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Minnesota Legislature

Office of the Revisor of Statutes

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

                            CHAPTER 263-H.F.No. 2095 
                  An act relating to mortgage foreclosure; providing for 
                  rescission of foreclosure consultant contracts; 
                  regulating foreclosure consultant contracts; providing 
                  remedies for foreclosure violations; requiring 
                  foreclosure purchasers to enter foreclosure 
                  reconveyances in the form of written contracts; 
                  regulating foreclosure contracts; prohibiting certain 
                  foreclosure purchaser practices; providing enforcement 
                  remedies; requiring certain foreclosure notices; 
                  imposing criminal penalties; amending Minnesota 
                  Statutes 2002, sections 462A.05, by adding a 
                  subdivision; 469.018, by adding a subdivision; 580.03; 
                  Minnesota Statutes 2003 Supplement, section 462A.03, 
                  subdivision 13; Laws 2003, chapter 128, article 10, 
                  section 4, subdivision 3; proposing coding for new law 
                  in Minnesota Statutes, chapter 580; proposing coding 
                  for new law as Minnesota Statutes, chapter 325N. 
        BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
           Section 1.  [325N.01] [DEFINITIONS.] 
           The definitions in paragraphs (a) to (h) apply to sections 
        325N.01 to 325N.09. 
           (a) "Foreclosure consultant" means any person who, directly 
        or indirectly, makes any solicitation, representation, or offer 
        to any owner to perform for compensation or who, for 
        compensation, performs any service which the person in any 
        manner represents will in any manner do any of the following: 
           (1) stop or postpone the foreclosure sale; 
           (2) obtain any forbearance from any beneficiary or 
        mortgagee; 
           (3) assist the owner to exercise the right of reinstatement 
        provided in section 580.30; 
           (4) obtain any extension of the period within which the 
        owner may reinstate the owner's obligation; 
           (5) obtain any waiver of an acceleration clause contained 
        in any promissory note or contract secured by a mortgage on a 
        residence in foreclosure or contained in the mortgage; 
           (6) assist the owner in foreclosure or loan default to 
        obtain a loan or advance of funds; 
           (7) avoid or ameliorate the impairment of the owner's 
        credit resulting from the recording of a notice of default or 
        the conduct of a foreclosure sale; or 
           (8) save the owner's residence from foreclosure. 
           (b) A foreclosure consultant does not include any of the 
        following: 
           (1) a person licensed to practice law in this state when 
        the person renders service in the course of his or her practice 
        as an attorney-at-law; 
           (2) a person licensed as a debt prorater under sections 
        332.12 to 332.29, when the person is acting as a debt prorater 
        as defined in these sections; 
           (3) a person licensed as a real estate broker or 
        salesperson under chapter 82 when the person engages in acts 
        whose performance requires licensure under that chapter unless 
        the person is engaged in offering services designed to, or 
        purportedly designed to, enable the owner to retain possession 
        of the residence in foreclosure; 
           (4) a person licensed as an accountant under chapter 326A 
        when the person is acting in any capacity for which the person 
        is licensed under those provisions; 
           (5) a person or the person's authorized agent acting under 
        the express authority or written approval of the Department of 
        Housing and Urban Development or other department or agency of 
        the United States or this state to provide services; 
           (6) a person who holds or is owed an obligation secured by 
        a lien on any residence in foreclosure when the person performs 
        services in connection with this obligation or lien if the 
        obligation or lien did not arise as the result of or as part of 
        a proposed foreclosure reconveyance; 
           (7) any person or entity doing business under any law of 
        this state, or of the United States relating to banks, trust 
        companies, savings and loan associations, industrial loan and 
        thrift companies, regulated lenders, credit unions, insurance 
        companies, or a mortgagee which is a United States Department of 
        Housing and Urban Development approved mortgagee and any 
        subsidiary or affiliate of these persons or entities, and any 
        agent or employee of these persons or entities while engaged in 
        the business of these persons or entities; 
           (8) a person licensed as a residential mortgage originator 
        or servicer pursuant to chapter 58, when acting under the 
        authority of that license or a foreclosure purchaser as defined 
        in section 325N.10; 
           (9) a nonprofit agency or organization that offers 
        counseling or advice to an owner of a home in foreclosure or 
        loan default if they do not contract for services with 
        for-profit lenders or foreclosure purchasers; and 
           (10) a judgment creditor of the owner, to the extent that 
        the judgment creditor's claim accrued prior to the personal 
        service of the foreclosure notice required by section 580.03, 
        but excluding a person who purchased the claim after such 
        personal service. 
           (c) "Foreclosure reconveyance" means a transaction 
        involving: 
           (1) the transfer of title to real property by a foreclosed 
        homeowner during a foreclosure proceeding, either by transfer of 
        interest from the foreclosed homeowner or by creation of a 
        mortgage or other lien or encumbrance during the foreclosure 
        process that allows the acquirer to obtain title to the property 
        by redeeming the property as a junior lienholder; and 
           (2) the subsequent conveyance, or promise of a subsequent 
        conveyance, of an interest back to the foreclosed homeowner by 
        the acquirer or a person acting in participation with the 
        acquirer that allows the foreclosed homeowner to possess the 
        real property following the completion of the foreclosure 
        proceeding, which interest includes, but is not limited to, an 
        interest in a contract for deed, purchase agreement, option to 
        purchase, or lease. 
           (d) "Person" means any individual, partnership, 
        corporation, limited liability company, association, or other 
        group, however organized. 
           (e) "Service" means and includes, but is not limited to, 
        any of the following: 
           (1) debt, budget, or financial counseling of any type; 
           (2) receiving money for the purpose of distributing it to 
        creditors in payment or partial payment of any obligation 
        secured by a lien on a residence in foreclosure; 
           (3) contacting creditors on behalf of an owner of a 
        residence in foreclosure; 
           (4) arranging or attempting to arrange for an extension of 
        the period within which the owner of a residence in foreclosure 
        may cure the owner's default and reinstate his or her obligation 
        pursuant to section 580.30; 
           (5) arranging or attempting to arrange for any delay or 
        postponement of the time of sale of the residence in 
        foreclosure; 
           (6) advising the filing of any document or assisting in any 
        manner in the preparation of any document for filing with any 
        bankruptcy court; or 
           (7) giving any advice, explanation, or instruction to an 
        owner of a residence in foreclosure, which in any manner relates 
        to the cure of a default in or the reinstatement of an 
        obligation secured by a lien on the residence in foreclosure, 
        the full satisfaction of that obligation, or the postponement or 
        avoidance of a sale of a residence in foreclosure, pursuant to a 
        power of sale contained in any mortgage. 
           (f) "Residence in foreclosure" means residential real 
        property consisting of one to four family dwelling units, one of 
        which the owner occupies as his or her principal place of 
        residence, and against which there is an outstanding notice of 
        pendency of foreclosure, recorded pursuant to section 580.032, 
        or against which a summons and complaint has been served under 
        chapter 581. 
           (g) "Owner" means the record owner of the residential real 
        property in foreclosure at the time the notice of pendency was 
        recorded, or the summons and complaint served. 
           (h) "Contract" means any agreement, or any term in any 
        agreement, between a foreclosure consultant and an owner for the 
        rendition of any service as defined in paragraph (e). 
           Sec. 2.  [325N.02] [RESCISSION OF FORECLOSURE CONSULTANT 
        CONTRACT.] 
           (a) In addition to any other right under law to rescind a 
        contract, an owner has the right to cancel such a contract until 
        midnight of the third business day after the day on which the 
        owner signs a contract which complies with section 325N.03. 
           (b) Cancellation occurs when the owner gives written notice 
        of cancellation to the foreclosure consultant at the address 
        specified in the contract. 
           (c) Notice of cancellation, if given by mail, is effective 
        when deposited in the mail properly addressed with postage 
        prepaid. 
           (d) Notice of cancellation given by the owner need not take 
        the particular form as provided with the contract and, however 
        expressed, is effective if it indicates the intention of the 
        owner not to be bound by the contract. 
           Sec. 3.  [325N.03] [CONTRACT.] 
           (a) Every contract must be in writing and must fully 
        disclose the exact nature of the foreclosure consultant's 
        services and the total amount and terms of compensation. 
           (b) The following notice, printed in at least 14-point 
        boldface type and completed with the name of the foreclosure 
        consultant, must be printed immediately above the statement 
        required by paragraph (c): 
                      "NOTICE REQUIRED BY MINNESOTA LAW 
                          .............. (Name) or anyone working
                          for him or her CANNOT:
                          (1) Take any money from you or ask you 
                          for money until ................ (Name)
                          has completely finished doing everything
                          he or she said he or she would do; and
                          (2) Ask you to sign or have you sign any  
                          lien, mortgage, or deed."
           (c) The contract must be written in the same language as 
        principally used by the foreclosure consultant to describe his 
        or her services or to negotiate the contract, must be dated and 
        signed by the owner, and must contain in immediate proximity to 
        the space reserved for the owner's signature a conspicuous 
        statement in a size equal to at least 10-point boldface type, as 
        follows: 
           "You, the owner, may cancel this transaction at any time 
           prior to midnight of the third business day after the date 
           of this transaction.  See the attached notice of 
           cancellation form for an explanation of this right." 
           (d) The contract must contain on the first page, in a type 
        size no smaller than that generally used in the body of the 
        document, each of the following: 
           (1) the name and address of the foreclosure consultant to 
        which the notice of cancellation is to be mailed; and 
           (2) the date the owner signed the contract. 
           (e) The contract must be accompanied by a completed form in 
        duplicate, captioned "notice of cancellation," which must be 
        attached to the contract, must be easily detachable, and must 
        contain in at least ten-point type the following statement 
        written in the same language as used in the contract: 
                           "NOTICE OF CANCELLATION 
                      ....................................
                       (Enter date of transaction) (Date)
                     You may cancel this transaction, without
                  any penalty or obligation, within three 
                  business days from the above date.
                      To cancel this transaction, mail or deliver
                  a signed and dated copy of this cancellation
                  notice, or any other written notice
                  to ...................................... 
                       (Name of foreclosure consultant)
                  at .................................................. 
                 (Address of foreclosure consultant's place of business)
                  NOT LATER THAN MIDNIGHT OF ..........................
                                                         (Date)
                  I hereby cancel this transaction .................. 
                                                         (Date)
                            ............................. 
                                 (Owner's signature)"
           (f) The foreclosure consultant shall provide the owner with 
        a copy of the contract and the attached notice of cancellation 
        immediately upon execution of the contract. 
           (g) The three business days during which the owner may 
        cancel the contract shall not begin to run until the foreclosure 
        consultant has complied with this section. 
           Sec. 4.  [325N.04] [VIOLATIONS.] 
           It is a violation for a foreclosure consultant to: 
           (1) claim, demand, charge, collect, or receive any 
        compensation until after the foreclosure consultant has fully 
        performed each and every service the foreclosure consultant 
        contracted to perform or represented he or she would perform; 
           (2) claim, demand, charge, collect, or receive any fee, 
        interest, or any other compensation for any reason which exceeds 
        eight percent per annum of the amount of any loan which the 
        foreclosure consultant may make to the owner; 
           (3) take any wage assignment, any lien of any type on real 
        or personal property, or other security to secure the payment of 
        compensation.  Any such security is void and unenforceable; 
           (4) receive any consideration from any third party in 
        connection with services rendered to an owner unless the 
        consideration is first fully disclosed to the owner; 
           (5) acquire any interest, directly or indirectly, or by 
        means of a subsidiary or affiliate in a residence in foreclosure 
        from an owner with whom the foreclosure consultant has 
        contracted; 
           (6) take any power of attorney from an owner for any 
        purpose, except to inspect documents as provided by law; or 
           (7) induce or attempt to induce any owner to enter a 
        contract which does not comply in all respects with sections 
        325N.02 and 325N.03. 
           Sec. 5.  [325N.05] [WAIVER NOT ALLOWED.] 
           Any waiver by an owner of the provisions of sections 
        325N.01 to 325N.09 is void and unenforceable as contrary to 
        public policy.  Any attempt by a foreclosure consultant to 
        induce an owner to waive the owner's rights is a violation of 
        sections 325N.01 to 325N.09. 
           Sec. 6.  [325N.06] [REMEDIES.] 
           (a) A violation of sections 325N.01 to 325N.09 is 
        considered to be a violation of section 325F.69, and all 
        remedies of section 8.31 are available for such an action.  A 
        private cause of action under section 8.31 by a foreclosed 
        homeowner is in the public interest.  An owner may bring an 
        action against a foreclosure consultant for any violation of 
        sections 325N.01 to 325N.09.  Judgment must be entered for 
        actual damages, reasonable attorney fees and costs, and 
        appropriate equitable relief.  
           (b) The rights and remedies provided in paragraph (a) are 
        cumulative to, and not a limitation of, any other rights and 
        remedies provided by law.  Any action brought pursuant to this 
        section must be commenced within four years from the date of the 
        alleged violation. 
           (c) The court may award exemplary damages up to one and 
        one-half times the compensation charged by the foreclosure 
        consultant if the court finds that the foreclosure consultant 
        violated the provisions of section 325N.04, clause (1), (2), or 
        (4), and the foreclosure consultant's conduct was in bad faith. 
           (d) Notwithstanding any other provision of this section, no 
        action may be brought on the basis of a violation of sections 
        325N.01 to 325N.09, except by an owner against whom the 
        violation was committed or by the attorney general.  This 
        limitation does not apply to administrative action by the 
        commissioner of commerce. 
           Sec. 7.  [325N.07] [PENALTY.] 
           Any person who commits any violation described in section 
        325N.04 may, upon conviction, be fined not more than $10,000 or 
        imprisoned not more than one year or both.  Prosecution or 
        conviction for any violation described in section 325N.04 will 
        not bar prosecution or conviction for any other offenses.  These 
        penalties are cumulative to any other remedies or penalties 
        provided by law. 
           Sec. 8.  [325N.08] [PROVISIONS SEVERABLE.] 
           If any provision of sections 325N.01 to 325N.09 or the 
        application of any of these provisions to any person or 
        circumstance is held to be unconstitutional and void, the 
        remainder of sections 325N.01 to 325N.09 remains valid. 
           Sec. 9.  [325N.09] [LIABILITY.] 
           (a) Any provision in a contract which attempts or purports 
        to require arbitration of any dispute arising under sections 
        325N.01 to 325N.09 is void at the option of the owner. 
           (b) This section applies to any contract entered into on or 
        after August 1, 2004. 
                             FORECLOSURE PURCHASERS 
           Sec. 10.  [325N.10] [DEFINITIONS.] 
           Subdivision 1.  [SCOPE.] For the purposes of sections 
        325N.10 to 325N.18, the terms defined in this section have the 
        meanings given them. 
           Subd. 2.  [FORECLOSED HOMEOWNER.] "Foreclosed homeowner" 
        means an owner of residential real property, including a 
        condominium, that is the primary residence of the owner and 
        whose mortgage on the real property is or was in foreclosure. 
           Subd. 3.  [FORECLOSURE RECONVEYANCE.] "Foreclosure 
        reconveyance" means a transaction involving: 
           (1) the transfer of title to real property by a foreclosed 
        homeowner during a foreclosure proceeding, either by transfer of 
        interest from the foreclosed homeowner or by creation of a 
        mortgage or other lien or encumbrance during the foreclosure 
        process that allows the acquirer to obtain title to the property 
        by redeeming the property as a junior lienholder; and 
           (2) the subsequent conveyance, or promise of a subsequent 
        conveyance, of an interest back to the foreclosed homeowner by 
        the acquirer or a person acting in participation with the 
        acquirer that allows the foreclosed homeowner to possess the 
        real property following the completion of the foreclosure 
        proceeding, which interest includes, but is not limited to, an 
        interest in a contract for deed, purchase agreement, option to 
        purchase, or lease. 
           Subd. 4.  [FORECLOSURE PURCHASER.] "Foreclosure purchaser" 
        means a person that has acted as the acquirer in more than one 
        foreclosure reconveyance during any 24-month period.  
        Foreclosure purchaser also includes a person that has acted in 
        joint venture or joint enterprise with one or more acquirers in 
        more than one foreclosure reconveyance during any 24-month 
        period.  A federal or state chartered bank, savings bank, 
        thrift, or credit union is not a foreclosure purchaser. 
           Subd. 5.  [RESALE.] "Resale" means a bona fide market sale 
        of the property subject to the foreclosure reconveyance by the 
        foreclosure purchaser to an unaffiliated third party. 
           Subd. 6.  [RESALE PRICE.] "Resale price" means the gross 
        sale price of the property on resale. 
           Sec. 11.  [325N.11] [CONTRACT REQUIREMENT; FORM AND 
        LANGUAGE.] 
           A foreclosure purchaser shall enter into every foreclosure 
        reconveyance in the form of a written contract.  Every contract 
        must be written in letters of a size equal to at least 12-point 
        boldface type, in the same language principally used by the 
        foreclosure purchaser and foreclosed homeowner to negotiate the 
        sale of the residence in foreclosure and must be fully completed 
        and signed and dated by the foreclosed homeowner and foreclosure 
        purchaser before the execution of any instrument of conveyance 
        of the residence in foreclosure. 
           Sec. 12.  [325N.12] [CONTRACT TERMS.] 
           Every contract required by section 325N.11 must contain the 
        entire agreement of the parties and must include the following 
        terms: 
           (1) the name, business address, and the telephone number of 
        the foreclosure purchaser; 
           (2) the address of the residence in foreclosure; 
           (3) the total consideration to be given by the foreclosure 
        purchaser in connection with or incident to the sale; 
           (4) a complete description of the terms of payment or other 
        consideration including, but not limited to, any services of any 
        nature that the foreclosure purchaser represents he or she will 
        perform for the foreclosed homeowner before or after the sale; 
           (5) the time at which possession is to be transferred to 
        the foreclosure purchaser; 
           (6) a complete description of the terms of any related 
        agreement designed to allow the foreclosed homeowner to remain 
        in the home, such as a rental agreement, repurchase agreement, 
        contract for deed, or lease with option to buy; 
           (7) a notice of cancellation as provided in section 
        325N.14, paragraph (b); and 
           (8) the following notice in at least 14-point boldface 
        type, if the contract is printed or in capital letters if the 
        contract is typed, and completed with the name of the 
        foreclosure purchaser, immediately above the statement required 
        by section 325N.14, paragraph (a): 
                      "NOTICE REQUIRED BY MINNESOTA LAW 
           Until your right to cancel this contract has ended, ....... 
           (Name) or anyone working for ....... (Name) CANNOT ask you 
           to sign or have you sign any deed or any other document." 
           The contract required by this section survives delivery of 
        any instrument of conveyance of the residence in foreclosure, 
        and has no effect on persons other than the parties to the 
        contract. 
           Sec. 13.  [325N.13] [CONTRACT CANCELLATION.] 
           (a) In addition to any other right of rescission, the 
        foreclosed homeowner has the right to cancel any contract with a 
        foreclosure purchaser until midnight of the fifth business day 
        following the day on which the foreclosed homeowner signs a 
        contract that complies with sections 325N.10 to 325N.15 or until 
        8:00 a.m. on the last day of the period during which the 
        foreclosed homeowner has a right of redemption, whichever occurs 
        first. 
           (b) Cancellation occurs when the foreclosed homeowner 
        delivers, by any means, written notice of cancellation to the 
        address specified in the contract. 
           (c) A notice of cancellation given by the foreclosed 
        homeowner need not take the particular form as provided with the 
        contract. 
           (d) Within ten days following receipt of a notice of 
        cancellation given in accordance with this section, the 
        foreclosure purchaser shall return without condition any 
        original contract and any other documents signed by the 
        foreclosed homeowner. 
           Sec. 14.  [325N.14] [NOTICE OF CANCELLATION.] 
           (a) The contract must contain in immediate proximity to the 
        space reserved for the foreclosed homeowner's signature a 
        conspicuous statement in a size equal to at least 14-point 
        boldface type, if the contract is printed, or in capital 
        letters, if the contract is typed, as follows: 
                     "You may cancel this contract for the sale
                  of your house without any penalty or obligation
                  at any time before
                  ..............................................
                            (Date and time of day)
                  See the attached notice of cancellation form
                  for an explanation of this right."
        The foreclosure purchaser shall accurately enter the date and 
        time of day on which the cancellation right ends. 
           (b) The contract must be accompanied by a completed form in 
        duplicate, captioned "notice of cancellation" in a size equal to 
        a 12-point boldface type if the contract is printed, or in 
        capital letters, if the contract is typed, followed by a space 
        in which the foreclosure purchaser shall enter the date on which 
        the foreclosed homeowner executes any contract.  This form must 
        be attached to the contract, must be easily detachable, and must 
        contain in type of at least 10 points, if the contract is 
        printed or in capital letters if the contract is typed, the 
        following statement written in the same language as used in the 
        contract: 
                           "NOTICE OF CANCELLATION 
                      ....................................
                           (Enter date contract signed)
                     You may cancel this contract for the sale
                  of your house, without any penalty or
                  obligation, at any time before
                  ...........................................
                         (Enter date and time of day)
                      To cancel this transaction, personally
                  deliver a signed and dated copy of this
                  cancellation notice to
                  ......................................... 
                             (Name of purchaser)
                  at ............................................... 
                   (Street address of purchaser's place of business)
                  NOT LATER THAN ............................
                                 (Enter date and time of day)
                  I hereby cancel this transaction .................... 
                                                         (Date)
                              ............................. 
                                  (Seller's signature)"
           (c) The foreclosure purchaser shall provide the foreclosed 
        homeowner with a copy of the contract and the attached notice of 
        cancellation at the time the contract is executed by all parties.
           (d) The five business days during which the foreclosed 
        homeowner may cancel the contract must not begin to run until 
        all parties to the contract have executed the contract and the 
        foreclosure purchaser has complied with this section. 
           Sec. 15.  [325N.15] [WAIVER.] 
           Any waiver of the provisions of sections 325N.10 to 315N.18 
        is void and unenforceable as contrary to public policy except a 
        consumer may waive the five-day right to cancel provided in 
        section 325N.13 if the property is subject to a foreclosure sale 
        within the five business days, and the foreclosed homeowner 
        agrees to waive his or her right to cancel in a handwritten 
        statement signed by all parties holding title to the foreclosed 
        property. 
           Sec. 16.  [325N.16] [LIABILITY.] 
           (a) Any provision in a contract which attempts or purports 
        to require arbitration of any dispute arising under sections 
        325N.10 to 325N.18 is void at the option of the owner. 
           (b) This section applies to any contract entered into on or 
        after August 1, 2004. 
           Sec. 17.  [325N.17] [PROHIBITED PRACTICES.] 
           A foreclosure purchaser shall not: 
           (a) enter into, or attempt to enter into, a foreclosure 
        reconveyance with a foreclosed homeowner unless: 
           (1) the foreclosure purchaser verifies and can demonstrate 
        that the foreclosed homeowner has a reasonable ability to pay 
        for the subsequent conveyance of an interest back to the 
        foreclosed homeowner.  In the case of a lease with an option to 
        purchase, payment ability also includes the reasonable ability 
        to make the lease payments and purchase the property within the 
        term of the option to purchase.  There is a rebuttable 
        presumption that a homeowner is reasonably able to pay for the 
        subsequent conveyance if the owner's payments for primary 
        housing expenses and regular principal and interest payments on 
        other personal debt, on a monthly basis, do not exceed 60 
        percent of the owner's monthly gross income.  For the purposes 
        of this section, "primary housing expenses" means the sum of 
        payments for regular principal, interest, rent, utilities, 
        hazard insurance, real estate taxes, and association dues.  
        There is a rebuttable presumption that the foreclosure purchaser 
        has not verified reasonable payment ability if the foreclosure 
        purchaser has not obtained documents other than a statement by 
        the foreclosed homeowner of assets, liabilities, and income; 
           (2) the foreclosure purchaser and the foreclosed homeowner 
        complete a closing for any foreclosure reconveyance in which the 
        foreclosure purchaser obtains a deed or mortgage from a 
        foreclosed homeowner.  For purposes of this section, "closing" 
        means an in-person meeting to complete final documents incident 
        to the sale of the real property or creation of a mortgage on 
        the real property conducted by a closing agent, as defined in 
        section 82.17, who is not employed by or an affiliate of the 
        foreclosure purchaser; 
           (3) the foreclosure purchaser obtains the written consent 
        of the foreclosed homeowner to a grant by the foreclosure 
        purchaser of any interest in the property during such times as 
        the foreclosed homeowner maintains any interest in the property; 
        and 
           (4) the foreclosure purchaser complies with the 
        requirements of the federal Home Ownership Equity Protection 
        Act, United States Code, title 15, section 1639, or its 
        implementing regulation, Code of Federal Regulations, title 12, 
        sections 226.31 to 226.34, for any foreclosure reconveyance in 
        which the foreclosed homeowner obtains a vendee interest in a 
        contract for deed; 
           (b) fail to either: 
           (1) ensure that title to the subject dwelling has been 
        reconveyed to the foreclosed homeowner; or 
           (2) make a payment to the foreclosed homeowner such that 
        the foreclosed homeowner has received consideration in an amount 
        of at least 82 percent of the fair market value of the property 
        within 150 days of either the eviction or voluntary 
        relinquishment of possession of the dwelling by the foreclosed 
        homeowner.  The foreclosure purchaser shall make a detailed 
        accounting of the basis for the payment amount, or a detailed 
        accounting of the reasons for failure to make a payment, 
        including providing written documentation of expenses, within 
        this 150-day period.  The accounting shall be on a form 
        prescribed by the attorney general, in consultation with the 
        commissioner of commerce, without being subject to the 
        rulemaking procedures of chapter 14.  For purposes of this 
        provision, the following applies: 
           (i) there is a rebuttable presumption that an appraisal by 
        a person licensed or certified by an agency of the federal 
        government or this state to appraise real estate constitutes the 
        fair market value of the property; 
           (ii) the time for determining the fair market value amount 
        shall be determined in the foreclosure reconveyance contract as 
        either at the time of the execution of the foreclosure 
        reconveyance contract or at resale.  If the contract states that 
        the fair market value shall be determined at the time of resale, 
        the fair market value shall be the resale price if it is sold 
        within 120 days of the eviction or voluntary relinquishment of 
        the property by the foreclosed homeowner.  If the contract 
        states that the fair market value shall be determined at the 
        time of resale, and the resale is not completed within 120 days 
        of the eviction or voluntary relinquishment of the property by 
        the foreclosed homeowner, the fair market value shall be 
        determined by an appraisal conducted during this 120 day period 
        and payment, if required, shall be made to the homeowner, but 
        the fair market value shall be recalculated as the resale price 
        on resale and an additional payment amount, if appropriate based 
        on the resale price, shall be made to the foreclosed homeowner 
        within 15 days of resale, and a detailed accounting of the basis 
        for the payment amount, or a detailed accounting of the reasons 
        for failure to make additional payment, shall be made within 15 
        days of resale, including providing written documentation of 
        expenses.  The accounting shall be on a form prescribed by the 
        attorney general, in consultation with the commissioner of 
        commerce, without being subject to the rulemaking procedures of 
        chapter 14; 
           (iii) "consideration" shall mean any payment or thing of 
        value provided to the foreclosed homeowner, including unpaid 
        rent or contract for deed payments owed by the foreclosed 
        homeowner prior to the date of eviction or voluntary 
        relinquishment of the property, reasonable costs paid to third 
        parties necessary to complete the foreclosure reconveyance 
        transaction, payment of money to satisfy a debt or legal 
        obligation of the foreclosed homeowner, or the reasonable cost 
        of repairs for damage to the dwelling caused by the foreclosed 
        homeowner; but 
           (iv) "consideration" shall not include amounts imputed as a 
        downpayment or fee to the foreclosure purchaser, or a person 
        acting in participation with the foreclosure purchaser, incident 
        to a contract for deed, lease, or option to purchase entered 
        into as part of the foreclosure reconveyance, except for 
        reasonable costs paid to third parties necessary to complete the 
        foreclosure reconveyance; 
           (c) enter into repurchase or lease terms as part of the 
        subsequent conveyance that are unfair or commercially 
        unreasonable, or engage in any other unfair conduct; 
           (d) represent, directly or indirectly, that: 
           (1) the foreclosure purchaser is acting as an advisor or a 
        consultant, or in any other manner represents that the 
        foreclosure purchaser is acting on behalf of the homeowner; 
           (2) the foreclosure purchaser has certification or 
        licensure that the foreclosure purchaser does not have, or that 
        the foreclosure purchaser is not a member of a licensed 
        profession if that is untrue; 
           (3) the foreclosure purchaser is assisting the foreclosed 
        homeowner to "save the house" or substantially similar phrase; 
        or 
           (4) the foreclosure purchaser is assisting the foreclosed 
        homeowner in preventing a completed foreclosure if the result of 
        the transaction is that the foreclosed homeowner will not 
        complete a redemption of the property; 
           (e) make any other statements, directly or by implication, 
        or engage in any other conduct that is false, deceptive, or 
        misleading, or that has the likelihood to cause confusion or 
        misunderstanding, including, but not limited to, statements 
        regarding the value of the residence in foreclosure, the amount 
        of proceeds the foreclosed homeowner will receive after a 
        foreclosure sale, any contract term, or the foreclosed 
        homeowner's rights or obligations incident to or arising out of 
        the foreclosure reconveyance; or 
           (f) do any of the following until the time during which the 
        foreclosed homeowner may cancel the transaction has fully 
        elapsed: 
           (1) accept from any foreclosed homeowner an execution of, 
        or induce any foreclosed homeowner to execute, any instrument of 
        conveyance of any interest in the residence in foreclosure; 
           (2) record with the county recorder or file with the 
        registrar of titles any document, including but not limited to, 
        any instrument of conveyance, signed by the foreclosed 
        homeowner; 
           (3) transfer or encumber or purport to transfer or encumber 
        any interest in the residence in foreclosure to any third party, 
        provided no grant of any interest or encumbrance is defeated or 
        affected as against a bona fide purchaser or encumbrance for 
        value and without notice of a violation of sections 325N.10 to 
        325N.18, and knowledge on the part of any such person or entity 
        that the property was "residential real property in foreclosure" 
        does not constitute notice of a violation of sections 325N.10 to 
        325N.18.  This section does not abrogate any duty of inquiry 
        which exists as to rights or interests of persons in possession 
        of the residential real property in foreclosure; or 
           (4) pay the foreclosed homeowner any consideration. 
           Sec. 18.  [325N.18] [ENFORCEMENT.] 
           Subdivision 1.  [REMEDIES.] A violation of sections 325N.10 
        to 325N.17 is considered to be a violation of section 325F.69, 
        and all the remedies of section 8.31 are available for such an 
        action.  A private right of action under section 8.31 by a 
        foreclosed homeowner is in the public interest.  
           Subd. 1a.  [LIMITATION.] Notwithstanding any other 
        provision of this section, no action may be brought on the basis 
        of a violation of sections 325N.10 to 325N.18, except by an 
        owner against whom the violation was committed or by the 
        attorney general.  This limitation does not apply to 
        administrative action by the commissioner of commerce. 
           Subd. 2.  [EXEMPLARY DAMAGES.] In a private right of action 
        under section 8.31 for a violation of section 325N.17, the court 
        may award exemplary damages of any amount.  In the event the 
        court determines that an award of exemplary damages is 
        appropriate, the amount of exemplary damages awarded shall not 
        be less than 1-1/2 times the foreclosed homeowner's actual 
        damages.  Any claim for exemplary damages brought pursuant to 
        this section must be commenced within four years after the date 
        of the alleged violation. 
           Subd. 3.  [REMEDIES CUMULATIVE.] The remedies provided in 
        this section are cumulative and do not restrict any remedy that 
        is otherwise available.  The provisions of sections 325N.10 to 
        325N.18 are not exclusive and are in addition to any other 
        requirements, rights, remedies, and penalties provided by law.  
        No action under this section shall affect the rights in the 
        foreclosed property held by a good faith purchaser for value 
        under sections 507.34, 508.48, 508A.48, or other applicable law. 
           Subd. 4.  [CRIMINAL PENALTY.] Any foreclosure purchaser who 
        engages in any practice which would operate as a fraud or deceit 
        upon a foreclosed homeowner may, upon conviction, be fined not 
        more than $50,000 or imprisoned not more than one year, or both. 
        Prosecution or conviction for any one of the violations does not 
        bar prosecution or conviction for any other offenses. 
           Subd. 5.  [FAILURE OF TRANSACTION.] Failure of the parties 
        to complete the reconveyance transaction, in the absence of 
        additional misconduct, shall not subject a foreclosure purchaser 
        to the criminal penalties under section 325N.07 or 325N.18. 
           Sec. 19.  Minnesota Statutes 2003 Supplement, section 
        462A.03, subdivision 13, is amended to read: 
           Subd. 13.  [ELIGIBLE MORTGAGOR.] "Eligible mortgagor" means 
        a nonprofit or cooperative housing corporation; the Department 
        of Administration for the purpose of developing nursing home 
        beds under section 251.011 or community-based programs as 
        defined in sections 252.50 and 253.28; a limited profit entity 
        or a builder as defined by the agency in its rules, which 
        sponsors or constructs residential housing as defined in 
        subdivision 7; or a natural person of low or moderate income, 
        except that the return to a limited dividend entity shall not 
        exceed ten 15 percent of the capital contribution of the 
        investors or such lesser percentage as the agency shall 
        establish in its rules, provided that residual receipts funds of 
        a limited dividend entity may be used for agency-approved, 
        housing-related investments owned by the limited dividend entity 
        without regard to the limitation on returns.  Owners of existing 
        residential housing occupied by renters shall be eligible for 
        rehabilitation loans, only if, as a condition to the issuance of 
        the loan, the owner agrees to conditions established by the 
        agency in its rules relating to rental or other matters that 
        will insure that the housing will be occupied by persons and 
        families of low or moderate income.  The agency shall require by 
        rules that the owner give preference to those persons of low or 
        moderate income who occupied the residential housing at the time 
        of application for the loan. 
           Sec. 20.  Minnesota Statutes 2002, section 462A.05, is 
        amended by adding a subdivision to read: 
           Subd. 3c.  [REFINANCING; LONG-TERM MORTGAGES.] It may agree 
        to purchase, make, or otherwise participate in the making and 
        enter into commitments for the purchase, making, or 
        participation in the making of long-term mortgage loans to 
        persons and families of low and moderate income to refinance a 
        long-term mortgage or other financing secured by the residential 
        housing occupied by the owner of the property.  The loans shall 
        be made only upon determination by the agency that long-term 
        mortgage loans are not otherwise available, wholly or in part, 
        from private lenders upon equivalent terms and conditions. 
           Sec. 21.  Minnesota Statutes 2002, section 469.018, is 
        amended by adding a subdivision to read: 
           Subd. 3.  [PROHIBITION ON LEASE 
        RESTRICTIONS.] Notwithstanding any other law to the contrary, no 
        declaration governing a common interest community, as defined in 
        chapter 515B, whether or not the common interest community is 
        subject to chapter 515B, and no bylaw, regulation, rule, or 
        policy adopted by or on behalf of the unit owners' association 
        for a common interest community, may prohibit or limit an 
        authority from leasing a residential unit owned by it to 
        eligible persons of low or moderate income and their families 
        under applicable state or federal legislation.  Nothing in this 
        subdivision shall prohibit common interest community 
        declarations, bylaws, regulations, rules, or policies from 
        otherwise regulating the use of a unit owned by an authority or 
        the conduct of unit occupants, provided the regulations apply to 
        all units in the common interest community; nor from enforcing a 
        prohibition against leasing residential units that was effective 
        before the authority owned the unit.  This subdivision applies 
        to all common interest community units owned by an authority for 
        which title was acquired by the authority after January 1, 1999. 
           Sec. 22.  Minnesota Statutes 2002, section 580.03, is 
        amended to read: 
           580.03 [NOTICE OF SALE; SERVICE ON OCCUPANT.] 
           Six weeks' published notice shall be given that such 
        mortgage will be foreclosed by sale of the mortgaged premises or 
        some part thereof, and at least four weeks before the appointed 
        time of sale a copy of such notice shall be served in like 
        manner as a summons in a civil action in the district court upon 
        the person in possession of the mortgaged premises, if the same 
        are actually occupied.  If there be a building on such premises 
        used by a church or religious corporation, for its usual 
        meetings, service upon any officer or trustee of such 
        corporation shall be a sufficient service upon it.  The notice 
        required by section 580.041 must be served simultaneously with 
        the notice of foreclosure required by this section. 
           Sec. 23.  [580.041] [FORECLOSURE ADVICE NOTICE.] 
           Subdivision 1.  [FORM AND DELIVERY OF NOTICE.] The notice 
        required by this section must be in 14-point boldface type and 
        must be printed on colored paper that is other than the color of 
        the notice of foreclosure and that does not obscure or 
        overshadow the content of the notice.  The title of the notice 
        must be in 20-point boldface type.  The notice must be on its 
        own page.  The notice required by this section must be delivered 
        with the notice of foreclosure required by sections 580.03 and 
        580.04.  The notice required by this section also must be 
        delivered with each subsequent written communication regarding 
        the foreclosure mailed to the mortgagor by the foreclosing party 
        up to the day of redemption.  A foreclosing mortgagee will be 
        deemed to have complied with this section if it sends the notice 
        required by this section at least once every 60 days during the 
        period of the foreclosure process.  The notice required by this 
        section must not be published. 
           Subd. 2.  [CONTENT OF NOTICE.] The notice required by this 
        section must appear substantially as follows: 
                     "Help For Homeowners in Foreclosure 
             Minnesota law requires that we send you this notice 
           about the foreclosure process.  Please read it carefully. 
             Mortgage foreclosure is a complex process.  Some 
           people may approach you about "saving" your home.  You 
           should be careful about any such promises. 
             The state encourages you to become informed about your 
           options in foreclosure before entering into any agreements 
           with anyone in connection with the foreclosure of your 
           home.  There are government agencies and nonprofit 
           organizations that you may contact for helpful information 
           about the foreclosure process.  For the name and telephone 
           number of an organization near you please call the 
           Minnesota Home Finance Agency (MHFA) at (insert telephone 
           number).  The state does not guarantee the advice of these 
           agencies. 
             Do not delay dealing with the foreclosure because your 
           options may become more limited as time passes." 
           Sec. 24.  Laws 2003, chapter 128, article 10, section 4, 
        subdivision 3, is amended to read:  
        Subd. 3.  Affordable Rental Investment Fund
        $9,273,000 the first year and 
        $9,273,000 the second year are for the 
        affordable rental investment fund 
        program under Minnesota Statutes, 
        section 462A.21, subdivision 8b. 
        This appropriation is to finance the 
        acquisition, rehabilitation, and debt 
        restructuring of federally assisted 
        rental property and for making equity 
        take-out loans under Minnesota 
        Statutes, section 462A.05, subdivision 
        39.  This appropriation also may be 
        used to finance the acquisition, 
        rehabilitation, and debt restructuring 
        of existing supportive housing 
        properties.  For purposes of this 
        subdivision, supportive housing means 
        affordable rental housing with linkages 
        to services necessary for individuals, 
        youth, and families with children to 
        maintain housing stability.  The owner 
        of the federally assisted rental 
        property must agree to participate in 
        the applicable federally assisted 
        housing program and to extend any 
        existing low-income affordability 
        restrictions on the housing for the 
        maximum term permitted.  The owner must 
        also enter into an agreement that gives 
        local units of government, housing and 
        redevelopment authorities, and 
        nonprofit housing organizations the 
        right of first refusal if the rental 
        property is offered for sale.  Priority 
        must be given among comparable 
        properties to properties with the 
        longest remaining term under an 
        agreement for federal rental 
        assistance.  Priority must also be 
        given among comparable rental housing 
        developments to developments that are 
        or will be owned by local government 
        units, a housing and redevelopment 
        authority, or a nonprofit housing 
        organization. 
           Sec. 25.  [PROVISIONS SEVERABLE.] 
           If any provision of this act, or if any application of this 
        act to any person or circumstances is held unconstitutional and 
        void, the remainder of this act remains valid. 
           Sec. 26.  [EFFECTIVE DATE; EXPIRATION.] 
           Sections 1 to 18, 22, 23, and 25 are effective August 1, 
        2004, and expire December 31, 2009.  Sections 19, 20, 21, and 24 
        are effective July 1, 2004. 
           Presented to the governor May 18, 2004 
           Signed by the governor May 28, 2004, 5:01 p.m.