Office of the Revisor of Statutes
Minnesota Session Laws - 2004, Regular Session
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.
Official Publication of the State of Minnesota
Revisor of Statutes