyond the control of the bank or trust company.
Sec. 18. Minnesota Statutes 1994, section 48.49, is
amended to read:
48.49 [BOOKS TO BE KEPT.]
Every such bank shall open and keep such books and accounts
as the commissioner may prescribe, for the purpose of keeping
accurate and convenient records of its transactions; and every
bank refusing or neglecting so to do shall forfeit $10 for every
day of such neglect or refusal.
Sec. 19. Minnesota Statutes 1994, section 48.61,
subdivision 7, is amended to read:
Subd. 7. [SUBSIDIARIES.] (a) A state bank or trust company
may organize, acquire, or invest in a subsidiary located in this
state for the purposes of engaging in one or more of the
following activities, subject to the prior written approval of
the commissioner:
(1) any activity, not including receiving deposits, lending
money, or paying checks, that a state bank is authorized to
engage in under state law or rule or under federal law or
regulation unless the activity is prohibited by the laws of this
state;
(2) any activity that a bank clerical service corporation
is authorized to engage in under section 48.89; and
(3) any other activity authorized for a national bank, a
bank holding company, or a subsidiary of a national bank or bank
holding company under federal law or regulation of general
applicability, and approved by the commissioner by rule.
(b) A bank or trust company subsidiary may engage in an
activity under this section only upon application together with
a filing fee of $250 and with the prior written approval of the
commissioner. In approving or denying a proposed activity, the
commissioner shall consider the financial and management
strength of the bank or trust company, the current written
operating plan and policies of the proposed subsidiary
corporation, the bank or trust company's community reinvestment
record, and whether the proposed activity should be conducted
through a subsidiary of the bank or trust company.
(c) The aggregate amount of funds invested in either an
equity or loan capacity in all of the subsidiaries of the bank
or trust company authorized under this subdivision shall not
exceed 25 percent of the capital stock and paid in surplus of
the bank or trust company.
(d) A subsidiary organized or acquired under this
subdivision is subject to the examination and enforcement
authority of the commissioner under chapters 45 and 46 to the
same extent as a state bank or trust company.
(e) For the purposes of this section, "subsidiary" means a
corporation of which more than 50 percent of the voting shares
are owned or controlled by the bank or trust company.
Sec. 20. [52.211] [STUDENT EDUCATION PROGRAMS.]
A credit union is allowed to establish part-time
deposit-taking locations at elementary and secondary schools
provided that the locations are established in connection with
student education programs approved by the school administration
and consistent with safe and sound financial institution
practices. For purposes of this section, students do not need
to be members of the credit union to participate, and the
students' parents are not eligible to become members solely by
reason of their child's participation.
Sec. 21. Minnesota Statutes 1994, section 53.015,
subdivision 4, is amended to read:
Subd. 4. [CAPITAL STOCK.] "Capital stock" means the par
value of preferred or common stock multiplied by the respective
number of shares of each type of stock. For purposes of section
53.05, clause (7), capital stock may include an amount of
mandatory convertible debentures approved by the commissioner.
The terms and conditions for redemption of the qualifying
debentures must include the prior written approval of the
commissioner as a condition for a redemption, but in no event an
amount in excess of 50 percent of total preferred or common
stock.
Sec. 22. Minnesota Statutes 1994, section 56.14, is
amended to read:
56.14 [DUTIES OF LICENSEE.]
Every licensee shall:
(1) deliver to the borrower (or if there are two or more
borrowers to one of them) at the time any loan is made a
statement making the disclosures and furnishing the information
required by the federal Truth-in-Lending Act, United States
Code, title 15, sections 1601 to 1667e, as amended from time to
time, with respect to the contract of loan. A copy of the loan
contract may be delivered in lieu of a statement if it discloses
the required information;
(2) deliver or mail to the borrower without request, a
written receipt within 30 days following payment for each
payment by coin or currency made on account of any loan wherein
charges are computed and paid on unpaid principal balances for
the time actually outstanding, specifying the amount applied to
charges and the amount, if any, applied to principal, and
stating the unpaid principal balance, if any, of the loan; and
wherein precomputed charges have been added to the principal of
the loan specifying the amount of the payment applied to
principal and charges combined, the amount applied to default or
extension charges, if any, and stating the unpaid balance, if
any, of the precomputed loan contract. A periodic statement
showing a payment received by mail complies with this clause;
(3) permit payment to be made in advance in any amount on
any contract of loan at any time, but the licensee may apply the
payment first to all charges in full at the agreed rate up to
the date of the payment;
(4) upon repayment of the loan in full, mark indelibly
every obligation and security, other than a mortgage or security
agreement which secures a new loan to the licensee, signed by
the borrower with the word "Paid" or "Canceled," and release any
mortgage or security agreement which no longer secures a loan to
the licensee, restore any pledge, and cancel and return any
note, and any assignment given to the licensee which does not
secure a new loan to the licensee within 20 days after the
repayment. For purposes of this requirement, the document
including actual evidence of an obligation or security may be
maintained, stored, and retrieved in a form or format acceptable
to the commissioner under section 46.04, subdivision 3;
(5) display prominently in each licensed place of business
a full and accurate schedule, to be approved by the
commissioner, of the charges to be made and the method of
computing the same; furnish a copy of the contract of loan to
any person obligated on it or who may become obligated on it at
any time upon the request of that person;
(6) show in the loan contract or statement of loan the rate
or rates of charge on which the charge in the contract is based,
expressed in terms of rate or rates per annum. The rate
expression shall be printed in at least 8-point type on the loan
statement or copy of the loan contract given to the borrower.;
(7) if a payment results in the prepayment of three or more
installment payments on a precomputed loan, at the same time the
receipt required by clause (2) is delivered or mailed, deliver
or mail to the borrower a notice in at least eight-point type as
part of the receipt or together with the receipt. The notice
must contain the following statement:
"You have substantially prepaid the installment payments on
your loan and may experience an interest savings over the
remaining term only if you refinance the balance within the
next 30 days."
Sec. 23. Minnesota Statutes 1994, 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 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, or credit unemployment benefits may be procured
by or through a licensee upon more than two of the obligors in
which case they shall be insured jointly or in the case of
credit unemployment benefits on a basis provided for in rules
adopted by the commissioner. 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. 24. Minnesota Statutes 1994, section 59A.06,
subdivision 2, is amended to read:
Subd. 2. Every licensee shall preserve its records of
premium finance transactions for at least three years after
making the final entry in respect to any premium finance
agreement. The records may be preserved in photographic form or
in a form acceptable to the commissioner under section 46.04,
subdivision 3.
Sec. 25. Minnesota Statutes 1994, section 62B.04,
subdivision 1, is amended to read:
Subdivision 1. [CREDIT LIFE INSURANCE.] (1) The initial
amount of credit life insurance shall not exceed the amount of
principal repayable under the contract of indebtedness plus an
amount equal to one monthly payment. Thereafter, if the
indebtedness is repayable in substantially equal installments
according to a predetermined schedule, the amount of insurance
shall not exceed the scheduled indebtedness plus one monthly
payment or actual amount of indebtedness, whichever is greater.
(2) Notwithstanding clause (1), the amount of credit life
insurance written in connection with credit transactions
repayable over a specified term exceeding 63 months shall not
exceed the greater of: (i) the actual amount of unpaid
indebtedness as it exists from time to time; or (ii) where an
indebtedness is repayable in substantially equal installments
according to a predetermined schedule, the scheduled amount of
unpaid indebtedness, less any unearned interest or finance
charges, plus an amount equal to two monthly payments.
(3) Notwithstanding clauses (1) and (2), insurance on
educational, agricultural, and horticultural credit transaction
commitments may be written on a nondecreasing or level term plan
for the amount of the loan commitment.
(4) If the contract of indebtedness provides for a variable
rate of finance charge or interest, the initial rate or the
scheduled rates based on the initial index shall be used in
determining the scheduled amount of indebtedness, and subsequent
changes to the rate shall be disregarded in determining whether
the contract is repayable in substantially equal installments
according to a predetermined schedule.
Sec. 26. Minnesota Statutes 1994, section 62B.08,
subdivision 2, is amended to read:
Subd. 2. Each individual policy or group certificate shall
provide that in the event of termination of the insurance prior
to the scheduled maturity date of the indebtedness, any refund
of an amount paid by the debtor for insurance shall be paid or
credited promptly to the person entitled thereto; provided,
however, that the commissioner shall prescribe a minimum refund
and no refund which would be less than such minimum need be made
a premium refund or credit need not be made if the amount
thereof is less than $5. The formula to be used in computing
the refund shall be filed with and approved by the commissioner.
Sec. 27. Minnesota Statutes 1994, section 300.20,
subdivision 1, is amended to read:
Subdivision 1. [ELECTION.] The business of savings banks
must be managed by a board of at least seven trustees, residents
of this state, each of whom, before being authorized to act,
must file a written acceptance of the trust. The business of
other corporations must be managed by a board of at least three
five directors, unless a greater number is otherwise required by
law, elected by ballot by the stockholders or members. A board
of directors of a financial institution referred to in section
47.12 which has less than five members on August 1, 1995, is not
subject to this requirement but may be increased to not more
than five members by order of the commissioner of commerce.
Sec. 28. Minnesota Statutes 1994, section 327B.04,
subdivision 1, is amended to read:
Subdivision 1. [LICENSE AND BOND REQUIRED.] No person
shall act as a dealer in manufactured homes, new or used,
without a license and a surety bond as provided in this
section. No person shall manufacture manufactured homes without
a license and a surety bond as provided in this section. The
licensing and bonding requirements of this section do not apply
to any bank, savings bank, savings and loan association, or
credit union, chartered by either this state or the federal
government, which acts as a dealer only by repossessing
manufactured homes and then offering the homes for resale
through the brokering services of a licensed dealer or real
estate broker or salesperson.
Sec. 29. Minnesota Statutes 1994, section 327B.09,
subdivision 1, is amended to read:
Subdivision 1. [LICENSE REQUIRED.] No person shall engage
in the business, either exclusively or in addition to any other
occupation of manufacturing, selling, offering to sell,
soliciting or advertising the sale of manufactured homes, or act
as a broker without being licensed as a manufacturer or a dealer
as provided in section 327B.04. Any person who manufactures,
sells, offers to sell, solicits or advertises the sale of
manufactured homes, or acts as a broker in violation of this
subdivision shall nevertheless be subject to the duties,
prohibitions and penalties imposed by sections 327B.01 to
327B.12. This subdivision chapter does not prohibit either an
individual from reselling, without a license, a manufactured
home which is or has been the individual's residence or any
bank, savings bank, savings association, or credit union,
chartered by either this state or the federal government, from
reselling, without a license, a repossessed manufactured home.
Sec. 30. Minnesota Statutes 1994, section 332.23,
subdivision 1, is amended to read:
Subdivision 1. [ORIGINATION FEE, CREDIT BACKGROUND REPORT
COST.] The licensee may charge an origination fee of not more
than $25 and collect from the debtor the actual cost of a credit
background report obtained from a credit reporting agency not
related to or affiliated with the licensee. The costs to the
debtor of said origination fee and credit background report may
be made from the originating amount paid by the debtor to the
licensee. The cost of only one credit background report may be
collected from the debtor in any 12-month period.
Sec. 31. Minnesota Statutes 1994, section 332.23,
subdivision 2, is amended to read:
Subd. 2. [WITHDRAWAL OF FEE.] The licensee may withdraw
and retain as partial payment of the licensee's total fee not
more than 15 percent of any sum deposited with the licensee by
the debtor for distribution. The remaining 85 percent must be
disbursed to listed creditors pursuant to and in accordance with
the contract between the debtor and the licensee within 35 days
after receipt. Total payment to licensee for services rendered,
excluding the origination fee and any credit background report,
shall not exceed 15 percent of funds deposited with licensee by
debtor for distribution.
Sec. 32. Minnesota Statutes 1994, section 334.011, is
amended by adding a subdivision to read:
Subd. 5. [LOANS BY CHARITABLE ORGANIZATIONS TO ASSIST
CERTAIN SMALL BUSINESSES.] (a) This subdivision applies to
nonprofit charitable organizations recognized as exempt from
federal income taxation under section 501(c)(3) of the federal
Internal Revenue Code of 1986, as amended, that make loans for
business purposes to individuals who are disadvantaged or
otherwise unable to access standard sources of business credit,
in conjunction with a program of education, training, business
counseling, or other assistance to assist borrowers in
developing their businesses at no extra charge to the borrowers
or at a charge that does not exceed the cost of providing the
assistance.
(b) Notwithstanding section 334.01 and subdivisions 1 and
2, an organization described in paragraph (a) may make loans
described in that paragraph, in principal amounts not to exceed
$10,000, at a rate of interest not to exceed 16 percent per
year, and with an origination fee not to exceed two percent of
the principal amount.
(c) Prior to beginning to make loans under this
subdivision, the lender shall provide written notice to the
commissioner of commerce, on a form prescribed by that
commissioner. The lender shall at the same time provide a copy
of that written notice to the commissioner of trade and economic
development.
(d) A lender making loans under this subdivision shall
annually file with the commissioner an annual report, on a date
and on a form prescribed by the commissioner, summarizing the
lender's loans made or outstanding in this state during the
preceding year. The lender shall at the same time provide a
copy of that annual report to the commissioner of trade and
economic development.
Sec. 33. [RECOMMENDATIONS; POINT-OF-SALE TERMINALS.]
The commissioner of commerce shall select and convene an
informal workgroup to make recommendations to the commissioner
regarding whether there is a need to license electronic
point-of-sale terminals operated by a retailer for use with
credit cards or debit cards. The informal workgroup must
include persons representing retailers, financial institutions,
and consumers. The commissioner shall make recommendations to
the legislature no later than December 1, 1994.
Sec. 34. [EFFECTIVE DATE.]
Sections 1 to 2, 5 to 15, 17 to 21, 23 to 31, and 33 are
effective the day following final enactment. Sections 3 and 4
are effective September 1, 1995. Section 16 is effective for
reports filed for close of business beginning June 30, 1995.
ARTICLE 3
INTEREST RATE SIMPLIFICATION AND SMALL DOLLAR
CREDIT AVAILABILITY
Section 1. [47.59] [FINANCIAL INSTITUTION CREDIT EXTENSION
MAXIMUM RATES.]
Subdivision 1. [DEFINITIONS.] For purposes of this
section, the following definitions shall apply.
(a) "Actuarial method" has the meaning given the term in
the Code of Federal Regulations, title 12, part 226, and
appendix J thereto.
(b) "Annual percentage rate" has the meaning given the term
in the Code of Federal Regulations, title 12, part 226, but
using the definition of "finance charge" used in this section.
(c) "Borrower" means a debtor under a loan or a purchaser
or debtor under a credit sale contract.
(d) "Business purpose" means a purpose other than a
personal, family, household, or agricultural purpose.
(e) "Cardholder" means a person to whom a credit card is
issued or who has agreed with the financial institution to pay
obligations arising from the issuance to or use of the card by
another person.
(f) "Consumer loan" means a loan made by a financial
institution in which:
(1) the debtor is a person other than an organization;
(2) the debt is incurred primarily for a personal, family,
or household purpose; and
(3) the debt is payable in installments or a finance charge
is made.
(g) "Credit" means the right granted by a financial
institution to a borrower to defer payment of a debt, to incur
debt and defer its payment, or to purchase property or services
and defer payment.
(h) "Credit card" means a card or device issued under an
arrangement pursuant to which a financial institution gives to a
cardholder the privilege of obtaining credit from the financial
institution or other person in purchasing or leasing property or
services, obtaining loans, or otherwise. A transaction is
"pursuant to a credit card" only if credit is obtained according
to the terms of the arrangement by transmitting information
contained on the card or device orally, in writing, by
mechanical or electronic methods, or in any other manner. A
transaction is not "pursuant to a credit card" if the card or
device is used solely in that transaction to:
(1) identify the cardholder or evidence the cardholder's
creditworthiness and credit is not obtained according to the
terms of the arrangement;
(2) obtain a guarantee of payment from the cardholder's
deposit account, whether or not the payment results in a credit
extension to the cardholder by the financial institution; or
(3) effect an immediate transfer of funds from the
cardholder's deposit account by electronic or other means,
whether or not the transfer results in a credit extension to the
cardholder by the financial institution.
(i) "Credit sale contract" means a contract evidencing a
credit sale. "Credit sale" means a sale of goods or services,
or an interest in land, in which:
(1) credit is granted by a seller who regularly engages as
a seller in credit transactions of the same kind; and
(2) the debt is payable in installments or a finance charge
is made.
(j) "Finance charge" has the meaning given in the Code of
Federal Regulations, title 12, part 226, except that the
following will not in any event be considered a finance charge:
(1) a charge as a result of default or delinquency under
subdivision 6 if made for actual unanticipated late payment,
delinquency, default, or other similar occurrence, and a charge
made for an extension or deferment under subdivision 5, unless
the parties agree that these charges are finance charges;
(2) an additional charge under subdivision 6; or
(3) a discount, if a financial institution purchases a loan
at less than the face amount of the obligation or purchases or
satisfies obligations of a cardholder pursuant to a credit card
and the purchase or satisfaction is made at less than the face
amount of the obligation.
(k) "Financial institution" means a state or federally
chartered bank, a state or federally chartered bank and trust, a
trust company with banking powers, a state or federally
chartered saving bank, a state or federally chartered savings
association, an industrial loan and thrift company, or a
regulated lender.
(l) "Loan" means:
(1) the creation of debt by the financial institution's
payment of money to the borrower or a third person for the
account of the borrower;
(2) the creation of debt pursuant to a credit card in any
manner, including a cash advance or the financial institution's
honoring a draft or similar order for the payment of money drawn
or accepted by the borrower, paying or agreeing to pay the
borrower's obligation, or purchasing or otherwise acquiring the
borrower's obligation from the obligee or the borrower's
assignee;
(3) the creation of debt by a cash advance to a borrower
pursuant to an overdraft line of credit arrangement;
(4) the creation of debt by a credit to an account with the
financial institution upon which the borrower is entitled to
draw immediately;
(5) the forbearance of debt arising from a loan; and
(6) the creation of debt pursuant to open-end credit.
"Loan" does not include the forbearance of debt arising
from a sale or lease, a credit sale contract, or an overdraft
from a person's deposit account with a financial institution
which is not pursuant to a written agreement to pay overdrafts
with the right to defer repayment thereof.
(m) "Official fees" means:
(1) fees and charges which actually are or will be paid to
public officials for determining the existence of or for
perfecting, releasing, terminating, or satisfying a security
interest or mortgage relating to a loan or credit sale, and any
separate fees or charges which actually are or will be paid to
public officials for recording a notice described in section
580.032, subdivision 1; and
(2) premiums payable for insurance in lieu of perfecting a
security interest or mortgage otherwise required by a financial
institution in connection with a loan or credit sale, if the
premium does not exceed the fees and charges described in clause
(1), which would otherwise be payable.
(n) "Organization" means a corporation, government,
government subdivision or agency, trust, estate, partnership,
joint venture, cooperative, limited liability company, limited
liability partnership, or association.
(o) "Person" means a natural person or an organization.
(p) "Principal" means the total of:
(1) the amount paid to, received by, or paid or repayable
for the account of, the borrower; and
(2) to the extent that payment is deferred:
(i) the amount actually paid or to be paid by the financial
institution for additional charges permitted under this section;
and
(ii) prepaid finance charges.
Subd. 2. [APPLICATION.] This section does not apply to
loans and other extensions of credit or purchases of extensions
of credit by financial institutions under sections 47.20, 47.21,
47.201, 47.204, 47.58, 47.60, 48.153, 48.185, 48.195, 59A.01,
168.66 to 168.77, 334.01, 334.011, 334.012, 334.06, and 334.061
to 334.19.
Subd. 3. [FINANCE CHARGE FOR LOANS.] (a) With respect to a
loan, including a loan pursuant to open-end credit but excluding
open-end credit pursuant to a credit card, a financial
institution may contract for and receive a finance charge on the
unpaid balance of the principal amount not to exceed the greater
of:
(1) an annual percentage rate not exceeding 21.75 percent;
or
(2) the total of:
(i) 33 percent per year on that part of the unpaid balance
of the principal amount not exceeding $750; and
(ii) 19 percent per year on that part of the unpaid balance
of the principal amount exceeding $750.
With respect to open-end credit pursuant to a credit card,
the financial institution may contract for and receive a finance
charge on the unpaid balance of the principal amount at an
annual percentage rate not exceeding 18 percent per year.
(b) On a loan where the finance charge is calculated
according to the method provided for in paragraph (a), clause
(2), the finance charge must be contracted for and earned as
provided in that provision or at the single annual percentage
rate computed to the nearest .001 of one percent that would earn
the same total finance charge at maturity of the contract as
would be earned by the application of the graduated rates
provided in paragraph (a), clause (2), when the debt is paid
according to the agreed terms and the calculations are made
according to the actuarial method.
(c) With respect to a loan, the finance charge must be
considered not to exceed the maximum annual percentage rate
permitted under this section if the finance charge contracted
for and received does not exceed the equivalent of the maximum
annual percentage rate calculated in accordance with Code of
Federal Regulations, title 12, part 226, but using the
definition of finance charge provided in this section.
(d) This subdivision does not limit or restrict the manner
of calculating the finance charge, whether by way of add-on,
discount, discount points, precomputed charges, single annual
percentage rate, variable rate, interest in advance,
compounding, average daily balance method, or otherwise, if the
annual percentage rate does not exceed that permitted by this
section.
(e) With respect to a loan secured by real estate, if a
finance charge is calculated or collected in advance, or
included in the principal amount of the loan, and the borrower
prepays the loan in full, the financial institution shall credit
the borrower with a refund of the charge to the extent that the
annual percentage rate yield on the loan would exceed the
maximum rate permitted under paragraph (a), taking into account
the prepayment.
(f) With respect to all other loans, if the finance charge
is calculated or collected in advance, or included in the
principal amount of the loan, and the borrower prepays the loan
in full, the financial institution shall credit the borrower
with a refund of the charge to the extent the annual percentage
rate yield on the loan would exceed the annual percentage rate
on the loan as originally determined under paragraph (a) and
taking into account the prepayment.
(g) For the purpose of calculating the refund under this
subdivision, the financial institution may assume that the
contract was paid before the date of prepayment according to the
schedule of payments under the loan and that all payments were
paid on their due dates.
(h) For loans repayable in substantially equal successive
monthly installments, the financial institution may calculate
the refund under paragraph (f) as the portion of the finance
charge allocable on an actuarial basis to all wholly unexpired
payment periods following the date of prepayment, based on the
annual percentage rate on the loan as originally determined
under paragraph (a), and for the purpose of calculating the
refund may assume that all payments are made on the due date.
(i) The dollar amounts in this subdivision and subdivision
(6), clause (4), shall change periodically, as provided in this
section, according to and to the extent of changes in the
implicit price deflator for the gross domestic product, 1987 =
100, compiled by the United States Department of Commerce, and
hereafter referred to as the index. The index for December 1991
is the reference base index for adjustments of dollar amounts.
(j) 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 this act, 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 this act, as a result of earlier application of this section.
(k) 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.
(l) 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 (j); and
(2) promptly after the changes occur, changes in the index
required by paragraph (k) 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.
(m) A person does not violate this chapter with respect to
a transaction otherwise complying with this chapter if that
person relies on dollar amounts either determined according to
paragraph (j), clause (2), or appearing in the last publication
of the commissioner announcing the then current dollar amounts.
(n) The adjustments provided in this section shall not be
affected unless explicitly provided otherwise by law.
Subd. 4. [FINANCE CHARGE FOR CREDIT SALES MADE BY A THIRD
PARTY.] (a) A person may enter into a credit sale contract for
sale to a financial institution and a financial institution may
purchase and enforce the contract, if the annual percentage rate
provided for in the contract does not exceed that permitted in
this section, or, in the case of contracts governed by sections
168.66 to 168.77, the rates permitted by those sections.
(b) The annual percentage rate may not exceed the
equivalent of the greater of either of the following:
(1) the total of:
(i) 36 percent per year on that part of the unpaid balances
of the amount financed that is $300 or less;
(ii) 21 percent per year on that part of the unpaid
balances of the amount financed which exceeds $300 but does not
exceed $1,000; and
(iii) 15 percent per year on that part of the unpaid
balances of the amount financed which exceeds $1,000; or
(2) 19 percent per year on the unpaid balances of the
amount financed.
(c) This subdivision does not limit or restrict the manner
of calculating the finance charge whether by way of add-on,
discount, discount points, single annual percentage rate,
precomputed charges, variable rate, interest in advance,
compounding, or otherwise, if the annual percentage rate
calculated under paragraph (d) does not exceed that permitted by
this section. The finance charge may be contracted for and
earned at the single annual percentage rate that would earn the
same finance charge as the graduated rates when the debt is paid
according to the agreed terms and the finance charge is
calculated under paragraph (d). If the finance charge is
calculated and collected in advance, or included in the
principal amount of the contract, and the borrower prepays the
contract in full, the financial institution shall credit the
borrower with a refund of the charge to the extent the annual
percentage rate yield on the contract would exceed the annual
percentage rate on the contract as originally determined under
paragraph (d) and taking into account the prepayment. For the
purpose of calculating the refund under this subdivision, the
financial institution may assume that the contract was paid
before the date of prepayment according to the schedule of
payments under the contract and that all payments were paid on
their due dates. For contracts repayable in substantially equal
successive monthly installments, the financial institution may
calculate the refund as the portion of the finance charge
allocable on an actuarial basis to all wholly unexpired payment
periods following the date of prepayment, based on the annual
percentage rate on the contract as originally determined under
paragraph (d), and for the purpose of calculating the refund may
assume that all payments are made on the due date.
(d) The annual percentage rate must be calculated in
accordance with Code of Federal Regulations, title 12, part 226,
except that the following will not in any event be considered a
finance charge:
(1) a charge as a result of delinquency or default under
subdivision 6 if made for actual unanticipated late payment,
delinquency, default, or other similar occurrence, and a charge
made for an extension or deferment under subdivision 5, unless
the parties agree that these charges are finance charges;
(2) an additional charge under subdivision 6; or
(3) a discount, if a financial institution purchases a
contract evidencing a credit sale at less than the face amount
of the obligation or purchases or satisfies obligations of a
cardholder according to a credit card and the purchase or
satisfaction is made at less than the face amount of the
obligation.
Subd. 5. [EXTENSIONS AND DEFERMENTS.] The parties may
agree in writing, either in the loan contract or credit sale
contract or in a subsequent agreement, to a deferment of wholly
unpaid installments. For precomputed loans and credit sale
contracts, the manner of deferment charge shall be determined as
provided for 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 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. If a loan or credit sale is prepaid in
full during a deferment period, the financial institution 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 or credit sale in full.
For the purpose of this subdivision, "applicable charge"
means the amount of finance charge attributable to each monthly
installment period for the loan or credit sale contract. The
applicable charge is computed as if each installment period were
one month and any charge for extending the first installment
period beyond the one month, or reduction in charge for a first
installment less than one month, is ignored. The applicable
charge for any installment period is that which would have been
made for the period had the loan been made on an
interest-bearing basis at the single annual percentage rate
provided for in the contract based upon the assumption that all
payments were made according to schedule. For convenience in
computation, the financial institution may round the single
annual rate to the nearest one quarter of one percent.
Subd. 6. [ADDITIONAL CHARGES.] (a) In addition to the
finance charges permitted by this section, a financial
institution may contract for and receive the following
additional charges that may be included in the amount financed:
(1) official fees and taxes;
(2) charges for insurance as described in paragraph (b);
(3) with respect to a loan or credit sale contract secured
by 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:
(i) fees or premiums for title examination, abstract of
title, title insurance, surveys, or similar purposes;
(ii) fees for preparation of a deed, mortgage, settlement
statement, or other documents, if not paid to the financial
institution;
(iii) escrows for future payments of taxes, including
assessments for improvements, insurance, and water, sewer, and
land rents;
(iv) fees for notarizing deeds and other documents;
(v) appraisal and credit report fees; and
(vi) fees for determining whether any portion of the
property is located in a flood zone and fees for ongoing
monitoring of the property to determine changes, if any, in
flood zone status;
(4) a delinquency charge on a payment, including the
minimum payment due in connection with the open-end credit, not
paid in full on or before the tenth day after its due date in an
amount not to exceed five percent of the amount of the payment
or $5.20, whichever is greater;
(5) for a returned check or returned automatic payment
withdrawal request, an amount not in excess of the service
charge limitation in section 332.50; and
(6) charges for other benefits, including insurance,
conferred on the borrower that are of a type that is not for
credit.
(b) An additional charge may be made for insurance written
in connection with the loan or credit sale contract, which may
be included in the amount financed:
(1) with respect to insurance against loss of or damage to
property, or against liability arising out of the ownership or
use of property, if the financial institution furnishes a clear,
conspicuous, and specific statement in writing to the borrower
setting forth the cost of the insurance if obtained from or
through the financial institution and stating that the borrower
may choose the person through whom the insurance is to be
obtained;
(2) with respect to credit insurance or mortgage insurance
providing life, accident, health, or unemployment coverage, if
the insurance coverage is not required by the financial
institution, and this fact is clearly and conspicuously
disclosed in writing to the borrower, and the borrower gives
specific, dated, and separately signed affirmative written
indication of the borrower's desire to do so after written
disclosure to the borrower of the cost of the insurance; and
(3) with respect to the vendor's single interest insurance,
but only (i) to the extent that the insurer has no right of
subrogation against the borrower; and (ii) to the extent that
the insurance does not duplicate the coverage of other insurance
under which loss is payable to the financial institution as its
interest may appear, against loss of or damage to property for
which a separate charge is made to the borrower according to
clause (1); and (iii) if a clear, conspicuous, and specific
statement in writing is furnished by the financial institution
to the borrower setting forth the cost of the insurance if
obtained from or through the financial institution and stating
that the borrower may choose the person through whom the
insurance is to be obtained.
(c) In addition to the finance charges and other additional
charges permitted by this section, a financial institution may
contract for and receive the following additional charges in
connection with open-end credit, which may be included in the
amount financed or balance upon which the finance charge is
computed:
(1) annual charges, not to exceed $50 per annum, payable in
advance, for the privilege of opening and maintaining open-end
credit;
(2) charges for the use of an automated teller machine;
(3) charges for any monthly or other periodic payment
period in which the borrower has exceeded or, except for the
financial institution's dishonor would have exceeded, the
maximum approved credit limit, in an amount not in excess of the
service charge permitted in section 332.50;
(4) charges for obtaining a cash advance in an amount not
to exceed the service charge permitted in section 332.50; and
(5) charges for check and draft copies and for the
replacement of lost or stolen credit cards.
(d) In addition to the finance charges and other additional
charges permitted by this section, a financial institution may
contract for and receive a one-time loan administrative fee not
exceeding $25 in connection with closed-end credit, which may be
included in the amount financed or principal balance upon which
the finance charge is computed. This paragraph applies only to
closed-end credit in an original principal amount of $4,320 or
less.
Subd. 7. [ADVANCES TO PERFORM COVENANTS OF BORROWER OR
PURCHASER.] (a) If the agreement with respect to a loan or
credit sale contract contains covenants by the borrower or
purchaser to perform certain duties pertaining to insuring or
preserving collateral and the financial institution according to
the agreement pays for performance of the duties on behalf of
the borrower or purchaser, the financial institution may add to
the debt or contract balance the amounts so advanced. Before or
within a reasonable time not less than 30 days after advancing
any sums, the financial institution shall state to the borrower
or purchaser in writing the amount of sums advanced or to be
advanced, any charges with respect to this amount, and any
revised payment schedule and, if the duties of the borrower or
purchaser performed by the financial institution pertain to
insurance, a brief description of the insurance paid for or to
be paid for by the financial institution including the type and
amount of coverages. Additional information need not be given.
The actions of the financial institution pursuant to this
subdivision shall not be deemed to cure the borrower's failure
to perform covenants in the loan or credit sale contract, unless
the loan or credit sale contract expressly provides otherwise.
(b) A finance charge equal to that specified in the loan
agreement or credit sale contract may be made for sums advanced
under paragraph (a).
Subd. 8. [ATTORNEY'S FEES.] With respect to a loan or
credit sale, the agreement may provide for payment by the
borrower of the attorney's fees and court costs incurred in
connection with collection or foreclosure. This subdivision is
not a limitation on attorney's fees that may be charged to an
organization.
Subd. 9. [RIGHT TO PREPAY.] The borrower or purchaser may
prepay in full the unpaid balance of a consumer loan or credit
sale contract, at any time without penalty.
Subd. 10. [CREDIT INSURANCE.] (a) The sale of credit
insurance or mortgage insurance is subject to chapters 61A, 62A,
and 62B, as applicable, and the rules adopted under those
chapters, if any. In case there are multiple consumers
obligated under a transaction subject to this chapter, no policy
or certificate or insurance providing credit life insurance may
be procured by or through a financial institution or person
described in subdivision 2 upon more than two of the consumers,
in which case they may be insured jointly.
(b) A financial institution that provides credit insurance
in relation to open-end credit may calculate the charge to the
borrower in each billing cycle by applying the current premium
rate to the balance in the manner permitted with respect to
finance charges by the provisions on finance charge in this
section.
(c) Upon prepayment in full of a consumer loan or credit
sale contract by the proceeds of credit insurance or mortgage
insurance, the consumer or the consumer's estate is entitled to
a refund of any portion of a separate charge for insurance that
by reason of prepayment is retained by the financial institution
or returned to it by the insurer, unless the charge was computed
from time to time on the basis of the balances of the consumer's
loan or credit sale contract.
(d) This section does not require a financial institution
to grant a refund to the consumer if all refunds due to the
consumer under paragraph (c) amount to less than $5 and, except
as provided in paragraph (c), does not require the financial
institution to account to the consumer for any portion of a
separate charge for insurance because:
(1) the insurance is terminated by performance of the
insurer's obligation;
(2) the financial institution pays or accounts for premiums
to the insurer in amounts and at times determined by the
agreement between them; or
(3) the financial institution receives directly or
indirectly under a policy of insurance a gain or advantage not
prohibited by law.
(e) Except as provided in paragraph (d), the financial
institution shall promptly make or cause to be made an
appropriate refund to the consumer with respect to a separate
charge made to the consumer for insurance if:
(1) the insurance is not provided or is provided for a
shorter term than for which the charge to the borrower for
insurance was computed; or
(2) the insurance terminates before the end of the term for
which it was written because of prepayment in full or otherwise.
(f) If a financial institution requires insurance, upon
notice to the borrower, the borrower has the option of providing
the required insurance through an existing policy of insurance
owned or controlled by the borrower, or through a policy to be
obtained and paid for by the borrower, but the financial
institution for reasonable cause may decline the insurance
provided by the borrower.
Subd. 11. [PROPERTY AND LIABILITY INSURANCE.] (a) Except
as otherwise provided in this section and subject to the
provisions on additional charges and maximum finance charges in
this section, a financial institution may agree to sell, as an
agent, property and liability insurance, and may contract for
and receive a charge for this insurance separate from and in
addition to other charges. This section does not authorize the
issuance of the insurance prohibited under any statute or rule
governing the business of insurance nor does it authorize a
financial institution to underwrite insurance.
(b) This section does not apply to an insurance premium
loan. A financial institution may request cancellation of a
policy of property or liability insurance only after the
borrower's default or in accordance with a written authorization
by the borrower. In either case, the cancellation does not take
effect until written notice is delivered to the borrower or
mailed to the borrower at the borrower's address as stated by
the borrower. The notice must state that the policy may be
canceled on a date not less than ten days after the notice is
delivered, or, if the notice is mailed, not less than 13 days
after it is mailed. A cancellation may not take effect until
those notice periods expire.
Subd. 12. [CONSUMER PROTECTIONS.] (a) Financial
institutions shall comply with the requirements of the federal
Truth in Lending Act, United States Code, title 15, sections
1601 to 1693, in connection with a consumer loan or credit sale
for a consumer purpose where the federal Truth in Lending Act is
applicable.
(b) Financial institutions shall comply with the following
consumer protection provisions in connection with a consumer
loan or credit sale for a consumer purpose: sections 325G.02 to
325G.05; 325G.06 to 325G.11; 325G.15 to 325G.22; and 325G.29 to
325G.36, and Code of Federal Regulations, title 12, part 535,
where those statutes or regulations are applicable.
(c) An assignment of a consumer's earnings by the consumer
to a financial institution as payment or as security for payment
of a debt arising out of a consumer loan or consumer credit sale
is unenforceable by the financial institution and revocable by
the consumer.
Subd. 13. [LOANS AND CONTRACTS OTHER THAN CONSUMER LOANS
AND CONTRACTS.] Loans and credit sale contracts other than
consumer loans and consumer credit sale contracts are not
subject to the provisions and limitations of subdivisions 9; 10;
11, paragraph (b); and 12.
Subd. 14. [EFFECT OF VIOLATIONS ON RIGHTS OF PARTIES.] (a)
If a financial institution has violated any provision of this
section applying to collection of finance or other charges, the
borrower or purchaser under a credit sale contract may recover
from the financial institution actual damages and, in an action
other than a class action, a penalty in an amount determined by
the court but not less than $100 nor more than $1,000. With
respect to violations arising from other than open-end credit
transactions, no action may be brought according to this
paragraph and no set-off or recoupment may be asserted according
to this paragraph more than one year after the making of the
debt.
(b) A borrower or purchaser under a credit sale contract is
not obligated to pay a charge in excess of that allowed by this
section and has a right of refund of any excess charge paid. A
refund may not be made by reducing the borrower's or purchaser's
obligation by the amount of the excess charge, unless the
financial institution has notified the borrower or purchaser
that the borrower or purchaser may request a refund and the
borrower or purchaser has not so requested within 30 days
thereafter. If the borrower or purchaser has paid an amount in
excess of the lawful obligation under the agreement, the
borrower or purchaser may recover the excess amount from the
financial institution that made the excess charge or from an
assignee of the financial institution's rights that undertakes
direct collection of payments from or enforcement of rights
against borrowers or purchasers arising from the debt.
(c) If a financial institution has contracted for or
received a charge in excess of that allowed by this section, or
if a borrower or purchaser under a credit sale contract is
entitled to a refund and a person liable to the borrower or
purchaser refuses to make a refund within a reasonable time
after demand, the borrower or purchaser may recover from the
financial institution or the person liable in an action other
than a class action a penalty in an amount determined by the
court but not less than $100 nor more than $1,000. With respect
to excess charges arising from other than open-end credit
transactions, no action according to this paragraph may be
brought more than one year after the making of the debt. For
purposes of this paragraph, a reasonable time is presumed to be
30 days.
(d) A violation of this section does not impair rights on a
debt.
(e) A financial institution is not liable for a penalty
under paragraph (a) or (c) if it notifies the borrower or
purchaser under a credit sale contract of a violation before the
financial institution receives from the borrower or purchaser
written notice of the violation or the borrower or purchaser has
brought an action under this section, and the financial
institution corrects the violation within 45 days after
notifying the borrower or purchaser. If the violation consists
of a prohibited agreement, giving the borrower or purchaser a
corrected copy of the writing containing the violation is
sufficient notification and correction. If the violation
consists of an excess charge, correction must be made by an
adjustment or refund.
(f) A financial institution may not be held liable in an
action brought under this section for a violation of this
section if the financial institution shows by a preponderance of
evidence that the violation was not intentional and resulted
from a bona fide error notwithstanding the maintenance of
procedures reasonably adopted to avoid the error.
(g) In an action in which it is found that a financial
institution has violated this section, the court shall award to
the borrower or the purchaser under a credit sale contract the
costs of the action and to the borrower's or purchaser's
attorneys their reasonable fees.
Sec. 2. [47.60] [CONSUMER SMALL LOANS.]
Subdivision 1. [DEFINITIONS.] For purposes of this
section, the terms defined have the meanings given them:
(a) "Consumer small loan" is a loan transaction in which
cash is advanced to a borrower for the borrower's own personal,
family, or household purpose. A consumer small loan is a
short-term, unsecured loan to be repaid in a single
installment. The cash advance of a consumer small loan is equal
to or less than $350. A consumer small loan includes an
indebtedness evidenced by but not limited to a promissory note
or agreement to defer the presentation of a personal check for a
fee.
(b) "Consumer small loan lender" is a financial institution
as defined in section 47.59 or a person registered with the
commissioner and engaged in the business of making consumer
small loans.
Subd. 2. [AUTHORIZATION, TERMS, CONDITIONS, AND
PROHIBITIONS.] (a) In lieu of the interest, finance charges, or
fees in any other law, a consumer small loan lender may charge
the following:
(i) on any amount up to and including $50, a charge of
$5.50 may be added;
(ii) on amounts in excess of $50, but not more than $100, a
charge may be added equal to ten percent of the loan proceeds
plus a $5 administrative fee;
(iii) on amounts in excess of $100, but not more than $250,
a charge may be added equal to seven percent of the loan
proceeds with a minimum of $10 plus a $5 administrative fee;
(iv) for amounts in excess of $250 and not greater than the
maximum in subdivision 1, paragraph (a), a charge may be added
equal to six percent of the loan proceeds with a minimum of
$17.50 plus a $5 administrative fee.
(b) The term of a loan made under this section shall be 30
days.
(c) After maturity, the contract rate must not exceed 2.75
percent per month of the remaining loan proceeds after the
maturity date calculated at a rate of 1/30 of the monthly rate
in the contract for each calendar day the balance is outstanding.
(d) No insurance charges or other charges must be permitted
to be charged, collected, or imposed on a consumer small loan
except as authorized in this section.
(e) On a loan transaction in which cash is advanced in
exchange for a personal check, a return check charge may be
charged as authorized by section 332.50, subdivision 2,
paragraph (d).
(f) A loan made under this section must not be repaid by
the proceeds of another loan made under this section by the same
lender or related interest. The proceeds from a loan made under
this section must not be applied to another loan from the same
lender or related interest. No loan to a single borrower made
pursuant to this section shall be split or divided and no single
borrower shall have outstanding more than one loan with the
result of collecting a higher charge than permitted by this
section or in an aggregate amount of principal exceed at any one
time the maximum of $350.
Subd. 3. [FILING.] Before a person other than a financial
institution as defined by section 47.59 engages in the business
of making consumer small loans, the person shall file with the
commissioner as a consumer small loan lender. The filing must
be on a form prescribed by the commissioner together with a fee
of $150 for each place of business and contain the following
information in addition to the information required by the
commissioner:
(1) evidence that the filer has available for the operation
of the business at the location specified, liquid assets of at
least $50,000; and
(2) a biographical statement on the principal person
responsible for the operation and management of the business to
be certified.
Revocation of the filing and the right to engage in the
business of a consumer small loan lender is the same as in the
case of a regulated lender license in section 56.09.
Subd. 4. [BOOKS OF ACCOUNT; ANNUAL REPORT; SCHEDULE OF
CHARGES; DISCLOSURES.] (a) A lender filing under subdivision 3
shall keep and use in the business books, accounts, and records
as will enable the commissioner to determine whether the filer
is complying with this section.
(b) A lender filing under subdivision 3 shall annually on
or before March 15 file a report to the commissioner giving the
information the commissioner reasonably requires concerning the
business and operations during the preceding calendar year.
(c) A lender filing under subdivision 3 shall display
prominently in each place of business a full and accurate
schedule, to be approved by the commissioner, of the charges to
be made and the method of computing those charges; furnish a
copy of the contract of loan to a person obligated on it or who
may become obligated on it at any time upon the request of that
person. This is in addition to any disclosures required by the
federal Truth in Lending Act, United States Code, title 15.
(d) A lender filing under subdivision 3 shall, upon
repayment of the loan in full, mark indelibly every obligation
signed by the borrower with the word "Paid" or "Canceled" within
20 days after repayment.
(e) A lender filing under subdivision 3 shall display
prominently, in each licensed place of business, a full and
accurate statement of the charges to be made for loans made
under this section. The statement of charges must be displayed
in a notice, on plastic or other durable material measuring at
least 12 inches by 18 inches, headed "CONSUMER NOTICE REQUIRED
BY THE STATE OF MINNESOTA." The notice shall include,
immediately above the statement of charges, the following
sentence, or a substantially similar sentence approved by the
commissioner: "These loan charges are higher than otherwise
permitted under Minnesota law. Minnesota law permits these
higher charges only because short-term small loans might
otherwise not be available to consumers. If you have another
source of a loan, you may be able to benefit from a lower
interest rate and other loan charges." The notice must not
contain any other statement or information, unless the
commissioner has determined that the additional statement or
information is necessary to prevent confusion or inaccuracy.
The notice must be designed with a type size that is large
enough to be readily noticeable and legible. The form of the
notice must be approved by the commissioner prior to its use.
Subd. 5. [COMPLAINTS ALLEGING VIOLATION.] A person
obligated to or having been obligated to a consumer small loan
lender filing under subdivision 3 and having reason to believe
that this section has been violated may file with the
commissioner a written complaint setting forth the details of
the alleged violation. The commissioner, upon receipt of the
complaint, may inspect the pertinent books, records, letters,
and contracts of the lender and borrower involved. The
commissioner may assess against the lender a fee covering the
necessary costs of an investigation under this section. The
commissioner may maintain an action for the recovery of the
costs in a court of competent jurisdiction.
Subd. 6. [PENALTIES FOR VIOLATION.] A person or the
person's members, officers, directors, agents, and employees who
violate or participate in the violation of any of the provisions
of this section may be liable in the same manner as in section
56.19.
Sec. 3. Minnesota Statutes 1994, section 48.194, is
amended to read:
48.194 [INSTALLMENT SALES CONTRACTS; LOANS.]
A person may enter into a credit sale or service contract
for sale to a state or national bank doing business in this
state, and a bank may purchase and enforce the contract under
the terms and conditions set forth in section 51A.385,
subdivisions 2 and 5 to 13 sections 47.59, subdivisions 2 and 4
to 14; and 51A.386, subdivision 4. A state bank or national
bank may extend credit pursuant to the terms and conditions set
forth in section 51A.385 sections 47.59, 47.60, and 51A.386,
subdivision 4.
Sec. 4. Minnesota Statutes 1994, section 51A.02,
subdivision 6, is amended to read:
Subd. 6. [ANNUAL PERCENTAGE RATE.] "Annual percentage
rate" has the meaning given the term in the Code of Federal
Regulations, title 12, part 226, but using the definition of
"finance charge" used in this section.
Sec. 5. Minnesota Statutes 1994, section 51A.02,
subdivision 26, is amended to read:
Subd. 26. [FINANCE CHARGE.] "Finance charge" has the
meaning given the term in the Code of Federal Regulations, title
12, part 226, except that the following will not in any event be
considered a finance charge:
(1) a charge as a result of default or delinquency under
section 51A.385 47.59 if made for actual unanticipated late
payment, delinquency, default, or other similar occurrence, and
a charge for an extension or deferment under section 47.59,
unless the parties agree that these charges are finance charges;
(2) any additional charge under section 51A.385 47.59,
subdivision 5 6; or
(3) a discount, if an association purchases a contract
evidencing a contract credit sale or loan at less than the face
amount of the obligation or purchases or satisfies obligations
of a cardholder pursuant to a credit card and the purchase or
satisfaction is made at less than the face amount of the
obligation.
Sec. 6. Minnesota Statutes 1994, section 51A.02,
subdivision 40, is amended to read:
Subd. 40. [OFFICIAL FEES.] "Official fees" means:
(1) fees and charges which actually are or will be paid to
public officials for determining the existence of or for
perfecting, releasing, terminating, or satisfying a security
interest or mortgage related to a loan or credit sale, and any
separate fees or charges which actually are or will be paid to
public officials for recording a notice described in section
580.032, subdivision 1; and
(2) premiums payable for insurance in lieu of perfecting a
security interest or mortgage otherwise required by an
association in connection with a loan or credit sale, if the
premium does not exceed the fees and charges described in clause
(1) which would otherwise be payable.
Sec. 7. Minnesota Statutes 1994, section 51A.19,
subdivision 9, is amended to read:
Subd. 9. [MAINTENANCE OF LOAN AND INVESTMENT RECORDS.]
Every association shall maintain complete loan and investment
records, and shall do so in a manner satisfactory to the
commissioner. Detailed records necessary to make determinations
of compliance by an association with the requirements of
sections 47.59 and 51A.35 to 51A.385 51A.386, and other
provisions of sections 51A.01 to 51A.57 shall be maintained
consistently and at all times, the record of each real estate
loan or other secured loan or investment containing
documentation to the satisfaction of the commissioner of the
type, adequacy, and complexion of the security.
Sec. 8. [51A.386] [TERMS AND CONDITIONS OF LOANS,
CONTRACTS, AND EXTENSIONS OF CREDIT.]
Subdivision 1. [APPLICATION.] Except as otherwise provided
in this section, this section applies to loans made and
contracts purchased by federal and state associations, and
"association" as used in this section applies to federal and
state associations.
Subd. 2. [FINANCE CHARGE FOR CREDIT SALES MADE BY A THIRD
PARTY.] A person may enter into a credit sale contract for sale
to an association and an association may purchase and enforce a
contract evidencing the sale, if the annual percentage rate
provided for in the contract does not exceed that permitted in
section 47.59 or, in the case of contracts governed by sections
168.66 to 168.77, the rates permitted by those sections.
Subd. 3. [FINANCE CHARGE FOR LOANS.] An association may
make loans and extend credit at the rates and on the terms
provided for in section 47.59.
Subd. 4. [ADDITIONAL AUTHORITY.] Extensions of credit, and
purchases of extensions of credit, authorized by sections 47.20,
subdivision 1, 3, or 4a; 47.204; 47.21; 47.58; 47.60; 47.69;
48.153; 48.185; 48.195; 59A.01 to 59A.15; 168.66 to 168.77;
334.01; 334.011; and 334.012 may, but need not, be made
according to those sections in lieu of the authority set forth
in subdivisions 1 to 3, and if so, are subject to those
sections, and not this section, except this subdivision. An
association may also charge an organization a rate of interest
and any charges agreed to by the organization and may calculate
and collect finance and other charges in any manner agreed to by
that organization. Except for extensions of credit the
association elects to make under section 334.01, 334.011, or
334.012, chapter 334 does not apply to extensions of credit made
according to this section or the sections mentioned in this
subdivision.
Subd. 5. [ADDITIONAL CHARGES.] In addition to the finance
charges permitted by this section, an association, or a person
described in subdivision 2, to the extent not otherwise
prohibited by law, may contract for and receive the additional
charges that may be included in the amount financed provided for
in section 47.59.
Sec. 9. Minnesota Statutes 1994, section 51A.50, is
amended to read:
51A.50 [FEDERAL ASSOCIATIONS.]
The following sections apply to federal associations,
except to the extent they are inconsistent with federal law or
regulations: sections 47.59; 51A.01; 51A.02; 51A.065; 51A.15,
subdivision 6; 51A.21, subdivisions 6a, 15, 16, 22, 25, 27, and
28; 51A.23, subdivision 1; 51A.24; 51A.251; 51A.261; 51A.262;
51A.27; 51A.28; 51A.29; 51A.30; 51A.31; 51A.37, subdivisions 1,
2, 3, paragraphs (a), (c), (d), 4, 5, 6, 7, 8, 9, 10, 11, and
12; 51A.38; 51A.385 51A.386; 51A.40; 51A.50; 51A.52; 51A.56; and
51A.57.
Sec. 10. Minnesota Statutes 1994, section 52.04,
subdivision 2a, is amended to read:
Subd. 2a. A person may enter into a credit sale or service
contract for sale to a state or federal credit union doing
business in this state, and a credit union may purchase and
enforce the contract under the terms and conditions set forth in
section 51A.385 47.59, subdivisions 2 4 and 5 6 to
13 14.
Sec. 11. Minnesota Statutes 1994, 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 in section 47.59. Loans made under
this authority 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 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. 12. Minnesota Statutes 1994, section 53.04,
subdivision 3c, is amended to read:
Subd. 3c. The right to extend credit and make loans under
chapter 51A sections 47.59 and 47.60 on the same terms and
subject to the same conditions as apply to other lenders under
that chapter those sections. This subdivision does not
authorize an industrial loan and thrift company to make loans
under a credit card or an overdraft checking plan.
Sec. 13. Minnesota Statutes 1994, section 53.04,
subdivision 4a, is amended to read:
Subd. 4a. [DISCLOSURE, AUTHORIZED INTEREST, AND OTHER
CHARGES.] The documentation of loans made pursuant to this
section must include in the promissory note clear reference to
the provisions of Minnesota Statutes under which the rate of
interest and other charges are authorized. The references must
be to the chapter number in the case of this chapter or chapter
56, or to the particular section or sections in the case of
chapter 47 or 334. On loans made under the authority of
subdivision 3a and not under the authority of chapter 334, other
charges including discount points, fees, late payment charges,
and insurance premiums not specifically authorized by this
chapter or any other state statute are controlled by chapter 56.
Sec. 14. Minnesota Statutes 1994, section 53.04,
subdivision 5a, is amended to read:
Subd. 5a. A person may enter into a credit sale or service
contract for sale to an industrial loan and thrift company
operating under this chapter in this state, and an industrial
loan and thrift company may purchase and enforce the contract
under the terms and conditions set forth in section 51A.385,
subdivisions 2 and 5 to 13 47.59, subdivisions 2 and 4 to 14.
Sec. 15. Minnesota Statutes 1994, section 56.125,
subdivision 1, is amended to read:
Subdivision 1. [AUTHORIZATION.] A licensee may make
open-end loans under this chapter other than loans under a
credit card or an overdraft checking plan and may charge a
daily, monthly, or other periodic rate of finance charge on
unpaid balances not in excess of the maximum rate of interest
permitted by section 56.131, subdivision 1, paragraph
(a), clause (2) under section 47.59, subdivision 3, paragraph
(a), clause (1). For purposes of this section "open-end loan"
means an agreement whereby: (1) the licensee pursuant to
written agreement permits the borrower to obtain advances of
money from the licensee from time to time or the licensee
advances money on behalf of the borrower from time to time as
directed by the borrower; (2) the borrower has the option of
paying the balance in full at any time without penalty; (3) the
amount of each advance and permitted charges and costs are
debited to the borrower's account and payments and other credits
are credited to the same account; and (4) the charges are
computed on the unpaid principal balance of the account from
time to time. A finance charge imposed on a transaction subject
to this section must be computed on: (1) the previous balance
after deducting all payments on accounts received by the
licensee during the cycle and all credits to the account during
the cycle applicable to any transaction reflected in the
previous balance; (2) the average daily balance determined by
adding the daily balances on the account for each day in the
billing cycle and dividing the total by the number of days in
the billing cycle; or (3) daily balances. The daily balance is
figured by taking the beginning balance of the account each day,
adding any new advances, subtracting any principal payments or
credits, and any unpaid interest. The average daily balance is
calculated by adding together all of the daily balances for the
billing cycle, and the sum is then divided by the total number
of days in the billing cycle. A billing cycle is considered to
be monthly if the billing dates are on the same day of each
month or do not vary by more than four days from that day. If a
licensee makes loans under a credit card plan, it may do so only
on the same terms and subject to the same conditions as apply to
lenders under section 47.59.
Sec. 16. Minnesota Statutes 1994, section 56.125,
subdivision 3, is amended to read:
Subd. 3. [CHARGES.] In addition to the charges authorized
in subdivision 1, a licensee may contract for and receive in
connection with an open-end loan agreement the additional
charges, fees, costs, and expenses with respect to the line of
credit limit permitted by sections 47.59, subdivisions 5 and 6,
paragraph (a), clause (4); 56.131, subdivisions 1, paragraph
(f), clauses (4) and (5), 2, 5, and 6; and 56.155 with respect
to other loans, with the following variations:
(1) If credit life, disability, or involuntary unemployment
insurance is provided and if the insured dies, becomes disabled,
or becomes involuntarily unemployed when there is an outstanding
open-end loan indebtedness, the amount of the insurance may not
exceed the total balance of the loan due on the date of the
borrower's death or on the date of the last billing statement in
the case of credit life insurance, or all minimum payments which
become due on the loan during the covered period of disability
in the case of credit disability insurance, or during the
covered period of involuntary unemployment in the case of credit
involuntary unemployment insurance. The additional charge for
credit life insurance, credit disability insurance, or credit
involuntary unemployment insurance must be calculated in each
billing cycle by applying the current monthly premium rate for
the insurance to the unpaid balances in the borrower's account.
(2) The amount, terms, and conditions of any credit
insurance against loss or damage to property must be reasonable
in relation to the character and value of the property insured.
Sec. 17. Minnesota Statutes 1994, section 56.131,
subdivision 1, is amended to read:
Subdivision 1. [INTEREST RATES AND CHARGES.] (a) On any
loan in a principal amount not exceeding $35,000 $56,000 or 15
percent of a Minnesota corporate licensee's capital stock and
surplus 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 $750;
and (ii) 19 percent per year on that part of the unpaid balance
of the principal amount exceeding $750; or
(2) 21.75 percent per year on the unpaid balance of the
principal amount finance charges, and other charges as provided
in section 47.59.
(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 1/100 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) (b) Loans may be interest-bearing or precomputed.
(d) (c) Notwithstanding section 47.59 to the contrary, 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) (d) With respect to interest-bearing loans and
notwithstanding section 47.59:
(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) (e), clause (3). The resulting loan contract is deemed a
new and separate loan transaction for all purposes.
(f) (e) With respect to precomputed loans and
notwithstanding section 47.59 to the contrary:
(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 $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) (4) 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) (5) 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
clause (6) (4), 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.
(8) (6) With respect to a loan secured by an interest in
real estate, and having a maturity of more than 60 months, the
original schedule of installment payments must fully amortize
the principal and interest on the loan. The original schedule
of installment payments for any other loan secured by an
interest in real estate must provide for payment amounts that
are sufficient to pay all interest scheduled to be due on the
loan.
Sec. 18. Minnesota Statutes 1994, 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, and
notwithstanding section 47.59, subdivision 5, to the contrary,
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 $400, whichever is
greater:
(1) fees or premiums for title examination, abstract of
title, title insurance, surveys, or similar purposes;
(2) fees, if not paid to the licensee, an employee of the
licensee, or a person related to the licensee, 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);
(d) discount points and appraisal fees may not be included
in the principal amount of a loan secured by an interest in real
estate when the loan is a refinancing for the purpose of
bringing the refinanced loan current and is made within 24
months of the original date of the refinanced loan. For
purposes of this paragraph, a refinancing is not considered to
be for the purpose of bringing the refinanced loan current if
new funds advanced to the customer, not including closing costs
or delinquent installments, exceed $1,000.
Sec. 19. Minnesota Statutes 1994, section 56.132, is
amended to read:
56.132 [INSTALLMENT SALES CONTRACTS.]
A person may enter into a credit sale or service contract
for sale to a licensee under this chapter doing business in this
state, and a licensee may purchase and enforce the contract
under the terms and conditions set forth in section 51A.385,
subdivisions 2 and 5 to 13 47.59, subdivisions 2 and 4 to 14.
Sec. 20. Minnesota Statutes 1994, section 56.155,
subdivision 1, is amended to read:
Subdivision 1. [AUTHORIZATION.] Notwithstanding section
47.59 to the contrary, 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 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. 21. [334.171] [OPEN END CREDIT PLANS; DELINQUENCIES
AND COLLECTION CHARGES.]
If an open end credit plan, agreement, or arrangement
between the buyer and seller so provides, a seller or holder may
collect a delinquency and collection charge on each installment
in arrears for a period of not less than ten days in an amount
not in excess of any such charge which may be imposed on
residents of this state by any institution defined in subsection
(c)(2)(F) of section 101(a) of the Competitive Equality
Amendments of 1987 and the Bank Holding Company Act of 1956,
United States Code, title 12, section 1841(c)(2)(F), by any
national banking association under section 85 of the National
Bank Act of 1864, United States Code, title 12, section 85, or
by any state chartered insured depository institution under
section 521 of the Depository Institutions Deregulation and
Monetary Control Act of 1980, United States Code, title 12,
section 1813d(a).
Sec. 22. [REPEALER.]
Minnesota Statutes 1994, sections 51A.385; and 325F.91,
subdivision 2, are repealed.
ARTICLE 4
INTERSTATE MARKET DEVELOPMENT AND FEDERALIZATION
OF INTERSTATE BANKING
Section 1. Minnesota Statutes 1994, section 46.048,
subdivision 1, is amended to read:
Subdivision 1. [REQUIREMENT.] Whenever a change in the
outstanding voting stock of a banking institution will result in
control or in a change in the control of the banking
institution, the person acquiring control of the banking
institution, including an out-of-state bank holding company,
shall file notice of the proposed acquisition of control with
the commissioner of commerce at least 60 days before the actual
effective date of the change, except that the commissioner may
extend the 60-day period an additional 30 days if in the
commissioner's judgment any material information submitted is
substantially inaccurate or the acquiring party has not
furnished all the information required. As used in this
section, the term "control" means the power to directly or
indirectly direct or cause the direction of the management or
policies of the banking institution. A change in ownership of
capital stock that would result in direct or indirect ownership
by a stockholder or an affiliated group of stockholders of less
than 25 percent of the outstanding capital stock is not
considered a change of control. If there is any doubt as to
whether a change in the outstanding voting stock is sufficient
to result in control or to effect a change in the control, the
doubt shall be resolved in favor of reporting the facts to the
commissioner. The commissioner shall use the criteria
established by the Financial Institution Regulatory and Interest
Rate Control Act of 1978, United States Code, title 12, section
1817(j), and the regulations adopted under it, when reviewing
the acquisition and determining if the acquisition should or
should not be disapproved. Within three days after making the
decision to disapprove a proposed acquisition, the commissioner
shall notify the acquiring party in writing of the disapproval.
The notice must provide a statement of the basis for the
disapproval.
Sec. 2. Minnesota Statutes 1994, section 46.048, is
amended by adding a subdivision to read:
Subd. 2a. [CONTENTS.] The notice required by subdivision 1
must contain the following information to the extent that it is
known by the person making the notice:
(1) the identity, personal history, business background,
and experience of each person by whom or on whose behalf the
acquisition is to be made, including the person's material
business activities and affiliations during the past five years,
and a description of any material pending legal or
administrative proceedings in which the person is a party and
any criminal indictment or conviction of that person by a state
or federal court;
(2) a statement of the assets and liabilities of each
person by whom or on whose behalf the acquisition is to be made,
as of the end of the fiscal year for each of the five years
immediately preceding the date of the notice, together with
related statements of income, sources, and application of funds
for each of the fiscal years then concluded, all prepared in
accordance with generally accepted accounting principles
consistently applied, and an interim statement of the assets and
liabilities for each person, together with related statements of
income, source, and application of funds as of a date not more
than 90 days before the date of the filing of the notice;
(3) the terms and conditions of the proposed acquisition
and the manner in which the acquisition is to be made;
(4) the identity, source, and amount of the funds or other
consideration to be used in making the acquisition, and if any
part of these funds or other consideration has been or is to be
borrowed or otherwise obtained for the purpose of making the
acquisition, a description of the transaction, the names of the
parties, and any arrangements, agreements, or understandings
with those persons;
(5) any plans or proposals that a party making the
acquisition may have to liquidate the bank, to sell its assets
or merge it, or make any other major change in its business or
corporate structure or management;
(6) the identity of any person employed, retained, or to be
compensated by the acquiring party, or by any person on the
acquiring party's behalf, to make solicitations or
recommendations to stockholders for the purpose of assisting in
the acquisition, and a brief description of the terms of the
employment, retainer, or arrangement for compensation;
(7) copies of all invitations, tenders, or advertisements
making tender offers to stockholders for purchase of their stock
to be used in connection with the proposed acquisition; and
(8) any additional relevant information in the form the
commissioner requires by rule or by specific request in
connection with any particular notice.
Sec. 3. Minnesota Statutes 1994, section 46.048, is
amended by adding a subdivision to read:
Subd. 2b. [NOTICE.] Upon the filing of an application:
(1) an applicant shall publish once in a newspaper of
general circulation notice of the proposed acquisition in a form
acceptable to the commissioner; and
(2) the commissioner shall accept public comment on an
application for a period of not less than 30 days from the date
of the publication required by clause (1).
Sec. 4. Minnesota Statutes 1994, section 46.048, is
amended by adding a subdivision to read:
Subd. 4. [HEARINGS.] Within ten days of receipt of notice
of disapproval according to subdivision 1, the acquiring party
may request a department hearing on the proposed acquisition.
At the hearing, all issues must be determined on the record
according to chapter 14 and the rules adopted by the
commissioner. At the conclusion of the hearing, the
commissioner shall by order approve or disapprove the proposed
acquisition on the basis of the record made at the hearing.
Sec. 5. Minnesota Statutes 1994, section 47.52, is amended
to read:
47.52 [AUTHORIZATION.]
(a) With the prior approval of the commissioner, any bank
doing business in this state may establish and maintain not more
than five detached facilities provided the facilities are
located within the municipality in which the principal office of
the applicant bank is located; or within 5,000 feet of its
principal office measured in a straight line from the closest
points of the closest structures involved; or within 100 miles
of its principal office measured in a straight line from the
closest points of the closest structures involved, if the
detached facility is within any municipality in which no bank is
located at the time of application or if the detached facility
is in a municipality having a population of more than 10,000, or
if the detached facility is located in a municipality having a
population of 10,000 or less, as determined by the commissioner
from the latest available data from the state demographer, or
for municipalities located in the seven-county metropolitan area
from the metropolitan council, and all the banks having a
principal office in the municipality have consented in writing
to the establishment of the facility.
(b) A detached facility shall not be closer than 50 feet to
a detached facility operated by any other bank and shall not be
closer than 100 feet to the principal office of any other bank,
the measurement to be made in the same manner as provided
above. This paragraph shall not be applicable if the proximity
to the facility or the bank is waived in writing by the other
bank and filed with the application to establish a detached
facility.
(c) Any bank is allowed, in addition to other facilities,
one drive-in or walk-up facility located between 150 to 1,500
feet of the main banking house or within 1,500 feet from a
detached facility. The drive-in or walk-up facility permitted
by this clause is subject to paragraph (b) and section 47.53.
(d) A bank whose home state is Minnesota as defined in
section 48.92 is allowed, in addition to facilities otherwise
permitted, to establish and operate a de novo detached facility
in a location in the host states of Iowa, North Dakota, South
Dakota, and Wisconsin not more than 30 miles from its principal
office measured in a straight line from the closest points of
the closest structures involved and subject to requirements of
sections 47.54 and 47.561 and the following additional
requirements and conditions:
(1) there is in effect in the host state a law, rule, or
ruling that permits Minnesota home state banks to establish de
novo branches in the host state under conditions substantially
similar to those imposed by the laws of Minnesota as determined
by the commissioner; and
(2) there is in effect a cooperative agreement between the
home and host state banking regulators to facilitate their
respective regulation and supervision of the bank including the
coordination of examinations.
For purposes of this paragraph, "host state" means a state
other than the home state, as defined in section 48.92.
Sec. 6. Minnesota Statutes 1994, section 47.78, is amended
to read:
47.78 [CONTRACTS TO ACCEPT AND RECEIVE DEPOSITS-HONOR AND
PAY WITHDRAWALS.]
(a) Notwithstanding any other law to the contrary, a
financial institution, the "customer institution," may contract
with another financial institution, the "service institution,"
to grant the service institution the authority to render
services to the customer institution's depositors, borrowers or
other customers, provided notice of the proposed contract is
given to the commissioner and the commissioner does not object
to the contract within 30 days of the notice.
(b) For purposes of this section: "Financial institution"
means a national banking association, federal savings and loan
association, or federal credit union having its main office in
this state, or a bank, savings bank, savings and loan
association, or credit union established and operating under the
laws of this state; and "services" means accepting and receiving
deposits, honoring and paying withdrawals, issuing money orders,
cashiers' checks, and travelers' checks or similar instruments,
cashing checks or drafts, receiving loan payments, receiving or
delivering cash and instruments and securities, disbursing loan
proceeds by machine, and any other transactions authorized by
section 47.63.
The term also includes a bank subsidiary of a bank holding
company or affiliated savings association to the extent agency
activities are permitted under section 18 of the Federal Deposit
Insurance Act, United States Code, title 12, section 1828, as
amended, effective September 29, 1995, and title I, Riegle-Neal
Interstate Banking and Branching Efficiency Act of 1994.
(c) A contract entered into pursuant to this section may
include authority to conduct transactions at or through any
principal office, branch, or detached facility of either
financial institution which is a party to the contract, and the
service institution is not considered a branch of the customer
institution for purposes of section 48.34.
Sec. 7. Minnesota Statutes 1994, section 48.90,
subdivision 1, is amended to read:
Subdivision 1. [SEVERABILITY.] It is the express intention
of the Minnesota legislature to act pursuant to the United
States Code, title 12, section 1842(d) to provide an orderly
transition to interstate banking by initially permitting limited
interstate banking on a regional basis as amended by title I of
the Riegle-Neal Interstate Banking and Branching Efficiency Act
of 1994 to provide for interstate banking on a nationwide basis
and to preserve certain state law, policy, and practices.
Therefore, notwithstanding the provisions of section 645.20, if
any provision of Laws 1986, chapter 339, other than Laws 1986,
chapter 339, sections 1 to 3, and 14, providing for the
supervisory powers of the commissioner or limiting expansion
into this state to bank holding companies located in states
defined as "reciprocating states" is determined by final,
nonappealable order of any Minnesota or federal court of
competent jurisdiction to be invalid or unconstitutional, Laws
1986, chapter 339, is null and void and of no further force and
effect from the effective date of the final determination.
Sec. 8. Minnesota Statutes 1994, section 48.91, is amended
to read:
48.91 [TITLE.]
Laws 1986, chapter 339 Sections 48.90 to 48.99 may be cited
as the "reciprocal interstate banking act."
Sec. 9. Minnesota Statutes 1994, section 48.92,
subdivision 2, is amended to read:
Subd. 2. [CONTROL.] "Control," means, with respect to a
bank holding company, bank, or bank to be organized pursuant to
chapters 46, 47, 48, and 300, (1) the ownership, directly or
indirectly or acting through one or more other persons, control
of or the power to vote 25 percent or more of any class of
voting securities; (2) control in any manner over the election
of a majority of the directors; or (3) the power to exercise,
directly or indirectly, a controlling influence over management
and policies means that term as defined in section 46.048,
subdivision 1.
Sec. 10. Minnesota Statutes 1994, section 48.92,
subdivision 6, is amended to read:
Subd. 6. [LOCATED IN THIS HOME STATE.] "Located in
this Home state" means: (1) a bank whose organizational
certificate identifies an address in this state as the principal
place of conducting the business of banking; or (2) a bank
holding company as defined in the Bank Holding Company Act of
1956, as amended, with banking subsidiaries, the majority of
whose deposits are in Minnesota. with respect to a national
bank, the state in which the main office of the bank is located;
(2) with respect to a state bank, the state by which the bank is
chartered; and (3) with respect to a bank holding company, the
state in which the total deposits of all banking subsidiaries of
the company are the largest on the later of (i) July 1, 1966, or
(ii) the date on which the company becomes a bank holding
company under the Bank Holding Company Act of 1956, as amended,
United States Code, title 12, section 1842.
Sec. 11. Minnesota Statutes 1994, section 48.92,
subdivision 7, is amended to read:
Subd. 7. [RECIPROCATING HOST STATE.] "Reciprocating Host
state" is a state that authorizes the acquisition, directly or
indirectly, or control of, banks in that state by a bank or bank
holding company located in this state under conditions
substantially similar to those imposed by the laws of Minnesota
as determined by the commissioner. other than the home state of
the bank holding company, in which the company controls, or
seeks to control, a bank subsidiary.
Sec. 12. Minnesota Statutes 1994, section 48.92,
subdivision 8, is amended to read:
Subd. 8. [RECIPROCATING STATE OUT-OF-STATE BANK HOLDING
COMPANY.] "Reciprocating state Out-of-state bank holding
company" means a bank holding company as defined in the Bank
Holding Company Act of 1956, as amended, whose operations are
principally conducted in a reciprocating home state is a state
other than Minnesota and is that state in which the operations
of its banking subsidiaries are the largest in terms of total
deposits.
Sec. 13. Minnesota Statutes 1994, section 48.92,
subdivision 9, is amended to read:
Subd. 9. [INTERSTATE BANK HOLDING COMPANY.] "Interstate
bank holding company" means (a) a bank holding company located
in this state, whose home state is Minnesota and that is
engaging in interstate banking under reciprocal
legislation, and (b) a reciprocating state an out-of-state bank
holding company engaged in banking in this state, and (c) other
out-of-state bank holding companies operating an institution
located in this state having deposits insured by the Federal
Deposit Insurance Corporation.
Sec. 14. Minnesota Statutes 1994, section 48.92, is
amended by adding a subdivision to read:
Subd. 11. [OUT-OF-STATE BANK.] "Out-of-state bank" means a
bank whose home state is other than Minnesota.
Sec. 15. Minnesota Statutes 1994, section 48.93,
subdivision 1, is amended to read:
Subdivision 1. [APPLICATION.] A reciprocating state An
out-of-state bank holding company may, through a purchase of
stock or assets of a bank, or through a purchase of stock or
assets of or merger with a bank holding company, acquire an
interest control in an existing bank or banks located in this
whose home state is Minnesota if it meets the conditions in this
section, sections 46.047 and 46.048 and, if the interest will
result in control of the bank or banks, it files an application
in writing with the commissioner on forms provided by the
department. The commissioner, upon receipt of the application,
shall act upon it within 30 days of the end of the public
comment period provided by section 48.98, and, unless the
proposed acquisition is disapproved within that period of time,
it becomes effective without approval in the manner provided for
in sections 46.047 and 46.048, except that the commissioner may
extend the 30-day 60-day period an additional 30 days if in the
commissioner's judgment any material information submitted is
substantially inaccurate or the acquiring party has not
furnished all the information required by subdivision 3 statute,
rule, or the commissioner. No application for approval required
by this section is complete unless accompanied by an application
fee of $5,000 payable to the state treasurer. Compliance with
the requirements of this section satisfies the requirements of
section 48.03, subdivision 4. Within three days after making
the decision to disapprove any proposed acquisition, the
commissioner shall notify the acquiring party in writing of the
disapproval. The notice must provide a statement of the basis
for the disapproval.
Sec. 16. Minnesota Statutes 1994, section 48.93,
subdivision 3, is amended to read:
Subd. 3. [CRITERIA FOR APPROVAL.] Except as otherwise
provided by rule of the department, an application filed
pursuant to subdivision 1 must contain the following
information: required by sections 46.047 and 46.048.
(1) the identity, personal history, business background,
and experience of each person by whom or on whose behalf the
acquisition is to be made, including the person's material
business activities and affiliations during the past five years,
and a description of any material pending legal or
administrative proceedings in which the person is a party and
any criminal indictment or conviction of that person by a state
or federal court;
(2) a statement of the assets and liabilities of each
person by whom or on whose behalf the acquisition is to be made,
as of the end of the fiscal year for each of the five years
immediately preceding the date of the notice, together with
related statements of income, sources, and application of funds
for each of the fiscal years then concluded, all prepared in
accordance with generally accepted accounting principles
consistently applied, and an interim statement of the assets and
liabilities for each person, together with related statements of
income, source, and application of funds as of a date not more
than 90 days prior to the date of the filing of the notice;
(3) the terms and conditions of the proposed acquisition
and the manner in which the acquisition is to be made;
(4) the identity, source, and amount of the funds or other
consideration to be used in making the acquisition, and if any
part of these funds or other consideration has been or is to be
borrowed or otherwise obtained for the purpose of making the
acquisition, a description of the transaction, the names of the
parties, and any arrangements, agreements, or understandings
with those persons;
(5) any plans or proposals which an acquiring party making
the acquisition may have to liquidate the bank, to sell its
assets or merge it, or make any other major change in its
business or corporate structure or management;
(6) the identification of any person employed, retained, or
to be compensated by the acquiring party, or by any person on
the acquiring party's behalf, to make solicitations or
recommendations to stockholders for the purpose of assisting in
the acquisition, and a brief description of the terms of the
employment, retainer, or arrangement for compensation;
(7) copies of all invitations, tenders, or advertisements
making tender offers to stockholders for purchase of their stock
to be used in connection with the proposed acquisition;
(8) a statement of how the acquisition will bring "net new
funds" to Minnesota. The description of net new funds must be
filed with the application stating the amount of capital funds,
including the increase in equity capital that will result from
the acquisition or establishment of a bank. The level of total
equity capital must exceed $3,000,000 for a new chartered bank
and $1,000,000 for an acquired bank. The description must state
the net increase in loanable funds expressed as an increase in
the total loan to asset ratio of Minnesota loans and assets.
The statement must also include a discussion of initial capital
investments, loan policy, investment policy, dividend policy,
and the general plan of business, including the full range of
consumer and business services which will be offered; and
(9) any additional relevant information in the form the
commissioner requires by rule or by specific request in
connection with any particular notice.
Sec. 17. Minnesota Statutes 1994, section 48.93,
subdivision 4, is amended to read:
Subd. 4. [DISAPPROVAL.] The commissioner shall disapprove
any proposed acquisition if:
(1) the financial condition of any acquiring person is such
as might jeopardize the financial stability of the bank or
prejudice the interests of the depositors of the bank;
(2) the competence, experience, integrity of any acquiring
person or of any of the proposed management personnel indicates
that it would not be in the interest of the depositors of the
bank, or in the interest of the public to permit the person to
control the bank;
(3) the acquisition will result in undue concentration of
resources or substantial lessening of competition in this state;
(4) the application fails to adequately demonstrate that
the acquisition proposal would bring net new funds into
Minnesota;
(5) the application is incomplete or any acquiring party
neglects, fails, or refuses to furnish all the information
required by the commissioner;
(6) (5) a subsidiary of the acquiring bank holding company
has failed to meet the requirements set forth in the federal
Community Reinvestment Act; or
(7) the acquisition will result in over 30 percent of
Minnesota's total deposits in financial institutions as defined
in section 13A.01, subdivision 2, being held by banks located in
this state owned by reciprocating state bank holding companies.
This limitation does not apply to consideration for approval
pursuant to section 48.99, special acquisitions.
(6) the bank to be acquired has not been in existence for
at least five years. For purposes of this paragraph, a bank
that has been chartered solely for the purpose of, and does not
open for business before, acquiring control of, or acquiring all
or substantially all of the assets of, an existing bank is
considered to have been in existence for the same period of time
as the bank to be acquired. For determining the time period of
existence of a bank, the time period begins after the issuance
of a certificate of authorization and from the date the approved
bank actually opens for business.
Sec. 18. Minnesota Statutes 1994, section 48.96, is
amended to read:
48.96 [SUPERVISION.]
The department may enter into cooperative and reciprocal
agreements with federal or bank state regulatory authorities of
reciprocating states responsible for supervision of out-of-state
bank holding companies for exchange or acceptance of reports of
examination and other records from the authorities in lieu of
conducting its own examinations. The department may enter into
joint actions with federal or bank state regulatory authorities
of reciprocating states responsible for supervision of
out-of-state bank holding companies to carry out its
responsibilities under Laws 1986, chapter 339 and assure
compliance with the laws of this state.
Sec. 19. Minnesota Statutes 1994, section 48.99,
subdivision 1, is amended to read:
Subdivision 1. [APPLICATION CRITERIA FOR APPROVAL.]
Pursuant to the present requirement of the United States Code,
title 12, section 1842(d) and notwithstanding any other
provision of state law, a reciprocating state an out-of-state
bank holding company, or any subsidiary of a bank holding
company, may acquire a bank located in this state where the
commissioner has determined that a merger, consolidation, or
purchase of assets and assumption of liabilities is necessary
and in the public interest to prevent the probable failure of a
bank or is made for the incorporation of a new bank in the same
locality coincidental with the closing of an existing bank by
the commissioner or federal authorities and does not increase
the number of banks in the community affected. The acquisition
is subject to the prior written approval of the commissioner of
an application submitted under this section and after the
following considerations:
(1) the financial and managerial resources of the
applicant;
(2) the future prospects of the applicant and the state
bank or its subsidiary whose assets, interest in, or shares it
will acquire;
(3) the financial history of the applicant;
(4) whether the acquisition or holding may result in undue
concentration of resources or substantial lessening of
competition in this state, but any deposit concentration
limitations imposed on the acquisition by Public Law Number
103-328, title 1, section 101, (a)(2), may be waived by order of
the commissioner;
(5) the convenience and needs of the public of this state;
and
(6) whether the acquisition or holding will strengthen the
financial condition of the state bank.
Sec. 20. [48.993] [RECIPROCAL INTERSTATE BRANCHING.]
With the prior approval of the commissioner, a bank doing
business in the state of Iowa, North Dakota, South Dakota, or
Wisconsin may establish a de novo detached facility in this
state not more than 30 miles from its principal office measured
in a straight line from the closest points of the closest
structures provided further that:
(a) There is in effect in the home state a statute, rule,
or ruling that permits Minnesota home state banks to establish
de novo branches in the state under conditions substantially
similar to those imposed by the laws of Minnesota as determined
by the commissioner.
(b) There is in effect a cooperative agreement between the
home state and host state banking regulator to facilitate their
respective regulation and supervision of the bank including
application and approval process, and the coordination of
examinations. The agreement must at a minimum provide:
(1) common form and information requirements to be
completed by the applicant bank;
(2) common form and procedure required to publish the
application in the location of the branch in the host state;
(3) a fee for the application to the state of Minnesota,
department of commerce, for filing and approval as the host
state of the application of $500;
(4) the requirements and limitations on the location and
operations of an interstate branch must be the same as for host
state branches in sections 47.51 to 47.55. Transfer of location
under section 47.56 is limited by this section;
(5) the branch is subject to the laws of the host state
relating to banking in resolution of conflicts of laws between
the home and host state; and
(6) the deposits of the bank must be insured by the Federal
Deposit Insurance Corporation.
(c) The home state banking regulator has granted any and
all necessary approvals.
(d) Beginning one year following establishment of a
detached facility in a host state, the home state bank's level
of lending in the host state relative to the deposits from the
host state shall not be less than half of the level of the
bank's loan to deposit ratio in its home state operations. The
bank shall maintain sufficient records to permit an examination
to determine compliance with this requirement by the host state
banking regulator. If the bank is found to be in noncompliance,
the home state or host state banking regulator may order that an
interstate branch of the bank in the host state be closed.
(e) For purposes of this section, "home state" has the
meaning given in section 48.92, and "host state" means a state
other than the home state.
Sec. 21. [48.995] [FOREIGN CORPORATION FILING.]
Subdivision 1. [TRUST POWERS.] A bank that holds trust
powers may conduct the activity through a host state branch
provided it complies with section 303.25.
Subd. 2. [FILING WITH SECRETARY OF STATE.] Notwithstanding
section 303.03, the branch in a host state must operate under a
certificate of authority filed with the Minnesota secretary of
state.
Subd. 3. [DEFINITION.] For purposes of this section, "host
state" means a state other than the home state, as defined in
section 48.92.
Sec. 22. Minnesota Statutes 1994, section 52.05,
subdivision 2, is amended to read:
Subd. 2. [APPLICATION.] Any 25 residents of the state
persons representing a group may apply to the commissioner,
advising the commissioner of the common bond of the group and
its number of potential members, for a determination whether it
is feasible for the group to form a credit union. Upon a
determination that it is not feasible to organize because the
number of potential members is too small, the applicants will be
certified by the commissioner as eligible to petition for
membership in an existing credit union capable of serving the
group. If the credit union so petitioned resolves to accept the
group into membership, it shall follow the bylaw amendment and
approval procedure set forth in section 52.02.
The commissioner shall adopt rules to implement this
subdivision. These rules must provide that:
(1) for the purpose of this subdivision, groups with a
potential membership of less than 1,500 will be considered too
small to be feasible as a separate credit union, unless there
are compelling reasons to the contrary, relevant to the
objectives of this subdivision;
(2) groups with a potential membership in excess of 1,500
will be considered in light of all circumstances relevant to the
objectives of this subdivision; and
(3) all group applications, except for applications from
groups made up of members of existing credit unions or groups
made up of people who have a common employer which qualifies
them for membership in an existing credit union, will be
considered separately from any consideration of the membership
provisions of existing credit unions; except that, groups made
up of members of an existing credit union may be certified under
this subdivision with the agreement of the credit union.
Sec. 23. [NONSEVERABILITY.]
Notwithstanding Minnesota Statutes, section 645.20, if any
section, subdivision, clause, phrase, or word of section 5,
paragraph (d), section 20, or section 21 is for any reason
determined by a final nonappealable order or judgment of a court
of competent jurisdiction to be unconstitutional, in violation
of federal law, or to constitute opting-in to de novo interstate
branching under section 103 of the federal Riegle-Neal
Interstate Banking and Branching Efficiency Act of 1994, the
determination shall cause the remaining portions of those
sections, subdivisions, clauses, and phrases to be null and void
from the effective date of the final determination.
Sec. 24. [SUNSET.]
Sections 5, 20, and 21 expire May 31, 1997.
Sec. 25. [IMMEDIATE REPEALER.]
Minnesota Statutes 1994, sections 48.1585; 48.512,
subdivision 6; 48.97; and 48.991, are repealed.
Sec. 26. [DELAYED REPEALER.]
Minnesota Statutes 1994, sections 47.80; 47.81; 47.82;
47.83; 47.84; 47.85; 48.95; and 48.98, are repealed.
Sec. 27. [EFFECTIVE DATE.]
Sections 1, 5, 20 to 22, and 25 are effective the day
following final enactment. Sections 2 to 4 and 6 to 19 are
effective September 29, 1995, except that the portions of
section 17 that strike existing clauses (4) and (7) are
effective the day following final enactment.
Presented to the governor May 22, 1995
Signed by the governor May 24, 1995, 10:20 a.m.
Official Publication of the State of Minnesota
Revisor of Statutes