Office of the Revisor of Statutes
Minnesota Session Laws - 1996, Regular Session
Key: (1) language to be deleted (2) new language
KEY: stricken = old language to be removed
underscored = new language to be added
CHAPTER 414-H.F.No. 2369
An act relating to financial institutions; regulating
consumer credit; modifying rates, fees, and other
terms and conditions; providing clarifying and
technical changes; providing opportunities for state
banks to develop their Minnesota markets through
broader intrastate branching; modifying finance charge
provisions and other provisions for certain
cooperatives; providing technical corrections;
amending Minnesota Statutes 1994, sections 9.031,
subdivision 13; 13.71, by adding a subdivision;
46.041, subdivision 1; 46.044, subdivision 1; 47.10,
subdivision 4; 47.101, subdivisions 2 and 3; 47.20,
subdivision 14; 47.201, subdivision 2; 47.51; 47.62,
subdivision 1; 48.09; 48.10; 48.301; 48.34; 48.845,
subdivision 4; 52.131; 53.01; 53.03, subdivision 1;
53.07, subdivision 2; 118.01, subdivision 1; 168.69;
168.705; 168.71; 168.72, by adding a subdivision;
168.73; 256.99; 300.025; 303.02, subdivision 2;
308A.135, subdivision 3; 308A.165, subdivision 2;
332.21; 332.50, subdivision 2; 334.02; and 334.03;
Minnesota Statutes 1995 Supplement, sections 46.048,
subdivision 2b; 47.20, subdivisions 1 and 9; 47.52;
47.59, subdivisions 2, 3, 4, 5, 6, and by adding a
subdivision; 47.60, subdivision 2; 47.61, subdivision
3; 48.153, subdivision 3a; 48.194; 48.65; 50.1485,
subdivision 1; 50.245, subdivisions 1 and 4; 53.04,
subdivision 3a; 53.09, subdivision 2; 55.10,
subdivision 4; 56.131, subdivisions 2, 4, and 6;
56.14; and 62B.04, subdivision 1; Laws 1995, chapter
171, section 70; proposing coding for new law in
Minnesota Statutes, chapters 49; and 334; repealing
Minnesota Statutes 1994, sections 48.94; 51A.01;
51A.02, subdivisions 1, 2, 3, 4, 5, 8, 9, 10, 11, 12,
13, 14, 15, 16, 17, 18, 19, 20, 21, 22, 23, 24, 25,
27, 28, 29, 30, 31, 32, 33, 34, 35, 36, 37, 38, 39,
41, 42, 43, 44, 45, 46, 47, 48, 49, 50, 51, 52, 53,
55, and 56; 51A.03; 51A.04; 51A.041; 51A.05; 51A.06;
51A.065; 51A.07; 51A.08; 51A.09; 51A.10; 51A.11;
51A.12; 51A.13; 51A.131; 51A.14; 51A.15; 51A.16;
51A.17; 51A.19, subdivisions 1, 4, 5, 6, 7, 8, 10, 11,
12, and 13; 51A.20; 51A.21, subdivisions 1, 2, 3, 4,
5, 6a, 6b, 7, 8, 9, 10, 11, 12, 13, 14, 15, 17, 18,
20, 21, 22, 23, 24, 25, 26, and 27; 51A.22; 51A.23,
subdivision 6; 51A.24; 51A.251; 51A.261; 51A.262;
51A.27; 51A.28; 51A.29; 51A.30; 51A.31; 51A.32;
51A.33; 51A.34; 51A.35; 51A.361; 51A.37; 51A.38;
51A.40; 51A.41; 51A.42; 51A.43; 51A.44; 51A.45;
51A.46; 51A.47; 51A.48; 51A.51; 51A.52; 51A.54;
51A.55; 51A.56; 51A.57; and 53.04, subdivision 3b;
Minnesota Statutes 1995 Supplement, sections 47.201,
subdivision 7; 47.27, subdivision 3; 51A.02,
subdivisions 6, 7, 26, 40, and 54; 51A.19, subdivision
9; 51A.21, subdivision 28; 51A.23, subdivisions 1 and
7; 51A.386; 51A.50; 51A.53; 51A.58; and 53.04,
subdivisions 3c and 4a; Minnesota Rules, parts
2655.0100; 2655.0200; 2655.0300; 2655.0400; 2655.0500;
2655.0600; 2655.0700; 2655.0800; 2655.0900; 2655.1000;
2655.1100; 2655.1200; and 2655.1300.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
ARTICLE 1
FINANCIAL INSTITUTIONS TECHNICAL CORRECTIONS
Section 1. Minnesota Statutes 1994, section 9.031,
subdivision 13, is amended to read:
Subd. 13. [REQUIRED COMMUNITY REINVESTMENT RATING.] Banks
and trust companies designated as depositories must have
received ratings of "outstanding" or "satisfactory" as their
most recent rating under section 47.83 or under United States
Code, title 12, section 2906. If a state depository receives a
rating that is below "satisfactory," the executive council shall
revoke its designation as a depository. The executive council
may delay the effective date of the revocation if necessary to
allow a reasonable period of time to arrange for a replacement
depository.
Sec. 2. Minnesota Statutes 1994, section 13.71, is amended
by adding a subdivision to read:
Subd. 21. [BANK CHARTER TRADE SECRETS DATA.] Trade secret
data provided in bank charter applications is classified under
section 46.041, subdivision 1.
Sec. 3. Minnesota Statutes 1994, section 46.041,
subdivision 1, is amended to read:
Subdivision 1. [FILING; FEE; PUBLIC INSPECTION.] The
incorporators of a bank proposed to be organized under the laws
of this state shall execute and acknowledge a written
application in the form prescribed by the commissioner of
commerce. The application must be signed by two or more of the
incorporators and request a certificate authorizing the proposed
bank to transact business at the place and in the name stated in
the application. The applicant shall file the application with
the department with a $1,000 filing fee and a $500 investigation
fee. The fees must be turned over by the commissioner to the
state treasurer and credited to the general fund. The
application file must be public, with the exception of financial
data on individuals which is private under the Minnesota
government data practices act and data defined as trade secret
information under section 13.37, subdivision 1, paragraph (b),
which must be given nonpublic classification upon written
request by the applicant.
Sec. 4. Minnesota Statutes 1994, section 46.044,
subdivision 1, is amended to read:
Subdivision 1. [CHARTERS ISSUED, CONDITIONS.] An
application for a bank charter must be granted if (1) the
applicants are of good moral character and financial integrity,
(2) there is a reasonable public demand for this bank in this
location, (3) the organization expenses being paid by the bank
do not exceed those allowed by section 46.043, (4) the probable
volume of business in this location is sufficient to insure and
maintain the solvency of the new bank and the solvency of the
then existing bank or banks in the locality without endangering
the safety of any bank in the locality as a place of deposit of
public and private money, (5) the commissioner of commerce is
satisfied that the proposed bank will be properly and safely
managed, and (6) the commissioner is satisfied that the capital
funds required pursuant to section 48.02 are available and the
commissioner may accept any reasonable demonstration including
subscription agreements supported by current financial
statements, and (7) the applicant, if it is an interstate bank
holding company, as defined in section 48.92, has provided
developmental loans as required by section 48.991, and has
complied with the net new funds reporting requirements of
section 48.93, the application must be granted; otherwise. If
the application does not satisfy the requirements of this
subdivision, it must be denied. In case of the denial of the
application, the commissioner of commerce shall specify the
grounds for the denial. A person aggrieved, may obtain judicial
review of the determination in accordance with chapter 14.
Sec. 5. Minnesota Statutes 1995 Supplement, section
46.048, subdivision 2b, is amended to read:
Subd. 2b. [NOTICE.] Upon the filing of an application a
notice:
(1) an applicant acquiring party 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 a notice for a period of not less than 30 days from
the date of the publication required by clause (1).
Sec. 6. Minnesota Statutes 1994, section 47.10,
subdivision 4, is amended to read:
Subd. 4. [APPROVAL OF CERTAIN INSIDER AGREEMENTS.] No
bank, trust company, savings bank, or savings association may
purchase or, sell, or lease real property, personal property,
improvements or equipment of a value of $25,000 or more if the
purchaser or, seller, lessor, or lessee other than the bank,
trust company, savings bank, or savings association has an
existing direct or indirect interest in the institution without
prior written approval by the commissioner. Each bank, trust
company, savings bank, or savings association must maintain
documentation of transactions with interested parties, including
personal property leases and purchases or sales of under
$25,000, which demonstrates the commercial reasonableness and
fair market value of the transaction.
Sec. 7. Minnesota Statutes 1995 Supplement, section 47.20,
subdivision 1, is amended to read:
Subdivision 1. Pursuant to rules the commissioner of
commerce finds to be necessary and proper, if any, banks,
savings banks, and savings associations organized under the laws
of this state or the United States, trust companies, trust
companies acting as fiduciaries, and other banking institutions
subject to the supervision of the commissioner of commerce, and
mortgagees or lenders 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 any
successor, or approved or certified by the federal home loan
mortgage corporation, or approved or certified by the federal
national mortgage association, are authorized:
(1) To make loans and advances of credit and purchases of
obligations representing loans and advances of credit which are
insured or guaranteed by the secretary of housing and urban
development pursuant to the national housing act, as amended, or
the administrator of veterans affairs pursuant to the
servicemen's readjustment act of 1944, as amended, or the
administrator of the farmers home administration or any
successor pursuant to the consolidated farm and rural
development act, Public Law Number 87-128, as amended, and to
obtain the insurance or guarantees;
(2) To make loans secured by mortgages on real property and
loans secured by a share or shares of stock or a membership
certificate or certificates issued to a stockholder or member by
a cooperative apartment corporation which the secretary of
housing and urban development, the administrator of veterans
affairs, or the administrator of the farmers home administration
or any successor has insured or guaranteed or made a commitment
to insure or guarantee, and to obtain the insurance or
guarantees;
(3) To make, purchase, or participate in such loans and
advances of credit; including reverse mortgage loans,
notwithstanding anything in sections 47.20, subdivision 4b,
47.58, and 334.01 and chapter 56 to the contrary; as would be
eligible for purchase, in whole or in part, by the federal
national mortgage association or the federal home loan mortgage
corporation, but without regard to any limitation placed upon
the maximum principal amount of an eligible loan;
(4) To make, purchase or participate in such loans and
advances of credit secured by mortgages on real property which
are authorized or allowed by the office of thrift supervision or
the office of the comptroller of the currency, or any successor
to these federal agencies.
Sec. 8. Minnesota Statutes 1995 Supplement, section 47.20,
subdivision 9, is amended to read:
Subd. 9. (1) For purposes of this subdivision the term
"mortgagee" shall mean all state banks and trust companies,
national banking associations, state and federally chartered
savings associations, mortgage banks, savings banks, insurance
companies, credit unions or assignees of the above.
(a) Each mortgagee requiring funds of a mortgagor to be
paid into an escrow, agency or similar account for the payment
of taxes or insurance premiums with respect to a mortgaged
one-to-four family, owner occupied residence located in this
state, unless the account is required by federal law or
regulation or maintained in connection with a conventional loan
in an original principal amount in excess of 80 percent of the
lender's appraised value of the residential unit at the time the
loan is made or maintained in connection with loans insured or
guaranteed by the secretary of housing and urban development, by
the administrator of veterans affairs, or by the administrator
of the farmers home administration or any successor, shall
calculate interest on such funds at a rate of not less than five
three percent per annum. Such interest shall be computed on the
average monthly balance in such account on the first of each
month for the immediately preceding 12 months of the calendar
year or such other fiscal year as may be uniformly adopted by
the mortgagee for such purposes and shall be annually credited
to the remaining principal balance on the mortgage, or at the
election of the mortgagee, paid to the mortgagor or credited to
the mortgagor's account. If the interest exceeds the remaining
balance, the excess shall be paid to the mortgagor or vendee.
The requirement to pay interest shall apply to such accounts
created prior to June 1, 1976, as well as to accounts created
after June 1, 1976 in conjunction with mortgage loans made prior
to July 1, 1996.
(b) Unless the account is exempt from the requirements of
paragraph (a), a mortgagee shall allow a mortgagor to elect to
discontinue the escrow account after the seventh anniversary of
the date of the mortgage, unless the mortgagor has been more
than 30 days delinquent in the previous 12 months. This
paragraph shall apply to accounts created prior to July 1, 1996,
as well as to accounts created on or after July 1, 1996. The
mortgagor's election shall be in writing. If the escrow account
has a negative balance or a shortage at the time the mortgagor
requests discontinuance, the mortgagee is not obligated to allow
discontinuance until the escrow account is balanced or the
shortage has been repaid.
(c) The mortgagee shall notify the mortgagor within 60 days
after the seventh anniversary of the date of the mortgage if the
right to discontinue the escrow account is in accordance with
paragraph (b). For mortgage loans entered into, on or prior to
July 1, 1989, the notice required by this paragraph shall be
provided to the mortgagor by January 1, 1997.
(d) A mortgagee may require the mortgagor to reestablish
the escrow account if the mortgagor has failed to make timely
payments for two consecutive payment periods at any time during
the remaining term of the mortgage, or if the mortgagor has
failed to pay taxes or insurance premiums when due. A payment
received during a grace period shall be deemed timely.
(e) The mortgagee shall, subject to paragraph (b), return
any funds remaining in the account to the mortgagor within 60
days after receipt of the mortgagor's written notice of election
to discontinue the escrow account.
(f) The mortgagee shall not charge a direct fee for the
administration of the escrow account, nor shall the mortgagee
charge a fee or other consideration for allowing the mortgagor
to discontinue the escrow account.
(2) A mortgagee offering the following option (c) to a
mortgagor but not requiring maintenance of escrow accounts as
described in clause (1), whether or not the accounts were
required by the mortgagee or were optional with the mortgagor,
shall offer to each of such mortgagors the following options:
(a) the mortgagor may personally manage the payment of
insurance and taxes;
(b) the mortgagor may open with the mortgagee a passbook
savings account carrying the current rate of interest being paid
on such accounts by the mortgagee in which the mortgagor can
deposit the funds previously paid into the escrow account; or
(c) the mortgagor may elect to maintain a noninterest
bearing escrow account as described in clause (1) to be serviced
by the mortgagee at no charge to the mortgagor.
A mortgagee that is not a depository institution offering
passbook savings accounts shall instead of offering option (b)
above notify its mortgagors (1) that they may open such accounts
at a depository institution and (2) of the current maximum legal
interest rate on such accounts.
A mortgagee offering option (c) above to a mortgagor but
not requiring the maintenance of escrow accounts shall notify
its mortgagor of the options under (a), (b) and (c). The notice
shall state the option and state that an escrow account is not
required by the mortgagee, that the mortgagor is legally
responsible for the payment of taxes and insurance, and that the
notice is being given pursuant to this subdivision.
Notice shall be given within 30 days after the effective
date of the provisions of Laws 1977, chapter 350 amending the
subdivision, as to mortgagees offering option (c) above to
mortgagors but not requiring escrow accounts as of the effective
date, or within 30 days after a mortgagee's decision to
discontinue requiring escrow accounts if the mortgagee continues
to offer option (c) above to mortgagors. If no reply is
received within 30 days, option (c) shall be selected for the
mortgagor but the mortgagor may, at any time, select another
option.
A mortgagee making a new mortgage and offering option (c)
above to a prospective mortgagor shall, at the time of loan
application, notify the prospective mortgagor of options (a),
(b) and (c) above which must be extended to the prospective
mortgagor. The mortgagor shall select one of the options at the
time the loan is made.
Any notice required by this clause shall be on forms
approved by the commissioner of commerce and shall provide that
at any time a mortgagor may select a different option. The form
shall contain a blank where the current passbook rate of
interest shall be entered by the mortgagee. Any option selected
by the mortgagor shall be binding on the mortgagee.
This clause does not apply to escrow accounts which are
excepted from the interest paying requirements of clause (1).
(3) A mortgagee shall be prohibited from charging a direct
fee for the administration of the escrow account.
Sec. 9. Minnesota Statutes 1994, section 47.20,
subdivision 14, is amended to read:
Subd. 14. (a) A lender requiring or offering private
mortgage insurance shall make available to the borrower or other
person paying the insurance premium the same premium payment
plans as are available to the lender in paying the private
mortgage insurance premium.
(b) Any refund or rebate for unearned private mortgage
insurance premiums shall be paid to the borrower or other person
actually providing the funds for payment of the premium.
(c) With regard to first mortgage loans made on or after
January 1, 1997, the mortgagor shall have the right to elect, in
writing, to cancel borrower-purchased private mortgage insurance
if all of the following terms and conditions have been met:
(1) if the current unpaid principal balance of a first
mortgage is 75 percent or less of the current fair market
appraised value of the property. "Current fair market appraised
value" shall be based upon a current appraisal by a real estate
appraiser licensed or certified by the appropriate state or
federal agency and reasonably acceptable to the lender. The
lender may require the mortgagor to pay for the appraisal;
(2) the mortgagor's monthly installments of principal,
interest, and escrow obligations have not been more than 30 days
past due over the 24-month period immediately preceding the
request for cancellation and all accrued late charges have been
paid;
(3) the mortgage was made at least 24 months prior to the
receipt of a request for cancellation of private mortgage
insurance;
(4) the property securing the mortgage is owner-occupied;
and
(5) the mortgage has not been pooled with other mortgages
in order to constitute, in whole or in part, collateral for
bonds issued by the state of Minnesota or any political
subdivision of the state of Minnesota or of any agency of any
political subdivision of the state of Minnesota.
(d) Other than the appraisal fee allowed pursuant to
paragraph (c), clause (1), the lender shall not charge the
borrower a fee or other consideration for cancellation of the
private mortgage insurance.
(e) A lender requiring private mortgage insurance shall,
after the payment of the 24th monthly premium installment of
private mortgage insurance, provide an annual written notice to
each mortgagor currently paying premiums for private mortgage
insurance. The notice may be included in the annual statement
or may be included in other regular mailings to the mortgagor.
The annual notice shall be on its own page, unless included in a
private mortgage insurance notice required under the federal
Real Estate Settlement Procedures Act, and shall appear
substantially as follows:
"NOTICE OF RIGHT TO CANCEL PRIVATE MORTGAGE INSURANCE
If you currently pay private mortgage insurance premiums,
you may have the right to cancel the insurance and cease paying
premiums. This would permit you to make a lower total monthly
mortgage payment. In most cases, you have the right to cancel
private mortgage insurance if the principal balance of your loan
is 80 percent or less of the current fair market appraised value
of your home. If you wish to learn whether you are eligible to
cancel this insurance, please contact us at (address/phone)."
(f) If a mortgage loan governed by paragraph (c) is
serviced in accordance with the guidelines of either the Federal
National Mortgage Association or the Federal Home Loan Mortgage
Corporation, the lender shall cancel private mortgage insurance
in accordance with the cancellation guidelines of the applicable
entity in effect at the time the request for cancellation is
received.
Sec. 10. Minnesota Statutes 1994, section 47.201,
subdivision 2, is amended to read:
Subd. 2. [AUTHORIZATION.] Notwithstanding the provisions
of sections section 334.01, subdivision 1, and 51A.37,
subdivision 3, clause (d), any financial institution is
authorized to make graduated payment home loans and purchases
representing graduated payment home loans pursuant to such rules
as the commissioner of commerce finds to be necessary and
proper, if any, at an interest rate not in excess of the maximum
lawful interest rate prescribed in section 47.20, subdivision 4a.
Notwithstanding the provisions of section 334.01, subdivision 1,
where initial repayments of a graduated payment home loan are
less than the total accrued outstanding interest, the excess
accrued and unpaid interest may be added to the outstanding loan
balance on which interest accrues at the contracted rate.
Sec. 11. Minnesota Statutes 1995 Supplement, 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.
(b) "Electronic financial terminal" does not include:
(1) a telephone;
(2) an electronic information processing device that is
used internally by a financial institution to conduct the
business activities of the institution; 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, and which also may be used to
obtain cash advances or cash back not to exceed $25 and only if
incidental to the retail sale transactions, 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. 12. Minnesota Statutes 1994, section 48.09, is
amended to read:
48.09 [DIVIDENDS; SURPLUS.]
Subdivision 1. [CREATION OF SURPLUS FUND.] At the end of
each dividend period, after deducting all necessary expenses,
losses, amounts receivable more than one year overdue and not
well secured, interest, and taxes due or levied, all of the
remaining net profits for the period shall be set aside as a
surplus fund, if the surplus fund of the banking institution is
not then equal to one-fifth of the capital stock. If the
surplus fund is more than one-fifth of the capital stock, ten
percent of the remaining net profits for the period shall be set
aside as a surplus fund until it equals 50 percent of the
capital stock. The directors may then declare a dividend of so
much of the remainder as they may think expedient, subject to
the commissioner's approval. When in any way impaired the
surplus fund shall be raised to this percentage in like manner.
Subd. 2. [UNDECLARED NET PROFITS, PRIOR DIVIDEND PERIODS.]
Any amount of remaining net profits qualifying for dividend
declaration in subdivision 1 and not declared at the end of each
annual dividend period may be subject to dividend declaration
under the requirements of subdivision 1 during any of the three
subsequent annual dividend periods.
Sec. 13. Minnesota Statutes 1994, section 48.10, is
amended to read:
48.10 [ANNUAL AUDIT; REPORT.]
The board of directors of a bank, bank and trust, or trust
company shall annually examine the its books of, a bank,
either in person, or by appointing an examining committee, or an
auditor, who may be an independent auditor or accountant. The
examining committee or auditor shall be solely responsible to
the directors. A report shall be made to the directors as to
the scope of the examination or audit, and also to show those
assets, excluding marketable securities and fixed assets, which
are carried on the books for more than actual value. This
report shall be retained as a permanent record or incorporated
in the minutes of the meeting, and a copy of the report shall be
sent to the commissioner of commerce.
Sec. 14. Minnesota Statutes 1995 Supplement, section
48.153, subdivision 3a, is amended to read:
Subd. 3a. A savings bank organized under chapter 50, a
savings association subject to the provisions of sections 51A.01
to 51A.57, or a savings association chartered under the laws of
the United States, that has its principal place of business in
this state, may make a loan for consumer purposes to a natural
person in an amount not exceeding $25,000 repayable in
installments, and may charge a rate of interest upon the unpaid
principal balance of the amount financed of 12 percent a year,
or the rate of interest authorized by section 48.195, whichever
is greater. If the rate of interest charged is permitted by
section 48.195 at the time the loan is made, the rate does not
later become usurious because of a fluctuation in the federal
discount rate.
Sec. 15. Minnesota Statutes 1995 Supplement, 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 sections section 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 sections 47.59, and 47.60, and
51A.386, subdivision 4.
Sec. 16. Minnesota Statutes 1994, section 48.301, is
amended to read:
48.301 [MULTIPARTY ACCOUNTS.]
When any deposit is made in the names of two or more
persons jointly, or by any person payable on death (P.O.D.) to
another, or by any person in trust for another, the rights of
the parties and the financial institution are determined by
chapter 528 524.
Sec. 17. Minnesota Statutes 1995 Supplement, 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, exercising deposit taking
powers, without fully complying with the provisions of section
48.221 relating to the reserve requirements of the state banks.
Sec. 18. Minnesota Statutes 1994, section 48.845,
subdivision 4, is amended to read:
Subd. 4. "Affiliated bank" with respect to another bank or
a trust company means any bank which is owned or controlled by
the corporation which owns or controls that other bank or trust
company, including a wholly owned subsidiary of the other bank
or trust company.
Sec. 19. Minnesota Statutes 1995 Supplement, section
50.1485, subdivision 1, is amended to read:
Subdivision 1. [GENERALLY.] In addition to other
investments authorized by law, a savings bank may make,
purchase, or invest in:
(a) loans secured by the pledge of policies of life
insurance, the assignment of which is properly acknowledged by
the insurer;
(b) consumer loans, which may be unsecured or secured by
personal or real property. Consumer loans include, but are not
limited to, closed-end installment loans, single payment loans,
nonamortizing loans, open-end revolving line of credit loans,
credit card loans and extensions of credit, and overdraft
protection loans. For the purpose of this paragraph, "consumer
loan" means a loan made by the savings bank in which: (1) the
debtor is a person other than an organization; (2) the debt is
incurred primarily for personal, family, or household purpose;
and (3) the debt is payable in installments or a finance charge
is made;
(c) secured and unsecured loans to organizations and
natural persons for business or commercial purposes. For the
purpose of this paragraph, "organization" means a corporation,
government or governmental subdivision, or agency, trust,
estate, partnership, limited liability partnership, limited
liability company, joint venture, cooperative, or association.
"Business or commercial purpose" means a purpose other than
personal, family, household, or agricultural purpose;
(d) secured and unsecured loans for agricultural purposes.
For the purpose of this paragraph, "agricultural purpose" means
a purpose relating to the production, harvest, exhibition,
marketing, transportation, processing, or manufacture of
agricultural products. "Agricultural products" includes
agricultural, horticultural, viticultural, and dairy products,
livestock, wildlife, poultry, bees, and forest products, and
products raised or produced on farms, including processed or
manufactured products;
(e) credit sale contracts, which means a sale of goods,
services, or an interest in land in which credit is granted by a
seller who regularly engages as a seller in credit transactions
of the same kind, and the debt is payable in installments or a
finance charge is made;
(f) loans on the security of deposit accounts;
(g) real estate loans, subject to the conditions applicable
to savings associations under section 51A.38 and Minnesota
Statutes 1994, section 51A.385. "Real estate loans" which
include a loan or other obligation secured by a first lien on
real estate in fee or in a leasehold extending or renewable
automatically for a period of at least ten years beyond the date
scheduled for the final principal payment of the loan or
obligation, or a transaction out of which a first lien or claim
is created against the real estate, including the purchase of
the real estate in fee by a savings bank and the concurrent or
immediate sale of it on installment contract;
(h) secured or unsecured loans for the purpose of repair,
improvement, rehabilitation, or furnishing of real estate;
(i) loans for the purpose of financing or refinancing an
ownership interest in certificates of stock, certificates of
beneficial interest, or other evidence of an ownership interest
in, or a proprietary lease from, a corporation, limited
liability company, trust, limited liability partnership, or
partnership formed for the purpose of the cooperative ownership
of real estate, secured by the assignment or transfer of
certificates or other evidence of ownership of the borrower;
(j) loans guaranteed or insured, in whole or in part, by
the United States or any of its instrumentalities;
(k) issuance of letters of credit or other similar
arrangements; and
(l) any other type of loan authorized by rules adopted by
the commissioner.
Sec. 20. Minnesota Statutes 1995 Supplement, section
50.245, subdivision 4, is amended to read:
Subd. 4. [PROCEDURAL REQUIREMENTS.] Procedural
requirements equivalent to those contained in sections 48.90 to
48.991 48.995 apply to reciprocal interstate branching and
acquisitions by savings banks and savings bank holding companies.
Sec. 21. Minnesota Statutes 1994, section 52.131, is
amended to read:
52.131 [MULTIPARTY ACCOUNTS.]
When any deposit is made in the names of two or more
persons jointly, or by any person payable on death (P.O.D.) to
another, or by any person in trust for another, the rights of
the parties and the financial institution are determined by
chapter 528 524.
Sec. 22. Minnesota Statutes 1994, section 53.01, is
amended to read:
53.01 [ORGANIZATION.]
It is lawful for three or more persons, who desire to form
a corporation for the purpose of carrying on primarily the
business of loaning money to persons within the conditions set
forth in this chapter, to organize, under this chapter, an
industrial loan and thrift company, by filing with the secretary
of state articles of incorporation, and upon paying the fees
prescribed by sections 301.07 and 301.071 or chapter 302A and
upon compliance with the procedure provided for the organization
and government of ordinary corporations under the laws of this
state, and upon compliance with the additional requirements of
this chapter prior to receiving authorization to do business.
Sec. 23. Minnesota Statutes 1994, section 53.03,
subdivision 1, is amended to read:
Subdivision 1. [APPLICATION, FEE, NOTICE.] Any corporation
hereafter organized as an industrial loan and thrift company,
shall, after compliance with the requirements set forth in
sections 53.01 and 53.02, file a written application with the
department of commerce for a certificate of authorization. A
corporation that will not sell or issue thrift certificates for
investment as permitted by this chapter need not comply with
subdivision 2b. The application must be in the form prescribed
by the department of commerce. The application must be made in
the name of the corporation, executed and acknowledged by an
officer designated by the board of directors of the corporation,
requesting a certificate authorizing the corporation to transact
business as an industrial loan and thrift company, at the place
and in the name stated in the application. At the time of
filing the application the applicant shall pay a $1,000 filing
fee and a $500 investigation fee. The fees must be turned over
by the commissioner to the state treasurer and credited to the
general fund. The applicant shall also submit a copy of the
bylaws of the corporation, its articles of incorporation and all
amendments thereto at that time. If the application is
contested, 50 percent of an additional fee equal to the actual
costs incurred by the department of commerce in approving or
disapproving the application, payable to the state treasurer and
credited to the general fund shall be paid by the applicant and
50 percent equally by the intervening parties. An application
for powers under subdivision 2b must also require that a notice
of the filing of the application must be published once within
30 days of the receipt of the form prescribed by the department
of commerce, at the expense of the applicant, in a qualified
newspaper published in the municipality in which the proposed
industrial loan and thrift company is to be located, or, if
there be none, in a qualified newspaper likely to give notice in
the municipality in which the company is proposed to be
located. If the department of commerce receives a written
objection to the application from any person within 20 21 days
of the notice having been fully published a contested case
hearing must be conducted on the application. Notice of a
hearing in connection with this section must be published once
in the form prescribed by the department of commerce, at the
expense of the applicant, in the same manner as a notice of
application, the commissioner shall proceed in the same manner
as required under section 46.041, subdivisions 3 and 4, relating
to state banks.
Sec. 24. Minnesota Statutes 1994, section 53.07,
subdivision 2, is amended to read:
Subd. 2. [TEMPORARY RESERVE MINIMUM.] Until an industrial
loan and thrift company obtains a commitment for insurance or
guarantee of accounts acceptable to the commissioner as required
by section 53.10, it shall establish a minimum reserve against
the certificates of indebtedness, savings accounts, and savings
deposits described in section 53.04, subdivision 5, of not less
than ten percent of the amount of indebtedness thus created.
Three percent of this indebtedness shall be in cash in the
actual possession of the industrial loan company or on demand
deposit in approved banks of this state, and seven percent of
the total indebtedness may be in bonds admissible for investment
by mutual savings banks under the laws of this state.
Sec. 25. Minnesota Statutes 1995 Supplement, 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 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. 26. Minnesota Statutes 1995 Supplement, section
55.10, subdivision 4, is amended to read:
Subd. 4. [WILL SEARCHES, BURIAL DOCUMENTS PROCUREMENT, AND
INVENTORY OF CONTENTS.] (a) Upon being furnished with
satisfactory proof of death of a sole lessee or the last
surviving co-lessee of a safe deposit box, an employee of the
safe deposit company shall open the box and examine the contents
in the presence of an employee of the safe deposit company and
an individual who appears in person and furnishes an affidavit
stating that the individual believes:
(1) the box may contain the will or deed to a burial lot or
a document containing instructions for the burial of the
lessee or that the box may contain property belonging to the
estate of the lessee; and
(2) the individual is an interested person as defined in
this section and wishes to open the box for any one or more of
the following purposes:
(i) to conduct a will search;
(ii) to obtain a document required to facilitate the
lessee's wishes regarding body, funeral, or burial arrangements;
or
(iii) to obtain an inventory of the contents of the box.
(b) The safe deposit company may not open the box under
this section if it has received a copy of letters of office of
the representative of the deceased lessee's estate or other
applicable court order.
(c) The safe deposit company need not open the box if:
(1) the box has previously been opened under this section
for the same purpose;
(2) the safe deposit company has received notice of a
written or oral objection from any person or has reason to
believe that there would be an objection; or
(3) the lessee's key or combination is not available.
(d) For purposes of this section, the term "interested
person" means any of the following:
(1) a person named as personal representative in a
purported will of the lessee;
(2) a person who immediately prior to the death of the
lessee had the right of access to the box as a deputy;
(3) the surviving spouse of the lessee;
(4) a devisee of the lessee;
(5) an heir of the lessee; or
(6) a person designated by the lessee in a writing
acceptable to the safe deposit company which is filed with the
safe deposit company before death.
(e) For purposes of this section, the term "will" includes
a will or a codicil.
(f) If the box is opened for the purpose of conducting a
will search, the safe deposit company shall remove any document
that appears to be a will and make a true and correct machine
copy thereof, replace the copy in the box, and then deliver the
original thereof to the clerk of court for the county in which
the lessee resided immediately before the lessee's death, if
known to the safe deposit company, otherwise to the clerk of the
court for the county in which the safe deposit box is located.
The will must be personally delivered or sent by registered
mail. If the interested person so requests, any deed to burial
lot or document containing instructions for the burial of the
lessee may be copied by the safe deposit box company and the
copy or copies thereof delivered to the interested person.
(g) If the box is opened for the purpose of obtaining a
document required to facilitate the lessee's wishes regarding
the body, funeral, or burial arrangements, any such document may
be removed from the box and delivered to the interested person
with a true and correct machine copy retained in the box. If
the safe deposit box company discovers a document that appears
to be a will, the safe deposit company shall act in accordance
with paragraph (f).
(h) If the box is opened for the purpose of obtaining an
inventory of the contents of the box, the employee of the safe
deposit company shall make, or cause to be made, an inventory of
the contents of the box, to which the employee and the
interested person shall attest under penalty of perjury to be
correct and complete. Within ten days of opening the box
pursuant to this subdivision, the safe deposit company shall
deliver the original inventory of the contents to the court
administrator for the county in which the lessee resided
immediately before the lessee's death, if known to the safe
deposit company, otherwise to the court administrator for the
county in which the safe deposit box is located. The inventory
must be personally delivered or sent by registered mail. If the
interested person so requests, the safe deposit company shall
make a true and correct copy of any document in the box and
deliver that copy to the interested person. If the contents of
the box include a document that appears to be a will, the safe
deposit company shall act in accordance with paragraph (f).
(i) The safe deposit company need not ascertain the truth
of any statement in the affidavit required to be furnished under
this subdivision and when acting in reliance upon an affidavit,
it is discharged as if it dealt with the personal representative
of the lessee. The safe deposit company is not responsible for
the adequacy of the description of any property included in an
inventory of the contents of a safe deposit box, nor for
conversion of the property in connection with actions performed
under this subdivision, except for conversion by intentional
acts of the company or its employees, directors, officers, or
agents. If the safe deposit company is not satisfied that the
requirements of this subdivision have been met, it may decline
to open the box.
(j) No contents of a box other than a will and a document
required to facilitate the lessee's wishes regarding body,
funeral, or burial arrangements may be removed pursuant to this
subdivision. The entire contents of the box, however, may be
removed pursuant to section 524.3-1201.
Sec. 27. Minnesota Statutes 1995 Supplement, 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 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 47.59, subdivision 3.
(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 1995, chapter 202, 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 1995, chapter 202, 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. 28. Minnesota Statutes 1995 Supplement, 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 within 15
days of receipt of the prepayment, 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. 29. Minnesota Statutes 1995 Supplement, 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
on which the premium is calculated shall not exceed be equal to
the scheduled indebtedness plus one monthly payment or actual
amount of indebtedness, whichever is greater. 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 must be used in determining the scheduled amount
of indebtedness and subsequent changes to the rate must be
disregarded in determining whether the contract is repayable in
substantially equal installments according to a predetermined
schedule.
(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. If the
credit transaction provides for a variable rate of finance
charge or interest, the initial rate or the scheduled rates
based on the initial index must be used in determining the
scheduled amount of unpaid indebtedness and subsequent changes
in the rate must be disregarded in determining whether the
contract is repayable in substantially equal installments
according to a predetermined schedule.
(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. 30. Minnesota Statutes 1994, section 118.01,
subdivision 1, is amended to read:
Subdivision 1. Any bank, trust company or thrift
institution authorized to do business in this state may, in lieu
of the corporate or personal surety bond required to be
furnished to secure deposited funds, deposit with the custodian
of the funds as collateral security: (1) certificates of
deposit that are fully insured by the Federal Deposit Insurance
Corporation or the Federal Savings and Loan Insurance
Corporation; (2) notes secured by first mortgages of future
maturity, upon which interest is not past due, on improved real
estate free from delinquent taxes, within the county wherein the
depository is located, or within counties immediately adjoining
the county in the state of Minnesota; (3) obligations which are
legally authorized investments for debt service funds under
section 475.66, subdivision 3; and (4) qualified state or local
government obligations acceptable to the treasurer or chief
financial officer; and (5) irrevocable standby letters of credit
issued by Federal Home Loan Banks to a municipality accompanied
by written evidence of the bank's public debt rating
contemplated by this subdivision. Qualified obligations under
clause (4) must be general obligations rated "A" or better by
Moody's Investors Service, Inc. or Standard & Poor's
Corporation; and Federal Home Loan Banks issuing letters of
credit under clause (5) must have a rating of "AA" or better by
Moody's Investors Service, Inc., or Standard & Poor's
Corporation.
Sec. 31. Minnesota Statutes 1994, section 168.69, is
amended to read:
168.69 [COMPLAINT ALLEGING VIOLATION.]
Any retail buyer having reason to believe that sections
168.66 to 168.77 relating to the buyer's retail installment
contract has been violated may file with the administrator a
written complaint setting forth the details of such alleged
violation and the administrator, upon receipt of such complaint,
may inspect the pertinent books, records, letters and contracts
of the licensee, assignee of the licensee or retail seller, and
of the retail seller involved, relating to such specific written
complaint.
Sec. 32. Minnesota Statutes 1994, section 168.705, is
amended to read:
168.705 [EXAMINATIONS, SPECIAL INVESTIGATIONS, COSTS.]
For the purpose of discovering violations of sections
168.66 to 168.77 or securing information lawfully required by
the administrator hereunder, the administrator may, at any time,
either personally or by a person or persons duly designated by
the administrator, investigate the conditional sales contracts
and business related to the conditional sales contracts and
examine the books, accounts, records, and files used therein, of
every licensee, assignee of the licensee, and of every person
who shall be engaged in the business of a sales finance company,
including the retail seller and assignee of the retail seller,
whether the person shall act as principal or agent, or under or
without the authority of sections 168.66 to 168.77. For that
purpose, the administrator and the administrator's duly
designated representative shall have free access to the offices
and places of business, books, accounts, papers, records, files,
safes, and vaults of all these persons. The administrator and
all persons duly designated by the administrator shall have
authority to require the attendance of and to examine, under
oath, all persons whomsoever whose testimony the administrator
may require relative to the conditional sales contract or the
business or to the subject matter of any examination,
investigation, or hearing.
The administrator may make an examination of the affairs,
business, office, and records of licensees, and of other persons
subject to examination under this section, as often as
considered necessary. The administrator may assess a fee
covering the necessary costs of an examination or special
investigation under this section, section 168.69, or reports
filed under section 168.706. The fee is payable to the
administrator on the administrator's request for payment. The
administrator may maintain an action for the recovery of the
costs in any court of competent jurisdiction.
Sec. 33. Minnesota Statutes 1994, section 168.71, is
amended to read:
168.71 [RETAIL INSTALLMENT CONTRACTS.]
(a)(1) Every retail installment contract shall be in
writing, shall contain all the agreements of the parties, shall
be signed by the retail buyer and seller, and a copy thereof
signed by the retail buyer shall be furnished to such retail
buyer at the time of the execution of retail buyer executes the
contract. The copy signed by both the retail buyer and retail
seller shall be provided to the retail buyer within seven days
after delivery of the vehicle. With respect to any contract
executed prior to August 1, 1996, which has not been paid in
full by the retail buyer, the retail seller shall provide such
retail buyer a copy signed by both the retail buyer and retail
seller within 120 days after August 1, 1996.
(2) No provisions for confession of judgment or power of
attorney therefor contained in any retail installment contract
or contained in a separate agreement relating thereto, shall be
valid or enforceable.
(3) The holder of a precomputed retail installment contract
may, if the contract so provides, collect a delinquency and
collection charge on each installment in arrears for a period
not less than ten days in an amount not in excess of five
percent of each installment or $5, whichever is greater. In
addition to such delinquency and collection charge, the retail
installment contract, whether interest-bearing or precomputed,
may provide for the payment of attorneys' fees not exceeding 15
percent of the amount due and payable under such contract where
such contract is referred to an attorney not a salaried employee
of the holder of the contract for collection plus the court
costs.
(4) Unless written notice has been given to the retail
buyer of actual or intended assignment of a retail installment
contract, payment thereunder or tender thereof made by the
retail buyer to the last known holder of such contract shall be
binding upon all subsequent holders or assignees.
(5) Upon written request from the retail buyer, the holder
of the retail installment contract shall give or forward to the
retail buyer a written statement of the dates and amounts of
payments and the total amount unpaid under such contract. A
retail buyer shall be given a written receipt for any payment
when made in cash.
(b) The retail installment contract shall contain the
following items:
(1) The cash sale price of the motor vehicle which is the
subject matter of the retail installment contract;
(2) The total amount of the retail buyer's down payment,
whether made in money or goods, or partly in money or partly in
goods;
(3) The difference between items one and two;
(4) The charge, if any, included in the transaction for any
insurance and other benefits not included in clause (1),
specifying the types of coverage and taxes, fees, and charges
that actually are or will be paid to public officials or
government agencies, including those for perfecting, releasing,
or satisfying a security interest if such taxes, fees, or
charges are not included in clause (1);
(5) Principal balance, which is the sum of items three and
four;
(6) The amount of the finance charge;
(7) The total of payments payable by the retail buyer to
the retail seller and the number of installment payments
required and the amount of each installment expressed in dollars
or percentages, and date of each payment necessary finally to
pay the total of payments which is the sum of item five and item
six.
Provided, however, that said items one to seven inclusive
need not be stated in the terms, sequence or order set forth
above. Provided further, that clauses (6) and (7) may be
disclosed on the assumption that all scheduled payments under
the contract will be made when due.
In lieu of the above clauses, the retail seller may give
the retail buyer disclosures which satisfy the requirements of
the Federal Truth-In-Lending Act in effect as of the time of the
contract, notwithstanding whether or not that act applies to the
transaction.
(c) Every retail seller or sales finance company, if a
charge for insurance on the motor vehicle is included in a
retail installment contract shall within 30 days after execution
of the retail installment contract send or cause to be sent to
the retail buyer a policy or policies or certificate of
insurance, which insurance shall be written by a company
authorized to do business in this state, clearly setting forth
the amount of the premium, the kind or kinds of insurance and
the scope of the coverage and all the terms, exceptions,
limitations, restrictions and conditions of the contract or
contracts of the insurance. The buyer of a motor vehicle under
a retail installment contract shall have the privilege of
purchasing such insurance from an agent or broker of the buyer's
own selection and selecting an insurance company mutually
acceptable to the seller and the buyer; provided, however, that
the inclusion of the cost of the insurance premium in the retail
installment contract when the buyer selects the agent, broker or
company, shall be optional with the seller.
(d) Any sales finance company hereunder may purchase or
acquire from any retail seller any retail installment contract
on such terms and conditions as may be mutually agreed upon
between them.
(e) An acknowledgment by the retail buyer of the delivery
of any such copy or notice as required in subsection (a)
contained in the body of the statement or contract shall be
conclusive proof of delivery in any action or proceeding by or
against any assignee of a retail installment contract.
Sec. 34. Minnesota Statutes 1994, section 168.73, is
amended to read:
168.73 [PREPAYMENT IN FULL, REFUND CREDITS, ALLOWANCE.]
Subdivision 1. [PREPAYMENT IN FULL.] Notwithstanding the
provisions of any retail installment contract to the contrary,
any retail buyer may pay in full at any time before maturity the
debt of any retail installment contract without penalty. In
paying a precomputed retail installment contract in full, the
retail buyer shall receive a refund credit thereon for such
anticipation of payments. For contracts with substantially
equal scheduled monthly payments remaining after the date of
prepayment in full, the refund must be calculated for all fully
unexpired monthly payment periods following the date of payment
in full. For all other contracts, the refund must be calculated
as of the date in the month following prepayment which
corresponds to the original contract date. The refund shall be
calculated according to the actuarial method, less an
acquisition cost of $15 which may be deducted from the refund so
calculated.
Where the amount of the credit for anticipation of payment
is less than $1, no refund need be made.
The actuarial method means the method of allocating
payments on a contract between the principal amount and finance
charge at the contract rate charged under section 168.72,
whereby a payment is applied first to the accumulated finance
charge and then to the unpaid principal balance based on the
original terms of the contract and based on the assumption that
all payments are made on the due date as originally scheduled or
deferred.
Subd. 2. [PARTIAL PREPAYMENT; NOTICE.] If a payment
results in the prepayment of three or more installment payments
on a precomputed contract, the retail seller or assignee of the
retail seller shall within 15 days of receipt of the prepayment,
deliver or mail to the retail buyer a notice in at least
eight-point type. The notice must contain the following
statement:
"You have substantially prepaid the installment payments on
your contract and may experience an interest savings over
the remaining term only if you refinance the balance within
the next 30 days."
Sec. 35. Minnesota Statutes 1994, section 256.99, is
amended to read:
256.99 [REVERSE MORTGAGE PROCEEDS DISREGARDED.]
All reverse mortgage loan proceeds received pursuant to
section 47.58, including interest or earnings thereon, shall be
disregarded and shall not be considered available to the
borrower for purposes of determining initial or continuing
eligibility for, or amount of, medical assistance, Minnesota
supplemental assistance, general assistance, general assistance
medical care, or a federal or state low interest loan or grant.
This section applies regardless of the time elapsed since the
loan was made or the disposition of the proceeds.
For purposes of medical assistance eligibility provided
under sections 256B.055, 256B.056, and 256B.06, proceeds from a
reverse mortgage must be disregarded as income in the month of
receipt but are a resource if retained after the month of
receipt.
Sec. 36. Minnesota Statutes 1994, section 300.025, is
amended to read:
300.025 [ORGANIZATION OF FINANCIAL CORPORATIONS.]
(a) Three or more persons may form a corporation for any of
the purposes specified in section 47.12 by applying to the
department of commerce and complying with all applicable
organizational requirements and the conditions set out in
clauses (1) to (7). However, no corporation may be formed under
this section if it may be formed under the Minnesota business
corporation act. The incorporators must subscribe a certificate
specifying:
(1) the corporation's name, which must distinguish it from
all other corporations authorized to do business in this state,
and must contain the word "company," "corporation," "bank,"
"association," or "incorporated";
(2) the general nature of the corporation's business and
its principal place of business;
(3) the period of its duration, if limited;
(4) the names and places of residence of the incorporators;
(5) the board in which the management of the corporation
will be vested, the date of the annual meeting at which it will
be elected, and the names and addresses of the board members
until the first election, a majority of whom must always be
residents of this state;
(6) the amount of capital stock, if any, how the capital
stock is to be paid in, the number of shares into which it is to
be divided, and the par value of each share; and, if there is to
be more than one class, a description and the terms of issue of
each class, and the method of voting on each class; and
(7) the highest amount of indebtedness or liability to
which the corporation will at any time be subject.
The certificate may contain any other lawful provision
defining and regulating the powers and business of the
corporation, its officers, directors, trustees, members, and
stockholders. However, a corporation subject to sections
section 48.27 and 51A.22, subdivision 2, may show its highest
amount of indebtedness to be 30 times the amount of its capital
and actual surplus.
(b) A person doing business in this state may contest the
subsequent registration of a name with the office of the
secretary of state as provided in section 5.22.
Sec. 37. Minnesota Statutes 1994, section 303.02,
subdivision 2, is amended to read:
Subd. 2. [CORPORATION.] In addition to the meaning set
forth in section 300.02, subdivision 2, "corporation" means a
corporation formed for profit and includes a cooperative.
Sec. 38. Minnesota Statutes 1994, section 308A.135,
subdivision 3, is amended to read:
Subd. 3. [CERTIFICATE.] (a) A certificate must be prepared
stating:
(1) the vote and meeting of the board adopting a resolution
of the proposed amendment;
(2) the notice given to members of the meeting that at
which the amendment was adopted;
(3) the quorum registered at the meeting; and
(4) the vote cast adopting the amendment.
(b) The certificate must be signed by the chair,
vice-chair, president, vice-president, secretary, or assistant
secretary and filed with the records of the cooperative.
Sec. 39. Minnesota Statutes 1994, section 308A.165,
subdivision 2, is amended to read:
Subd. 2. [ADOPTION AND AMENDMENT.] (a) Except as provided
in paragraph (b), the bylaws of a cooperative may be adopted or
amended at a regular or special members' meeting if:
(1) the notice of the meeting contains a summary statement
of the proposed bylaws or amendment;
(2) a quorum is registered as being present or represented
by mail vote if authorized by the board; and
(3) the bylaws or amendment is approved by a majority of
the votes cast, or for a cooperative with articles or bylaws
requiring more than majority approval or other conditions for
approval, the bylaws or amendment is approved by a proportion of
the votes cast or a number of the total members as required by
the articles or bylaws and the conditions for approval in the
articles or bylaws have been satisfied.
(b) Until the first annual members meeting, the majority of
directors may adopt and amend bylaws for the cooperative that
are consistent with subdivision 3 if the cooperative does not
have any members or stockholders with voting rights.
Sec. 40. Minnesota Statutes 1994, section 332.21, is
amended to read:
332.21 [CONTRACTS.]
Each contract entered into by the licensee and the debtor
shall be in writing and signed by both parties. The licensee
shall furnish the debtor with a copy of the signed contract.
Each such contract shall set forth (1) the dollar charges agreed
upon for the services of the licensee, clearly disclosing to
such debtor the total amount which may be retained by licensee
for services if the contract is fully performed, which maximum
amount would be the origination fee together with 15 percent of
the amount scheduled to be liquidated by such contract, (2) the
terms upon which the debtor may cancel the contract as set out
in section 332.23, (3) all debts which are to be managed by the
licensee, including the name of the creditor and the amount of
the debt, and (4) such other matter as the commissioner may
require by rule. A contract shall not be effective until a
payment has been made to the licensee for distribution to
creditors or until three business days after the signing
thereof, whichever is later. Within such period an individual
may disaffirm said contract and upon such disaffirmance said
contract shall be null and void. Total fees contained in the
contract may be exceeded in relation to creditors under open-end
agreements if it is agreed to in the contract and the additional
debts so contracted to be prorated do not exceed ten percent of
the original debts in the contract or written revisions to the
original contract.
Sec. 41. Minnesota Statutes 1994, section 332.50,
subdivision 2, is amended to read:
Subd. 2. [ACTS CONSTITUTING.] (a) Whoever issues any check
that is dishonored and is not paid within 30 days after mailing
a notice of dishonor that includes a citation to this section
and section 609.535, and a description of the penalties
contained in these sections, in compliance with subdivision 3,
is liable to the payee, holder, or agent of the holder for: (1)
the amount of the check plus a civil penalty of up to $100 or up
to 100 percent of the value of the check, whichever is greater;
(2) interest at the rate payable on judgments pursuant to
section 549.09 on the face amount of the check from the date of
dishonor; and (3) reasonable attorney fees if the aggregate
amount of dishonored checks issued by the issuer to all payees
within a six-month period is over $1,250.
(b) If the amount of the dishonored check plus any service
charges that have been incurred under paragraph (d) or (e) have
not been paid within 30 days after having mailed a notice of
dishonor in compliance with subdivision 3 but before bringing an
action, a payee, holder, or agent of the holder may make a
written demand for payment for the liability imposed by
paragraph (a) by sending a copy of this section and a
description of the liability contained in this section to the
issuer's last known address.
(c) After notice has been sent but before an action under
this section is heard by the court, the plaintiff shall settle
the claim if the defendant gives the plaintiff the amount of the
check plus court costs, any service charge owed under paragraph
(d), and reasonable attorney fees if provided for under
paragraph (a), clause (3).
(d) A service charge may be imposed immediately on any
dishonored check, regardless of mailing a notice of dishonor, if
written notice of the service charge was conspicuously displayed
on the premises when the check was issued. The service charge
may not exceed $20, except that if the payee uses the services
of a law enforcement agency to obtain payment of a dishonored
check, a service charge of up to $25 may be imposed if the
service charge is used to reimburse the law enforcement agency
for its expenses. A payee may impose only one service charge
under this paragraph for each dishonored check.
(e) This subdivision prevails over any provision of law
limiting, prohibiting, or otherwise regulating service charges
authorized by this subdivision, but does not nullify charges for
dishonored checks, which do not exceed the charges in paragraph
(d) or the actual cost of collection, but in no case more than
$30, or terms or conditions for imposing the charges which have
been agreed to by the parties to an express contract.
Sec. 42. Laws 1995, chapter 171, section 70, is amended to
read:
Sec. 70. [REPEALER.]
Minnesota Statutes 1994, sections 47.095; 47.30,
subdivisions 4 and 6; 48.67; 50.02; 50.07; 50.08; 50.09; 50.10;
50.12; 50.15; 50.16; 50.21; and 50.22, are repealed.
Sec. 43. [CAPITAL REQUIREMENTS FOR TRUST COMPANIES;
REENACTMENT OF REPEALED SECTION.]
Notwithstanding Minnesota Statutes, section 645.36,
Minnesota Statutes, section 48.67, inadvertently repealed in
Laws 1995, chapter 171, section 70, is reenacted as of the
effective date of Laws 1995, chapter 171, section 70.
Sec. 44. [REPEALER.]
(a) Minnesota Statutes 1994, sections 51A.01; 51A.02,
subdivisions 1, 2, 3, 4, 5, 8, 9, 10, 11, 12, 13, 14, 15, 16,
17, 18, 19, 20, 21, 22, 23, 24, 25, 27, 28, 29, 30, 31, 32, 33,
34, 35, 36, 37, 38, 39, 41, 42, 43, 44, 45, 46, 47, 48, 49, 50,
51, 52, 53, 55, and 56; 51A.03; 51A.04; 51A.041; 51A.05; 51A.06;
51A.065; 51A.07; 51A.08; 51A.09; 51A.10; 51A.11; 51A.12; 51A.13;
51A.131; 51A.14; 51A.15; 51A.16; 51A.17; 51A.19, subdivisions 1,
4, 5, 6, 7, 8, 10, 11, 12, and 13; 51A.20; 51A.21, subdivisions
1, 2, 3, 4, 5, 6a, 6b, 7, 8, 9, 10, 11, 12, 13, 14, 15, 17, 18,
20, 21, 22, 23, 24, 25, 26, and 27; 51A.22; 51A.23, subdivision
6; 51A.24; 51A.251; 51A.261; 51A.262; 51A.27; 51A.28; 51A.29;
51A.30; 51A.31; 51A.32; 51A.33; 51A.34; 51A.35; 51A.361; 51A.37;
51A.38; 51A.40; 51A.41; 51A.42; 51A.43; 51A.44; 51A.45; 51A.46;
51A.47; 51A.48; 51A.51; 51A.52; 51A.54; 51A.55; 51A.56; and
51A.57; Minnesota Statutes 1995 Supplement, sections 47.201,
subdivision 7; 47.27, subdivision 3; 51A.02, subdivisions 6, 7,
26, 40, and 54; 51A.19, subdivision 9; 51A.21, subdivision 28;
51A.23, subdivisions 1 and 7; 51A.386; 51A.50; 51A.53; and
51A.58, are repealed.
(b) Minnesota Statutes 1994, section 48.94, is repealed.
(c) Minnesota Rules, parts 2655.0100; 2655.0200; 2655.0300;
2655.0400; 2655.0500; 2655.0600; 2655.0700; 2655.0800;
2655.0900; 2655.1000; 2655.1100; 2655.1200; and 2655.1300, are
repealed.
Sec. 45. [EFFECTIVE DATE.]
Sections 1 to 5, 7 to 9, 11, 12, 16, 20 to 27, 30, 33, 35,
42, 43, and 44, paragraphs (b) and (c), are effective the day
following final enactment. Section 44, paragraph (a), is
effective July 1, 1998.
Sections 10, 14, 15, 19, and 36 are effective on the
effective date of the repeals in section 44, paragraph (a).
ARTICLE 2
CONSUMER CREDIT UNIFORM CODE
CLARIFICATION AND DEVELOPMENT ACT
Section 1. Minnesota Statutes 1995 Supplement, section
47.59, subdivision 2, is amended to read:
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 to
59A.15, 168.66 to 168.77, 334.01, 334.011, 334.012, 334.021,
334.06, and 334.061 to 334.19. may, but need not, be made
according to those sections in lieu of the authority set forth
in this section to the extent those sections authorize the
financial institution to make extensions of credit or purchase
extensions of credit under those sections. If a financial
institution elects to make an extension of credit or to purchase
an extension of credit under those other sections, the extension
of credit or the purchase of an extension of credit is subject
to those sections and not this section, except this subdivision,
and except as expressly provided in those sections. A financial
institution 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 a financial
institution elects to make under section 334.01, 334.011,
334.012, 334.021, 334.06, or 334.061 to 334.19, chapter 334 does
not apply to extensions of credit made according to this section
or the sections listed in this subdivision. This subdivision
does not authorize a financial institution to extend credit or
purchase an extension of credit under any of the sections listed
in this subdivision if the financial institution is not
authorized to do so under those sections. A financial
institution extending credit under any of the sections listed in
this subdivision shall specify in the promissory note, contract,
or other loan document the section under which the extension of
credit is made.
Sec. 2. Minnesota Statutes 1995 Supplement, section 47.59,
subdivision 3, is amended to read:
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 one-tenth 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. Discount points permitted by this paragraph and not
collected but included in the principal amount must not be
included in the amount on which credit insurance premiums are
calculated and charged.
(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. The refund need not be made if it would be less
than $5.
(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. The refund need not be made
if it would be less than $5.
(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, paragraph (a), 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 Laws 1995, chapter 202, on May 24,
1995; and
(2) the dollar amounts shall not change if the amounts
required by this section are those currently in effect pursuant
to Laws 1995, chapter 202, 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.
Sec. 3. Minnesota Statutes 1995 Supplement, section 47.59,
subdivision 4, is amended to read:
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 subdivision 4a.
(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.
Sec. 4. Minnesota Statutes 1995 Supplement, section 47.59,
is amended by adding a subdivision to read:
Subd. 4a. [FINANCE CHARGE FOR MOTOR VEHICLE RETAIL
INSTALLMENT SALES.] A retail installment contract evidencing the
retail installment sale of a motor vehicle as defined in section
168.66 is subject to the finance charge limitations in
paragraphs (a) and (b).
(a) The finance charge authorized by this subdivision in a
retail installment sale may not exceed the following annual
percentage rates:
(1) Class 1. A motor vehicle designated by the
manufacturer by a year model of the same or not more than one
year before the year in which the sale is made, 18 percent per
year.
(2) Class 2. A motor vehicle designated by the
manufacturer by a year model of two to three years before the
year in which the sale is made, 19.75 percent per year.
(3) Class 3. Any motor vehicle not in Class 1 or Class 2,
23.25 percent per year.
(b) A sale of a manufactured home made after July 31, 1983,
is governed by this subdivision for purposes of determining the
lawful finance charge rate, except that the maximum finance
charge for a Class 1 manufactured home may not exceed 14.5
percent per year. A retail installment sale of a manufactured
home that imposes a finance charge that is greater than the rate
permitted by this subdivision is lawful and enforceable in
accordance with its terms until the indebtedness is fully
satisfied if the rate was lawful when the sale was made.
Sec. 5. Minnesota Statutes 1995 Supplement, section 47.59,
subdivision 5, is amended to read:
Subd. 5. [EXTENSIONS AND, DEFERMENTS, AND CONVERSION TO
INTEREST BEARING.] (a) 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.
(b) Subject to a refund of unearned finance or deferment
charge required by this section, a financial institution may
convert a loan or credit sale contract to an interest bearing
balance, if:
(1) the loan contract or credit sale contract so provides
and is subject to a change of the terms of the written agreement
between the parties; or
(2) the loan contract so provides and two or more
installments are delinquent one full month or more on any due
date.
Thereafter, and in lieu of any other default, extension, or
deferment charges, the single annual percentage rate must be
determined under the applicable charge provisions of this
subdivision.
Sec. 6. Minnesota Statutes 1995 Supplement, section 47.59,
subdivision 6, is amended to read:
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 principal amount
financed of the loan or credit sale unpaid balances:
(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 principal amount financed of the loan or
credit sale unpaid balances:
(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
principal amount financed of the loan 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. The determination of an original principal amount must
exclude the administrative fee contracted for and received
according to this paragraph.
Sec. 7. Minnesota Statutes 1995 Supplement, section 47.60,
subdivision 2, is amended to read:
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) (1) on any amount up to and including $50, a charge of
$5.50 may be added;
(ii) (2) 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) (3) 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) (4) 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 for
no more than 30 calendar 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.
Sec. 8. Minnesota Statutes 1995 Supplement, 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 in section 47.59 under chapters 47 and 334. Loans
made under this authority must be in amounts in compliance with
section 53.05, clause (7). The right to extend credit or lend
money and to collect and receive charges therefor as provided by
chapter 334. 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 $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.
(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.
(d) This subdivision does not authorize an industrial loan
and thrift company to make loans under an overdraft checking
plan.
Sec. 9. Minnesota Statutes 1995 Supplement, 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 6, 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 $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;
(e) the one-time loan administrative fee in section 47.59,
subdivision 6, paragraph (d).
Sec. 10. Minnesota Statutes 1995 Supplement, 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 $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. Discount points permitted by
this subdivision and not collected but included in the principal
amount must not be included in the amount on which credit
insurance premiums are calculated and charged.
Sec. 11. Minnesota Statutes 1994, section 168.72, is
amended by adding a subdivision to read:
Subd. 5. In lieu of this section and sections 168.66,
subdivisions 9, 10, and 11; 168.71; 168.73; and 168.74, a retail
seller may proceed under section 47.59 relating to credit sales
made by a third party. In cases where the retail seller
proceeds under section 47.59, the remaining provisions of
sections 168.66 to 168.77 apply notwithstanding section 47.59.
Sec. 12. Minnesota Statutes 1994, section 334.02, is
amended to read:
334.02 [USURIOUS INTEREST; RECOVERY.]
Every person who for any such loan or forbearance shall
have paid or delivered any greater sum or value than in section
334.01 allowed to be received may, personally or through
personal representatives, recover in an action against the
person who shall have received the same, or the receiver's
personal representatives, the full amount of interest or premium
so paid, with costs, if action is brought within two years after
such payment or delivery. This section does not apply when the
loan or forbearance is made by a lender and the lender is liable
for the penalty provided in subject to section 47.59 or 48.196
or chapter 56 in connection with the loan or forbearance. For
purposes of this section, the term "lender" means a bank or
savings bank organized under the laws of this state, a federally
chartered savings and loan association or savings bank, a
savings association organized under chapter 51A, a federally
chartered credit union, a credit union organized under chapter
52, an industrial loan and thrift company organized under
chapter 53, a licensed lender under chapter 56, or a mortgagee
or lender approved or certified by the secretary of housing and
urban development or approved or certified by the administrator
of veterans affairs.
Sec. 13. Minnesota Statutes 1994, section 334.03, is
amended to read:
334.03 [USURIOUS CONTRACTS INVALID; EXCEPTIONS.]
All bonds, bills, notes, mortgages, and all other contracts
and securities, and all deposits of goods, or any other thing,
whereupon or whereby there shall be reserved, secured, or taken
any greater sum or value for the loan or forbearance of any
money, goods, or things in action than prescribed, except such
instruments which are taken or received in accordance with and
in reliance upon the provisions of any statute, shall be void
except as to a holder in due course. No merely clerical error
in the computation of interest, made without intent to avoid the
provisions of this chapter, shall constitute usury. Interest at
the rate of 1/12 of eight percent for every 30 days shall not be
construed to exceed eight percent per annum; nor shall the
payment of interest in advance of one year, or any less time, at
a rate not exceeding eight percent per annum constitute usury;
and nothing herein shall prevent the purchase of negotiable
mercantile paper, usurious or otherwise, for a valuable
consideration, by a purchaser without notice, at any price
before the maturity of the same, when there has been no intent
to evade the provisions of this chapter, or where such purchase
has not been a part of the original usurious transactions; but
where the original holder of a usurious note sells the same to
an innocent purchaser, the maker thereof, or the maker's
representatives, may recover back from the original holder the
amount of principal and interest paid on the note. This section
does not apply when the loan or forbearance is made by a lender
and the lender is liable for the penalty provided in subject to
section 47.59 or 48.196 or chapter 56 in connection with the
loan or forbearance. For purposes of this section, the term
"lender" means a bank or savings bank organized under the laws
of this state, a federally chartered savings and loan
association or savings bank, a savings association organized
under chapter 51A, a federally chartered credit union, a credit
union organized under chapter 52, an industrial loan and thrift
company organized under chapter 53, a licensed lender under
chapter 56, or a mortgagee or lender approved or certified by
the secretary of housing and urban development or approved or
certified by the administrator of veterans affairs.
Sec. 14. [334.062] [AGRICULTURAL COOPERATIVES AND FARM
SUPPLY.]
Notwithstanding sections 334.01 and 334.011, a cooperative
organized for agricultural purposes under chapter 308A, or a
similar statute of another state and registered to conduct
business in this state, and other persons or entities engaged in
an agricultural retail or farm supply business, may impose,
charge, and collect a finance charge on goods, products, and
services, including sales and open- and closed-end credit
transactions that do not exceed a monthly rate of 1-1/2 percent
or an annual rate of 18 percent, and the delinquency and
collection charge authorized under section 334.171, provided,
however, for a cooperative, the finance, delinquency, and
collection charge is the same for member and nonmember patrons.
Sec. 15. [REPEALER.]
Minnesota Statutes 1994, section 53.04, subdivision 3b; and
Minnesota Statutes 1995 Supplement, section 53.04, subdivisions
3c and 4a, are repealed.
Sec. 16. [EFFECTIVE DATE.]
Sections 1, 3 to 9, 11 to 13, and 15 are effective the day
following final enactment.
ARTICLE 3
BANKING SERVICES DEVELOPMENT ACT
Section 1. Minnesota Statutes 1994, section 47.101,
subdivision 2, is amended to read:
Subd. 2. [BANKING INSTITUTIONS; CERTAIN RELOCATIONS,
APPLICATIONS, NOTICE, APPROVAL.] A banking institution defined
in section 48.01, subdivision 2, desiring to relocate its main
office within the lesser of a radius of three miles measured in
a straight line or the municipality, as defined in section
47.51, in which it is located shall submit an application notify
the commissioner of commerce in a form prescribed by the
commissioner of commerce., an investigation fee of $500 and
additional fees as prescribed in section 46.041 if subsequently
processed under subdivision 3. After the application is deemed
to be complete and accepted by the commissioner of commerce, The
applicant shall publish once in a form prescribed by the
commissioner a notice of the filing of the
application relocation in a qualified newspaper published in the
municipalities municipality where the banking institution is
located and relocating if different. If there are no such
newspapers, then notice of the filing shall be published in
qualified newspapers likely to give notice in the existing and
proposed municipalities municipality. The applicant shall cause
the notice to be publicly displayed in its lobby and sent by
certified mail to all banking institutions within three miles of
the proposed location measured in a straight line. Upon
expiration of a period of 21 days for comment, the commissioner,
after considering the applicable conditions for issuance of the
bank charter defined in section 46.044, shall within 60 days
approve or disapprove the application.
Sec. 2. Minnesota Statutes 1994, section 47.101,
subdivision 3, is amended to read:
Subd. 3. [APPLICATIONS TO DEPARTMENT OF COMMERCE.] An
application by a banking institution to relocate its main office
outside a radius of three miles measured in a straight line
other than those provided for in subdivision 2 shall be approved
or disapproved by the commissioner of commerce as provided for
in sections 46.041 and 46.044.
Sec. 3. Minnesota Statutes 1994, section 47.51, is amended
to read:
47.51 [DETACHED BANKING FACILITIES; DEFINITIONS.]
As used in sections 47.51 to 47.57:
"Extension of the main banking house" means any structure
or stationary mechanical device serving as a drive-in or walk-up
facility, or both, which is located within 150 1,500 feet of the
main banking house or detached facility, the distance to be
measured in a straight line from the closest points of the
closest structures involved and which performs one or more of
the functions described in section 47.53.
"Detached facility" means any permanent structure, office
accommodation located within the premises of any existing
commercial or business establishment, stationary automated
remote controlled teller facility, stationary unstaffed cash
dispensing or receiving device, located separate and apart from
the main banking house which is not an "extension of the main
banking house" as above defined, that serves as a drive-in or
walk-up facility, or both, with one or more tellers windows, or
as a remote controlled teller facility or a cash dispensing or
receiving device, and which performs one or more of those
functions described in section 47.53.
"Bank" means a bank as defined in section 46.046 and any
banking office established prior to the effective date of Laws
1923, chapter 170, section 1.
"Commissioner" means the commissioner of commerce.
"Municipality" means the geographical area encompassing the
boundaries of any home rule charter or statutory city located in
this state, and any detached area, pursuant to section 473.625,
operated as a major airport by the metropolitan airports
commission pursuant to sections 473.601 to 473.679. When a bank
is located in a township, the term municipality is expanded to
mean the geographical area encompassing the boundaries of the
township.
Sec. 4. Minnesota Statutes 1995 Supplement, 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: (1) the municipality in which the principal
office of the applicant bank is located; or within (2) 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 (3) a municipality in which
no bank is located at the time of application; or if the
detached facility is in (4) a municipality having a population
of more than 10,000,; or if the detached facility is located in
(5) 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.
(e) (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. 5. Minnesota Statutes 1994, section 47.62,
subdivision 1, is amended to read:
Subdivision 1. Any person may establish and maintain one
or more electronic financial terminals. Any financial
institution may provide for its customers the use of an
electronic financial terminal by entering into an agreement with
any person who has established and maintains one or more
electronic financial terminals if that person authorizes use of
the electronic financial terminal to all financial institutions
on a nondiscriminatory basis pursuant to section
47.64. Electronic financial terminals to be established and
maintained in this state by financial institutions located in
states other than Minnesota must file a notification to the
commissioner as required in this section. The notification may
be in the form lawfully required by the state regulator
responsible for the examination and supervision of that
financial institution. If there is no such requirement, then
notification must be in the form required by this section for
Minnesota financial institutions.
Sec. 6. Minnesota Statutes 1994, section 48.34, is amended
to read:
48.34 [BRANCH BANKS PROHIBITED.]
No bank or trust company organized under the laws of this
state shall maintain a branch bank or receive deposits or pay
checks within this state, except at its own banking house, and
except as authorized by sections 47.51 to 47.57 and, 47.61 to
47.74, and 49.411. The commissioner shall take possession of
and liquidate the business and affairs of any state bank or
trust company violating the provisions of this section, in the
manner prescribed by law for the liquidation of insolvent state
banks and trust companies.
Sec. 7. [49.411] [INTERSTATE BANK MERGERS AFFECTING
INTERSTATE BRANCHING.]
Subdivision 1. [PURPOSE.] It is the express intent of this
section to permit interstate branching by mergers under section
102 of the Riegle-Neal Interstate Banking and Branching
Efficiency Act of 1994, Public Law Number 103-328, according to
this section.
Subd. 2. [DEFINITIONS.] As used in this section, unless
the context clearly indicates otherwise, the following terms
have the meanings given them.
(a) "Bank" has the meaning given in United States Code,
title 12, section 1813(h) with the following exceptions: (1)
the term does not include a foreign bank as defined in United
States Code, title 12, section 3101(7); and (2) the term
includes a foreign bank organized under the laws of a territory
of the United States, Puerto Rico, Guam, American Samoa, or the
Virgin Islands, the deposits of which are insured by the Federal
Deposit Insurance Corporation.
(b) "Bank holding company" has the meaning given in United
States Code, title 12, section 1841(a)(1).
(c) "Bank supervisory agency" means:
(1) an agency of another state with the primary
responsibility for chartering and supervising banks; and
(2) the Office of the Comptroller of the Currency, the
Federal Deposit Insurance Corporation, the Board of Governors of
the Federal Reserve System, and any successor to these agencies.
(d) "Branch" has the meaning given in United States Code,
title 12, section 1813(o).
(e) "Commissioner" means the commissioner of commerce.
(f) "Control" has the meaning given in section 46.048,
subdivision 1.
(g) "Home state" has the meaning given in section 48.92,
subdivision 6, except in relation to foreign banks, for which
home state means the state determined to be the home state of
the foreign bank under United States Code, title 12, section
3103(c).
(h) "Home state regulator" means, with respect to an
out-of-state state bank, the bank supervisory agency of the
state in which the bank is chartered.
(i) "Host state" means a state other than the home state of
a bank in which the bank maintains or seeks to establish and
maintain a branch.
(j) "Interstate merger transaction" means:
(1) the merger or consolidation of banks with different
home states, and the conversion of branches of any bank involved
in the merger or consolidation into branches of the resulting
bank; or
(2) the purchase of all or substantially all of the assets
including all or substantially all of the branches of a bank
whose home state is different from the home state of the
acquiring bank.
(k) "Out-of-state bank" has the meaning given in section
48.92, subdivision 11.
(l) "Out-of-state state bank" means a bank chartered under
the laws of any state other than Minnesota.
(m) "Resulting bank" means a bank that has resulted from an
interstate merger transaction under this section.
(n) "State" means any state of the United States, the
District of Columbia, or any territory of the United States,
Puerto Rico, Guam, American Samoa, the Trust Territory of the
Pacific Islands, the Virgin Islands, and the Northern Mariana
Islands.
(o) "Minnesota bank" means a bank whose home state is
Minnesota.
(p) "Minnesota state bank" means a bank chartered under the
laws of Minnesota.
Subd. 3. [AUTHORITY OF STATE BANKS TO ESTABLISH INTERSTATE
BRANCHES BY MERGER.] With the prior approval of the
commissioner, a Minnesota state bank may establish, maintain,
and operate one or more branches in a state other than Minnesota
as a result of an interstate merger transaction in which the
Minnesota state bank is the resulting bank. Not later than the
date on which the required application for the interstate merger
transaction is filed with the responsible federal bank
supervisory agency, the applicant Minnesota state bank shall
file with the commissioner an application on a form prescribed
by the commissioner and pay the fee prescribed by section
49.36. The applicant shall also comply with the applicable
provisions of sections 49.33 to 49.41. After considering the
criteria in section 49.36, subdivision 3, the commissioner may
approve the interstate merger transaction and the operation of
branches outside of Minnesota by the Minnesota state bank. Such
an interstate merger transaction may be consummated only after
the applicant has received the commissioner's written approval.
Subd. 4. [INTERSTATE MERGER TRANSACTIONS AND BRANCHING
PERMITTED.] (a) One or more Minnesota banks may enter into an
interstate merger transaction with one or more out-of-state
banks under this section, and an out-of-state bank resulting
from the transaction may maintain and operate the branches in
Minnesota of a Minnesota bank that participated in the
transaction if the conditions and filing requirements of this
section are met.
(b) An interstate merger transaction resulting in the
acquisition by an out-of-state bank of a Minnesota state bank,
or all or substantially all of the branches of a Minnesota state
bank, shall not be permitted under this section unless the
Minnesota state bank has been in continuous operation, on the
date of the acquisition, 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.
Subd. 5. [NOTICE AND FILING REQUIREMENT.] An out-of-state
bank that will be the resulting bank under an interstate merger
transaction involving a Minnesota state bank shall notify the
commissioner of the proposed merger not later than the date on
which it files an application for an interstate merger
transaction with the responsible federal bank supervisory
agency, and shall submit a copy of that application to the
commissioner and pay the filing fee, if any, required by the
commissioner. A Minnesota state bank that is a party to an
interstate merger transaction shall comply with sections 49.33
to 49.41 and with other applicable state and federal laws. An
out-of-state bank that is the resulting bank in such an
interstate merger transaction shall provide satisfactory
evidence to the commissioner of compliance with applicable
requirements of the bank's home state.
Subd. 6. [POWERS; ADDITIONAL BRANCHES.] (a) An
out-of-state state bank that establishes and maintains one or
more branches in Minnesota under this section may conduct any
activities at the branch or branches that are authorized under
the laws of this state for Minnesota state banks.
(b) A Minnesota state bank may conduct any activities at or
in connection with a branch outside Minnesota that are
permissible for a bank chartered by the host state where the
branch is located, except to the extent that the activities are
expressly prohibited by the laws of this state or by any rule or
order of the commissioner applicable to the Minnesota state
bank. The commissioner may waive the prohibition if the
commissioner determines, by rule or order, that the involvement
of out-of-state branches of Minnesota state banks in particular
activities would not threaten the safety or soundness of the
banks.
(c) An out-of-state bank that has established or acquired a
branch in Minnesota under this section may establish or acquire
additional branches in Minnesota to the same extent that a
Minnesota bank may establish or acquire a branch in Minnesota
under applicable federal and state law where a bank involved in
the transaction could have established, acquired, or operated
the additional branches if the bank had not been a party to the
merger transaction.
Subd. 7. [EXAMINATIONS; PERIODIC REPORTS; COOPERATIVE
AGREEMENTS; ASSESSMENT OF FEES.] (a) To the extent consistent
with paragraph (c), the commissioner may make examinations of a
branch established and maintained in this state under this
section by an out-of-state state bank as the commissioner
considers necessary to determine whether the branch is being
operated in compliance with the laws of this state and according
to safe and sound banking practices. Section 46.04 applies to
the examinations.
(b) The commissioner may prescribe requirements for
periodic reports regarding an out-of-state bank that operates a
branch in Minnesota under this section. The required reports
must be provided by the bank or by the bank supervisory agency
having primary responsibility for the bank. Reporting
requirements prescribed by the commissioner under this paragraph
must be: (1) consistent with the reporting requirements
applicable to Minnesota state banks; and (2) appropriate for the
purpose of enabling the commissioner to carry out
responsibilities under this section.
(c) The commissioner may enter into cooperative,
coordinating, and information-sharing agreements with any other
bank supervisory agencies or any organization affiliated with or
representing one or more bank supervisory agencies with respect
to the periodic examination or other supervision of a branch in
Minnesota of an out-of-state state bank, or a branch of a
Minnesota state bank in a host state. The commissioner may
accept the parties' reports of examination and reports of
investigation in lieu of conducting the commissioner's own
examinations or investigations.
(d) The commissioner may enter into contracts with a bank
supervisory agency that has concurrent jurisdiction over a
Minnesota state bank or an out-of-state state bank operating a
branch in this state under this section to engage the services
of the agency's examiners at a reasonable rate of compensation,
or to provide the services of the commissioner's examiners to
the agency at a reasonable rate of compensation.
(e) The commissioner may enter into joint examinations or
joint enforcement actions with other bank supervisory agencies
having concurrent jurisdiction over a branch in Minnesota of an
out-of-state state bank or a branch of a Minnesota state bank in
a host state. However, the commissioner may at any time take
the actions independently if the commissioner considers the
actions to be necessary or appropriate to carry out
responsibilities under this section or to ensure compliance with
the laws of this state. In the case of an out-of-state state
bank, the commissioner shall recognize the exclusive authority
of the home state regulator over corporate governance matters
and the primary responsibility of the home state regulator with
respect to safety and soundness matters.
(f) Each out-of-state state bank that maintains one or more
branches in this state may be assessed and charged according to
section 46.131 as if it were a Minnesota state bank and, if
assessed, shall pay supervisory and examination fees according
to the laws of this state and rules of the commissioner. The
fees may be shared with other bank supervisory agencies or an
organization affiliated with or representing one or more bank
supervisory agencies according to agreements between the parties
and the commissioner.
Subd. 8. [ENFORCEMENT.] If the commissioner determines
that a branch maintained by an out-of-state state bank in this
state is being operated in violation of the laws of this state,
or that the branch is being operated in an unsafe and unsound
manner, the commissioner has the authority to take all
enforcement actions the commissioner would be empowered to take
if the branch were a Minnesota state bank. The commissioner
shall promptly give notice to the home state regulator of each
enforcement action taken against an out-of-state state bank and,
to the extent practicable, shall consult and cooperate with the
home state regulator in pursuing and resolving enforcement
action.
Subd. 9. [NOTICE OF SUBSEQUENT MERGER.] Each out-of-state
state bank that has established and maintains a branch in this
state under this section shall give at least 60 days' prior
written notice or, in the case of an emergency transaction,
shorter notice as is consistent with applicable state or federal
law to the commissioner of any merger, consolidation, or other
transaction that would cause a change of control with respect to
the bank or any bank holding company that controls the bank,
with the result that an application would be required to be
filed under United States Code, title 12, section 1817(j), or
the federal Bank Holding Company Act of 1956, as amended, United
States Code, title 12, section 1841, et seq.
Subd. 10. [SEVERABILITY.] If a provision of this section,
or the application of the provision, is found by any court of
competent jurisdiction in the United States to be invalid as to
a bank, bank holding company, foreign bank, or other person or
circumstances, or to be superseded by federal law, the remaining
provisions of this section shall not be affected and shall
continue to apply to a bank, bank holding company, foreign bank,
or other person or circumstance.
Sec. 8. Minnesota Statutes 1995 Supplement, section
50.245, subdivision 1, is amended to read:
Subdivision 1. [AUTHORITY FOR BRANCH OFFICES.] A savings
bank may establish five any number of detached facilities as may
be approved by the commissioner of commerce pursuant to sections
47.51 to 47.57 in the territories of Hennepin and Anoka
counties. The savings bank shall not change the location of a
detached facility without prior written approval of the
commissioner of commerce. A savings bank may establish a loan
production office, without restriction as to geographical
location, upon written notice to the commissioner of commerce.
Sec. 9. [EFFECTIVE DATE.]
Sections 1 to 5 and 8 are effective the day following final
enactment. Sections 6 and 7 are effective June 1, 1997.
Presented to the governor March 30, 1996
Signed by the governor April 2, 1996, 12:35 p.m.
Official Publication of the State of Minnesota
Revisor of Statutes