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1998 Minnesota Session Laws

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                            CHAPTER 343-S.F.No. 2966 
                  An act relating to mortgages; enacting the Minnesota 
                  Residential Mortgage Originator and Servicer Licensing 
                  Act; establishing licensing and enforcement 
                  mechanisms; amending Minnesota Statutes 1996, sections 
                  47.206, subdivision 1; 82.17, subdivision 4; 82.18; 
                  and 82.27, subdivision 1; proposing coding for new law 
                  as Minnesota Statutes, chapter 58; repealing Minnesota 
                  Statutes 1996, section 82.175. 
        BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
                                   ARTICLE 1 
                        RESIDENTIAL MORTGAGE ORIGINATOR 
                             AND SERVICER LICENSING 
           Section 1.  [58.01] [CITATION.] 
           This chapter shall be cited as the "Minnesota Residential 
        Mortgage Originator and Servicer Licensing Act." 
           Sec. 2.  [58.02] [DEFINITIONS.] 
           Subdivision 1.  [SCOPE.] For purposes of this chapter, the 
        terms defined in this section have the meanings given to them. 
           Subd. 2.  [ACT.] "Act" means the Minnesota Residential 
        Mortgage Originator and Servicer Licensing Act. 
           Subd. 3.  [ADVANCE FEE.] "Advance fee" means a commission, 
        fee, charge, or compensation of any kind paid to a residential 
        mortgage originator before the closing of a loan, that is 
        intended in whole or in part as payment for the originator's 
        services in finding or attempting to find a loan for a 
        borrower.  Advance fee does not include pass-through fees or 
        commitment or extended lock fees or other fees as determined by 
        the commissioner. 
           Subd. 4.  [BORROWER.] "Borrower" means a person or persons 
        applying for a residential mortgage loan, a mortgagor, or the 
        person or persons on whose behalf the activities in subdivisions 
        12, 14, 22, and 23 are conducted. 
           Subd. 5.  [CLOSING.] "Closing" means either or both of the 
        following:  (1) the process whereby the real estate contract 
        between a buyer and a seller is consummated; or (2) the process 
        whereby the documents creating a security interest in real 
        property become effective between the borrower and the lender. 
           Subd. 6.  [COMMISSIONER.] "Commissioner" means the 
        commissioner of commerce. 
           Subd. 7.  [EMPLOYEE.] "Employee" means an individual who is 
        treated as an employee by the residential mortgage originator or 
        servicer for purposes of compliance with federal income tax laws.
           Subd. 8.  [ESCROW ACCOUNT.] "Escrow account" means a trust 
        account that is established and maintained to hold funds 
        received from a borrower, such as real estate taxes and 
        insurance premiums, incurred in connection with the servicing of 
        the mortgage. 
           Subd. 9.  [EXEMPT PERSON.] "Exempt person" means a person 
        exempt from residential mortgage originator licensing 
        requirements, and a person exempt from residential mortgage 
        service licensing requirements. 
           Subd. 10.  [FINANCIAL INSTITUTION.] "Financial institution" 
        means a bank, bank and trust, trust company with banking powers, 
        savings bank, savings association, or credit union, organized 
        under the laws of this state or the United States; a Minnesota 
        host state branch of an out-of-state state-chartered bank as 
        provided for in section 49.411; an industrial loan and thrift 
        under chapter 53; or a regulated lender under chapter 56.  The 
        term "financial institution" also includes a subsidiary or 
        operating subsidiary of a financial institution or of a bank 
        holding company as defined in the federal Bank Holding Company 
        Act, United States Code, title 12, section 1841 et seq., if the 
        subsidiary or operating subsidiary can demonstrate to the 
        satisfaction of the commissioner that it is regulated and 
        subject to active and ongoing oversight and supervision by a 
        federal banking agency, as defined in the Federal Deposit 
        Insurance Act, United States Code, title 12, section 1811 et 
        seq., or the commissioner.  
           Subd. 11.  [LENDER.] "Lender" means a person who makes 
        residential mortgage loans including a person who provides table 
        funding. 
           Subd. 12.  [MAKING A RESIDENTIAL MORTGAGE LOAN.] "Making a 
        residential mortgage loan" means for compensation or gain, or 
        the expectation of compensation or gain, to advance funds or 
        make a commitment to advance funds in connection with a 
        residential mortgage. 
           Subd. 13.  [MORTGAGE BROKER; BROKER.] "Mortgage broker" or 
        "broker" means a person who performs the activities described in 
        subdivisions 14 and 23. 
           Subd. 14.  [MORTGAGE BROKERING; BROKERING.] "Mortgage 
        brokering" or "brokering" means helping to obtain from another 
        person, for a borrower, a residential mortgage loan or assisting 
        a borrower in obtaining a residential mortgage loan in return 
        for consideration to be paid by the borrower or lender or both.  
        Mortgage brokering or brokering includes, but is not limited to, 
        soliciting, placing, or negotiating a residential mortgage loan. 
           Subd. 15.  [NET WORTH.] "Net worth" has the meaning given 
        it in section 58.07. 
           Subd. 16.  [PERSON.] "Person" means a natural person, firm, 
        partnership, limited liability partnership, corporation, 
        association, limited liability company, or other form of 
        business organization and the officers, directors, employees, or 
        agents of that person. 
           Subd. 17.  [PERSON IN CONTROL.] "Person in control" means 
        any member of senior management and other persons who possess, 
        directly or indirectly, the power to direct or cause the 
        direction of the management policies of an applicant or licensee 
        under this chapter, regardless of whether the person has any 
        ownership interest in the applicant or licensee.  Control is 
        presumed to exist if a person, directly or indirectly, owns, 
        controls, or holds with power to vote ten percent or more of the 
        voting stock of an applicant or licensee or of a person who 
        owns, controls, or holds with power to vote ten percent or more 
        of the voting stock of an applicant or licensee. 
           Subd. 18.  [RESIDENTIAL MORTGAGE LOAN.] "Residential 
        mortgage loan" means a loan made primarily for personal, family, 
        or household use and secured primarily by either a:  (1) 
        mortgage on residential real property; or (2) certificates of 
        stock or other evidence of ownership interest in and proprietary 
        lease from corporations, partnerships, or other forms of 
        business organizations formed for the purpose of cooperative 
        ownership of residential real property. 
           Subd. 19.  [RESIDENTIAL MORTGAGE ORIGINATOR.] "Residential 
        mortgage originator" means a person who, directly or indirectly, 
        for compensation or gain or in expectation of compensation or 
        gain, solicits or offers to solicit, or accepts or offers to 
        accept an application for a residential mortgage loan through 
        any medium or mode of communication from a borrower, or makes a 
        residential mortgage loan.  "Residential mortgage originator" 
        includes a lender as defined in subdivision 11 and a broker as 
        defined in subdivision 13. 
           Subd. 20.  [RESIDENTIAL MORTGAGE SERVICER; 
        SERVICER.] "Residential mortgage servicer" or "servicer" means a 
        person who engages in the activity of servicing a residential 
        mortgage as defined in subdivision 22. 
           Subd. 21.  [RESIDENTIAL REAL PROPERTY; RESIDENTIAL REAL 
        ESTATE.] "Residential real property" or "residential real 
        estate" means real property improved or intended to be improved 
        by a structure designed principally for the occupancy of from 
        one to four families. 
           Subd. 22.  [SERVICING; SERVICING A RESIDENTIAL MORTGAGE.] 
        "Servicing" or "servicing a residential mortgage loan" means 
        through any medium or mode of communication the collection or 
        remittance for, or the right or obligation to collect or remit 
        for a lender, mortgagee, note owner, noteholder, or for a 
        person's own account, of payments, interest, principal, and 
        escrow items such as insurance and taxes for property subject to 
        a residential mortgage loan. 
           Subd. 23.  [SOLICITING, PLACING, OR NEGOTIATING A 
        RESIDENTIAL MORTGAGE LOAN.] "Soliciting, placing, or negotiating 
        a residential mortgage loan" means for compensation or gain or 
        expectation of compensation or gain, whether directly or 
        indirectly, accepting or offering to accept an application for a 
        residential mortgage loan, assisting, or offering to assist a 
        borrower in applying for a residential mortgage loan, or 
        negotiating or offering to negotiate the terms or conditions of 
        a residential mortgage loan with a lender on behalf of a 
        borrower. 
           Subd. 24.  [TABLE FUNDING.] "Table funding" means a closing 
        or settlement at which a residential mortgage loan is funded by 
        a lender by way of a contemporaneous advance of residential 
        mortgage loan funds and an assignment of the residential 
        mortgage loan to the lender advancing the funds. 
           Subd. 25.  [TRUST ACCOUNT.] "Trust account" means a 
        negotiable order of withdrawal account, demand deposit, or 
        checking account maintained for the purpose of segregating trust 
        funds from other funds.  A "trust account" must not allow the 
        financial institution a right of set-off against the money owed 
        it by the account holder. 
           Subd. 26.  [TRUST FUNDS.] "Trust funds" means funds 
        received by a residential mortgage originator or servicer in a 
        fiduciary capacity for later distribution, such as appraisal or 
        credit report fees, taxes, or insurance premiums.  Trust funds 
        includes commitment, lock, extended lock, and advance fees. 
           Sec. 3.  [58.03] [CLASSES OF LICENSE.] 
           The commissioner may issue the following classes of license 
        under this chapter: 
           (1) a residential mortgage originator license; and 
           (2) a residential mortgage servicer license. 
           Sec. 4.  [58.04] [LICENSING REQUIREMENT.] 
           Subdivision 1.  [RESIDENTIAL MORTGAGE ORIGINATOR LICENSING 
        REQUIREMENTS.] (a) Beginning August 1, 1999, no person shall act 
        as a residential mortgage originator, or make residential 
        mortgage loans without first obtaining a license from the 
        commissioner according to the licensing procedures provided in 
        this chapter. 
           (b) The following persons are exempt from the residential 
        mortgage originator licensing requirements: 
           (1) an employee of one mortgage originator licensee or one 
        person holding a certificate of exemption; 
           (2) a person engaged solely in commercial mortgage 
        activities; 
           (3) a person licensed as a real estate broker under chapter 
        82, and an individual licensee who is licensed to the broker if: 
           (i) the individual licensee acts only under the name, 
        authority, and supervision of the broker to whom the licensee is 
        licensed; 
           (ii) the broker obtains a certificate of exemption 
        according to section 58.05, subdivision 2; 
           (iii) the broker does not collect an advance fee for its 
        residential mortgage-related activities; and 
           (iv) the residential mortgage origination activities are 
        incidental to the real estate licensee's primary activities as a 
        real estate broker or salesperson; 
           (4) a person making no more than five residential mortgage 
        loans with its own funds, during any 12-month period; 
           (5) a financial institution as defined in section 58.02, 
        subdivision 10; 
           (6) an agency of the federal government, or of a state or 
        municipal government; 
           (7) an employee or employer pension plan making loans only 
        to its participants; 
           (8) a person acting in a fiduciary capacity, such as a 
        trustee or receiver, as a result of a specific order issued by a 
        court of competent jurisdiction; or 
           (9) a person exempted by order of the commissioner. 
           Subd. 2.  [RESIDENTIAL MORTGAGE SERVICER LICENSING 
        REQUIREMENTS.] (a) Beginning August 1, 1999, no person shall 
        engage in activities or practices that fall within the 
        definition of "servicing a residential mortgage loan" under 
        section 58.02, subdivision 22, without first obtaining a license 
        from the commissioner according to the licensing procedures 
        provided in this chapter. 
           (b) The following persons are exempt from the residential 
        mortgage servicer licensing requirements: 
           (1) a person licensed as a residential mortgage originator; 
           (2) an employee of one licensee or one person holding a 
        certificate of exemption based on an exemption under this 
        subdivision; 
           (3) a person engaged solely in commercial mortgage 
        activities; 
           (4) a person servicing loans made with its own funds, if no 
        more than five such loans are made in any 12-month period; 
           (5) a financial institution as defined in section 58.02, 
        subdivision 10; 
           (6) an agency of the federal government, or of a state or 
        municipal government; 
           (7) an employee or employer pension plan making loans only 
        to its participants; 
           (8) a person acting in a fiduciary capacity, such as a 
        trustee or receiver, as a result of a specific order issued by a 
        court of competent jurisdiction; or 
           (9) a person exempted by order of the commissioner. 
           Subd. 3.  [CONDUCTING BUSINESS UNDER LICENSE.] No person 
        required to be licensed under this chapter may, without a 
        license, do business under a name or title or circulate or use 
        advertising or make representations or give information to a 
        person, that indicates or reasonably implies activity within the 
        scope of this chapter. 
           Subd. 4.  [APPLICABILITY TO BANKS AND CREDIT 
        UNIONS.] Except for section 58.13, this chapter does not apply 
        to a bank, savings bank, savings association, or credit union 
        subject to supervision by either a federal regulatory agency or 
        the commissioner. 
           Sec. 5.  [58.05] [EXEMPTIONS FROM LICENSE.] 
           Subdivision 1.  [EXEMPTION FROM LICENSURE.] An exempt 
        person as defined by section 58.04, subdivision 1, paragraph 
        (b), and subdivision 2, paragraph (b), is exempt from the 
        licensing requirements of this chapter, but is subject to all 
        other provisions of this chapter. 
           Subd. 2.  [ELIGIBILITY FOR EXEMPTION.] To qualify as an 
        exempt person, a person, except an employee exempt under section 
        58.04, subdivision 1, paragraph (b), clause (1), or subdivision 
        2, paragraph (b), clause (2), or an individual real estate 
        licensee exempt under section 58.04, subdivision 1, paragraph 
        (b), clause (3), must obtain a certificate of exemption from the 
        commissioner.  A certificate of exemption will be issued upon 
        the person's filing, on a form provided by the commissioner, a 
        statement indicating the basis on which the exemption is claimed 
        and, if applicable, the name and address of the state or federal 
        regulatory agency or body to which complaints regarding the 
        person's residential mortgage originating or servicing 
        activities may be directed. 
           Sec. 6.  [58.06] [APPLICATION REQUIREMENTS FOR RESIDENTIAL 
        MORTGAGE ORIGINATORS AND SERVICERS.] 
           Subdivision 1.  [LICENSE APPLICATION FORM.] Application for 
        a residential mortgage originator or a residential mortgage 
        servicer license must be in writing, under oath, and on a form 
        obtained from and prescribed by the commissioner. 
           Subd. 2.  [APPLICATION CONTENTS.] The application must 
        contain the name and complete business address or addresses of 
        the license applicant.  If the license applicant is a 
        partnership, limited liability partnership, association, limited 
        liability company, corporation, or other form of business 
        organization, the application must contain the names and 
        complete business addresses of each partner, member, director, 
        and principal officer.  The application must also include a 
        description of the activities of the license applicant, in the 
        detail and for the periods the commissioner may require.  The 
        application must also include all of the following: 
           (a) an affirmation under oath that the applicant: 
           (1) will maintain competent staff and adequate staffing 
        levels, through direct employees or otherwise, to meet the 
        requirements of this chapter; 
           (2) will advise the commissioner of any material changes to 
        the information submitted in the most recent application within 
        ten days of the change; 
           (3) will advise the commissioner in writing immediately of 
        any bankruptcy petitions filed against or by the applicant or 
        licensee; 
           (4) is financially solvent and in compliance with net worth 
        requirements; 
           (5) complies with federal and state tax laws; 
           (6) complies with sections 345.31 to 345.60, the Minnesota 
        unclaimed property law; and 
           (7) is, or that a person in control of the license 
        applicant is, at least 18 years of age; 
           (b) information as to the mortgage lending, servicing, or 
        brokering experience of the applicant and persons in control of 
        the applicant; 
           (c) information as to criminal convictions, excluding 
        traffic violations, of persons in control of the license 
        applicant; 
           (d) whether a court of competent jurisdiction has found 
        that the applicant or persons in control of the applicant have 
        engaged in conduct evidencing gross negligence, fraud, 
        misrepresentation, or deceit in performing an act for which a 
        license is required under this chapter; 
           (e) whether the applicant or persons in control of the 
        applicant have been the subject of:  an order of suspension or 
        revocation, cease and desist order, or injunctive order, or 
        order barring involvement in an industry or profession issued by 
        this or another state or federal regulatory agency or by the 
        Secretary of Housing and Urban Development within the ten-year 
        period immediately preceding submission of the application; and 
           (f) other information required by the commissioner. 
           Sec. 7.  [58.07] [NET WORTH FOR ORIGINATORS AND SERVICERS.] 
           Subdivision 1.  [REQUIREMENT.] A licensee who is issued a 
        residential mortgage originator license shall maintain a minimum 
        net worth of $25,000.  A licensee who is issued a residential 
        mortgage servicer's license shall maintain a minimum net worth 
        of $250,000. 
           Subd. 2.  [COMPUTATION.] Net worth must be computed 
        according to generally accepted accounting principles and must 
        reflect any adjustment to net worth required by the Government 
        National Mortgage Association. 
           Subd. 3.  [CERTIFIED FINANCIALS.] The commissioner may 
        require the submission of financial data audited by an 
        independent certified public accountant when it is considered 
        necessary for an investigation or examination. 
           Sec. 8.  [58.08] [BONDS; LETTERS OF CREDIT.] 
           Subdivision 1.  [REQUIREMENT OF RESIDENTIAL MORTGAGE 
        ORIGINATORS.] A residential mortgage originator licensee shall 
        continuously maintain a surety bond or irrevocable letter of 
        credit in an amount not less than $50,000 in a form approved by 
        the commissioner, issued by an insurance company or bank 
        authorized to do so in this state.  The bond must be available 
        for the recovery of expenses, fines, and fees levied by the 
        commissioner under this chapter, and for losses or damages 
        incurred by borrowers as the result of a licensee's 
        noncompliance with the requirements of this chapter, sections 
        325D.43 to 325D.48, and 325F.67 to 325F.69, or breach of 
        contract. 
           The bond or irrevocable letter of credit must be submitted 
        with the originator's license application, and evidence of 
        continued coverage must be submitted with each renewal.  Any 
        change in the bond or letter of credit must be submitted for 
        approval by the commissioner, within ten days of its execution. 
           Subd. 2.  [REQUIREMENT OF RESIDENTIAL MORTGAGE 
        SERVICERS.] A residential mortgage servicer licensee shall 
        continuously maintain a surety bond or irrevocable letter of 
        credit in an amount not less than $100,000 in a form approved by 
        the commissioner, issued by an insurance company or bank 
        authorized to do so in this state.  The bond must be available 
        for the recovery of expenses, fines, and fees levied by the 
        commissioner under this chapter, and for losses or damages 
        incurred by borrowers or other aggrieved parties as the result 
        of a licensee's noncompliance with the requirements of this 
        chapter, sections 325D.43 to 325D.48, and 325F.67 to 325F.69, or 
        breach of contract relating to activities regulated by this 
        chapter.  
           The bond or irrevocable letter of credit must be submitted 
        with the servicer's license application and evidence of 
        continued coverage must be submitted with each renewal.  Any 
        change in the bond or letter of credit must be submitted for 
        approval by the commissioner, within ten days of its execution. 
           Subd. 3.  [EXEMPTION.] Subdivisions 1 and 2 do not apply to 
        mortgage originators or mortgage servicers who are approved as 
        seller/servicers by the Federal National Mortgage Association or 
        the Federal Home Loan Mortgage Corporation. 
           Sec. 9.  [58.09] [TERM OF LICENSE.] 
           Initial licenses for residential mortgage originators and 
        residential mortgage servicers issued under this chapter expire 
        on July 31, 2001, and are renewable on August 1, 2001, and on 
        August 1 of each odd-numbered year after that date.  A new 
        licensee whose license expires less than 12 months from the date 
        of issuance shall pay a fee equal to one-half the applicable 
        initial license fee set forth in section 58.10, subdivision 1, 
        clause (1) or (3). 
           Sec. 10.  [58.10] [FEES.] 
           Subdivision 1.  [AMOUNTS.] The following fees must be paid 
        to the commissioner: 
           (1) for an initial residential mortgage originator license, 
        $800; 
           (2) for a renewal license, $400; 
           (3) for an initial residential mortgage servicer's license, 
        $1,000; 
           (4) for a renewal license, $500; 
           (5) license service fees as set forth in chapter 45; and 
           (6) for a certificate of exemption, $100. 
           Subd. 2.  [FORFEITURE.] All fees are nonrefundable except 
        that an overpayment of a fee must be refunded upon proper 
        application. 
           Sec. 11.  [58.11] [LICENSE RENEWAL.] 
           Subdivision 1.  [TERM.] Licenses are renewable on August 1, 
        2001, and on August 1 of each odd-numbered year after that date. 
           Subd. 2.  [TIMELY RENEWAL.] (a) A person whose application 
        is properly and timely filed who has not received notice of 
        denial of renewal is considered approved for renewal and the 
        person may continue to transact business as a residential 
        mortgage originator or servicer whether or not the renewed 
        license has been received on or before August 1 of the renewal 
        year.  Application for renewal of a license is considered timely 
        filed if received by the commissioner by, or mailed with proper 
        postage and postmarked by, July 15 of the renewal year.  An 
        application for renewal is considered properly filed if made 
        upon forms duly executed and sworn to, accompanied by fees 
        prescribed by this chapter, and containing any information that 
        the commissioner requires. 
           (b) A person who fails to make a timely application for 
        renewal of a license and who has not received the renewal 
        license as of August 1 of the renewal year is unlicensed until 
        the renewal license has been issued by the commissioner and is 
        received by the person. 
           Subd. 3.  [CONTENTS OF RENEWAL APPLICATION.] Application 
        for the renewal of an existing license must contain the 
        information specified in section 58.06, subdivision 2; however, 
        only the requested information having changed from the most 
        recent prior application need be submitted. 
           Subd. 4.  [CANCELLATION.] A licensee ceasing an activity or 
        activities regulated by this chapter and desiring to no longer 
        be licensed shall so inform the commissioner in writing and, at 
        the same time, surrender the license and all other symbols or 
        indicia of licensure.  The licensee shall include a plan for the 
        withdrawal from regulated business, including a timetable for 
        the disposition of the business.  
           Sec. 12.  [58.12] [DENIAL, SUSPENSION, REVOCATION OF 
        LICENSES.] 
           Subdivision 1.  [POWERS OF COMMISSIONER.] (a) The 
        commissioner may by order take any or all of the following 
        actions: 
           (1) bar a person from engaging in residential mortgage 
        origination or servicing; 
           (2) deny, suspend, or revoke a residential mortgage 
        originator or a servicer license; 
           (3) censure a licensee; 
           (4) impose a civil penalty as provided for in section 
        45.027, subdivision 6; or 
           (5) revoke an exemption or certificate of exemption.  
           (b) In order to take the action in paragraph (a), the 
        commissioner must find:  
           (1) that the order is in the public interest; and 
           (2) that the residential mortgage originator, servicer, 
        applicant, or other person, an officer, director, partner, 
        employee, or agent or any person occupying a similar status or 
        performing similar functions, or a person in control of the 
        originator, servicer, applicant, or other person has: 
           (i) violated any provision of this chapter or rule or order 
        under this chapter; 
           (ii) filed an application for a license that is incomplete 
        in any material respect or contains a statement that, in light 
        of the circumstances under which it is made, is false or 
        misleading with respect to a material fact; 
           (iii) failed to maintain compliance with the affirmations 
        made under section 58.06, subdivision 2; 
           (iv) violated a standard of conduct or engaged in a 
        fraudulent, coercive, deceptive, or dishonest act or practice, 
        whether or not the act or practice involves the residential 
        mortgage lending business; 
           (v) engaged in an act or practice, whether or not the act 
        or practice involves the business of making a residential 
        mortgage loan, that demonstrates untrustworthiness, financial 
        irresponsibility, or incompetence; 
           (vi) pled guilty, with or without explicitly admitting 
        guilt, pled nolo contendere, or been convicted of a felony, 
        gross misdemeanor, or a misdemeanor involving moral turpitude; 
           (vii) paid a civil penalty or been the subject of 
        disciplinary action by the commissioner, or an order of 
        suspension or revocation, cease and desist order or injunction 
        order or order barring involvement in an industry or profession 
        issued by this or any other state or federal regulatory agency 
        or by the Secretary of Housing and Urban Development; 
           (viii) been found by a court of competent jurisdiction to 
        have engaged in conduct evidencing gross negligence, fraud, 
        misrepresentation, or deceit; 
           (ix) refused to cooperate with an investigation or 
        examination by the commissioner; 
           (x) failed to pay any fee or assessment imposed by the 
        commissioner; or 
           (xi) failed to comply with state and federal tax 
        obligations. 
           Subd. 2.  [ORDERS OF THE COMMISSIONER.] To begin a 
        proceeding under this section, the commissioner shall issue an 
        order requiring the subject of the proceeding to show cause why 
        action should not be taken against the person according to this 
        section.  The order must be calculated to give reasonable notice 
        of the time and place for the hearing and must state the reasons 
        for entry of the order.  The commissioner may by order summarily 
        suspend a license or exemption or summarily bar a person from 
        engaging in residential mortgage origination or servicing, 
        pending a final determination of an order to show cause.  If a 
        license or exemption is summarily suspended or if the person is 
        summarily barred from any involvement in the residential 
        mortgage loan business, pending final determination of an order 
        to show cause, a hearing on the merits must be held within 30 
        days of the issuance of the order of summary suspension or bar.  
        All hearings must be conducted under chapter 14.  After the 
        hearing, the commissioner shall enter an order disposing of the 
        matter as the facts require.  If the subject of the order fails 
        to appear at a hearing after having been duly notified of it, 
        the person is considered in default, and the proceeding may be 
        determined against the subject of the order upon consideration 
        of the order to show cause, the allegations of which may be 
        considered to be true. 
           Subd. 3.  [ACTIONS AGAINST LAPSED LICENSE.] If a license or 
        certificate of exemption lapses, is surrendered, withdrawn, 
        terminated, or otherwise becomes ineffective, the commissioner 
        may institute a proceeding under this subdivision within two 
        years after the license or certificate of exemption was last 
        effective and enter a revocation or suspension order as of the 
        last date on which the license or certificate of exemption was 
        in effect, and may impose a civil penalty as provided for in 
        this section or section 45.027, subdivision 6. 
           Sec. 13.  [58.13] [STANDARDS OF CONDUCT.] 
           Subdivision 1.  [GENERALLY.] No person acting as a 
        residential mortgage originator or servicer, including a person 
        required to be licensed under this chapter, and no person exempt 
        from the licensing requirements of this chapter under section 
        58.04, shall: 
           (1) fail to maintain a trust account to hold trust funds 
        received in connection with a residential mortgage loan; 
           (2) fail to deposit all trust funds into a trust account 
        within three business days of receipt; commingle trust funds 
        with funds belonging to the licensee or exempt person; or use 
        trust account funds for any purpose other than that for which 
        they are received; 
           (3) unreasonably delay the processing of a residential 
        mortgage loan application, or the closing of a residential 
        mortgage loan.  For purposes of this clause, evidence of 
        unreasonable delay includes but is not limited to those factors 
        identified in section 47.206, subdivision 7, clause (d); 
           (4) fail to disburse funds according to its contractual or 
        statutory obligations; 
           (5) fail to perform in conformance with its written 
        agreements with borrowers, investors, other licensees, or exempt 
        persons; 
           (6) charge a fee for a product or service where the product 
        or service is not actually provided, or misrepresent the amount 
        charged by or paid to a third party for a product or service; 
           (7) fail to comply with sections 345.31 to 345.60, the 
        Minnesota unclaimed property law; 
           (8) violate any provision of any other applicable state or 
        federal law regulating residential mortgage loans including, 
        without limitation, sections 47.20 to 47.208; 
           (9) make or cause to be made, directly or indirectly, any 
        false, deceptive, or misleading statement or representation in 
        connection with a residential loan transaction including, 
        without limitation, a false, deceptive, or misleading statement 
        or representation regarding the borrower's ability to qualify 
        for any mortgage product; 
           (10) conduct residential mortgage loan business under any 
        name other than that under which the license or certificate of 
        exemption was issued; 
           (11) compensate, whether directly or indirectly, coerce or 
        intimidate an appraiser for the purpose of influencing the 
        independent judgment of the appraiser with respect to the value 
        of real estate that is to be covered by a residential mortgage 
        or is being offered as security according to an application for 
        a residential mortgage loan; 
           (12) issue any document indicating conditional 
        qualification or conditional approval for a residential mortgage 
        loan, unless the document also clearly indicates that final 
        qualification or approval is not guaranteed, and may be subject 
        to additional review; 
           (13) make or assist in making any residential mortgage loan 
        with the intent that the loan will not be repaid and that the 
        residential mortgage originator will obtain title to the 
        property through foreclosure; 
           (14) provide or offer to provide for a borrower, any 
        brokering or lending services under an arrangement with a person 
        other than a licensee or exempt person, provided that a person 
        may rely upon a written representation by the residential 
        mortgage originator that it is in compliance with the licensing 
        requirements of this chapter; 
           (15) claim to represent a licensee or exempt person, unless 
        the person is an employee of the licensee or exempt person or 
        unless the person has entered into a written agency agreement 
        with the licensee or exempt person; 
           (16) fail to comply with the recordkeeping and notification 
        requirements identified in section 58.14 or fail to abide by the 
        affirmations made on the application for licensure; 
           (17) represent that the licensee or exempt person is acting 
        as the borrower's agent after providing the non-agency 
        disclosure required by section 58.15, unless the disclosure is 
        retracted and the licensee or exempt person complies with all of 
        the requirements of section 58.16; 
           (18) make, provide, or arrange for a residential mortgage 
        loan that is of a lower investment grade if the borrower's 
        credit score or, if the originator does not utilize credit 
        scoring or if a credit score is unavailable, then comparable 
        underwriting data, indicates that the borrower may qualify for a 
        residential mortgage loan, available from or through the 
        originator, that is of a higher investment grade, unless the 
        borrower is informed that the borrower may qualify for a higher 
        investment grade loan with a lower interest rate and/or lower 
        discount points, and consents in writing to receipt of the lower 
        investment grade loan. 
           For purposes of this section, "investment grade" refers to 
        a system of categorizing residential mortgage loans in which the 
        loans are:  (i) commonly referred to as "prime" or "subprime;" 
        (ii) commonly designated by an alphabetical character with "A" 
        being the highest investment grade; and (iii) are distinguished 
        by interest rate or discount points or both charged to the 
        borrower, which vary according to the degree of perceived risk 
        of default based on factors such as the borrower's credit, 
        including credit score and credit patterns, income and 
        employment history, debt ratio, loan-to-value ratio, and prior 
        bankruptcy or foreclosure; 
           (19) make, publish, disseminate, circulate, place before 
        the public, or cause to be made, directly or indirectly, any 
        advertisement or marketing materials of any type, or any 
        statement or representation relating to the business of 
        residential mortgage loans that is false, deceptive, or 
        misleading; 
           (20) advertise loan types or terms that are not available 
        from or through the licensee or exempt person on the date 
        advertised, or on the date specified in the advertisement.  For 
        purposes of this clause, advertisement includes, but is not 
        limited to, a list of sample mortgage terms, including interest 
        rates, discount points, and closing costs provided by licensees 
        or exempt persons to a print or electronic medium that presents 
        the information to the public; and 
           (21) use or employ phrases, pictures, return addresses, 
        geographic designations, or other means that create the 
        impression, directly or indirectly, that a licensee or other 
        person is a governmental agency, or is associated with, 
        sponsored by, or in any manner connected to, related to, or 
        endorsed by a governmental agency, if that is not the case. 
           Subd. 2.  [STATEMENTS, REPRESENTATIONS, OR ADVERTISING.] A 
        statement, representation, or advertisement is deceptive or 
        misleading if it has the capacity or tendency to deceive or 
        mislead a borrower or potential borrower.  The commissioner 
        shall consider the following factors in deciding whether a 
        statement, representation, or advertisement is deceptive or 
        misleading:  the overall impression that the statement, 
        representation, or advertisement reasonably creates; the 
        particular type of audience to which it is directed; and whether 
        it may be reasonably comprehended by the segment of the public 
        to which it is directed.  
           Sec. 14.  [58.14] [RECORDKEEPING AND NOTIFICATION 
        REQUIREMENTS.] 
           Subdivision 1.  [CHANGE IN LICENSING DATA.] A licensee must 
        advise the commissioner of any material changes to the 
        information submitted in the most recent license application 
        within ten days of the change. 
           Subd. 2.  [NOTICE OF BANKRUPTCY PETITIONS.] A licensee or 
        person who has been issued a certificate of exemption must 
        advise the commissioner in writing immediately of any bankruptcy 
        petitions filed against or by the licensee. 
           Subd. 3.  [DOCUMENTATION AND RESOLUTION OF COMPLAINTS.] A 
        licensee or exempt person must investigate and attempt to 
        resolve complaints made regarding acts or practices subject to 
        the provisions of this chapter.  If a complaint is received in 
        writing, the licensee or exempt person must maintain a file 
        containing all materials relating to the complaint and 
        subsequent investigation for a period of 26 months. 
           Subd. 4.  [TRUST ACCOUNT RECORDS FOR MORTGAGE ORIGINATORS.] 
        A residential mortgage originator shall keep and maintain for 26 
        months a record of all trust funds, sufficient to identify the 
        transaction, date and source of receipt, and date and 
        identification of disbursement. 
           Subd. 5.  [RECORD RETENTION.] A licensee or exempt person 
        must keep and maintain for 26 months the business records 
        regarding residential mortgage loans applied for, originated, or 
        serviced in the course of its business. 
           Sec. 15.  [58.15] [DISCLOSURE REQUIREMENTS FOR RESIDENTIAL 
        MORTGAGE ORIGINATORS.] 
           Subdivision 1.  [NON-AGENCY DISCLOSURE.] If a residential 
        mortgage originator or exempt person does not contract or offer 
        to contract to act as an agent of a borrower, or accept an 
        advance fee, it must, within 72 hours of accepting an 
        application for a residential mortgage loan, provide the 
        borrower with a written disclosure as provided in subdivision 2. 
           Subd. 2.  [FORM AND CONTENT REQUIREMENTS.] The disclosure 
        must be a separate document, 8-1/2 inches by 11 inches, must be 
        signed by the borrower and must contain the following statement 
        in 14-point boldface print: 
           [ORIGINATOR] IS NOT ACTING AS YOUR AGENT IN CONNECTION WITH 
           OBTAINING A RESIDENTIAL MORTGAGE LOAN.  WHILE WE SEEK TO 
           ASSIST YOU IN MEETING YOUR FINANCIAL NEEDS, WE CANNOT 
           GUARANTEE THE LOWEST OR BEST TERMS AVAILABLE IN THE MARKET. 
           Subd. 3.  [ELECTRONIC APPLICATION DISCLOSURE REQUIREMENT.] 
        In case of an electronic residential mortgage application, the 
        disclosure requirements of this section may be satisfied by 
        providing the disclosure statement as a separate screen if the 
        disclosure must be acknowledged by the borrower before an 
        application is accepted.  
           Subd. 4.  [EXEMPTION FROM DISCLOSURE REQUIREMENT.] If the 
        Department of Housing and Urban Development adopts and 
        implements a disclosure requirement for persons offering 
        mortgage origination services that the commissioner determines 
        to be substantially similar to the disclosure required in 
        subdivision 2, licensees and exempt persons complying with the 
        HUD disclosure shall be considered to have complied with the 
        requirements of subdivisions 1 and 2. 
           Sec. 16.  [58.16] [RESIDENTIAL MORTGAGE ORIGINATORS; 
        STANDARDS OF CONDUCT FOR AGENCY OR ADVANCE FEE TRANSACTIONS.] 
           Subdivision 1.  [COMPLIANCE.] Residential mortgage 
        originators who solicit or receive an advance fee in exchange 
        for assisting a borrower located in this state in obtaining a 
        loan secured by a lien on residential real estate, or who offer 
        to act as an agent of the borrower located in this state in 
        obtaining a loan secured by a lien on residential real estate 
        shall be considered to have created a fiduciary relationship 
        with the borrower and shall comply with the requirements of 
        subdivisions 2 to 7. 
           Subd. 2.  [CONTRACT PROVISIONS.] A residential mortgage 
        originator who engages in the activities described in 
        subdivision 1 shall enter into a written contract with each 
        borrower and shall provide a copy of the written contract to 
        each borrower at or before the time of receipt of any fee or 
        valuable consideration paid for mortgage origination services.  
        The written contract must: 
           (1) specifically describe the services to be provided by 
        the residential mortgage originator and if the originator 
        collects an advance fee, the dates by which the services will be 
        performed; 
           (2) specifically identify whether the residential mortgage 
        originator may receive compensation from sources other than the 
        borrower in connection with the loan transaction; 
           (3) state the total amount of commission or compensation 
        that the borrower agrees to pay for the residential mortgage 
        originator's services, or the basis on which the compensation 
        will be computed; 
           (4) state the maximum rate of interest to be charged on any 
        residential mortgage loan obtained; 
           (5) contain a statement that notifies the borrower of the 
        right to cancel the contract according to subdivision 3; and 
           (6) disclose, with respect to the 12-month period ending 
        ten business days before the date of the contract in question, 
        the percentage of the mortgage originator's customers for whom 
        loans have actually been funded as a result of the residential 
        mortgage originator's services.  
           (c) If an advance fee is solicited or received the contract 
        must also: 
           (1) identify the trust account into which the fees or 
        consideration will be deposited; 
           (2) set forth the circumstances under which the residential 
        mortgage originator will be entitled to disbursement from the 
        trust account; and 
           (3) set forth the circumstances under which the borrower 
        will be entitled to a refund of all or part of the fee. 
           Subd. 3.  [CANCELLATION.] A borrower who pays an advance 
        fee, or who enters into a contract for residential mortgage 
        services as set forth in subdivisions 1 and 2, has an 
        unconditional right to rescind the contract for residential 
        mortgage origination services at any time until midnight of the 
        third business day after the day on which the contract is 
        signed.  Cancellation is evidenced by the borrower giving 
        written notice of cancellation to the residential mortgage 
        originator at the address stated in the contract.  Notice of 
        cancellation, if given by mail, is effective upon deposit in a 
        mailbox properly addressed to the originator with postage 
        prepaid.  Notice of cancellation need not take a particular form 
        and is sufficient if it indicates by any form of written 
        expression the intention of the borrower not be bound by the 
        contract.  No act of a borrower or a residential mortgage 
        originator is effective to waive the right to rescind as 
        provided in this subdivision. 
           Subd. 4.  [TRUST ACCOUNT.] The residential mortgage 
        originator shall deposit in a trust account within three 
        business days all fees received before the time a loan is 
        actually funded.  The trust account must be in a financial 
        institution located within the state of Minnesota. 
           Subd. 5.  [RECORDS.] The residential mortgage originator 
        shall maintain a separate record of all fees received for 
        services performed or to be performed as a residential mortgage 
        originator.  Each record must set forth the date the funds are 
        received; the person from whom the funds are received; the 
        amount received; the date of deposit in the escrow account, the 
        account number, the date the funds are disbursed and the check 
        number of the disbursement, and a description of each 
        disbursement and the justification for the disbursement. 
           Subd. 6.  [MONTHLY STATEMENT.] The residential mortgage 
        originator shall provide to each borrower at least monthly a 
        detailed written accounting of all disbursements of the 
        borrower's funds from the trust account. 
           Subd. 7.  [DISCLOSURE OF LENDERS.] The residential mortgage 
        originator shall provide to each borrower at the expiration of 
        the contract a list of the lenders or loan sources to whom loan 
        applications were submitted on behalf of the borrower. 
           Sec. 17.  [58.17] [SCOPE OF CHAPTER.] 
           Subdivision 1.  [RESIDENTIAL MORTGAGE ORIGINATOR SERVICES.] 
        This chapter applies when an offer of residential mortgage 
        origination services is made to a borrower in this state or when 
        the residential mortgage originator is located in this state. 
           Subd. 2.  [RESIDENTIAL MORTGAGE SERVICING.] The provisions 
        of this chapter regarding residential mortgage servicing apply 
        when the borrower is a resident of this state. 
           Subd. 3.  [OFFER.] For purposes of this section, an "offer" 
        means any advertisement or solicitation of any type, including 
        an advertisement or solicitation in newspapers and magazines, by 
        mail, by telephone, on television, on radio, or via the internet 
        or any other electronic medium of any kind, for residential 
        mortgage originator services.  The term "offer" excludes an 
        advertisement or solicitation that specifically states that the 
        services are not available to Minnesota residents. 
           Sec. 18.  [REPEALER.] 
           Minnesota Statutes 1996, section 82.175, is repealed. 
           Sec. 19.  [EFFECTIVE DATES.] 
           Sections 1 to 11 and 17 are effective July 1, 1998.  
        Sections 12 to 16 are effective July 1, 1999. 
                                   ARTICLE 2 
                               CONFORMING CHANGES 
           Section 1.  Minnesota Statutes 1996, section 47.206, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [DEFINITIONS.] For the purposes of this 
        section, the terms defined in this subdivision have the meanings 
        given them. 
           (a) "Lender" means a person or entity referred to in 
        section 47.20, subdivision 1, a credit union, or a person making 
        a conventional loan as defined under section 47.20, subdivision 
        2, clause (3), or cooperative apartment loan as defined under 
        section 47.20, subdivision 2, clause (4), except that 
        conventional loans or cooperative apartment loans include any 
        loan or advance of credit in an original principal balance of 
        less than $200,000.  "Lender" also means a mortgage broker as 
        defined in paragraph (e). 
           (b) "Loan" means loans and advances of credit authorized 
        under section 47.20, subdivision 1, clauses (1) to (4), and 
        conventional loans as defined under section 47.20, subdivision 
        2, clause (3), or cooperative apartment loans as defined under 
        section 47.20, subdivision 2, clause (4), except that 
        conventional loans or cooperative apartment loans also include 
        all loans and advances of credit in an original principal 
        balance of less than $200,000.  "Loan" does not include a loan 
        or advance of credit secured by a mortgage upon real property 
        containing more than one residential unit or secured by a 
        security interest in shares of more than one residential unit in 
        a building owned or leased by a cooperative apartment 
        corporation. 
           (c) "Borrower" means a natural person who has submitted an 
        application for a loan to a lender. 
           (d) "Interest rate or discount point agreement" or 
        "agreement" means a contract between a lender and a borrower 
        under which the lender agrees, subject to the lender's 
        underwriting and approval requirements, to make a loan at a 
        specified interest rate or number of discount points, or both, 
        and the borrower agrees to make a loan on those terms.  The term 
        also includes an offer by a lender that is accepted by a 
        borrower under which the lender promises to guarantee or lock in 
        an interest rate or number of discount points, or both, for a 
        specific period of time. 
           (e) "Mortgage broker" includes: 
           (1) a person who negotiates mortgage loans as described in 
        section 82.17, subdivision 4, clause (b), if the person does not 
        qualify for the exception set forth in section 82.18, clause 
        (o); performs or offers to perform the activities of "mortgage 
        brokering" or "soliciting, placing, or negotiating a residential 
        mortgage loan" as defined by chapter 58; or 
           (2) the employees of the a person; or 
           (3) any person or firm which holds itself out to the public 
        as a mortgage broker, regardless of whether the person or firm 
        holds a limited broker's license pursuant to section 82.20, 
        subdivision 13 described in clause (1). 
           Sec. 2.  Minnesota Statutes 1996, section 82.17, 
        subdivision 4, is amended to read: 
           Subd. 4.  "Real estate broker" or "broker" means any person 
        who: 
           (a) for another and for commission, fee, or other valuable 
        consideration or with the intention or expectation of receiving 
        the same directly or indirectly lists, sells, exchanges, buys or 
        rents, manages, or offers or attempts to negotiate a sale, 
        option, exchange, purchase or rental of an interest or estate in 
        real estate, or advertises or holds out as engaged in these 
        activities; 
           (b) for another and for commission, fee, or other valuable 
        consideration or with the intention or expectation of receiving 
        the same directly or indirectly negotiates or offers or attempts 
        to negotiate a loan, secured or to be secured by a mortgage or 
        other encumbrance on real estate, which is not a residential 
        mortgage loan as defined by section 58.02, subdivision 18; 
           (c) for another and for commission, fee, or other valuable 
        consideration or with the intention or expectation of receiving 
        the same directly or indirectly lists, sells, exchanges, buys, 
        rents, manages, offers or attempts to negotiate a sale, option, 
        exchange, purchase or rental of any business opportunity or 
        business, or its good will, inventory, or fixtures, or any 
        interest therein; 
           (d) for another and for commission, fee, or other valuable 
        consideration or with the intention or expectation of receiving 
        the same directly or indirectly offers, sells or attempts to 
        negotiate the sale of property that is subject to the 
        registration requirements of chapter 83, concerning subdivided 
        land; 
           (e) for another and for commission, fee, or other valuable 
        consideration or with the intention or expectation of receiving 
        the same, promotes the sale of real estate by advertising it in 
        a publication issued primarily for this purpose, if the person:  
           (1) negotiates on behalf of any party to a transaction; 
           (2) disseminates any information regarding the property to 
        any party or potential party to a transaction subsequent to the 
        publication of the advertisement, except that in response to an 
        initial inquiry from a potential purchaser, the person may 
        forward additional written information regarding the property 
        which has been prepared prior to the publication by the seller 
        or broker or a representative of either; 
           (3) counsels, advises, or offers suggestions to the seller 
        or a representative of the seller with regard to the marketing, 
        offer, sale, or lease of the real estate, whether prior to or 
        subsequent to the publication of the advertisement; 
           (4) counsels, advises, or offers suggestions to a potential 
        buyer or a representative of the seller with regard to the 
        purchase or rental of any advertised real estate; or 
           (5) engages in any other activity otherwise subject to 
        licensure under this chapter; 
           (f) engages wholly or in part in the business of selling 
        real estate to the extent that a pattern of real estate sales is 
        established, whether or not the real estate is owned by the 
        person.  A person shall be presumed to be engaged in the 
        business of selling real estate if the person engages as 
        principal in five or more transactions during any 12-month 
        period, unless the person is represented by a licensed real 
        estate broker or salesperson;. 
           (g) offers or makes more than five loans secured by real 
        estate during any 12-month period and who is not a bank, savings 
        bank, mutual savings bank, or savings association organized 
        under the laws of this state or the United States, trust 
        company, trust company acting as a fiduciary, or other financial 
        institution subject to the supervision of the commissioner of 
        commerce, or mortgagee or lender approved or certified by the 
        secretary of housing and urban development or approved or 
        certified by the administrator of veterans affairs, or approved 
        or certified by the administrator of the Farmers Home 
        Administration, or approved or certified by the Federal Home 
        Loan Mortgage Corporation, or approved or certified by the 
        Federal National Mortgage Association. 
           Sec. 3.  Minnesota Statutes 1996, section 82.18, is amended 
        to read: 
           82.18 [EXCEPTIONS.] 
           Unless a person is licensed or otherwise required to be 
        licensed under this chapter, the term real estate broker does 
        not include: 
           (a) a licensed practicing attorney if the attorney complies 
        in all respects with the trust account provisions of this 
        chapter; 
           (b) a receiver, trustee, administrator, guardian, executor, 
        or other person appointed by or acting under the judgment or 
        order of any court; 
           (c) any person owning and operating a cemetery and selling 
        lots therein solely for use as burial plots; 
           (d) any custodian, janitor, or employee of the owner or 
        manager of a residential building who leases residential units 
        in the building; 
           (e) any bank, trust company, savings association, 
        industrial loan and thrift company, regulated lender under 
        chapter 56, public utility, or land mortgage or farm loan 
        association organized under the laws of this state or the United 
        States, when engaged in the transaction of business within the 
        scope of its corporate powers as provided by law; 
           (f) public officers while performing their official duties; 
           (g) employees of persons enumerated in clauses (b), (e), 
        and (f), when engaged in the specific performance of their 
        duties; 
           (h) any person who acts as an auctioneer bonded in 
        conformity with section 330.02, when that person is engaged in 
        the specific performance of duties as an auctioneer, and when 
        that person has been employed to auction real estate by a person 
        licensed under this chapter or when the auctioneer has engaged a 
        licensed attorney to supervise the real estate transaction; 
           (i) any person who acquires real estate for the purpose of 
        engaging in and does engage in, or who is engaged in the 
        business of constructing residential, commercial or industrial 
        buildings for the purpose of resale if no more than 25 such 
        transactions occur in any 12-month period and the person 
        complies with section 82.24; 
           (j) any person who is licensed as a securities 
        broker-dealer or is licensed as a securities agent representing 
        a broker-dealer pursuant to chapter 80A and who offers to sell 
        or sells an interest or estate in real estate which is a 
        security as defined in section 80A.14, subdivision 18, and is 
        registered or exempt from registration or part of a transaction 
        exempt from registration pursuant to chapter 80A, when acting 
        solely as an incident to the sale of these securities; 
           (k) any person who offers to sell or sells a business 
        opportunity which is a franchise registered pursuant to chapter 
        80C, when acting solely to sell the franchise; 
           (l) any person who contracts with or solicits on behalf of 
        a provider a contract with a resident or prospective resident to 
        provide continuing care in a facility, pursuant to the 
        Continuing Care Facility Disclosure and Rehabilitation Act 
        (chapter 80D), when acting solely as incident to the contract; 
           (m) any broker-dealer or agent of a broker-dealer when 
        participating in a transaction in which all or part of a 
        business opportunity or business, including any interest 
        therein, is conveyed or acquired pursuant to an asset purchase, 
        merger, exchange of securities, or other business combination, 
        if the agent or broker-dealer is licensed pursuant to chapter 
        80A; 
           (n) an accountant acting incident to the practice of the 
        accounting profession if the accountant complies in all respects 
        with the trust account provisions of this chapter;. 
           (o) a person who negotiates mortgage loans as described in 
        section 82.17, subdivision 4, clause (b), if the person is the 
        actual lender on at least 80 percent of all mortgage lending and 
        brokering transactions conducted by the person and if the person 
        is also a lender:  (1) approved or certified by the secretary of 
        housing and urban development; (2) approved or certified by the 
        administrator of Veterans Affairs; (3) approved or certified by 
        the Administrator of the Farmers Home Administration; (4) 
        approved or certified by the Federal Home Loan Mortgage 
        Corporation; or (5) approved or certified by the Federal 
        National Mortgage Association. 
           Sec. 4.  Minnesota Statutes 1996, section 82.27, 
        subdivision 1, is amended to read: 
           Subdivision 1.  The commissioner may by order deny, suspend 
        or revoke any license or may censure a licensee if the 
        commissioner finds (1) that the order is in the public interest, 
        and (2) that the applicant or licensee or, in the case of a 
        broker, any officer, director, partner, employee or agent or any 
        person occupying a similar status or performing similar 
        functions, or any person directly or indirectly controlling the 
        broker or closing agent or controlled by the broker or closing 
        agent: 
           (a) has filed an application for a license which is 
        incomplete in any material respect or contains any statement 
        which, in light of the circumstances under which it is made, is 
        false or misleading with respect to any material fact; 
           (b) has engaged in a fraudulent, deceptive, or dishonest 
        practice; 
           (c) is permanently or temporarily enjoined by any court of 
        competent jurisdiction from engaging in or continuing any 
        conduct or practice involving any aspect of the real estate 
        business; 
           (d) has failed to reasonably supervise brokers, 
        salespersons, or closing agents so as to cause injury or harm to 
        the public; 
           (e) has violated or failed to comply with any provision of 
        this chapter or any rule or order under this chapter; 
           (f) has, in the conduct of the licensee's affairs under the 
        license, been shown to be incompetent, untrustworthy, or 
        financially irresponsible; or 
           (g) has acted on behalf of any party to a transaction, 
        where the licensee has a conflict of interest that may affect 
        the licensee's ability to represent that party, without the 
        knowledge and consent of the party; or 
           (h) has, while performing residential mortgage activities 
        regulated under chapter 58 violated any provision of chapter 58. 
           Sec. 5.  [EFFECTIVE DATE.] 
           Sections 1 to 4 are effective August 1, 1999. 
           Presented to the governor March 27, 1998 
           Signed by the governor March 31, 1998, 10:58 a.m.

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