1.1                          A bill for an act 
  1.2             relating to financial institutions; regulating 
  1.3             notices; electronic financial terminals, mergers with 
  1.4             subsidiaries, the powers and duties of the 
  1.5             commissioner of commerce, reporting and records 
  1.6             requirements, lending powers, the powers and duties of 
  1.7             institutions, detached facilities, interstate banking, 
  1.8             and pawnbrokers; making technical changes; amending 
  1.9             Minnesota Statutes 1994, sections 46.04, subdivision 
  1.10            1, and by adding a subdivision; 46.041, subdivision 4; 
  1.11            46.046, subdivision 1; 46.048, subdivision 1, and by 
  1.12            adding subdivisions; 47.10, subdivision 3; 47.11; 
  1.13            47.20, subdivisions 5 and 10; 47.28, subdivision 1; 
  1.14            47.52; 47.56; 47.58, subdivision 2; 47.61, subdivision 
  1.15            3; 47.62, subdivisions 2, 3, and by adding 
  1.16            subdivisions; 47.67; 47.69, subdivisions 3 and 5; 
  1.17            47.78; 48.16; 48.194; 48.24, subdivision 5; 48.475, 
  1.18            subdivision 3; 48.48, subdivisions 1 and 2; 48.49; 
  1.19            48.61, subdivision 7, and by adding a subdivision; 
  1.20            48.65; 48.90, subdivision 1; 48.91; 48.92, 
  1.21            subdivisions 1, 2, 6, 7, 8, 9, and by adding a 
  1.22            subdivision; 48.93, subdivisions 1, 3, and 4; 48.96; 
  1.23            48.99, subdivision 1; 49.01, subdivision 3; 51A.02, 
  1.24            subdivisions 6, 26, and 40; 51A.19, subdivision 9; 
  1.25            51A.50; 51A.58; 52.04, subdivision 2a; 52.05, 
  1.26            subdivision 2; 53.015, subdivision 4; 53.04, 
  1.27            subdivisions 3a, 3c, 4a, and 5a; 53.09, subdivisions 
  1.28            1, 2, and by adding a subdivision; 56.11; 56.12; 
  1.29            56.125, subdivisions 1, 2, and 3; 56.131, subdivisions 
  1.30            1, 2, 4, and 6; 56.132; 56.14; 56.155, subdivision 1; 
  1.31            56.17; 59A.06, subdivision 2; 61A.09, subdivision 3; 
  1.32            62B.04, subdivision 1; 62B.08, subdivision 2; 300.20, 
  1.33            subdivision 1; 325F.91, subdivision 2; 325G.02, 
  1.34            subdivision 1; 327B.04, subdivision 1; 327B.09, 
  1.35            subdivision 1; and 332.23, subdivisions 1 and 2; 
  1.36            proposing coding for new law in Minnesota Statutes, 
  1.37            chapters 45; 47; 48; 51A; 52; 168; 325G; and 334; 
  1.38            repealing Minnesota Statutes 1994, sections 46.03; 
  1.39            48.1585; 48.512, subdivision 6; 48.611; 48.97; 48.991; 
  1.40            and 51A.385. 
  1.41  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.42                             ARTICLE 1 
  1.43            FINANCIAL INSTITUTIONS TECHNICAL CORRECTIONS 
  2.1      Section 1.  [45.014] [SEAL OF DEPARTMENT OF COMMERCE.] 
  2.2      The commissioner of commerce shall devise a seal for 
  2.3   official use as the seal of the department of commerce.  The 
  2.4   seal must be capable of being legibly reproduced under 
  2.5   photographic methods.  A description of the seal, and a copy of 
  2.6   it, must be filed in the office of the secretary of state. 
  2.7      Sec. 2.  Minnesota Statutes 1994, section 46.04, 
  2.8   subdivision 1, is amended to read: 
  2.9      Subdivision 1.  The commissioner of commerce, referred to 
  2.10  in chapters 46 to ~~59~~ 59A, and sections 332.12 to 332.29, as the 
  2.11  commissioner, is vested with all the powers, authority, and 
  2.12  privileges which, prior to the enactment of Laws 1909, chapter 
  2.13  201, were conferred by law upon the public examiner, and shall 
  2.14  take over all duties in relation to state banks, savings banks, 
  2.15  trust companies, savings associations, and other financial 
  2.16  institutions within the state which, prior to the enactment of 
  2.17  chapter 201, were imposed upon the public examiner.  The 
  2.18  commissioner of commerce shall exercise a constant supervision, 
  2.19  either personally or through the examiners herein provided for, 
  2.20  over the books and affairs of all state banks, savings banks, 
  2.21  trust companies, savings associations, credit unions, industrial 
  2.22  loan and thrift companies, and other financial institutions 
  2.23  doing business within this state; and shall, through examiners, 
  2.24  examine each financial institution at least once every 18 
  2.25  calendar months.  In satisfying this examination requirement, 
  2.26  the commissioner may accept reports of examination prepared by a 
  2.27  federal agency having comparable supervisory powers and 
  2.28  examination procedures.  With the exception of industrial loan 
  2.29  and thrift companies which do not have deposit liabilities and 
  2.30  licensed regulated lenders, it shall be the principal purpose of 
  2.31  these examinations to inspect and verify the assets and 
  2.32  liabilities of each and so far investigate the character and 
  2.33  value of the assets of each institution as to determine with 
  2.34  reasonable certainty that the values are correctly carried on 
  2.35  its books.  Assets and liabilities shall be verified in 
  2.36  accordance with methods of procedure which the commissioner may 
  3.1   determine to be adequate to carry out the intentions of this 
  3.2   section.  It shall be the further purpose of these examinations 
  3.3   to assess the adequacy of capital protection and the capacity of 
  3.4   the institution to meet usual and reasonably anticipated deposit 
  3.5   withdrawals and other cash commitments without resorting to 
  3.6   excessive borrowing or sale of assets at a significant loss, and 
  3.7   to investigate each institution's compliance with applicable 
  3.8   laws and rules.  Based on the examination findings, the 
  3.9   commissioner shall make a determination as to whether the 
  3.10  institution is being operated in a safe and sound manner.  None 
  3.11  of the above provisions limits the commissioner in making 
  3.12  additional examinations as deemed necessary or advisable.  The 
  3.13  commissioner shall investigate the methods of operation and 
  3.14  conduct of these institutions and their systems of accounting, 
  3.15  to ascertain whether these methods and systems are in accordance 
  3.16  with law and sound banking principles.  The commissioner may 
  3.17  make requirements as to records as deemed necessary to 
  3.18  facilitate the carrying out of the commissioner's duties and to 
  3.19  properly protect the public interest.  The commissioner may 
  3.20  examine, or cause to be examined by these examiners, on oath, 
  3.21  any officer, director, trustee, owner, agent, clerk, customer, 
  3.22  or depositor of any financial institution touching the affairs 
  3.23  and business thereof, and may issue, or cause to be issued by 
  3.24  the examiners, subpoenas, and administer, or cause to be 
  3.25  administered by the examiners, oaths.  In case of any refusal to 
  3.26  obey any subpoena issued under the commissioner's direction, the 
  3.27  refusal may at once be reported to the district court of the 
  3.28  district in which the bank or other financial institution is 
  3.29  located, and this court shall enforce obedience to these 
  3.30  subpoenas in the manner provided by law for enforcing obedience 
  3.31  to subpoenas of the court.  In all matters relating to official 
  3.32  duties, the commissioner of commerce has the power possessed by 
  3.33  courts of law to issue subpoenas and cause them to be served and 
  3.34  enforced, and all officers, directors, trustees, and employees 
  3.35  of state banks, savings banks, trust companies, savings 
  3.36  associations, and other financial institutions within the state, 
  4.1   and all persons having dealings with or knowledge of the affairs 
  4.2   or methods of these institutions, shall afford reasonable 
  4.3   facilities for these examinations, make returns and reports to 
  4.4   the commissioner of commerce as the commissioner may require; 
  4.5   attend and answer, under oath, the commissioner's lawful 
  4.6   inquiries; produce and exhibit any books, accounts, documents, 
  4.7   and property as the commissioner may desire to inspect, and in 
  4.8   all things aid the commissioner in the performance of duties.  
  4.9      Sec. 3.  Minnesota Statutes 1994, section 46.041, 
  4.10  subdivision 4, is amended to read: 
  4.11     Subd. 4.  [HEARING.] In any case in which the commissioner 
  4.12  grants a request for a hearing or makes the independent 
  4.13  determination that a hearing is warranted on the basis of the 
  4.14  conditions in subdivision 3, the commissioner shall fix a time 
  4.15  for a hearing conducted pursuant to chapter 14 to decide whether 
  4.16  or not the application will be granted.  A notice of the hearing 
  4.17  must be published by the applicant in the form prescribed by the 
  4.18  commissioner in a newspaper published in the municipality in 
  4.19  which the proposed bank is to be located, and if there is no 
  4.20  such newspaper, then ~~at the county seat of the county~~ in a 
  4.21  qualified newspaper likely to give notice in the municipality in 
  4.22  which the bank is proposed to be located.  The notice must be 
  4.23  published once, at the expense of the applicants, not less than 
  4.24  30 days prior to the date of the hearing.  At the hearing the 
  4.25  commissioner shall consider the application and hear the 
  4.26  applicants and witnesses that appear in favor of or against the 
  4.27  granting of the application of the proposed bank.  If an 
  4.28  application is contested, 50 percent of an additional fee equal 
  4.29  to the actual costs incurred by the department of commerce in 
  4.30  approving or disapproving the application, payable to the 
  4.31  department of commerce to be deposited in the general fund, must 
  4.32  be paid by the applicant and 50 percent equally by the 
  4.33  intervening parties. 
  4.34     Sec. 4.  Minnesota Statutes 1994, section 46.046, 
  4.35  subdivision 1, is amended to read: 
  4.36     Subdivision 1.  [WORDS, TERMS, AND PHRASES.] Unless the 
  5.1   language or context clearly indicates that a different meaning 
  5.2   is intended, the word defined in subdivision 2, for the purposes 
  5.3   of sections 46.041 to 46.044, shall be given the meaning 
  5.4   subjoined to it; and the word defined in subdivision 3, for the 
  5.5   purposes of chapters 46 to ~~77~~ 83, shall be given the meaning 
  5.6   subjoined to it.  
  5.7      Sec. 5.  Minnesota Statutes 1994, section 47.11, is amended 
  5.8   to read: 
  5.9      47.11 [SELECTION OF NAME.] 
  5.10     Before execution of the certificate of incorporation of any 
  5.11  such corporation or conduct of business under an assumed name, 
  5.12  its proposed name or proposed assumed name shall be submitted to 
  5.13  the commissioner of commerce, who shall compare it with those of 
  5.14  corporations operating in the state, and if it is likely to be 
  5.15  mistaken for any of them, or to confuse the public as to the 
  5.16  character of its business, or is otherwise objectionable, 
  5.17  additional names shall be submitted until a satisfactory one is 
  5.18  selected, whereupon the commissioner shall issue a certificate 
  5.19  of approval thereof.  
  5.20     Sec. 6.  Minnesota Statutes 1994, section 47.28, 
  5.21  subdivision 1, is amended to read: 
  5.22     Subdivision 1.  Any savings bank organized and existing 
  5.23  under and by virtue of the law of this state may amend its 
  5.24  articles of incorporation so as to convert itself into a 
  5.25  savings~~, building and loan~~ association, by complying with the 
  5.26  following requirements and procedure: 
  5.27     The savings bank by a two-thirds vote of the entire board 
  5.28  of trustees, at any regular or special meeting of said board 
  5.29  duly called for that purpose, shall (a) pass a resolution 
  5.30  declaring their intention to convert the savings bank into a 
  5.31  savings~~, building and loan~~ association, and (b) cause an 
  5.32  application in writing to be executed, by such persons as the 
  5.33  trustees may direct, in the form prescribed by the department of 
  5.34  commerce, requesting a certificate of authorization (charter) as 
  5.35  a savings~~, building and loan~~ association to transact business at 
  5.36  the place and in the name stated in the application.  The 
  6.1   amendments proposed to the articles of incorporation and bylaws 
  6.2   shall be included as part of the application.  
  6.3      The application shall be submitted to, considered and acted 
  6.4   upon by the department of commerce in the same manner and by the 
  6.5   same standards as applications are submitted, considered and 
  6.6   acted upon under ~~section 51.08~~ chapter 51A. 
  6.7      Sec. 7.  Minnesota Statutes 1994, section 47.58, 
  6.8   subdivision 2, is amended to read: 
  6.9      Subd. 2.  [AUTHORIZATION.] Pursuant to rules which the 
  6.10  commissioner of commerce ~~or commissioner of insurance~~ may find 
  6.11  to be necessary and proper, if any, and subject to federal laws 
  6.12  and regulations, lenders may make investments in reverse 
  6.13  mortgage loans and purchases of obligations representing reverse 
  6.14  mortgage loans, provided the aggregate total of committed 
  6.15  principal of the investment in reverse mortgage loans by any 
  6.16  bank, savings bank, or savings and loan association, does not 
  6.17  exceed five percent of that lender's total deposits and savings 
  6.18  accounts.  This limitation shall be determined at each June 30 
  6.19  and December 31 for the following six-month period.  Any decline 
  6.20  in the total of deposits and savings accounts subsequent to a 
  6.21  determination may be disregarded.  Security for loans made under 
  6.22  this section shall be a first lien on residential property (a) 
  6.23  which the borrower occupies as principal residence and which 
  6.24  qualifies for homestead classification pursuant to section 
  6.25  273.13, and (b) to which the borrower alone has title.  
  6.26     Sec. 8.  Minnesota Statutes 1994, section 47.62, 
  6.27  subdivision 3, is amended to read: 
  6.28     Subd. 3.  Application for authorization shall be made in 
  6.29  the manner prescribed by rule.  The commissioner shall grant 
  6.30  authorization for the establishment of an electronic financial 
  6.31  terminal if the commissioner finds that: 
  6.32     (a) There is reason to believe that the terminal will be 
  6.33  properly and safely managed; 
  6.34     (b) The applicant is financially sound; 
  6.35     (c) The proposed charges for making the services of the 
  6.36  terminal available to financial institutions are fair, 
  7.1   equitable, and nondiscriminatory; 
  7.2      (d) The applicant has furnished all of the information 
  7.3   required by rule; 
  7.4      (e) The terminal applicant will not gain an unfair 
  7.5   competitive advantage because the terminal is not operationally 
  7.6   available to other financial institutions or their data 
  7.7   processors within a reasonable period of time~~; and~~. 
  7.8      ~~(f) The location and placement of the electronic financial~~ 
  7.9   ~~terminal is not designed to give or promote an unfair~~ 
  7.10  ~~competitive advantage to any financial institution.~~ 
  7.11     If the commissioner has not denied the application within 
  7.12  45 days of its submission, the authorization shall be deemed to 
  7.13  be granted. 
  7.14     Sec. 9.  Minnesota Statutes 1994, section 48.475, 
  7.15  subdivision 3, is amended to read: 
  7.16     Subd. 3.  [GENERAL REQUIREMENTS.] If the bank at which a 
  7.17  trust service office is to be established has exercised trust 
  7.18  powers, then the trust company or bank which is establishing the 
  7.19  trust service office shall enter into an agreement respecting 
  7.20  those fiduciary powers to which the trust company or bank shall 
  7.21  succeed and shall file the agreement with the commissioner.  The 
  7.22  trust company or bank which is establishing a trust service 
  7.23  office under subdivision 1 shall publish a notice of the filing 
  7.24  in the form prescribed by the commissioner in a newspaper 
  7.25  published in the municipality in which the trust service office 
  7.26  is to be located, and if there is no such newspaper, ~~then at the~~ 
  7.27  ~~county seat of the county in which the trust service office is~~ 
  7.28  ~~to be located.  The notice shall be published once in a~~ 
  7.29  ~~qualified newspaper in the municipality in which the proposed~~ 
  7.30  ~~trust service office is to be located, and if there is no such~~ 
  7.31  ~~newspaper,~~ then in a qualified newspaper likely to give notice 
  7.32  in the municipality in which the proposed trust service office 
  7.33  is to be located, and proof of publication shall be filed with 
  7.34  the commissioner immediately after publication of the notice of 
  7.35  filing.  After filing and publication, the trust company or bank 
  7.36  establishing the trust service office shall, as of the date the 
  8.1   office first opens for business, and without further 
  8.2   authorization of any kind, succeed to and be substituted for the 
  8.3   bank at which the trust service office is located as to all 
  8.4   fiduciary powers, rights, duties, privileges, and liabilities of 
  8.5   the bank in its capacity as fiduciary for all estates, trusts, 
  8.6   conservatorships, guardianships, and other fiduciary 
  8.7   relationships of which the bank is then serving as fiduciary, 
  8.8   except as may be otherwise specified in the agreement between 
  8.9   the bank and the trust company or bank which has established the 
  8.10  trust service office.  The trust company or bank which has 
  8.11  established the trust service office shall also be deemed named 
  8.12  as fiduciary in all writings, including, but not limited to, 
  8.13  wills, trusts, court orders, and similar documents and 
  8.14  instruments, naming the bank at which the trust service office 
  8.15  is located signed before the date the trust service office first 
  8.16  opens for business, unless expressly negated by the writing or 
  8.17  otherwise specified in the agreement between the trust company 
  8.18  or bank and the bank at which the trust service office is 
  8.19  located.  On the effective date of the substitution, the bank at 
  8.20  which the trust service office has been established shall be 
  8.21  released and absolved from all fiduciary duties and obligations 
  8.22  under the writings and shall discontinue its exercise of trust 
  8.23  powers on all matters not specifically retained by the 
  8.24  agreement.  This subdivision does not absolve the bank from 
  8.25  liabilities arising out of any breach of fiduciary duty or 
  8.26  obligation occurring prior to the date the trust service office 
  8.27  first opens for business.  This subdivision does not affect the 
  8.28  authority, duties, or obligations of a bank with respect to 
  8.29  relationships which may be established without trust powers, 
  8.30  whether the relationships arise before or after the 
  8.31  establishment of the trust service office.  
  8.32     Sec. 10.  Minnesota Statutes 1994, section 48.61, is 
  8.33  amended by adding a subdivision to read: 
  8.34     Subd. 9.  [MERGER WITH SUBSIDIARIES; AUTHORITY.] (a) 
  8.35  Notwithstanding any other law to the contrary, a bank may merge 
  8.36  a subsidiary authorized and established according to this 
  9.1   section into itself if it owns 100 percent of the outstanding 
  9.2   voting stock.  
  9.3      (b) A merger of a subsidiary authorized by subdivision 1 
  9.4   must conform to the procedures in section 302A.621.  
  9.5      (c) Before filing the articles of merger with the secretary 
  9.6   of state, the merger plan must be filed with and approved in 
  9.7   writing by the commissioner who shall determine that:  
  9.8      (1) the provisions of section 302A.621 are followed; and 
  9.9      (2) the merger will not have an undue adverse effect on the 
  9.10  safety and soundness of the bank. 
  9.11     Sec. 11.  Minnesota Statutes 1994, section 48.65, is 
  9.12  amended to read: 
  9.13     48.65 [TRUST COMPANIES TO COMPLY WITH CERTAIN LAWS.] 
  9.14     No trust company of this state shall conduct a banking 
  9.15  business, as defined in section 47.02, without fully complying 
  9.16  with the provisions of section ~~48.22~~ 48.221 relating to the 
  9.17  reserve requirements of the state banks.  
  9.18     Sec. 12.  Minnesota Statutes 1994, section 48.92, 
  9.19  subdivision 1, is amended to read: 
  9.20     Subdivision 1.  [TERMS.] When used in sections 48.90 to 
  9.21  ~~48.991~~ 48.99, the terms defined in this section have the 
  9.22  meanings given them, unless their context requires a different 
  9.23  meaning.  
  9.24     Sec. 13.  Minnesota Statutes 1994, section 49.01, 
  9.25  subdivision 3, is amended to read: 
  9.26     Subd. 3.  [INVESTMENT COMPANY.] "Investment company" means 
  9.27  any person, copartnership, association, or corporation referred 
  9.28  to in sections 54.26 to ~~54.29~~ 54.297. 
  9.29     Sec. 14.  Minnesota Statutes 1994, section 51A.58, is 
  9.30  amended to read: 
  9.31     51A.58 [INTERSTATE BRANCHING.] 
  9.32     An association, whether or not the subsidiary of a savings 
  9.33  and loan holding company, may, by acquisition, merger, purchase 
  9.34  and assumption of some or all of the assets and liabilities, or 
  9.35  consolidation, establish or operate branch offices in any 
  9.36  reciprocating state, and a savings and loan association 
 10.1   chartered in any reciprocating state may establish or operate 
 10.2   branch offices in this state by acquisition, merger, purchase, 
 10.3   and assumption of some or all of the assets or liabilities or 
 10.4   consolidation.  A savings and loan holding company with its 
 10.5   headquarters in this state may acquire by direct or indirect 
 10.6   ownership or control the voting shares of a savings and loan 
 10.7   holding company, savings and loan association, or savings bank 
 10.8   located in any reciprocating state, and a savings and loan 
 10.9   holding company with its headquarters in a reciprocating state, 
 10.10  may acquire by direct or indirect ownership or control the 
 10.11  voting shares of a savings and loan holding company, a savings 
 10.12  and loan association, or savings bank located in this state, and 
 10.13  may acquire and merge with a savings and loan holding company 
 10.14  with its headquarters in this state.  For the purposes of this 
 10.15  section, "reciprocating state" is a state that authorizes the 
 10.16  establishment of branch offices in that state by an association 
 10.17  located in this state, and the acquisition of savings and loan 
 10.18  associations and savings banks located in that state by a 
 10.19  savings and loan holding company with its headquarters in this 
 10.20  state, under conditions no more restrictive than those imposed 
 10.21  by the laws of Minnesota as determined by the commissioner of 
 10.22  commerce. 
 10.23     The commissioner of commerce shall adopt rules to provide 
 10.24  that procedural requirements equivalent to those contained in 
 10.25  sections 48.90 to ~~48.991~~ 48.99 apply to reciprocal interstate 
 10.26  branching and acquisitions by savings and loan associations. 
 10.27     Sec. 15.  Minnesota Statutes 1994, section 53.04, 
 10.28  subdivision 3a, is amended to read: 
 10.29     Subd. 3a.  (a) The right to make loans, secured or 
 10.30  unsecured, at the rates and on the terms and other conditions 
 10.31  permitted licensees under chapter 56.  Loans made under the 
 10.32  authority of section 56.125 must be in amounts in compliance 
 10.33  with section 53.05, clause (7).  All other loans made under the 
 10.34  authority of chapter 56 must be in amounts in compliance with 
 10.35  section 53.05, clause (7), or 56.131, subdivision 1, paragraph 
 10.36  (a), whichever is less.  The right to extend credit or lend 
 11.1   money and to collect and receive charges therefor as provided by 
 11.2   chapter 334, or in lieu thereof to charge, collect, and receive 
 11.3   interest at the rate of 21.75 percent per annum, including the 
 11.4   right to contract for, charge, and collect all other charges 
 11.5   including discount points, fees, late payment charges, and 
 11.6   insurance premiums on the loans to the same extent permitted on 
 11.7   loans made under the authority of chapter 56, regardless of the 
 11.8   amount of the loan.  The provisions of sections 47.20 and 47.21 
 11.9   do not apply to loans made under this subdivision, except as 
 11.10  specifically provided in this subdivision.  Nothing in this 
 11.11  subdivision is deemed to supersede, repeal, or amend any 
 11.12  provision of section 53.05.  A licensee making a loan under this 
 11.13  chapter secured by a lien on real estate shall comply with the 
 11.14  requirements of section 47.20, subdivision 8.  
 11.15     (b) Loans made under this subdivision at a rate of interest 
 11.16  not in excess of that provided for in paragraph (a) may be 
 11.17  secured by real or personal property, or both.  If the proceeds 
 11.18  of a loan secured by a first lien on the borrower's primary 
 11.19  residence are used to finance the purchase of the borrower's 
 11.20  primary residence, the loan must comply with the provisions of 
 11.21  section 47.20.  
 11.22     (c) A loan made under this subdivision that is secured by 
 11.23  real estate and that is in a principal amount of ~~$7,500~~ $12,000 
 11.24  or more and a maturity of 60 months or more may contain a 
 11.25  provision permitting discount points, if the loan does not 
 11.26  provide a loan yield in excess of the maximum rate of interest 
 11.27  permitted by this subdivision.  Loan yield means the annual rate 
 11.28  of return obtained by a licensee computed as the annual 
 11.29  percentage rate is computed under Federal Regulation Z.  If the 
 11.30  loan is prepaid in full, the licensee must make a refund to the 
 11.31  borrower to the extent that the loan yield will exceed the 
 11.32  maximum rate of interest provided by this subdivision when the 
 11.33  prepayment is taken into account.  
 11.34     (d) An agency or instrumentality of the United States 
 11.35  government or a corporation otherwise created by an act of the 
 11.36  United States Congress or a lender approved or certified by the 
 12.1   secretary of housing and urban development, or approved or 
 12.2   certified by the administrator of veterans affairs, or approved 
 12.3   or certified by the administrator of the farmers home 
 12.4   administration, or approved or certified by the federal home 
 12.5   loan mortgage corporation, or approved or certified by the 
 12.6   federal national mortgage association, that engages in the 
 12.7   business of purchasing or taking assignments of mortgage loans 
 12.8   and undertakes direct collection of payments from or enforcement 
 12.9   of rights against borrowers arising from mortgage loans, is not 
 12.10  required to obtain a certificate of authorization under this 
 12.11  chapter in order to purchase or take assignments of mortgage 
 12.12  loans from persons holding a certificate of authorization under 
 12.13  this chapter. 
 12.14     Sec. 16.  Minnesota Statutes 1994, section 53.09, 
 12.15  subdivision 1, is amended to read: 
 12.16     Subdivision 1.  [FREQUENCY AND EXPENSE.] The commissioner 
 12.17  shall make examinations for the purposes set forth in section 
 12.18  46.04, subdivision 1, at least once every 18 calendar months, of 
 12.19  each authorized place of business of every industrial loan and 
 12.20  thrift company with the right to issue thrift certificates for 
 12.21  investment organized or operating under this chapter to satisfy 
 12.22  the commissioner that the corporation is in a solvent condition 
 12.23  and is complying with the requirements of this chapter and 
 12.24  operating according to sound business principles.  In order to 
 12.25  enforce actions in this connection, the commissioner is hereby 
 12.26  vested with the same authority as in the examination and 
 12.27  regulation of state banks.  The corporation so examined shall 
 12.28  pay to the commissioner such fees as may be required under 
 12.29  section 46.131.  The commissioner may maintain an action for the 
 12.30  recovery of such costs in any court of competent jurisdiction.  
 12.31     Sec. 17.  Minnesota Statutes 1994, section 53.09, 
 12.32  subdivision 2, is amended to read: 
 12.33     Subd. 2.  [REPORT TO COMMISSIONER.] (1) Each industrial 
 12.34  loan and thrift company shall annually on or before the first 
 12.35  day of ~~February~~ March file a report with the commissioner 
 12.36  stating in detail, under appropriate heads, its assets and 
 13.1   liabilities at the close of business on the last day of the 
 13.2   preceding calendar year.  This report shall be made under oath 
 13.3   in the form prescribed by the commissioner. 
 13.4      (2) Each industrial loan and thrift company which holds 
 13.5   authority to accept accounts pursuant to section 53.04, 
 13.6   subdivision 5, shall in place of the requirement in clause (1) 
 13.7   submit the reports and make the publication required of state 
 13.8   banks pursuant to section 48.48.  
 13.9      (3) Within 30 days following a change in controlling 
 13.10  ownership of the capital stock of an industrial loan and thrift 
 13.11  company, it shall file a written report with the commissioner 
 13.12  stating in detail the nature of such change in ownership.  
 13.13     Sec. 18.  Minnesota Statutes 1994, section 53.09, is 
 13.14  amended by adding a subdivision to read: 
 13.15     Subd. 2a.  [COMPLIANCE EXAMINATIONS.] For the purpose of 
 13.16  discovering violations of this chapter or securing information 
 13.17  lawfully required by the commissioner under this chapter, the 
 13.18  commissioner may, at any time, either personally or by a person 
 13.19  or persons duly designated, investigate the loans and business, 
 13.20  and examine the books, accounts, records, and files used in the 
 13.21  business, of every licensee and of every person engaged in the 
 13.22  business whether or not the person acts or claims to act as 
 13.23  principal or agent, or under the authority of this chapter.  For 
 13.24  the purposes of this subdivision, the commissioner and duly 
 13.25  designated representatives have free access to the offices and 
 13.26  places of business, books, accounts, papers, records, files, 
 13.27  safes, and vaults of all these persons.  The commissioner and 
 13.28  all persons duly designated may require the attendance of and 
 13.29  examine, under oath, all persons whose testimony the 
 13.30  commissioner may require relative to the loans or business or to 
 13.31  the subject matter of an examination, investigation, or hearing. 
 13.32     Each licensee shall pay to the commissioner the amount 
 13.33  required under section 46.131, and the commissioner may maintain 
 13.34  an action for the recovery of the costs in a court of competent 
 13.35  jurisdiction. 
 13.36     Sec. 19.  Minnesota Statutes 1994, section 56.11, is 
 14.1   amended to read: 
 14.2      56.11 [BOOKS OF ACCOUNT; ANNUAL REPORT.] 
 14.3      The licensee shall keep and use in the licensee's business 
 14.4   such books, accounts, and records as will enable the 
 14.5   commissioner to determine whether the licensee is complying with 
 14.6   the provisions of this chapter and with the rules lawfully made 
 14.7   by the commissioner hereunder.  Every licensee shall preserve 
 14.8   such books, accounts, and records, including cards used in the 
 14.9   card system, if any, for at least two years after making the 
 14.10  final entry on any loan recorded therein.  Accounting systems 
 14.11  maintained in whole or in part by mechanical or electronic data 
 14.12  processing methods which provide information equivalent to that 
 14.13  otherwise required are acceptable for this purpose.  
 14.14     Each licensee shall annually on or before the ~~fifteenth day~~ 
 14.15  ~~of March, except in odd numbered years and then on or before the~~ 
 14.16  ~~seventh~~ first day of ~~February~~ March, file a report with the 
 14.17  commissioner giving such relevant information as the 
 14.18  commissioner reasonably may require concerning the business and 
 14.19  operations during the preceding calendar year of each licensed 
 14.20  place of business, conducted by such licensee within the state.  
 14.21  Such report shall be made under oath and shall be in the form 
 14.22  prescribed by the commissioner, who shall make and publish 
 14.23  annually an analysis and recapitulation of such reports. 
 14.24     Sec. 20.  Minnesota Statutes 1994, section 56.12, is 
 14.25  amended to read: 
 14.26     56.12 [ADVERTISING; TAKING OF SECURITY; PLACE OF BUSINESS.] 
 14.27     No licensee shall advertise, print, display, publish, 
 14.28  distribute, or broadcast, or cause or permit to be advertised, 
 14.29  printed, displayed, published, distributed, or broadcast, in any 
 14.30  manner any statement or representation with regard to the rates, 
 14.31  terms, or conditions for the lending of money, credit, goods, or 
 14.32  things in action which is false, misleading, or deceptive.  The 
 14.33  commissioner may order any licensee to desist from any conduct 
 14.34  which the commissioner shall find to be a violation of the 
 14.35  foregoing provisions. 
 14.36     The commissioner may require that rates of charge, if 
 15.1   stated by a licensee, be stated fully and clearly in such manner 
 15.2   as the commissioner may deem necessary to prevent 
 15.3   misunderstanding thereof by prospective borrowers.  In lieu of 
 15.4   the disclosure requirements of this section and section 56.14, a 
 15.5   licensee may give the disclosures required by the federal 
 15.6   Truth-in-Lending Act. 
 15.7      A licensee may take a lien upon real estate as security for 
 15.8   any loan exceeding ~~$2,700~~ $4,320 in principal amount made under 
 15.9   this chapter.  The provisions of sections 47.20 and 47.21 do not 
 15.10  apply to loans made under this chapter, except as provided in 
 15.11  this section.  No loan secured by a first lien on a borrower's 
 15.12  primary residence shall be made pursuant to this section if the 
 15.13  proceeds of the loan are used to finance the purchase of the 
 15.14  borrower's primary residence, unless:  
 15.15     (1) the proceeds of the loan are used to finance the 
 15.16  purchase of a manufactured home or a prefabricated building; or 
 15.17     (2) the proceeds of the loan are used in whole or in part 
 15.18  to satisfy the balance owed on a contract for deed.  
 15.19     If the proceeds of the loan are used to finance the 
 15.20  purchase of the borrower's primary residence, the licensee shall 
 15.21  consent to the subsequent transfer of the real estate if the 
 15.22  existing borrower continues after transfer to be obligated for 
 15.23  repayment of the entire remaining indebtedness.  The licensee 
 15.24  shall release the existing borrower from all obligations under 
 15.25  the loan instruments, if the transferee (1) meets the standards 
 15.26  of credit worthiness normally used by persons in the business of 
 15.27  making loans, including but not limited to the ability of the 
 15.28  transferee to make the loan payments and satisfactorily maintain 
 15.29  the property used as collateral, and (2) executes an agreement 
 15.30  in writing with the licensee whereby the transferee assumes the 
 15.31  obligations of the existing borrower under the loan 
 15.32  instruments.  Any such agreement shall not affect the priority, 
 15.33  validity or enforceability of any loan instrument.  A licensee 
 15.34  may charge a fee not in excess of one-tenth of one percent of 
 15.35  the remaining unpaid principal balance in the event the loan is 
 15.36  assumed by the transferee and the existing borrower continues 
 16.1   after the transfer to be obligated for repayment of the entire 
 16.2   assumed indebtedness.  A licensee may charge a fee not in excess 
 16.3   of one percent of the remaining unpaid principal balance in the 
 16.4   event the remaining indebtedness is assumed by the transferee 
 16.5   and the existing borrower is released from all obligations under 
 16.6   the loan instruments, but in no event shall the fee exceed 
 16.7   ~~$150~~ $240. 
 16.8      A licensee making a loan under this chapter secured by a 
 16.9   lien on real estate shall comply with the requirements of 
 16.10  section 47.20, subdivision 8.  
 16.11     No licensee shall conduct the business of making loans 
 16.12  under this chapter within any office, room, or place of business 
 16.13  in which any other business is solicited or engaged in, or in 
 16.14  association or conjunction therewith, if the commissioner finds 
 16.15  that the character of the other business is such that it would 
 16.16  facilitate evasions of this chapter or of the rules lawfully 
 16.17  made hereunder.  The commissioner may promulgate rules dealing 
 16.18  with such other businesses. 
 16.19     No licensee shall transact the business or make any loan 
 16.20  provided for by this chapter under any other name or at any 
 16.21  other place of business than that named in the license.  No 
 16.22  licensee shall take any confession of judgment or any power of 
 16.23  attorney.  No licensee shall take any note or promise to pay 
 16.24  that does not accurately disclose the principal amount of the 
 16.25  loan, the time for which it is made, and the agreed rate or 
 16.26  amount of charge, nor any instrument in which blanks are left to 
 16.27  be filled in after execution.  Nothing herein is deemed to 
 16.28  prohibit the making of loans by mail or arranging for settlement 
 16.29  and closing of real estate secured loans by an unrelated 
 16.30  qualified closing agent at a location other than the licensed 
 16.31  location. 
 16.32     Sec. 21.  Minnesota Statutes 1994, section 56.125, 
 16.33  subdivision 2, is amended to read: 
 16.34     Subd. 2.  [REAL ESTATE AS SECURITY.] A licensee may take a 
 16.35  lien upon real estate as security for any open-end loan at or 
 16.36  after such time as the outstanding balance first exceeds 
 17.1   ~~$2,700~~ $4,320.  A subsequent reduction in the balance 
 17.2   below ~~$2,700~~ $4,320 has no effect on the lien.  A licensee may 
 17.3   retain the security interest until it terminates the open-end 
 17.4   account.  If there is no outstanding balance in the account and 
 17.5   there is no commitment by the licensee to a line of credit in 
 17.6   excess of ~~$2,700~~ $4,320, the licensee shall, within 20 days 
 17.7   following written demand by the borrower, deliver to the 
 17.8   borrower a release of the mortgage on any real property taken as 
 17.9   security for the open-end loan agreement.  A real estate 
 17.10  mortgage authorized for a financial institution secures all 
 17.11  advances and obligations thereunder from the date of recording.  
 17.12     Sec. 22.  Minnesota Statutes 1994, section 56.131, 
 17.13  subdivision 1, is amended to read: 
 17.14     Subdivision 1.  [INTEREST RATES AND CHARGES.] (a) On any 
 17.15  loan in a principal amount not exceeding ~~$35,000~~ $56,000 or 15 
 17.16  percent of a Minnesota corporate licensee's capital stock and 
 17.17  surplus as defined in section 53.015, if greater, a licensee may 
 17.18  contract for and receive interest, calculated according to the 
 17.19  actuarial method, not exceeding the equivalent of the greater of 
 17.20  any of the following: 
 17.21     (1) the total of:  (i) 33 percent per year on that part of 
 17.22  the unpaid balance of the principal amount not exceeding $750; 
 17.23  and (ii) 19 percent per year on that part of the unpaid balance 
 17.24  of the principal amount exceeding $750; or 
 17.25     (2) 21.75 percent per year on the unpaid balance of the 
 17.26  principal amount. 
 17.27     (b) On any loan where interest has been calculated 
 17.28  according to the method provided for in paragraph (a), clause 
 17.29  (1), interest must be contracted for and earned as provided in 
 17.30  that provision or at the single annual percentage rate computed 
 17.31  to the nearest 1/100 of one percent that would earn the same 
 17.32  total interest at maturity of the contract as would be earned by 
 17.33  the application of the graduated rates provided in paragraph 
 17.34  (a), clause (1), when the debt is paid according to the agreed 
 17.35  terms and the calculations are made according to the actuarial 
 17.36  method.  
 18.1      (c) Loans may be interest-bearing or precomputed. 
 18.2      (d) To compute time on interest-bearing and precomputed 
 18.3   loans, including, but not limited to the calculation of 
 18.4   interest, a day is considered 1/30 of a month when calculation 
 18.5   is made for a fraction of a calendar month.  A year is 12 
 18.6   calendar months.  A calendar month is that period from a given 
 18.7   date in one month to the same numbered date in the following 
 18.8   month, and if there is no same numbered date, to the last day of 
 18.9   the following month.  When a period of time includes a whole 
 18.10  month and a fraction of a month, the fraction of a month is 
 18.11  considered to follow the whole month.  
 18.12     In the alternative, for interest-bearing loans, a licensee 
 18.13  may charge interest at the rate of 1/365 of the agreed annual 
 18.14  rate for each actual day elapsed.  
 18.15     (e) With respect to interest-bearing loans: 
 18.16     (1) Interest must be computed on unpaid principal balances 
 18.17  outstanding from time to time, for the time outstanding.  Each 
 18.18  payment must be applied first to the accumulated interest and 
 18.19  the remainder of the payment applied to the unpaid principal 
 18.20  balance; provided however, that if the amount of the payment is 
 18.21  insufficient to pay the accumulated interest, the unpaid 
 18.22  interest continues to accumulate to be paid from the proceeds of 
 18.23  subsequent payments and is not added to the principal balance. 
 18.24     (2) Interest must not be payable in advance or compounded.  
 18.25  However, if part or all of the consideration for a new loan 
 18.26  contract is the unpaid principal balance of a prior loan, then 
 18.27  the principal amount payable under the new loan contract may 
 18.28  include any unpaid interest which has accrued.  The unpaid 
 18.29  principal balance of a precomputed loan is the balance due after 
 18.30  refund or credit of unearned interest as provided in paragraph 
 18.31  (f), clause (3).  The resulting loan contract is deemed a new 
 18.32  and separate loan transaction for all purposes. 
 18.33     (f) With respect to precomputed loans: 
 18.34     (1) Loans must be repayable in substantially equal and 
 18.35  consecutive monthly installments of principal and interest 
 18.36  combined, except that the first installment period may be more 
 19.1   or less than one month by not more than 15 days, and the first 
 19.2   installment payment amount may be larger than the remaining 
 19.3   payments by the amount of interest charged for the extra days 
 19.4   and must be reduced by the amount of interest for the number of 
 19.5   days less than one month to the first installment payment; and 
 19.6   monthly installment payment dates may be omitted to accommodate 
 19.7   borrowers with seasonal income. 
 19.8      (2) Payments may be applied to the combined total of 
 19.9   principal and precomputed interest until the loan is fully 
 19.10  paid.  Payments must be applied in the order in which they 
 19.11  become due. 
 19.12     (3) When any loan contract is paid in full by cash, renewal 
 19.13  or refinancing, or a new loan, one month or more before the 
 19.14  final installment due date, a licensee shall refund or credit 
 19.15  the borrower with the total of the applicable charges for all 
 19.16  fully unexpired installment periods, as originally scheduled or 
 19.17  as deferred, which follow the day of prepayment; if the 
 19.18  prepayment is made other than on a scheduled payment date, the 
 19.19  nearest scheduled installment payment date must be used in the 
 19.20  computation; provided further, if the prepayment occurs prior to 
 19.21  the first installment due date, the licensee may retain 1/30 of 
 19.22  the applicable charge for a first installment period of one 
 19.23  month for each day from the date of the loan to the date of 
 19.24  prepayment, and shall refund or credit the borrower with the 
 19.25  balance of the total interest contracted for.  If the maturity 
 19.26  of the loan is accelerated for any reason and judgment is 
 19.27  entered, the licensee shall credit the borrower with the same 
 19.28  refund as if prepayment in full had been made on the date the 
 19.29  judgment is entered. 
 19.30     (4) If an installment, other than the final installment, is 
 19.31  not paid in full within ten days of its scheduled due date, a 
 19.32  licensee may contract for and receive a default charge not 
 19.33  exceeding five percent of the amount of the installment, but not 
 19.34  less than ~~$4~~ $5.20. 
 19.35     A default charge under this subdivision may not be 
 19.36  collected on an installment paid in full within ten days of its 
 20.1   scheduled due date, or deferred installment due date with 
 20.2   respect to deferred installments, even though a default or 
 20.3   deferral charge on an earlier installment has not been paid in 
 20.4   full.  A default charge may be collected at the time it accrues 
 20.5   or at any time thereafter. 
 20.6      (5) If the parties agree in writing, either in the loan 
 20.7   contract or in a subsequent agreement, to a deferment of wholly 
 20.8   unpaid installments, a licensee may grant a deferment and may 
 20.9   collect a deferment charge as provided in this section.  A 
 20.10  deferment postpones the scheduled due date of the earliest 
 20.11  unpaid installment and all subsequent installments as originally 
 20.12  scheduled, or as previously deferred, for a period equal to the 
 20.13  deferment period.  The deferment period is that period during 
 20.14  which no installment is scheduled to be paid by reason of the 
 20.15  deferment.  The deferment charge for a one-month period may not 
 20.16  exceed the applicable charge for the installment period 
 20.17  immediately following the due date of the last undeferred 
 20.18  payment.  A proportionate charge may be made for deferment for 
 20.19  periods of more or less than one month.  A deferment charge is 
 20.20  earned pro rata during the deferment period and is fully earned 
 20.21  on the last day of the deferment period.  Should a loan be 
 20.22  prepaid in full during a deferment period, the licensee shall 
 20.23  make or credit to the borrower a refund of the unearned 
 20.24  deferment charge in addition to any other refund or credit made 
 20.25  for prepayment of the loan in full. 
 20.26     (6) If two or more installments are delinquent one full 
 20.27  month or more on any due date, and if the contract so provides, 
 20.28  the licensee may reduce the unpaid balance by the refund credit 
 20.29  which would be required for prepayment in full on the due date 
 20.30  of the most recent maturing installment in default.  Thereafter, 
 20.31  and in lieu of any other default or deferment charges, the 
 20.32  single annual percentage rate permitted by this subdivision may 
 20.33  be charged on the unpaid balance until fully paid. 
 20.34     (7) Following the final installment as originally scheduled 
 20.35  or deferred, the licensee, for any loan contract which has not 
 20.36  previously been converted to interest-bearing under clause (6), 
 21.1   may charge interest on any balance remaining unpaid, including 
 21.2   unpaid default or deferment charges, at the single annual 
 21.3   percentage rate permitted by this subdivision until fully paid.  
 21.4      (8) With respect to a loan secured by an interest in real 
 21.5   estate, and having a maturity of more than 60 months, the 
 21.6   original schedule of installment payments must fully amortize 
 21.7   the principal and interest on the loan.  The original schedule 
 21.8   of installment payments for any other loan secured by an 
 21.9   interest in real estate must provide for payment amounts that 
 21.10  are sufficient to pay all interest scheduled to be due on the 
 21.11  loan. 
 21.12     Sec. 23.  Minnesota Statutes 1994, section 56.131, 
 21.13  subdivision 2, is amended to read: 
 21.14     Subd. 2.  [ADDITIONAL CHARGES.] In addition to the charges 
 21.15  provided for by this section and section 56.155, no further or 
 21.16  other amount whatsoever, shall be directly or indirectly 
 21.17  charged, contracted for, or received for the loan made, except 
 21.18  actual out of pocket expenses of the licensee to realize on a 
 21.19  security after default, and except for the following additional 
 21.20  charges which may be included in the principal amount of the 
 21.21  loan:  
 21.22     (a) lawful fees and taxes paid to any public officer to 
 21.23  record, file, or release security; 
 21.24     (b) with respect to a loan secured by an interest in real 
 21.25  estate, the following closing costs, if they are bona fide, 
 21.26  reasonable in amount, and not for the purpose of circumvention 
 21.27  or evasion of this section; provided the costs do not exceed one 
 21.28  percent of the principal amount or ~~$250~~ $400, whichever is 
 21.29  greater: 
 21.30     (1) fees or premiums for title examination, abstract of 
 21.31  title, title insurance, surveys, or similar purposes; 
 21.32     (2) fees, if not paid to the licensee, an employee of the 
 21.33  licensee, or a person related to the licensee, for preparation 
 21.34  of a mortgage, settlement statement, or other documents, fees 
 21.35  for notarizing mortgages and other documents, and appraisal 
 21.36  fees; 
 22.1      (c) the premium for insurance in lieu of perfecting and 
 22.2   releasing a security interest to the extent that the premium 
 22.3   does not exceed the fees described in paragraph (a); 
 22.4      (d) discount points and appraisal fees may not be included 
 22.5   in the principal amount of a loan secured by an interest in real 
 22.6   estate when the loan is a refinancing for the purpose of 
 22.7   bringing the refinanced loan current and is made within 24 
 22.8   months of the original date of the refinanced loan.  For 
 22.9   purposes of this paragraph, a refinancing is not considered to 
 22.10  be for the purpose of bringing the refinanced loan current if 
 22.11  new funds advanced to the customer, not including closing costs 
 22.12  or delinquent installments, exceed $1,000.  
 22.13     Sec. 24.  Minnesota Statutes 1994, section 56.131, 
 22.14  subdivision 4, is amended to read: 
 22.15     Subd. 4.  [ADJUSTMENT OF DOLLAR AMOUNTS.] (a) The dollar 
 22.16  amounts in this section, sections 53.04, subdivision 3a, 
 22.17  paragraph (c), 56.01, 56.12, and 56.125 shall change 
 22.18  periodically, as provided in this section, according to and to 
 22.19  the extent of changes in the implicit price deflator for the 
 22.20  gross ~~national~~ domestic product, ~~1972~~ 1987 = 100, compiled by 
 22.21  the United States Department of Commerce, and hereafter referred 
 22.22  to as the index.  The index for December ~~1980~~ 1991 is the 
 22.23  reference base index for adjustments of dollar amounts~~, except~~ 
 22.24  ~~that the index for December 1984 is the reference base index for~~ 
 22.25  ~~the minimum default charge of $4.  The reference base index for~~ 
 22.26  ~~subdivision 1, paragraph (a), clause (1), and subdivision 2,~~ 
 22.27  ~~paragraph (d), is December 1990~~. 
 22.28     (b) The designated dollar amounts shall change on July 1 of 
 22.29  each even-numbered year if the percentage of change, calculated 
 22.30  to the nearest whole percentage point, between the index for 
 22.31  December of the preceding year and the reference base index is 
 22.32  ten percent or more, but; 
 22.33     (1) the portion of the percentage change in the index in 
 22.34  excess of a multiple of ten percent shall be disregarded and the 
 22.35  dollar amounts shall change only in multiples of ten percent of 
 22.36  the amounts appearing in ~~Laws 1981, chapter 258~~ this act, on the 
 23.1   date of enactment; and 
 23.2      (2) the dollar amounts shall not change if the amounts 
 23.3   required by this section are those currently in effect pursuant 
 23.4   to ~~Laws 1981, chapter 258~~ this act, as a result of earlier 
 23.5   application of this section.  
 23.6      (c) If the index is revised, the percentage of change 
 23.7   pursuant to this section shall be calculated on the basis of the 
 23.8   revised index.  If a revision of the index changes the reference 
 23.9   base index, a revised reference base index shall be determined 
 23.10  by multiplying the reference base index then applicable by the 
 23.11  rebasing factor furnished by the department of commerce.  If the 
 23.12  index is superseded, the index referred to in this section is 
 23.13  the one represented by the department of commerce as reflecting 
 23.14  most accurately changes in the purchasing power of the dollar 
 23.15  for consumers.  
 23.16     (d) The commissioner shall announce and publish:  
 23.17     (1) on or before April 30 of each year in which dollar 
 23.18  amounts are to change, the changes in dollar amounts required by 
 23.19  paragraph (b); and 
 23.20     (2) promptly after the changes occur, changes in the index 
 23.21  required by paragraph (c) including, if applicable, the 
 23.22  numerical equivalent of the reference base index under a revised 
 23.23  reference base index and the designation or title of any index 
 23.24  superseding the index.  
 23.25     (e) A person does not violate this chapter with respect to 
 23.26  a transaction otherwise complying with this chapter if that 
 23.27  person relies on dollar amounts either determined according to 
 23.28  paragraph (b), clause (2) or appearing in the last publication 
 23.29  of the commissioner announcing the then current dollar amounts.  
 23.30     (f) The adjustments provided in this section shall not be 
 23.31  affected unless explicitly provided otherwise by law.  
 23.32     Sec. 25.  Minnesota Statutes 1994, section 56.131, 
 23.33  subdivision 6, is amended to read: 
 23.34     Subd. 6.  [DISCOUNT POINTS.] A loan made under this section 
 23.35  that is secured by real estate and that is in a principal amount 
 23.36  of ~~$7,500~~ $12,000 or more and has a maturity of 60 months or 
 24.1   more may contain a provision permitting discount points, if the 
 24.2   loan does not provide a loan yield in excess of the maximum rate 
 24.3   of interest permitted by this section.  Loan yield means the 
 24.4   annual rate of return obtained by a licensee computed as the 
 24.5   annual percentage rate is computed under Federal Regulation Z.  
 24.6   If the loan is prepaid in full, the licensee must make a refund 
 24.7   to the borrower to the extent that the loan yield will exceed 
 24.8   the maximum rate of interest provided by this section when the 
 24.9   prepayment is taken into account.  
 24.10     Sec. 26.  Minnesota Statutes 1994, section 56.17, is 
 24.11  amended to read: 
 24.12     56.17 [LIMITATION; ASSIGNMENT OF WAGES; SECURITY 
 24.13  AGREEMENT.] 
 24.14     No assignment of, or order for payment of, any salary, 
 24.15  wages, commissions, or other compensation for services earned or 
 24.16  to be earned, given to secure any loan made by any licensee 
 24.17  under this chapter, shall be valid unless the principal amount 
 24.18  of the loan is ~~$1,200 or less and is~~ paid to the borrower 
 24.19  simultaneously with its execution; nor shall any assignment or 
 24.20  order, or any security agreement or other lien on household 
 24.21  furniture then in the possession and use of the borrower, be 
 24.22  valid unless it is in writing, signed in person by the borrower~~,~~ 
 24.23  ~~nor if the borrower is married, unless it is signed in person by~~ 
 24.24  ~~both husband and wife; provided, that written assent of a spouse~~ 
 24.25  ~~shall not be required when husband and wife have been living~~ 
 24.26  ~~separate and apart for a period of at least five months prior to~~ 
 24.27  ~~the making of the assignment, order, security agreement, or lien~~.
 24.28     Under any assignment or order for the payment of future 
 24.29  salary, wages, commissions, or other compensation for services, 
 24.30  given as security for a loan made by any licensee under this 
 24.31  chapter, a sum not to exceed ten percent of the borrower's 
 24.32  salary, wages, commissions, or other compensation for services 
 24.33  shall be collectible from the employer of the borrower by the 
 24.34  licensee at the time for each payment to the borrower of salary, 
 24.35  wages, commissions, or other compensation for services, from the 
 24.36  time that a copy of the assignment, verified by the oath of the 
 25.1   licensee or the licensee's agent, together with a similarly 
 25.2   verified statement of the amount unpaid upon the loan and a 
 25.3   printed copy of this section is served upon the employer; 
 25.4   provided, that this section shall not be construed as giving the 
 25.5   assignee any greater rights than those under section 181.05. 
 25.6      This section shall control, with respect to licensees, 
 25.7   notwithstanding anything in section 47.59, subdivision 12, 
 25.8   clause (c), to the contrary. 
 25.9      Sec. 27.  [REVISOR INSTRUCTION.] 
 25.10     The revisor of statutes shall change the term "building and 
 25.11  loan association" or "savings, building and loan association" or 
 25.12  similar term to "savings association" or similar term in 
 25.13  Minnesota Statutes and Minnesota Rules. 
 25.14     Sec. 28.  [REPEALER.] 
 25.15     Minnesota Statutes 1994, sections 46.03; 48.611; and 48.97, 
 25.16  subdivisions 2, 3, and 4, are repealed. 
 25.17     Sec. 29.  [EFFECTIVE DATE.] 
 25.18     Sections 1 to 23 and 25 to 28 are effective the day 
 25.19  following final enactment.  
 25.20                             ARTICLE 2 
 25.21                       REGULATORY IMPROVEMENT 
 25.22     Section 1.  Minnesota Statutes 1994, section 46.04, is 
 25.23  amended by adding a subdivision to read: 
 25.24     Subd. 3.  [FINANCIAL INSTITUTIONS AND LICENSEE RECORDS.] 
 25.25  For purposes of examination and regulation of those entities 
 25.26  referred to in subdivisions 1 and 2, records may be maintained 
 25.27  on optical image storage systems acceptable to the 
 25.28  commissioner.  Electronically maintained and stored records must 
 25.29  meet the following minimum standards:  
 25.30     (1) a document or record may be transferred to and stored 
 25.31  on a nonerasable imaging system and retained only in that format 
 25.32  if all documents and records preserved on nonerasable optical 
 25.33  imaging systems meet nationally recognized standards for 
 25.34  permanent records and are available for retrieval for as long as 
 25.35  applicable law requires; 
 25.36     (2) a backup copy of the record is created and stored at a 
 26.1   site other than the site where the original is kept.  The backup 
 26.2   copy must be preserved either:  (i) on a nonerasable optical 
 26.3   imaging system; or (ii) by another reproduction method approved 
 26.4   by the commissioner; and 
 26.5      (3) all contracts for third-party maintenance and storage 
 26.6   of those records must include assurance of access by the 
 26.7   commissioner consistent with the purposes of this section. 
 26.8      Sec. 2.  Minnesota Statutes 1994, section 47.10, 
 26.9   subdivision 3, is amended to read: 
 26.10     Subd. 3.  [LEASEHOLD PLACE OF BUSINESS; APPROVAL OF CERTAIN 
 26.11  LEASE AGREEMENTS.] No bank, trust company, savings bank, or 
 26.12  ~~building and loan~~ savings association may acquire real property 
 26.13  and improvements of any nature to it for its place of business 
 26.14  by lease agreement if the lessor has an existing direct or 
 26.15  indirect interest in the management or ownership of the bank, 
 26.16  trust company, savings bank, or ~~building and loan~~ savings 
 26.17  association without prior written approval by the commissioner.  
 26.18  This includes subsequent amendments and associated leasehold 
 26.19  improvements.  A lessee's expenditures to maintain the leasehold 
 26.20  premises consistent with ordinary business conditions and within 
 26.21  the preapproved lease agreement does not constitute an amendment 
 26.22  requiring prior written approval. 
 26.23     Sec. 3.  Minnesota Statutes 1994, section 47.20, 
 26.24  subdivision 5, is amended to read: 
 26.25     Subd. 5.  [PREPAYMENT PENALTY.] (a) Unless the mortgagor 
 26.26  waives its right to prepay the mortgage loan without penalty, in 
 26.27  a uniform written disclosure waiver approved by the commissioner 
 26.28  and signed by the mortgagor, no conventional loan or loan 
 26.29  authorized in subdivision 1 ~~made on or after the effective date~~ 
 26.30  ~~of Laws 1977, chapter 350~~ shall contain a provision requiring or 
 26.31  permitting the imposition of a penalty in the event the loan or 
 26.32  advance of credit is prepaid.  The prepayment penalty shall not 
 26.33  exceed the lesser of two percent of the unpaid principal balance 
 26.34  or 60 days interest on the unpaid principal balance.  A lender 
 26.35  that offers a mortgage loan with a prepayment penalty shall also 
 26.36  offer a mortgage loan without a prepayment penalty. 
 27.1      This section does not permit the imposition of a prepayment 
 27.2   penalty in the event that the property securing the mortgage 
 27.3   loan is sold or the mortgage loan is prepaid in part.  No 
 27.4   prepayment penalty may be enforced after 42 months from the date 
 27.5   of the mortgage loan. 
 27.6      (b) A precomputed conventional loan or precomputed loan 
 27.7   authorized in subdivision 1 shall provide for a refund of the 
 27.8   precomputed finance charge according to the actuarial method if 
 27.9   the loan is paid in full by cash, renewal or refinancing, or a 
 27.10  new loan, one month or more before the final installment due 
 27.11  date.  The actuarial method for the purpose of this section is 
 27.12  the amount of interest attributable to each fully unexpired 
 27.13  monthly installment period of the loan contract following the 
 27.14  date of prepayment in full, calculated as if the loan was made 
 27.15  on an interest-bearing basis at the rate of interest provided 
 27.16  for in the note based on the assumption that all payments were 
 27.17  made according to schedule.  A precomputed loan for the purpose 
 27.18  of this section means a loan for which the debt is expressed as 
 27.19  a sum comprised of the principal amount and the amount of 
 27.20  interest for the entire term of the loan computed actuarially in 
 27.21  advance on the assumption that all scheduled payments will be 
 27.22  made when due, and does not include a loan for which interest is 
 27.23  computed from time to time by application of a rate to the 
 27.24  unpaid principal balance, interest-bearing loans, or 
 27.25  simple-interest loans.  For the purpose of calculating a refund 
 27.26  for precomputed loans under this section, any portion of the 
 27.27  finance charge for extending the first payment period beyond one 
 27.28  month may be ignored.  Nothing in this section shall be 
 27.29  considered a limitation on discount points or other finance 
 27.30  charges charged or collected in advance, and nothing in this 
 27.31  section shall require a refund of the charges in the event of 
 27.32  prepayment.  Nothing in this section shall be considered to 
 27.33  supersede section 47.204. 
 27.34     Sec. 4.  Minnesota Statutes 1994, section 47.20, 
 27.35  subdivision 10, is amended to read: 
 27.36     Subd. 10.  [WAIVER.] ~~Notwithstanding any other law~~ Except 
 28.1   as provided in subdivision 5, the provisions of this section may 
 28.2   not be waived by any oral or written agreement executed by any 
 28.3   person. 
 28.4      Sec. 5.  Minnesota Statutes 1994, section 47.52, is amended 
 28.5   to read: 
 28.6      47.52 [AUTHORIZATION.] 
 28.7      (a) With the prior approval of the commissioner, any bank 
 28.8   doing business in this state may establish and maintain not more 
 28.9   than five detached facilities provided the facilities are 
 28.10  located within the municipality in which the principal office of 
 28.11  the applicant bank is located; or within 5,000 feet of its 
 28.12  principal office measured in a straight line from the closest 
 28.13  points of the closest structures involved; or within 100 miles 
 28.14  of its principal office measured in a straight line from the 
 28.15  closest points of the closest structures involved, if the 
 28.16  detached facility is within any municipality in which no bank is 
 28.17  located at the time of application or if the detached facility 
 28.18  is in a municipality having a population of more than 10,000, or 
 28.19  if the detached facility is located in a municipality having a 
 28.20  population of 10,000 or less, as determined by the commissioner 
 28.21  from the latest available data from the state demographer, or 
 28.22  for municipalities located in the seven-county metropolitan area 
 28.23  from the metropolitan council, and all the banks having a 
 28.24  principal office in the municipality have consented in writing 
 28.25  to the establishment of the facility. 
 28.26     (b) A detached facility shall not be closer than 50 feet to 
 28.27  a detached facility operated by any other bank and shall not be 
 28.28  closer than 100 feet to the principal office of any other bank, 
 28.29  the measurement to be made in the same manner as provided 
 28.30  above.  This paragraph shall not be applicable if the proximity 
 28.31  to the facility or the bank is waived in writing by the other 
 28.32  bank and filed with the application to establish a detached 
 28.33  facility. 
 28.34     (c) Any bank is allowed, in addition to other facilities, 
 28.35  one drive-in or walk-up facility located between 150 to 1,500 
 28.36  feet of the main banking house or within 1,500 feet from a 
 29.1   detached facility.  The drive-in or walk-up facility permitted 
 29.2   by this clause is subject to paragraph (b) and section 47.53. 
 29.3      (d) A bank is allowed, in addition to other facilities, 
 29.4   part-time deposit-taking locations at elementary and secondary 
 29.5   schools located within the municipality in which the main 
 29.6   banking house or a detached facility is located if they are 
 29.7   established in connection with student education programs 
 29.8   approved by the school administration and consistent with safe, 
 29.9   sound banking practices. 
 29.10     Sec. 6.  Minnesota Statutes 1994, section 47.56, is amended 
 29.11  to read: 
 29.12     47.56 [TRANSFER OF LOCATION.] 
 29.13     The location of a detached facility ~~may be~~ transferred to 
 29.14  another location~~,~~ outside of a radius of three miles measured in 
 29.15  a straight line is subject to the same procedures and approval 
 29.16  as required hereunder for establishing a new detached facility, 
 29.17  except that the relocation of a detached facility within a 
 29.18  municipality of 10,000 or less population shall not require 
 29.19  consent of other banks required in section 47.52.  
 29.20     Sec. 7.  Minnesota Statutes 1994, section 47.61, 
 29.21  subdivision 3, is amended to read: 
 29.22     Subd. 3.  (a) "Electronic financial terminal" means an 
 29.23  electronic information processing device~~,~~ that is established to 
 29.24  do either or both of the following: 
 29.25     (1) capture the data necessary to initiate financial 
 29.26  transactions; or 
 29.27     (2) through its attendant support system, store or initiate 
 29.28  the transmission of the information necessary to consummate a 
 29.29  financial transaction. ~~other than~~ 
 29.30     (b) "Electronic financial terminal" does not include: 
 29.31     (1) a telephone ~~or~~; 
 29.32     (2) an electronic information processing device that is 
 29.33  used internally by a financial institution to conduct the 
 29.34  business activities of the institution~~, that is established to~~ 
 29.35  ~~do either or both of the following:~~ 
 29.36     ~~(a) capture the data necessary to initiate financial~~ 
 30.1   ~~transactions; or~~ 
 30.2      ~~(b) through its attendant support system, store or initiate~~ 
 30.3   ~~the transmission of the information necessary to consummate a~~ 
 30.4   ~~financial transaction.~~; or 
 30.5      (3) an electronic point-of-sale terminal operated by a 
 30.6   retailer that is used to process payments for the purchase of 
 30.7   goods and services by consumers through the use of debit cards, 
 30.8   which payment transactions are subject to the federal Electronic 
 30.9   Funds Transfer Act, United States Code, title 12, sections 1693 
 30.10  et seq., and Regulation E of the Federal Reserve Board, Code of 
 30.11  Federal Regulations title 12, subpart 205.2; this clause does 
 30.12  not exempt the retailer from liability for negligent conduct or 
 30.13  intentional misconduct of the operator under section 47.69, 
 30.14  subdivision 3.  
 30.15     Sec. 8.  Minnesota Statutes 1994, section 47.62, 
 30.16  subdivision 2, is amended to read: 
 30.17     Subd. 2.  [APPROVAL REQUIRED.] No electronic financial 
 30.18  terminal shall be established by a person other than a state or 
 30.19  federal savings ~~and loan~~ association, state or federal savings 
 30.20  bank, state or federal credit union, or state bank or national 
 30.21  banking association unless the commissioner has approved the 
 30.22  establishment of the terminal. 
 30.23     Sec. 9.  Minnesota Statutes 1994, section 47.62, is amended 
 30.24  by adding a subdivision to read: 
 30.25     Subd. 5.  [ESTABLISHMENT BY NOTICE.] A bank, savings bank, 
 30.26  savings association, or credit union organized under the laws of 
 30.27  this state may, after completing the notification procedure 
 30.28  required by this subdivision, establish and maintain one or more 
 30.29  electronic financial terminals.  The filing must be on forms 
 30.30  provided by the commissioner.  No electronic financial terminal 
 30.31  may be established according to sections 47.61 to 47.74 if 
 30.32  disallowed by order of the commissioner within 15 days of the 
 30.33  filing of a complete and acceptable notification of the intent 
 30.34  to establish an electronic financial terminal. 
 30.35     Sec. 10.  Minnesota Statutes 1994, section 47.62, is 
 30.36  amended by adding a subdivision to read: 
 31.1      Subd. 6.  [RELOCATION; PROCEDURE.] An application or 
 31.2   notification to relocate an existing financial terminal outside 
 31.3   a radius of three miles measured in a straight line must be 
 31.4   approved by, or a notification must be filed with, the 
 31.5   commissioner of commerce as provided for in this section. 
 31.6      Sec. 11.  Minnesota Statutes 1994, section 47.67, is 
 31.7   amended to read: 
 31.8      47.67 [ADVERTISING.] 
 31.9      No advertisement by a person which relates to an electronic 
 31.10  financial terminal may be inaccurate or misleading with respect 
 31.11  to such a terminal.  Except with respect to direct mailings by 
 31.12  financial institutions to their customers, the advertising of 
 31.13  rate of interest paid on accounts in connection with electronic 
 31.14  financial terminals is prohibited.  Any advertisement, either on 
 31.15  or off the site of an electronic financial terminal, promoting 
 31.16  the use or identifying the location of an electronic financial 
 31.17  terminal, which identifies any financial institution, group or 
 31.18  combination of financial institutions, or third parties as 
 31.19  owning or providing for the use of its services is prohibited.  
 31.20  The following shall be expressly permitted: 
 31.21     (a) a simple directory listing placed at the site of an 
 31.22  electronic financial terminal identifying the particular 
 31.23  financial institutions using its services; 
 31.24     (b) the use of a generic name, either on or off the site of 
 31.25  an electronic financial terminal, which does not promote or 
 31.26  identify any particular financial institution, group or 
 31.27  combination of financial institutions, or any third parties; 
 31.28     (c) media advertising or direct mailing of information by a 
 31.29  financial institution or retailer identifying locations of 
 31.30  electronic financial terminals and promoting their usage; ~~and~~ 
 31.31     (d) any advertising, whether on or off the site, relating 
 31.32  to electronic financial terminals, or the services performed at 
 31.33  the electronic financial terminals located on the premises of 
 31.34  the main office, or any office or detached facility of any 
 31.35  financial institution; 
 31.36     (e) a coupon or other promotional advertising that is 
 32.1   printed upon the reverse side of the receipt or record of each 
 32.2   transaction required under section 47.69, subdivision 6; and 
 32.3      (f) promotional advertising displayed on the electronic 
 32.4   screen. 
 32.5      Sec. 12.  Minnesota Statutes 1994, section 47.69, 
 32.6   subdivision 3, is amended to read: 
 32.7      Subd. 3.  Every financial institution using an electronic 
 32.8   financial terminal shall maintain reasonable procedures to 
 32.9   minimize losses from unauthorized withdrawals from its 
 32.10  customers' accounts by use of an electronic financial terminal.  
 32.11  After a customer makes a bona fide deposit or payment at an 
 32.12  electronic financial terminal and has received a receipt, any 
 32.13  loss due to theft or other reason shall not be borne by the 
 32.14  customer; provided, loss due to the nonpayment or dishonor of a 
 32.15  check, or other order for payment, deposited at an electronic 
 32.16  financial terminal shall be governed by the applicable 
 32.17  provisions of chapter 336.  A financial institution shall be 
 32.18  liable for all unauthorized withdrawals unless the unauthorized 
 32.19  withdrawal was ~~(1) due to the negligent conduct or the~~ 
 32.20  ~~intentional misconduct of the operator of an electronic~~ 
 32.21  ~~financial terminal or that operator's agent in which case the~~ 
 32.22  ~~operator of an electronic financial terminal or the agent shall~~ 
 32.23  ~~be liable, or (2)~~ due to the loss or theft of the customer 
 32.24  machine readable card in which case the customer shall be 
 32.25  liable, subject to a maximum liability of $50, for those 
 32.26  unauthorized withdrawals made prior to the time the financial 
 32.27  institution is notified of the loss or theft.  The limitation on 
 32.28  liability ~~contained in clause (2)~~ is effective only if the 
 32.29  issuer is notified of unauthorized charges contained in a bill 
 32.30  within 60 days of receipt of the bill by the person in whose 
 32.31  name the card is issued.  For purposes of this subdivision, 
 32.32  "unauthorized withdrawal" means a withdrawal by a person other 
 32.33  than the customer ~~who does not have actual, implied, or apparent~~ 
 32.34  ~~authority for such withdrawal,~~ and from which withdrawal the 
 32.35  customer or a member of the customer's family or household 
 32.36  receives no benefit. 
 33.1      Sec. 13.  Minnesota Statutes 1994, section 47.69, 
 33.2   subdivision 5, is amended to read: 
 33.3      Subd. 5.  Any customer of a financial institution may bring 
 33.4   a civil action against any person violating any subdivision of 
 33.5   this section in the district court in the county of the alleged 
 33.6   violator's residence or principal place of business or in the 
 33.7   county wherein the alleged violation occurred.  Upon adverse 
 33.8   adjudication, the defendant shall be liable for actual damages, 
 33.9   or $500, whichever is greater, punitive damages when applicable, 
 33.10  together with the court costs and reasonable attorneys' fees 
 33.11  incurred by the plaintiff.  The court may provide such equitable 
 33.12  relief as it deems necessary or proper, including enjoining the 
 33.13  defendant from further violations.  If the unauthorized 
 33.14  withdrawal was due to the negligent conduct or the intentional 
 33.15  misconduct of an operator or person establishing and maintaining 
 33.16  an electronic financial terminal other than a financial 
 33.17  institution or agent of a financial institution, that operator 
 33.18  or person establishing and maintaining an electronic financial 
 33.19  terminal or its agent is liable and subject to a civil action 
 33.20  under this subdivision by the financial institution considered 
 33.21  liable under subdivision 3 and having made reimbursement to the 
 33.22  customer. 
 33.23     Sec. 14.  Minnesota Statutes 1994, section 48.16, is 
 33.24  amended to read: 
 33.25     48.16 [BANKS MAY NOT PLEDGE ASSETS; EXCEPTIONS.] 
 33.26     No bank or trust company shall pledge, hypothecate, assign, 
 33.27  transfer, or create a lien upon or charge against any of its 
 33.28  assets except as follows:  
 33.29     (1) to the state; 
 33.30     (2) to secure public deposits; 
 33.31     (3) to secure funds of trustees in bankruptcy; 
 33.32     (4) to secure money borrowed in good faith from other 
 33.33  banks, trust companies, or a financial agency created by act of 
 33.34  Congress, or the state in programs specifically authorizing 
 33.35  state banks to participate as an eligible local lender; 
 33.36     (5) to finance the acquisition of real estate to be carried 
 34.1   as an asset as provided for in section 47.10; 
 34.2      (6) to secure a liability that arises from a transfer of a 
 34.3   direct obligation of, or obligations that are fully guaranteed 
 34.4   as to principal and interest by, the United States government or 
 34.5   an agency thereof that the bank or trust company is obligated to 
 34.6   repurchase. 
 34.7      This section shall not be construed to permit the use of 
 34.8   assets as security for public deposits other than the securities 
 34.9   made eligible by law for that purpose. 
 34.10     Sec. 15.  Minnesota Statutes 1994, section 48.24, 
 34.11  subdivision 5, is amended to read: 
 34.12     Subd. 5.  Loans or obligations shall not be subject under 
 34.13  this section to any limitation based upon such capital and 
 34.14  surplus to the extent that they are secured or covered by 
 34.15  guarantees, or by commitments or agreements to take over or to 
 34.16  purchase the same, made by: 
 34.17     (1) the commissioner of agriculture on the purchase of 
 34.18  agricultural land; 
 34.19     (2) any Federal Reserve bank; 
 34.20     (3) the United States or any department, bureau, board, 
 34.21  commission, or establishment of the United States, including any 
 34.22  corporation wholly owned directly or indirectly by the United 
 34.23  States; 
 34.24     (4) the Minnesota energy and economic development 
 34.25  authority; ~~or~~ 
 34.26     (5) the Minnesota export finance authority; or 
 34.27     (6) a municipality or political subdivision within 
 34.28  Minnesota to the extent that the guarantee or collateral is a 
 34.29  valid and enforceable general obligation of that political body. 
 34.30     Sec. 16.  Minnesota Statutes 1994, section 48.48, 
 34.31  subdivision 1, is amended to read: 
 34.32     Subdivision 1.  [SUBMISSION AND PUBLICATION.] At least four 
 34.33  times in each year, and at any other time when so requested by 
 34.34  the commissioner, every bank or trust company shall, within 30 
 34.35  days of the date of notice, make and transmit to the 
 34.36  commissioner or to the commissioner's designee, in a form the 
 35.1   commissioner prescribes, a report, ~~verified by its president or~~ 
 35.2   ~~vice-president and by its cashier or treasurer, and~~ attested ~~by~~ 
 35.3   ~~at least two~~ to in the official minutes of its directors, 
 35.4   stating in detail, under appropriate heads, as required by the 
 35.5   commissioner, its assets and liabilities at the close of 
 35.6   business on the day specified in the request.  The commissioner 
 35.7   may accept a report made to a federal authority having 
 35.8   supervision of banks or trust companies in fulfilling this 
 35.9   requirement.  ~~This statement shall be published once at the~~ 
 35.10  ~~expense of the bank or trust company in a qualified newspaper in~~ 
 35.11  ~~the municipality or town in which the bank or trust company is~~ 
 35.12  ~~located, and if there is no such newspaper, then in a qualified~~ 
 35.13  ~~newspaper likely to give notice in the municipality or town in~~ 
 35.14  ~~which the bank or trust company is located.  Proof of~~ 
 35.15  ~~publication shall be filed with the commissioner immediately~~ 
 35.16  ~~after publication of the report, but no later than 60 days~~ 
 35.17  ~~following the date of the notice.~~  That portion of the report 
 35.18  constituting the statement of assets, liabilities, and capital 
 35.19  and statement of income and expenses must be made available to 
 35.20  the public within 45 days of the notice at every location of the 
 35.21  bank or trust company including detached facilities and trust 
 35.22  service offices. 
 35.23     Sec. 17.  Minnesota Statutes 1994, section 48.48, 
 35.24  subdivision 2, is amended to read: 
 35.25     Subd. 2.  [PENALTIES FOR LATE SUBMISSION.] For failure to 
 35.26  send these reports to the commissioner or to the commissioner's 
 35.27  designee in the time specified, a bank or trust company shall 
 35.28  forfeit to the state the sum of $25 for each day of delay and 
 35.29  shall pay the accumulated sum to the commissioner upon a formal 
 35.30  demand for payment by the commissioner.  If it appears that a 
 35.31  report was ~~mailed~~ transmitted by a bank or trust company on or 
 35.32  before the end of the 30-day period, ~~or proof of publication~~ 
 35.33  ~~mailed on or before the end of the 60-day period,~~ the 
 35.34  commissioner shall waive any forfeit.  In the event it does not 
 35.35  appear that a report was timely ~~mailed~~ transmitted, the 
 35.36  commissioner may nevertheless waive forfeit upon a showing by 
 36.1   the bank or trust company to the satisfaction of the 
 36.2   commissioner that failure to send the reports was the result of 
 36.3   causes beyond the control of the bank or trust company. 
 36.4      Sec. 18.  Minnesota Statutes 1994, section 48.49, is 
 36.5   amended to read: 
 36.6      48.49 [BOOKS TO BE KEPT.] 
 36.7      Every such bank shall open and keep such books and accounts 
 36.8   as the commissioner may prescribe, for the purpose of keeping 
 36.9   accurate and convenient records of its transactions~~; and every~~ 
 36.10  ~~bank refusing or neglecting so to do shall forfeit $10 for every~~ 
 36.11  ~~day of such neglect or refusal~~.  
 36.12     Sec. 19.  Minnesota Statutes 1994, section 48.61, 
 36.13  subdivision 7, is amended to read: 
 36.14     Subd. 7.  [SUBSIDIARIES.] (a) A state bank or trust company 
 36.15  may organize, acquire, or invest in a subsidiary located in this 
 36.16  state for the purposes of engaging in one or more of the 
 36.17  following activities, subject to the prior written approval of 
 36.18  the commissioner: 
 36.19     (1) any activity, not including receiving deposits~~, lending~~ 
 36.20  ~~money,~~ or paying checks that a state bank is authorized to 
 36.21  engage in under state law or rule or under federal law or 
 36.22  regulation unless the activity is prohibited by the laws of this 
 36.23  state; 
 36.24     (2) any activity that a bank clerical service corporation 
 36.25  is authorized to engage in under section 48.89; and 
 36.26     (3) any other activity authorized for a national bank, a 
 36.27  bank holding company, or a subsidiary of a national bank or bank 
 36.28  holding company under federal law or regulation of general 
 36.29  applicability, and approved by the commissioner by rule.  
 36.30     (b) A bank or trust company subsidiary may engage in an 
 36.31  activity under this section only upon application together with 
 36.32  a filing fee of $250 and with the prior written approval of the 
 36.33  commissioner.  In approving or denying a proposed activity, the 
 36.34  commissioner shall consider the financial and management 
 36.35  strength of the bank or trust company, the current written 
 36.36  operating plan and policies of the proposed subsidiary 
 37.1   corporation, the bank or trust company's community reinvestment 
 37.2   record, and whether the proposed activity should be conducted 
 37.3   through a subsidiary of the bank or trust company. 
 37.4      (c) The aggregate amount of funds invested in either an 
 37.5   equity or loan capacity in all of the subsidiaries of the bank 
 37.6   or trust company authorized under this subdivision shall not 
 37.7   exceed 25 percent of the capital stock and paid in surplus of 
 37.8   the bank or trust company. 
 37.9      (d) A subsidiary organized or acquired under this 
 37.10  subdivision is subject to the examination and enforcement 
 37.11  authority of the commissioner under chapters 45 and 46 to the 
 37.12  same extent as a state bank or trust company. 
 37.13     (e) For the purposes of this section, "subsidiary" means a 
 37.14  corporation of which more than 50 percent of the voting shares 
 37.15  are owned or controlled by the bank or trust company. 
 37.16     Sec. 20.  [52.211] [STUDENT EDUCATION PROGRAMS.] 
 37.17     A credit union is allowed to establish part-time 
 37.18  deposit-taking locations at elementary and secondary schools 
 37.19  provided that the locations are established in connection with 
 37.20  student education programs approved by the school administration 
 37.21  and consistent with safe and sound financial institution 
 37.22  practices.  For purposes of this section, students do not need 
 37.23  to be members of the credit union to participate, and the 
 37.24  students' parents are not automatically made members by reason 
 37.25  of their child's participation. 
 37.26     Sec. 21.  Minnesota Statutes 1994, section 53.015, 
 37.27  subdivision 4, is amended to read: 
 37.28     Subd. 4.  [CAPITAL STOCK.] "Capital stock" means the par 
 37.29  value of preferred or common stock multiplied by the respective 
 37.30  number of shares of each type of stock.  For purposes of section 
 37.31  53.05, clause (7), capital stock may include an amount of 
 37.32  mandatory convertible debentures approved by the commissioner.  
 37.33  The terms and conditions for redemption of the qualifying 
 37.34  debentures must include the prior written approval of the 
 37.35  commissioner as a condition for a redemption, but in no event an 
 37.36  amount in excess of 50 percent of total preferred or common 
 38.1   stock. 
 38.2      Sec. 22.  Minnesota Statutes 1994, section 56.14, is 
 38.3   amended to read: 
 38.4      56.14 [DUTIES OF LICENSEE.] 
 38.5      Every licensee shall: 
 38.6      (1) deliver to the borrower (or if there are two or more 
 38.7   borrowers to one of them) at the time any loan is made a 
 38.8   statement making the disclosures and furnishing the information 
 38.9   required by the federal Truth-in-Lending Act, United States 
 38.10  Code, title 15, sections 1601 to 1667e, as amended from time to 
 38.11  time, with respect to the contract of loan.  A copy of the loan 
 38.12  contract may be delivered in lieu of a statement if it discloses 
 38.13  the required information; 
 38.14     (2) deliver or mail to the borrower without request, a 
 38.15  written receipt within 30 days following payment for each 
 38.16  payment by coin or currency made on account of any loan wherein 
 38.17  charges are computed and paid on unpaid principal balances for 
 38.18  the time actually outstanding, specifying the amount applied to 
 38.19  charges and the amount, if any, applied to principal, and 
 38.20  stating the unpaid principal balance, if any, of the loan; and 
 38.21  wherein precomputed charges have been added to the principal of 
 38.22  the loan specifying the amount of the payment applied to 
 38.23  principal and charges combined, the amount applied to default or 
 38.24  extension charges, if any, and stating the unpaid balance, if 
 38.25  any, of the precomputed loan contract.  A periodic statement 
 38.26  showing a payment received by mail complies with this clause; 
 38.27     (3) permit payment to be made in advance in any amount on 
 38.28  any contract of loan at any time, but the licensee may apply the 
 38.29  payment first to all charges in full at the agreed rate up to 
 38.30  the date of the payment; 
 38.31     (4) upon repayment of the loan in full, mark indelibly 
 38.32  every obligation and security, other than a mortgage or security 
 38.33  agreement which secures a new loan to the licensee, signed by 
 38.34  the borrower with the word "Paid" or "Canceled," and release any 
 38.35  mortgage or security agreement which no longer secures a loan to 
 38.36  the licensee, restore any pledge, and cancel and return any 
 39.1   note, and any assignment given to the licensee which does not 
 39.2   secure a new loan to the licensee within 20 days after the 
 39.3   repayment.  For purposes of this requirement, the document 
 39.4   including actual evidence of an obligation or security may be 
 39.5   maintained, stored, and retrieved in a form or format acceptable 
 39.6   to the commissioner under section 46.04, subdivision 3; 
 39.7      (5) display prominently in each licensed place of business 
 39.8   a full and accurate schedule, to be approved by the 
 39.9   commissioner, of the charges to be made and the method of 
 39.10  computing the same; furnish a copy of the contract of loan to 
 39.11  any person obligated on it or who may become obligated on it at 
 39.12  any time upon the request of that person; 
 39.13     (6) show in the loan contract or statement of loan the rate 
 39.14  or rates of charge on which the charge in the contract is based, 
 39.15  expressed in terms of rate or rates per annum.  The rate 
 39.16  expression shall be printed in at least 8-point type on the loan 
 39.17  statement or copy of the loan contract given to the borrower~~.~~; 
 39.18     (7) if a payment results in the prepayment of three or more 
 39.19  installment payments on a precomputed loan, at the same time the 
 39.20  receipt required by clause (2) is delivered or mailed, deliver 
 39.21  or mail to the borrower a notice in at least eight-point type as 
 39.22  part of the receipt or together with the receipt.  The notice 
 39.23  must contain the following statement:  
 39.24     "You have substantially prepaid the installment payments on 
 39.25     your loan and may experience an interest savings over the 
 39.26     remaining term only if you refinance the balance within the 
 39.27     next 30 days." 
 39.28     Sec. 23.  Minnesota Statutes 1994, section 56.155, 
 39.29  subdivision 1, is amended to read: 
 39.30     Subdivision 1.  [AUTHORIZATION.] No licensee shall, 
 39.31  directly or indirectly, sell or offer for sale any insurance in 
 39.32  connection with any loan made under this chapter except as and 
 39.33  to the extent authorized by this section.  The sale of credit 
 39.34  life, credit accident and health, and credit involuntary 
 39.35  unemployment insurance is subject to the provisions of chapter 
 39.36  62B, except that the term of the insurance may exceed 60 months 
 40.1   if the term of the loan exceeds 60 months.  Life, accident, 
 40.2   health, and involuntary unemployment insurance, or any of them, 
 40.3   may be written upon or in connection with any loan but must not 
 40.4   be required as additional security for the indebtedness.  If the 
 40.5   debtor chooses to procure credit life insurance, credit accident 
 40.6   and health insurance, or credit involuntary unemployment 
 40.7   insurance as security for the indebtedness, the debtor shall 
 40.8   have the option of furnishing this security through existing 
 40.9   policies of insurance that the debtor owns or controls, or of 
 40.10  furnishing the coverage through any insurer authorized to 
 40.11  transact business in this state.  A statement in substantially 
 40.12  the following form must be made orally, except for loans by mail 
 40.13  pursuant to section 56.12, and provided in writing in bold face 
 40.14  type of a minimum size of 12 points to the borrower before the 
 40.15  transaction is completed for each credit life, accident and 
 40.16  health, and involuntary unemployment insurance coverage sold: 
 40.17     CREDIT LIFE INSURANCE, CREDIT DISABILITY INSURANCE, AND 
 40.18     CREDIT INVOLUNTARY UNEMPLOYMENT INSURANCE ARE NOT REQUIRED 
 40.19     TO OBTAIN CREDIT.  YOU MAY BUY ANY INSURANCE FROM ANYONE 
 40.20     YOU CHOOSE OR YOU MAY USE EXISTING INSURANCE.  
 40.21     The licensee shall disclose whether or not the benefits 
 40.22  commence as of the first day of disability or involuntary 
 40.23  unemployment and shall further disclose the number of days that 
 40.24  an insured obligor must be disabled or involuntarily unemployed, 
 40.25  as defined in the policy, before benefits, whether retroactive 
 40.26  or nonretroactive, commence.  ~~In case there are multiple~~ 
 40.27  ~~obligors under a transaction subject to this chapter, no policy~~ 
 40.28  ~~or certificate of insurance providing credit unemployment~~ 
 40.29  ~~benefits may be procured by or through a licensee upon more than~~ 
 40.30  ~~one of the obligors.~~  In case there are multiple obligors under 
 40.31  a transaction subject to this chapter, no policy or certificate 
 40.32  of insurance providing credit accident and health ~~or~~, credit 
 40.33  life insurance, or credit unemployment benefits may be procured 
 40.34  by or through a licensee upon more than two of the obligors in 
 40.35  which case they shall be insured jointly or in the case of 
 40.36  credit unemployment benefits on a basis provided for in rules 
 41.1   adopted by the commissioner.  The premium or identifiable charge 
 41.2   for the insurance must not exceed that filed by the insurer with 
 41.3   the department of commerce.  The charge, computed at the time 
 41.4   the loan is made for a period not to exceed the full term of the 
 41.5   loan contract on an amount not to exceed the total amount 
 41.6   required to pay principal and charges, may be deducted from the 
 41.7   proceeds or may be included as part of the principal of any 
 41.8   loan.  If a borrower procures insurance by or through a 
 41.9   licensee, the statement required by section 56.14 must disclose 
 41.10  the cost to the borrower and the type of insurance, and the 
 41.11  licensee shall cause to be delivered to the borrower a copy of 
 41.12  the policy, certificate, or other evidence thereof, within a 
 41.13  reasonable time.  No licensee shall decline new or existing 
 41.14  insurance which meets the standards set out in this section nor 
 41.15  prevent any obligor from obtaining this insurance coverage from 
 41.16  other sources.  Notwithstanding any other provision of this 
 41.17  chapter, any gain or advantage to the licensee or to any 
 41.18  employee, affiliate, or associate of the licensee from this 
 41.19  insurance or the sale or provision thereof is not an additional 
 41.20  or further charge in connection with the loan; nor are any of 
 41.21  the provisions pertaining to insurance contained in this section 
 41.22  prohibited by any other provision of this chapter. 
 41.23     Sec. 24.  Minnesota Statutes 1994, section 59A.06, 
 41.24  subdivision 2, is amended to read: 
 41.25     Subd. 2.  Every licensee shall preserve its records of 
 41.26  premium finance transactions for at least three years after 
 41.27  making the final entry in respect to any premium finance 
 41.28  agreement.  The records may be preserved in photographic form or 
 41.29  in a form acceptable to the commissioner under section 46.04, 
 41.30  subdivision 3. 
 41.31     Sec. 25.  Minnesota Statutes 1994, section 62B.04, 
 41.32  subdivision 1, is amended to read: 
 41.33     Subdivision 1.  [CREDIT LIFE INSURANCE.] (1) The initial 
 41.34  amount of credit life insurance shall not exceed the amount of 
 41.35  principal repayable under the contract of indebtedness plus an 
 41.36  amount equal to one monthly payment.  Thereafter, if the 
 42.1   indebtedness is repayable in substantially equal installments 
 42.2   according to a predetermined schedule, the amount of insurance 
 42.3   shall not exceed the scheduled indebtedness plus one monthly 
 42.4   payment or actual amount of indebtedness, whichever is greater. 
 42.5      (2) Notwithstanding clause (1), the amount of credit life 
 42.6   insurance written in connection with credit transactions 
 42.7   repayable over a specified term exceeding 63 months shall not 
 42.8   exceed the greater of:  (i) the actual amount of unpaid 
 42.9   indebtedness as it exists from time to time; or (ii) where an 
 42.10  indebtedness is repayable in substantially equal installments 
 42.11  according to a predetermined schedule, the scheduled amount of 
 42.12  unpaid indebtedness, less any unearned interest or finance 
 42.13  charges, plus an amount equal to two monthly payments. 
 42.14     (3) Notwithstanding clauses (1) and (2), insurance on 
 42.15  educational, agricultural, and horticultural credit transaction 
 42.16  commitments may be written on a nondecreasing or level term plan 
 42.17  for the amount of the loan commitment. 
 42.18     (4) If the contract of indebtedness provides for a variable 
 42.19  rate of finance charge or interest, the initial rate or the 
 42.20  scheduled rates based on the initial index shall be used in 
 42.21  determining the scheduled amount of indebtedness, and subsequent 
 42.22  changes to the rate shall be disregarded in determining whether 
 42.23  the contract is repayable in substantially equal installments 
 42.24  according to a predetermined schedule. 
 42.25     Sec. 26.  Minnesota Statutes 1994, section 62B.08, 
 42.26  subdivision 2, is amended to read: 
 42.27     Subd. 2.  Each individual policy or group certificate shall 
 42.28  provide that in the event of termination of the insurance prior 
 42.29  to the scheduled maturity date of the indebtedness, any refund 
 42.30  of an amount paid by the debtor for insurance shall be paid or 
 42.31  credited promptly to the person entitled thereto; provided, 
 42.32  however, that ~~the commissioner shall prescribe a minimum refund~~ 
 42.33  ~~and no refund which would be less than such minimum need be made~~ 
 42.34  a premium refund or credit need not be made if the amount 
 42.35  thereof is less than $5.  The formula to be used in computing 
 42.36  the refund shall be filed with and approved by the commissioner. 
 43.1      Sec. 27.  [168.79] [MOTOR VEHICLE LEASING CONTRACT 
 43.2   REGULATION.] 
 43.3      Subdivision 1.  [DEFINITIONS.] (a) For purposes of this 
 43.4   section, the terms defined in this subdivision have the meanings 
 43.5   given. 
 43.6      (b) "Acquisition fee" means an origination fee, document 
 43.7   preparation fee, or similar change regardless of what it is 
 43.8   called, charged by the lessor or lease finance company for the 
 43.9   privilege of entering into the lease contract. 
 43.10     (c) "Capitalized cost" means the charge for the motor 
 43.11  vehicle and other charges to be financed under the lease 
 43.12  contract less any capitalized cost reduction. 
 43.13     (d) "Capitalized cost reduction" means the amount paid by 
 43.14  the lessee at the time of entering into the leasing contract to 
 43.15  be applied against the cost of the motor vehicle, regardless of 
 43.16  whether it is called a down payment or similar term. 
 43.17     (e) "Commissioner" means the commissioner of commerce or 
 43.18  that commissioner's designee. 
 43.19     (f) "Depreciation" means the capitalized cost minus the 
 43.20  residual. 
 43.21     (g) "Disposition fee" means a charge for disposing of the 
 43.22  motor vehicle upon termination fo the leasing contract. 
 43.23     (h) "Excess mileage charge" means a charge imposed for 
 43.24  exceeding the mileage allowed under the leasing contract.  
 43.25     (i) "Gap insurance" means insurance to protect the lessee, 
 43.26  in the event of a total loss of the motor vehicle, against a 
 43.27  difference between the amount owing under the leasing contract 
 43.28  the amount received from insurance on the motor vehicle. 
 43.29     (j) "Lease finance company" means a person engaged, in 
 43.30  whole or in part, in the business of purchasing motor vehicle 
 43.31  leasing contracts, or any rights with respect to them, in this 
 43.32  state from one or more lessors.  The term includes a bank, trust 
 43.33  company, savings bank, savings association, industrial loan and 
 43.34  thrift company, or a regulated lender, if so engaged.  The term 
 43.35  also includes a lessor engaged, in whole or in part, in the 
 43.36  business of creating and holding motor vehicle leasing 
 44.1   contracts.  The term includes a person that obtains a pledge of, 
 44.2   or other security interest in, motor vehicle leasing contracts. 
 44.3      (k) "Lessee" means an individual, a small business as 
 44.4   defined in section 645.445, or a small employer as defined in 
 44.5   section 62L.02, that enters into a motor vehicle leasing 
 44.6   contract in this state with a lessor. 
 44.7      (l) "Lessor" means a person engaged in the business of 
 44.8   entering into motor vehicle leasing contract in this state with 
 44.9   lessees. 
 44.10     (m) "Money factor" means the rate charged under the leasing 
 44.11  contract for the time value of money, whether called interest or 
 44.12  not.  The money factor is the interest rate divided by 2400. 
 44.13     (n) "Motor vehicle" has the meaning given in section 
 44.14  168.66, subdivision 5, except that the term includes all farm 
 44.15  tractors and other agricultural machinery. 
 44.16     (o) "Motor vehicle leasing contract" or "leasing contract" 
 44.17  means a contract for the lease of a motor vehicle entered into 
 44.18  in this state between a lessor and lessee, provided that a 
 44.19  contract for the short-term rental of a motor vehicle at a 
 44.20  daily, weekly, or monthly rental rate is not a lease.  
 44.21     (p) "MSRP" means the manufacturer's suggested retail price 
 44.22  of the motor vehicle. 
 44.23     (q) "Residual" means the lessor's determination of the 
 44.24  expected value of the motor vehicle at the scheduled termination 
 44.25  date of the leasing contract. 
 44.26     Subd. 2.  [APPLICABILITY.] (a) This section applies to all 
 44.27  motor vehicle leasing contracts entered into in this state, 
 44.28  including those extended or otherwise renewed beyond their 
 44.29  original term after the effective date of this section. 
 44.30     (b) This section does not apply to a retail installment 
 44.31  sales contract, as defined under section 168.66, subdivision 4. 
 44.32     Subd. 3.  [GENERAL REQUIREMENTS AND PROVISIONS.] (a) Motor 
 44.33  vehicle lease contracts must comply with Regulation Z of the 
 44.34  Federal Reserve Board.  This includes contracts that are not 
 44.35  covered by Regulation Z but are covered by this section.  For 
 44.36  purposes of the state requirement contained in this paragraph, 
 45.1   the commissioner may independently determine whether a motor 
 45.2   vehicle leasing contract complies with Regulation Z and is not 
 45.3   bound by any such determination made by a federal regulator for 
 45.4   purposes of federal enforcement.  The commissioner is not bound 
 45.5   by any interpretative opinions or other guidance provided by a 
 45.6   federal regulator. 
 45.7      (b) Motor vehicle leasing contracts and any disclosures and 
 45.8   other documents provided in connection with them must comply 
 45.9   with the applicable requirements of chapter 72C.  The 
 45.10  certification of the Flesch scale analysis readability score 
 45.11  must be provided by a qualified person not employed by, or 
 45.12  regularly retained in any way by, the lessor or lease finance 
 45.13  company.  For purposes of this paragraph, requirements are 
 45.14  applicable unless clearly inapplicable, as determined by the 
 45.15  commissioner. 
 45.16     (c) Motor vehicle leasing contracts must comply with all 
 45.17  applicable requirements of sections 168.66 to 168.78.  For 
 45.18  purposes of this paragraph, requirements are applicable unless 
 45.19  clearly inapplicable, as determined by the commissioner. 
 45.20     Subd. 4.  [REQUIRED DISCLOSURE.] (a) This subdivision 
 45.21  applies to all motor vehicle leasing contracts, in addition to 
 45.22  requirements under subdivision 3. 
 45.23     (b) A motor vehicle leasing contract, and all disclosures 
 45.24  required in connection with it, must not be used in this state 
 45.25  until the forms have been filed with and approved by the 
 45.26  commissioner.  Any such forms filed with the commissioner must 
 45.27  be accompanied by the written opinion of an attorney admitted to 
 45.28  practice in this state, stating that in the attorney's opinion, 
 45.29  the forms fully comply with all requirements of this section.  
 45.30  If, however, the attorney believes that there is any uncertainty 
 45.31  as to whether the forms fully comply, the attorney's opinion 
 45.32  shall state the uncertainty and the grounds for the 
 45.33  uncertainty.  If the attorney's opinion is based in whole or in 
 45.34  part upon the analysis by accountants, actuaries, financial 
 45.35  analysts, or other attorneys, the attorney providing the opinion 
 45.36  shall attach a copy of the written analyses relied upon.  The 
 46.1   attorney providing the opinion must not be employed by, or 
 46.2   retained on a regular basis by, the lessor, the lease finance 
 46.3   company, an affiliate of either, or a trade association of 
 46.4   either. 
 46.5      (c) A motor vehicle leasing contract may be canceled by the 
 46.6   lessee at any time, for any reason or for no reason, prior to 
 46.7   the end of the fifth business day after the day upon which the 
 46.8   leasing contract became effective, at no cost to the lessee. 
 46.9   Upon the cancellation, the lessor or lease finance company shall 
 46.10  refund to the lessee all payments of any kind made by the lessee 
 46.11  in connection with the lease contract. 
 46.12     (d) A motor vehicle leasing contract may be canceled by the 
 46.13  lessee, for any reason or for no reason, at any time prior to 
 46.14  the end of the 60th day after the effective date of the leasing 
 46.15  contract.  In the event of a cancellation under this paragraph, 
 46.16  the total charge to the lessee must not exceed the money factor 
 46.17  times 24 times the capitalized cost, times the number of months 
 46.18  since the effective date, in addition to a depreciation charge 
 46.19  of 1/60 times the charge for the motor vehicle times the number 
 46.20  of months since the effective date.  Partial months must be 
 46.21  included on a pro rata basis, based upon a 30-day month. 
 46.22     (e) A motor vehicle leasing contract must be accompanied by 
 46.23  a completed disclosure form, clearly explaining the differences 
 46.24  between a leasing contract, a sales finance contract, and a 
 46.25  purchase for cash.  The disclosure must compare the total cost 
 46.26  to the customer at one-year intervals, including the time value 
 46.27  of money. 
 46.28     (f) A motor vehicle leasing contract and any written 
 46.29  disclosures used with it must prominently display the telephone 
 46.30  number of the commissioner and state that complaints may be made 
 46.31  to the commissioner. 
 46.32     (g) A motor vehicle leasing contract must be accompanied by 
 46.33  a disclosure form informing the potential lessee of: 
 46.34     (1) the MSRP of the vehicle and, if the lessor is also in 
 46.35  the business of selling motor vehicles, the lessor's average 
 46.36  discount from the MSRP on cash purchases and sales finance 
 47.1   contracts over the most recent 12 calendar months, not including 
 47.2   the most recent calendar month; 
 47.3      (2) the charge for the motor vehicle implicit in the 
 47.4   leasing contract; 
 47.5      (3) the annual percentage rate as defined under the Federal 
 47.6   Truth in Lending Act, United States Code, title 15, sections 
 47.7   1601 to 1667e; 
 47.8      (4) the money factor and its relationship to the annual 
 47.9   percentage rate; 
 47.10     (5) an amortization schedule showing the allocation of each 
 47.11  payment among interest, credit against the capitalization cost, 
 47.12  and credit against other charges, showing with each payment the 
 47.13  amount required at that point to purchase the motor vehicle for 
 47.14  cash, if that option is offered; 
 47.15     (6) the amounts of the acquisition fee, capitalized cost, 
 47.16  capitalized cost reduction, depreciation, disposition fee, 
 47.17  excess mileage charge, premiums for gap insurance, the residual, 
 47.18  and any other charges of any kind; 
 47.19     (7) the commissions received by the lessor or lease finance 
 47.20  company for the gap insurance, together with a statement that 
 47.21  the insurance is not required as a condition of the leasing 
 47.22  contract; 
 47.23     (8) precisely how the amount needed to purchase the motor 
 47.24  vehicle will be determined at each point during the term of the 
 47.25  leasing contract, if that option is available, and at 
 47.26  termination; and 
 47.27     (9) the rights of cancellation under paragraphs (c) and (d).
 47.28     Subd. 5.  [ENFORCEMENT.] (a) The commissioner shall enforce 
 47.29  this section and has for purposes of this section all 
 47.30  enforcement powers otherwise available to the commissioner. 
 47.31     (b) A lessee or other person damaged by a violation of this 
 47.32  section has the rights and remedies provided under section 8.31, 
 47.33  subdivision 3a. 
 47.34     (c) The penalty or damages assessed against a lessor or 
 47.35  lease finance company under paragraphs (a) and (b) must be no 
 47.36  less than the interest that was paid or would have been payable 
 48.1   by the lessee over the term of the motor vehicle leasing 
 48.2   contract. 
 48.3      (d) A motor vehicle leasing contract that violates this 
 48.4   section is not assignable, transferable, or subject to creation 
 48.5   of a security interest.  Any purported assignment, transfer, or 
 48.6   creation of a security interest in the leasing contract is 
 48.7   voidable at the option of the party to whom the contract was 
 48.8   purportedly assigned, transferred, or pledged as security.  A 
 48.9   lessor, lease finance company, or the assignee of either, must 
 48.10  provide to prospective assignees, transferees, or recipients of 
 48.11  a security interest a certification of the commissioner that the 
 48.12  form of the motor vehicle leasing contract, and all disclosures 
 48.13  used with it, were approved by the commissioner prior to use and 
 48.14  have not since that time been disapproved by the commissioner. 
 48.15     Sec. 28.  Minnesota Statutes 1994, section 300.20, 
 48.16  subdivision 1, is amended to read: 
 48.17     Subdivision 1.  [ELECTION.] The business of savings banks 
 48.18  must be managed by a board of at least seven trustees, residents 
 48.19  of this state, each of whom, before being authorized to act, 
 48.20  must file a written acceptance of the trust.  The business of 
 48.21  other corporations must be managed by a board of at least ~~three~~ 
 48.22  five directors, unless a greater number is otherwise required by 
 48.23  law, elected by ballot by the stockholders or members.  A board 
 48.24  of directors of a financial institution referred to in section 
 48.25  47.12 which has less than five members on August 1, 1995, is not 
 48.26  subject to this requirement but may be increased to not more 
 48.27  than five members by order of the commissioner of commerce.  
 48.28     Sec. 29.  Minnesota Statutes 1994, section 325G.02, 
 48.29  subdivision 1, is amended to read: 
 48.30     Subdivision 1.  [APPLICABILITY.] For purposes of sections 
 48.31  325G.02 to ~~325G.04~~ 325G.042 the terms defined in this section 
 48.32  shall have meanings given them. 
 48.33     Sec. 30.  [325G.042] [CONSUMER CREDIT; EQUAL TREATMENT OF 
 48.34  SPOUSES.] 
 48.35     Subdivision 1.  [CONSIDERATION REQUIRED; SPOUSAL CREDIT 
 48.36  HISTORY.] (a) To the extent that an issuer of financial 
 49.1   transaction cards considers credit history in evaluating the 
 49.2   credit worthiness of similarly qualified applicants for a 
 49.3   similar type and amount of credit, in evaluating an applicant's 
 49.4   credit worthiness, the issuer shall consider: 
 49.5      (1) the credit history, when available, of accounts 
 49.6   designated as accounts that the applicant and the applicant's 
 49.7   spouse are permitted to use or for which both are contractually 
 49.8   liable; and 
 49.9      (2) at the applicant's request, the credit history, when 
 49.10  available, of any account reported in the name of the 
 49.11  applicant's spouse or former spouse that the applicant can 
 49.12  demonstrate accurately reflects the applicant's credit 
 49.13  worthiness. 
 49.14     (b) In considering a credit history referred to in 
 49.15  paragraph (a), the issuer shall consider it as if the credit 
 49.16  history were reported in the name of the applicant. 
 49.17     (c) This section does not affect the right of an issuer to 
 49.18  decline to issue a financial transaction card to an applicant 
 49.19  who does not meet the issuer's standards of credit worthiness, 
 49.20  other than credit history. 
 49.21     Subd. 2.  [CREDIT REPORTING; EQUAL TREATMENT OF 
 49.22  SPOUSES.] (a) An issuer of financial transaction cards that 
 49.23  furnishes credit information shall designate: 
 49.24     (1) any new account to reflect the participation of both 
 49.25  spouses if the applicant's spouse is permitted to use or is 
 49.26  contractually liable on the account, other than as a guarantor, 
 49.27  surety, endorser, or similar party; and 
 49.28     (2) any existing account to reflect such participation, 
 49.29  within 90 days after receiving a written request to do so from 
 49.30  one of the spouses.  The issuer shall at least once per year, 
 49.31  inform the accountholder in writing of the right to make that 
 49.32  request. 
 49.33     (b) If an issuer of financial transaction cards furnishes 
 49.34  credit information to a consumer reporting agency concerning an 
 49.35  account designated to reflect the participation of both spouses, 
 49.36  the issuer shall furnish the information in a manner that will 
 50.1   enable the agency to provide access to the information in the 
 50.2   name of each spouse. 
 50.3      (c) If an issuer of financial transaction cards furnishes 
 50.4   credit information in response to an inquiry concerning an 
 50.5   account designated to reflect the participation of both spouses, 
 50.6   the issuer shall furnish the information in the name of the 
 50.7   spouse about whom the information is requested. 
 50.8      Subd. 3.  [ENFORCEMENT.] Enforcement of this section is 
 50.9   under section 8.31, except that in the private cause of action 
 50.10  under subdivision 3a of that section, the damages are limited to 
 50.11  $1,000 and the plaintiff has no right to recover costs of 
 50.12  investigation and attorney fees. 
 50.13     Sec. 31.  Minnesota Statutes 1994, section 327B.04, 
 50.14  subdivision 1, is amended to read: 
 50.15     Subdivision 1.  [LICENSE AND BOND REQUIRED.] No person 
 50.16  shall act as a dealer in manufactured homes, new or used, 
 50.17  without a license and a surety bond as provided in this 
 50.18  section.  No person shall manufacture manufactured homes without 
 50.19  a license and a surety bond as provided in this section.  The 
 50.20  licensing and bonding requirements of this section do not apply 
 50.21  to any bank, savings bank, savings ~~and loan~~ association, or 
 50.22  credit union, chartered by either this state or the federal 
 50.23  government, which acts as a dealer only by repossessing 
 50.24  manufactured homes and then offering the homes for resale 
 50.25  ~~through the brokering services of a licensed dealer or real~~ 
 50.26  ~~estate broker or salesperson~~.  
 50.27     Sec. 32.  Minnesota Statutes 1994, section 327B.09, 
 50.28  subdivision 1, is amended to read: 
 50.29     Subdivision 1.  [LICENSE REQUIRED.] No person shall engage 
 50.30  in the business, either exclusively or in addition to any other 
 50.31  occupation of manufacturing, selling, offering to sell, 
 50.32  soliciting or advertising the sale of manufactured homes, or act 
 50.33  as a broker without being licensed as a manufacturer or a dealer 
 50.34  as provided in section 327B.04.  Any person who manufactures, 
 50.35  sells, offers to sell, solicits or advertises the sale of 
 50.36  manufactured homes, or acts as a broker in violation of this 
 51.1   subdivision shall nevertheless be subject to the duties, 
 51.2   prohibitions and penalties imposed by sections 327B.01 to 
 51.3   327B.12.  This ~~subdivision~~ chapter does not prohibit either an 
 51.4   individual from reselling, without a license, a manufactured 
 51.5   home which is or has been the individual's residence or any 
 51.6   bank, savings bank, savings association, or credit union, 
 51.7   chartered by either this state or the federal government, from 
 51.8   reselling, without a license, a repossessed manufactured home.  
 51.9      Sec. 33.  Minnesota Statutes 1994, section 332.23, 
 51.10  subdivision 1, is amended to read: 
 51.11     Subdivision 1.  [ORIGINATION FEE, CREDIT BACKGROUND REPORT 
 51.12  COST.] The licensee may charge an origination fee of not more 
 51.13  than $25 and collect the actual cost of a credit background 
 51.14  report from a credit reporting agency not related to or 
 51.15  affiliated with the licensee.  The costs to the debtor of said 
 51.16  origination fee and credit background report may be made from 
 51.17  the originating amount paid by the debtor to the licensee.  The 
 51.18  cost of only one credit background report may be collected from 
 51.19  the debtor in any 12-month period. 
 51.20     Sec. 34.  Minnesota Statutes 1994, section 332.23, 
 51.21  subdivision 2, is amended to read: 
 51.22     Subd. 2.  [WITHDRAWAL OF FEE.] The licensee may withdraw 
 51.23  and retain as partial payment of the licensee's total fee not 
 51.24  more than 15 percent of any sum deposited with the licensee by 
 51.25  the debtor for distribution.  The remaining 85 percent must be 
 51.26  disbursed to listed creditors pursuant to and in accordance with 
 51.27  the contract between the debtor and the licensee within 35 days 
 51.28  after receipt.  Total payment to licensee for services rendered, 
 51.29  excluding the origination fee and any credit background report, 
 51.30  shall not exceed 15 percent of funds deposited with licensee by 
 51.31  debtor for distribution. 
 51.32     Sec. 35.  [RECOMMENDATIONS; POINT-OF-SALE TERMINALS.] 
 51.33     The commissioner of commerce shall select and convene an 
 51.34  informal workgroup to make recommendations to the commissioner 
 51.35  regarding whether there is a need to license electronic 
 51.36  point-of-sale terminals operated by a retailer for use with 
 52.1   credit cards, rather than debit cards.  The informal workgroup 
 52.2   must include persons representing retailers, financial 
 52.3   institutions, and consumers.  The commissioner shall make 
 52.4   recommendations to the legislature no later than December 1, 
 52.5   1994. 
 52.6      Sec. 36.  [EFFECTIVE DATE.] 
 52.7      Sections 1 to 2, 5 to 15, 17 to 21, 23 to 26, 28, and 31 to 
 52.8   35 are effective the day following final enactment.  Sections 3 
 52.9   and 4 are effective September 1, 1995.  Section 16 is effective 
 52.10  for reports filed for close of business beginning June 30, 1995. 
 52.11  Section 22 is effective June 1, 1995.  Section 27 is effective 
 52.12  January 1, 1996.  Sections 29 and 30 are effective August 1, 
 52.13  1995.  
 52.14                             ARTICLE 3 
 52.15           INTEREST RATE SIMPLIFICATION AND SMALL DOLLAR 
 52.16                         CREDIT AVAILABILITY 
 52.17     Section 1.  [47.59] [FINANCIAL INSTITUTION CREDIT EXTENSION 
 52.18  MAXIMUM RATES.] 
 52.19     Subdivision 1.  [DEFINITIONS.] For purposes of this 
 52.20  section, the following definitions shall apply. 
 52.21     (a) "Actuarial method" has the meaning given the term in 
 52.22  the Code of Federal Regulations, title 12, part 226, and 
 52.23  appendix J thereto. 
 52.24     (b) "Annual percentage rate" has the meaning given the term 
 52.25  in the Code of Federal Regulations, title 12, part 226, but 
 52.26  using the definition of "finance charge" used in this section. 
 52.27     (c) "Borrower" means a debtor under a loan or a purchaser 
 52.28  or debtor under a credit sale contract. 
 52.29     (d) "Business purpose" means a purpose other than personal, 
 52.30  family, household, or agricultural purpose. 
 52.31     (e) "Cardholder" means a person to whom a credit card is 
 52.32  issued or who has agreed with the financial institution to pay 
 52.33  obligations arising from the issuance to or use of the card by 
 52.34  another person. 
 52.35     (f) "Consumer loan" means a loan made by a financial 
 52.36  institution in which: 
 53.1      (1) the debtor is a person other than an organization; 
 53.2      (2) the debt is incurred primarily for a personal, family, 
 53.3   or household purpose; and 
 53.4      (3) the debt is payable in installments or a finance charge 
 53.5   is made. 
 53.6      (g) "Credit" means the right granted by a financial 
 53.7   institution to a borrower to defer payment of a debt, to incur 
 53.8   debt and defer its payment, or to purchase property or services 
 53.9   and defer payment. 
 53.10     (h) "Credit card" means a card or device issued under an 
 53.11  arrangement pursuant to which a financial institution gives to a 
 53.12  cardholder the privilege of obtaining credit from the financial 
 53.13  institution or other person in purchasing or leasing property or 
 53.14  services, obtaining loans, or otherwise.  A transaction is 
 53.15  "pursuant to a credit card" only if credit is obtained according 
 53.16  to the terms of the arrangement by transmitting mechanical or 
 53.17  electronic methods, or in any other manner.  A transaction is 
 53.18  not "pursuant to a credit card" if the card or device is used 
 53.19  solely in that transaction to: 
 53.20     (1) identify the cardholder or evidence the cardholder's 
 53.21  creditworthiness and credit is not obtained according to the 
 53.22  terms of the arrangement; 
 53.23     (2) obtain a guarantee of payment from the cardholder's 
 53.24  deposit account, whether or not the payment results in a credit 
 53.25  extension to the cardholder by the financial institution; or 
 53.26     (3) effect an immediate transfer of funds from the 
 53.27  cardholder's deposit account by electronic or other means, 
 53.28  whether or not the transfer results in a credit extension to the 
 53.29  cardholder by the financial institution. 
 53.30     (i) "Credit sale contract" means a contract evidencing a 
 53.31  credit sale.  "Credit sale" means a sale of goods or services, 
 53.32  or an interest in land, in which: 
 53.33     (1) credit is granted by a seller who regularly engages as 
 53.34  a seller in credit transactions of the same kind; and 
 53.35     (2) the debt is payable in installments or a finance charge 
 53.36  is made. 
 54.1      (j) "Finance charge" has the meaning set forth in this 
 54.2   section. 
 54.3      (k) "Financial institution" means state and federally 
 54.4   chartered banks, state and federally chartered banks and trusts, 
 54.5   trust companies with banking powers, state and federally 
 54.6   chartered savings banks, state and federally chartered savings 
 54.7   associations, industrial loan and thrift companies, and 
 54.8   regulated lenders. 
 54.9      (l) "Loan" means: 
 54.10     (1) the creation of debt by the financial institution's 
 54.11  payment of money to the borrower or a third person for the 
 54.12  account of the borrower; 
 54.13     (2) the creation of debt pursuant to a credit card in any 
 54.14  manner, including a cash advance or the financial institution's 
 54.15  honoring a draft or similar order for the payment of money drawn 
 54.16  or accepted by the borrower, paying or agreeing to pay the 
 54.17  borrower's obligation, or purchasing or otherwise acquiring the 
 54.18  borrower's obligation from the obligee or the borrower's 
 54.19  assignee; 
 54.20     (3) the creation of debt by a cash advance to a borrower 
 54.21  pursuant to an overdraft line of credit arrangement; 
 54.22     (4) the creation of debt by a credit to an account with the 
 54.23  financial institution upon which the borrower is entitled to 
 54.24  draw immediately; 
 54.25     (5) the forbearance of debt arising from a loan; and 
 54.26     (6) the creation of debt pursuant to open-end credit. 
 54.27     "Loan" does not include the forbearance of debt arising 
 54.28  from a sale or lease, a credit sale contract, or an overdraft 
 54.29  from a person's deposit account with a financial institution 
 54.30  which is not pursuant to a written agreement to pay overdrafts 
 54.31  with the right to defer repayment thereof. 
 54.32     (m) "Official fees" means: 
 54.33     (1) fees and charges which actually are or will be paid to 
 54.34  public officials for determining the existence of or for 
 54.35  perfecting, releasing, terminating, or satisfying a security 
 54.36  interest or mortgage relating to a loan or credit sale, and any 
 55.1   separate fees or charges which actually are or will be paid to 
 55.2   public officials for recording a notice described in section 
 55.3   580.032, subdivision 1; and 
 55.4      (2) premiums payable for insurance in lieu of perfecting a 
 55.5   security interest or mortgage otherwise required by a financial 
 55.6   institution in connection with a loan or credit sale, if the 
 55.7   premium does not exceed the fees and charges described in clause 
 55.8   (1), which would otherwise be payable. 
 55.9      (n) "Organization" means a corporation, government, or 
 55.10  government subdivision or agency, trust, estate, partnership, 
 55.11  joint venture, cooperative, limited liability company, limited 
 55.12  liability partnership, or association. 
 55.13     (o) "Person" means a natural person or an organization. 
 55.14     (p) "Principal" means the total of: 
 55.15     (1) the amount paid to, received by or paid or repayable 
 55.16  for the account of the borrower; and 
 55.17     (2) to the extent that payment is deferred: 
 55.18     (i) the amount actually paid or to be paid by the financial 
 55.19  institution for additional charges permitted under this section; 
 55.20  and 
 55.21     (ii) prepaid finance charges. 
 55.22     Subd. 2.  [APPLICATION.] This section does not apply to 
 55.23  loans and other direct advances of credit made by financial 
 55.24  institutions as lender or creditor under sections 47.20, 47.21, 
 55.25  47.201, 47.204, 47.58, 47.60, 48.185, 48.195, 59A.01, 334.01, 
 55.26  334.011, 334.012, 334.06, and 334.061 to 334.19.  
 55.27     Subd. 3.  [FINANCE CHARGE FOR LOANS.] (a) With respect to a 
 55.28  loan, including a loan pursuant to open-end credit but excluding 
 55.29  open-end credit pursuant to a credit card, a financial 
 55.30  institution may contract for and receive a finance charge on the 
 55.31  unpaid balance of the principal amount not to exceed the greater 
 55.32  of:  
 55.33     (1) an annual percentage rate not exceeding 21.75 percent; 
 55.34  or 
 55.35     (2) the total of: 
 55.36     (i) 33 percent per year on that part of the unpaid balance 
 56.1   of the principal amount not exceeding $750; and 
 56.2      (ii) 19 percent per year on that part of the unpaid balance 
 56.3   of the principal amount exceeding $750.  
 56.4      With respect to open-end credit pursuant to a credit card, 
 56.5   the financial institution may contract for and receive a finance 
 56.6   charge on the unpaid balance of the principal amount at an 
 56.7   annual percentage rate not exceeding 18 percent per year. 
 56.8      (b) On a loan where the finance charge is calculated 
 56.9   according to the method provided for in paragraph (a), clause 
 56.10  (2), the finance charge must be contracted for and earned as 
 56.11  provided in that provision or at the single annual percentage 
 56.12  rate computed to the nearest .001 of one percent that would earn 
 56.13  the same total finance charge at maturity of the contract as 
 56.14  would be earned by the application of the graduated rates 
 56.15  provided in paragraph (a), clause (2), when the debt is paid 
 56.16  according to the agreed terms and the calculations are made 
 56.17  according to the actuarial method. 
 56.18     (c) With respect to a loan, the finance charge must be 
 56.19  considered not to exceed the maximum annual percentage rate 
 56.20  permitted under this section if the finance charge contracted 
 56.21  for and received does not exceed the equivalent of the maximum 
 56.22  annual percentage rate calculated in accordance with Code of 
 56.23  Federal Regulations, title 12, part 226, except that the 
 56.24  following will not in any event be considered a finance charge: 
 56.25     (1) a charge as a result of default or delinquency under 
 56.26  subdivision 6 if made for actual unanticipated late payment, 
 56.27  delinquency, default, or other similar occurrence, and a charge 
 56.28  made for an extension or deferment under subdivision 5, unless 
 56.29  the parties agree that these charges are finance charges; 
 56.30     (2) an additional charge under subdivision 6; or 
 56.31     (3) a discount, if a financial institution purchases a loan 
 56.32  at less than the face amount of the obligation or purchases or 
 56.33  satisfies obligations of a cardholder pursuant to a credit card 
 56.34  and the purchase or satisfaction is made at less than the face 
 56.35  amount of the obligation. 
 56.36     (d) This subdivision does not limit or restrict the manner 
 57.1   of calculating the finance charge, whether by way of add-on, 
 57.2   discount, discount points, precomputed charges, single annual 
 57.3   percentage rate, variable rate, interest in advance, 
 57.4   compounding, average daily balance method, or otherwise, if the 
 57.5   annual percentage rate does not exceed that permitted by this 
 57.6   section. 
 57.7      (e) With respect to a loan secured by real estate, if a 
 57.8   finance charge is calculated or collected in advance, or 
 57.9   included in the principal amount of the loan, and the borrower 
 57.10  prepays the loan in full, the financial institution shall credit 
 57.11  the borrower with a refund of the charge to the extent that the 
 57.12  annual percentage rate yield on the loan would exceed the 
 57.13  maximum rate permitted under paragraph (a), taking into account 
 57.14  the prepayment. 
 57.15     (f) With respect to all other loans, if the finance charge 
 57.16  is calculated or collected in advance, or included in the 
 57.17  principal amount of the loan, and the borrower prepays the loan 
 57.18  in full, the financial institution shall credit the borrower 
 57.19  with a refund of the charge to the extent the annual percentage 
 57.20  rate yield on the loan would exceed the annual percentage rate 
 57.21  on the loan as originally determined under paragraph (a) and 
 57.22  taking into account the prepayment. 
 57.23     (g) For the purpose of calculating the refund under this 
 57.24  subdivision, the financial institution may assume that the 
 57.25  contract was paid before the date of prepayment according to the 
 57.26  schedule of payments under the loan and that all payments were 
 57.27  paid on their due dates. 
 57.28     (h) For loans repayable in substantially equal successive 
 57.29  monthly installments, the financial institution may calculate 
 57.30  the refund under paragraph (f) as the portion of the finance 
 57.31  charge allocable on an actuarial basis to all wholly unexpired 
 57.32  payment periods following the date of prepayment, based on the 
 57.33  annual percentage rate on the loan as originally determined 
 57.34  under paragraph (a), and for the purpose of calculating the 
 57.35  refund may assume that all payments are made on the due date. 
 57.36     (i) The dollar amounts in this subdivision and subdivision 
 58.1   (6), clause (4), shall change periodically, as provided in this 
 58.2   section, according to and to the extent of changes in the 
 58.3   implicit price deflator for the gross domestic product, 1987 = 
 58.4   100, compiled by the United States Department of Commerce, and 
 58.5   hereafter referred to as the index.  The index for December 1991 
 58.6   is the reference base index for adjustments of dollar amounts. 
 58.7      (j) The designated dollar amounts shall change on July 1 of 
 58.8   each even-numbered year if the percentage of change, calculated 
 58.9   to the nearest whole percentage point, between the index for 
 58.10  December of the preceding year and the reference base index is 
 58.11  ten percent or more; but 
 58.12     (1) the portion of the percentage change in the index in 
 58.13  excess of a multiple of ten percent shall be disregarded and the 
 58.14  dollar amounts shall change only in multiples of ten percent of 
 58.15  the amounts appearing in this act, on the date of enactment; and 
 58.16     (2) the dollar amounts shall not change if the amounts 
 58.17  required by this section are those currently in effect pursuant 
 58.18  to this act, as a result of earlier application of this section. 
 58.19     (k) If the index is revised, the percentage of change 
 58.20  pursuant to this section shall be calculated on the basis of the 
 58.21  revised index.  If a revision of the index changes the reference 
 58.22  base index, a revised reference base index shall be determined 
 58.23  by multiplying the reference base index then applicable by the 
 58.24  rebasing factor furnished by the department of commerce.  If the 
 58.25  index is superseded, the index referred to in this section is 
 58.26  the one represented by the department of commerce as reflecting 
 58.27  most accurately changes in the purchasing power of the dollar 
 58.28  for consumers. 
 58.29     (l) The commissioner shall announce and publish: 
 58.30     (1) on or before April 30 of each year in which dollar 
 58.31  amounts are to change, the changes in dollar amounts required by 
 58.32  paragraph (j); and 
 58.33     (2) promptly after the changes occur, changes in the index 
 58.34  required by paragraph (k) including, if applicable, the 
 58.35  numerical equivalent of the reference base index under a revised 
 58.36  reference base index and the designation or title of any index 
 59.1   superseding the index. 
 59.2      (m) A person does not violate this chapter with respect to 
 59.3   a transaction otherwise complying with this chapter if that 
 59.4   person relies on dollar amounts either determined according to 
 59.5   paragraph (j), clause (2), or appearing in the last publication 
 59.6   of the commissioner announcing the then current dollar amounts. 
 59.7      (n) The adjustments provided in this section shall not be 
 59.8   affected unless explicitly provided otherwise by law. 
 59.9      Subd. 4.  [FINANCE CHARGE FOR CREDIT SALES MADE BY A THIRD 
 59.10  PARTY.] (a) A person may enter into a credit sale contract for 
 59.11  sale to a financial institution and a financial institution may 
 59.12  purchase and enforce the contract, if the annual percentage rate 
 59.13  provided for in the contract does not exceed that permitted in 
 59.14  this section, or, in the case of contracts governed by sections 
 59.15  168.66 to 168.77, the rates permitted by those sections.  
 59.16     (b) The annual percentage rate may not exceed the 
 59.17  equivalent of the greater of either of the following:  
 59.18     (1) the total of:  
 59.19     (i) 36 percent per year on that part of the unpaid balances 
 59.20  of the amount financed that is $300 or less; 
 59.21     (ii) 21 percent per year on that part of the unpaid 
 59.22  balances of the amount financed which exceeds $300 but does not 
 59.23  exceed $1,000; and 
 59.24     (iii) 15 percent per year on that part of the unpaid 
 59.25  balances of the amount financed which exceeds $1,000; or 
 59.26     (2) 19 percent per year on the unpaid balances of the 
 59.27  amount financed.  
 59.28     (c) This subdivision does not limit or restrict the manner 
 59.29  of calculating the finance charge whether by way of add-on, 
 59.30  discount, discount points, single annual percentage rate, 
 59.31  precomputed charges, variable rate, interest in advance, 
 59.32  compounding, or otherwise, if the annual percentage rate 
 59.33  calculated under paragraph (d) does not exceed that permitted by 
 59.34  this section.  The finance charge may be contracted for and 
 59.35  earned at the single annual percentage rate that would earn the 
 59.36  same finance charge as the graduated rates when the debt is paid 
 60.1   according to the agreed terms and the finance charge is 
 60.2   calculated under paragraph (d).  If the finance charge is 
 60.3   calculated and collected in advance, or included in the 
 60.4   principal amount of the contract, and the borrower prepays the 
 60.5   contract in full, the financial institution shall credit the 
 60.6   borrower with a refund of the charge to the extent the annual 
 60.7   percentage rate yield on the contract would exceed the annual 
 60.8   percentage rate on the contract as originally determined under 
 60.9   paragraph (d) and taking into account the prepayment.  For the 
 60.10  purpose of calculating the refund under this subdivision, the 
 60.11  financial institution may assume that the contract was paid 
 60.12  before the date of prepayment according to the schedule of 
 60.13  payments under the contract and that all payments were paid on 
 60.14  their due dates.  For contracts repayable in substantially equal 
 60.15  successive monthly installments, the financial institution may 
 60.16  calculate the refund as the portion of the finance charge 
 60.17  allocable on an actuarial basis to all wholly unexpired payment 
 60.18  periods following the date of prepayment, based on the annual 
 60.19  percentage rate on the contract as originally determined under 
 60.20  paragraph (d), and for the purpose of calculating the refund may 
 60.21  assume that all payments are made on the due date.  
 60.22     (d) The annual percentage rate must be calculated in 
 60.23  accordance with Code of Federal Regulations, title 12, part 226, 
 60.24  except that the following will not in any event be considered a 
 60.25  finance charge:  
 60.26     (1) a charge as a result of delinquency or default under 
 60.27  subdivision 6 if made for actual unanticipated late payment, 
 60.28  delinquency, default, or other similar occurrence, and a charge 
 60.29  made for an extension or deferment under subdivision 5, unless 
 60.30  the parties agree that these charges are finance charges; 
 60.31     (2) an additional charge under subdivision 6; or 
 60.32     (3) a discount, if a financial institution purchases a 
 60.33  contract evidencing a credit sale at less than the face amount 
 60.34  of the obligation or purchases or satisfies obligations of a 
 60.35  cardholder according to a credit card and the purchase or 
 60.36  satisfaction is made at less than the face amount of the 
 61.1   obligation.  
 61.2      Subd. 5.  [EXTENSIONS AND DEFERMENTS.] The parties may 
 61.3   agree in writing, either in the loan contract or credit sale 
 61.4   contract or in a subsequent agreement, to a deferment of wholly 
 61.5   unpaid installments.  For precomputed loans and credit sale 
 61.6   contracts, the manner of deferment charge shall be determined as 
 61.7   provided for in this section.  A deferment postpones the 
 61.8   scheduled due date of the earliest unpaid installment and all 
 61.9   subsequent installments as originally scheduled, or as 
 61.10  previously deferred, for a period equal to the deferment 
 61.11  period.  The deferment period is that period during which no 
 61.12  installment is scheduled to be paid by reason of the deferment.  
 61.13  The deferment charge for a one-month period may not exceed the 
 61.14  applicable charge for the installment period immediately 
 61.15  following the due date of the last undeferred payment.  A 
 61.16  proportionate charge may be made for deferment periods of more 
 61.17  or less than one month.  A deferment charge is earned pro rata 
 61.18  during the deferment period and is fully earned on the last day 
 61.19  of the deferment period.  If a loan or credit sale is prepaid in 
 61.20  full during a deferment period, the financial institution shall 
 61.21  make or credit to the borrower a refund of the unearned 
 61.22  deferment charge in addition to any other refund or credit made 
 61.23  for prepayment of the loan or credit sale in full.  
 61.24     For the purpose of this subdivision, "applicable charge" 
 61.25  means the amount of finance charge attributable to each monthly 
 61.26  installment period for the loan or credit sale contract.  The 
 61.27  applicable charge is computed as if each installment period were 
 61.28  one month and any charge for extending the first installment 
 61.29  period beyond the one month, or reduction in charge for a first 
 61.30  installment less than one month, is ignored.  The applicable 
 61.31  charge for any installment period is that which would have been 
 61.32  made for the period had the loan been made on an 
 61.33  interest-bearing basis at the single annual percentage rate 
 61.34  provided for in the contract based upon the assumption that all 
 61.35  payments were made according to schedule.  For convenience in 
 61.36  computation, the financial institution may round the single 
 62.1   annual rate to the nearest one quarter of one percent. 
 62.2      Subd. 6.  [ADDITIONAL CHARGES.] (a) In addition to the 
 62.3   finance charges permitted by this section, a financial 
 62.4   institution may contract for and receive the following 
 62.5   additional charges that may be included in the amount financed:  
 62.6      (1) official fees and taxes; 
 62.7      (2) charges for insurance as described in paragraph (b); 
 62.8      (3) with respect to a loan or credit sale contract secured 
 62.9   by real estate, the following "closing costs," if they are bona 
 62.10  fide, reasonable in amount, and not for the purpose of 
 62.11  circumvention or evasion of this section: 
 62.12     (i) fees or premiums for title examination, abstract of 
 62.13  title, title insurance, surveys, or similar purposes; 
 62.14     (ii) fees for preparation of a deed, mortgage, settlement 
 62.15  statement, or other documents, if not paid to the financial 
 62.16  institution; 
 62.17     (iii) escrows for future payments of taxes, including 
 62.18  assessments for improvements, insurance, and water, sewer, and 
 62.19  land rents; 
 62.20     (iv) fees for notarizing deeds and other documents; and 
 62.21     (v) appraisal and credit report fees; 
 62.22     (4) a delinquency charge on a payment, including the 
 62.23  minimum payment due in connection with the open-end credit, not 
 62.24  paid in full on or before the tenth day after its due date in an 
 62.25  amount not to exceed five percent of the amount of the payment 
 62.26  or $5.20, whichever is greater; 
 62.27     (5) for a returned check or returned automatic payment 
 62.28  withdrawal request, an amount not in excess of the service 
 62.29  charge limitation in section 332.50; and 
 62.30     (6) charges for other benefits, including insurance, 
 62.31  conferred on the borrower that are of a type that is not for 
 62.32  credit. 
 62.33     (b) An additional charge may be made for insurance written 
 62.34  in connection with the loan or credit sale contract, which may 
 62.35  be included in the amount financed:  
 62.36     (1) with respect to insurance against loss of or damage to 
 63.1   property, or against liability arising out of the ownership or 
 63.2   use of property, if the financial institution furnishes a clear, 
 63.3   conspicuous, and specific statement in writing to the borrower 
 63.4   setting forth the cost of the insurance if obtained from or 
 63.5   through the financial institution and stating that the borrower 
 63.6   may choose the person through whom the insurance is to be 
 63.7   obtained; 
 63.8      (2) with respect to credit insurance providing life, 
 63.9   accident, health, or unemployment coverage, if the insurance 
 63.10  coverage is not required by the financial institution, and this 
 63.11  fact is clearly and conspicuously disclosed in writing to the 
 63.12  borrower, and the borrower gives specific, dated, and separately 
 63.13  signed affirmative written indication of the borrower's desire 
 63.14  to do so after written disclosure to the borrower of the cost of 
 63.15  the insurance; and 
 63.16     (3) with respect to the vendor's single interest insurance, 
 63.17  but only (i) to the extent that the insurer has no right of 
 63.18  subrogation against the borrower; and (ii) to the extent that 
 63.19  the insurance does not duplicate the coverage of other insurance 
 63.20  under which loss is payable to the financial institution as its 
 63.21  interest may appear, against loss of or damage to property for 
 63.22  which a separate charge is made to the borrower according to 
 63.23  clause (1); and (iii) if a clear, conspicuous, and specific 
 63.24  statement in writing is furnished by the financial institution 
 63.25  to the borrower setting forth the cost of the insurance if 
 63.26  obtained from or through the financial institution and stating 
 63.27  that the borrower may choose the person through whom the 
 63.28  insurance is to be obtained. 
 63.29     (c) In addition to the finance charges and other additional 
 63.30  charges permitted by this section, a financial institution may 
 63.31  contract for and receive the following additional charges in 
 63.32  connection with open-end credit, which may be included in the 
 63.33  amount financed or balance upon which the finance charge is 
 63.34  computed:  
 63.35     (1) annual charges, not to exceed $50 per annum, payable in 
 63.36  advance, for the privilege of opening and maintaining open-end 
 64.1   credit; 
 64.2      (2) charges for the use of an automated teller machine; 
 64.3      (3) charges for any monthly or other periodic payment 
 64.4   period in which the borrower has exceeded or, except for the 
 64.5   financial institution's dishonor would have exceeded, the 
 64.6   maximum approved credit limit, in an amount not in excess of the 
 64.7   service charge permitted in section 332.50; 
 64.8      (4) charges for obtaining a cash advance in an amount not 
 64.9   to exceed the service charge permitted in section 332.50; and 
 64.10     (5) charges for check and draft copies and for the 
 64.11  replacement of lost or stolen credit cards.  
 64.12     (d) In addition to the finance charges and other additional 
 64.13  charges permitted by this section, a financial institution may 
 64.14  contract for and receive a one-time loan administrative fee not 
 64.15  exceeding $25 in connection with closed-end credit, which may be 
 64.16  included in the amount financed or principal balance upon which 
 64.17  the finance charge is computed.  This paragraph applies only to 
 64.18  closed-end credit in an original principal amount of $4,320 or 
 64.19  less. 
 64.20     Subd. 7.  [ADVANCES TO PERFORM COVENANTS OF BORROWER OR 
 64.21  PURCHASER.] (a) If the agreement with respect to a loan or 
 64.22  credit sale contract contains covenants by the borrower or 
 64.23  purchaser to perform certain duties pertaining to insuring or 
 64.24  preserving collateral and the financial institution according to 
 64.25  the agreement pays for performance of the duties on behalf of 
 64.26  the borrower or purchaser, the financial institution may add to 
 64.27  the debt or contract balance the amounts so advanced.  Before or 
 64.28  within a reasonable time not less than 30 days after advancing 
 64.29  any sums, the financial institution shall state to the borrower 
 64.30  or purchaser in writing the amount of sums advanced or to be 
 64.31  advanced, any charges with respect to this amount, and any 
 64.32  revised payment schedule and, if the duties of the borrower or 
 64.33  purchaser performed by the financial institution pertain to 
 64.34  insurance, a brief description of the insurance paid for or to 
 64.35  be paid for by the financial institution including the type and 
 64.36  amount of coverages.  Additional information need not be given.  
 65.1   The actions of the financial institution pursuant to this 
 65.2   subdivision shall not be deemed to cure the borrower's failure 
 65.3   to perform covenants in the loan or credit sale contract, unless 
 65.4   the loan or credit sale contract expressly provides otherwise. 
 65.5      (b) A finance charge equal to that specified in the loan 
 65.6   agreement or credit sale contract may be made for sums advanced 
 65.7   under paragraph (a). 
 65.8      Subd. 8.  [ATTORNEY'S FEES.] With respect to a loan or 
 65.9   credit sale, the agreement may provide for payment by the 
 65.10  borrower of the attorney's fees and court costs incurred in 
 65.11  connection with collection or foreclosure.  This subdivision is 
 65.12  not a limitation on attorney's fees that may be charged to an 
 65.13  organization. 
 65.14     Subd. 9.  [RIGHT TO PREPAY.] The borrower or purchaser may 
 65.15  prepay in full the unpaid balance of a consumer loan or credit 
 65.16  sale contract, at any time without penalty.  
 65.17     Subd. 10.  [CREDIT INSURANCE.] (a) The sale of credit 
 65.18  insurance is subject to chapter 62B and the rules adopted under 
 65.19  that chapter, but the term of the insurance may exceed 60 months 
 65.20  if the loan or credit sale contract exceeds 60 months and the 
 65.21  insurance will nevertheless be subject to chapter 62B and the 
 65.22  rules adopted under that chapter.  In case there are multiple 
 65.23  consumers obligated under a transaction subject to this chapter, 
 65.24  no policy or certificate or insurance providing credit life 
 65.25  insurance may be procured by or through a financial institution 
 65.26  or person described in subdivision 2 upon more than two of the 
 65.27  consumers, in which case they may be insured jointly.  
 65.28     (b) A financial institution that provides credit insurance 
 65.29  in relation to open-end credit may calculate the charge to the 
 65.30  borrower in each billing cycle by applying the current premium 
 65.31  rate to the balance in the manner permitted with respect to 
 65.32  finance charges by the provisions on finance charge in this 
 65.33  section.  
 65.34     (c) Upon prepayment in full of a consumer loan or credit 
 65.35  sale contract by the proceeds of credit insurance, the consumer 
 65.36  or the consumer's estate is entitled to a refund of any portion 
 66.1   of a separate charge for insurance that by reason of prepayment 
 66.2   is retained by the financial institution or returned to it by 
 66.3   the insurer, unless the charge was computed from time to time on 
 66.4   the basis of the balances of the consumer's loan or credit sale 
 66.5   contract.  
 66.6      (d) This section does not require a financial institution 
 66.7   to grant a refund to the consumer if all refunds due to the 
 66.8   consumer under paragraph (c) amount to less than $5 and, except 
 66.9   as provided in paragraph (c), does not require the financial 
 66.10  institution to account to the consumer for any portion of a 
 66.11  separate charge for insurance because:  
 66.12     (1) the insurance is terminated by performance of the 
 66.13  insurer's obligation; 
 66.14     (2) the financial institution pays or accounts for premiums 
 66.15  to the insurer in amounts and at times determined by the 
 66.16  agreement between them; or 
 66.17     (3) the financial institution receives directly or 
 66.18  indirectly under a policy of insurance a gain or advantage not 
 66.19  prohibited by law.  
 66.20     (e) Except as provided in paragraph (d), the financial 
 66.21  institution shall promptly make or cause to be made an 
 66.22  appropriate refund to the consumer with respect to a separate 
 66.23  charge made to the consumer for insurance if:  
 66.24     (1) the insurance is not provided or is provided for a 
 66.25  shorter term than for which the charge to the borrower for 
 66.26  insurance was computed; or 
 66.27     (2) the insurance terminates before the end of the term for 
 66.28  which it was written because of prepayment in full or otherwise. 
 66.29     (f) If a financial institution requires insurance, upon 
 66.30  notice to the borrower, the borrower has the option of providing 
 66.31  the required insurance through an existing policy of insurance 
 66.32  owned or controlled by the borrower, or through a policy to be 
 66.33  obtained and paid for by the borrower, but the financial 
 66.34  institution for reasonable cause may decline the insurance 
 66.35  provided by the borrower.  
 66.36     Subd. 11.  [PROPERTY AND LIABILITY INSURANCE.] (a) Except 
 67.1   as otherwise provided in this section and subject to the 
 67.2   provisions on additional charges and maximum finance charges in 
 67.3   this section, a financial institution may agree to sell, as an 
 67.4   agent, property and liability insurance, and may contract for 
 67.5   and receive a charge for this insurance separate from and in 
 67.6   addition to other charges.  A financial institution need not 
 67.7   make a separate charge for the insurance provided or required by 
 67.8   it.  This section does not authorize the issuance of the 
 67.9   insurance prohibited under any statute or rule governing the 
 67.10  business of insurance nor does it authorize a financial 
 67.11  institution to underwrite insurance.  
 67.12     (b) This section does not apply to an insurance premium 
 67.13  loan.  A financial institution may request cancellation of a 
 67.14  policy of property or liability insurance only after the 
 67.15  borrower's default or in accordance with a written authorization 
 67.16  by the borrower.  In either case, the cancellation does not take 
 67.17  effect until written notice is delivered to the borrower or 
 67.18  mailed to the borrower at the borrower's address as stated by 
 67.19  the borrower.  The notice must state that the policy may be 
 67.20  canceled on a date not less than ten days after the notice is 
 67.21  delivered, or, if the notice is mailed, not less than 13 days 
 67.22  after it is mailed.  A cancellation may not take effect until 
 67.23  those notice periods expire.  
 67.24     Subd. 12.  [CONSUMER PROTECTIONS.] (a) Financial 
 67.25  institutions shall comply with the requirements of the federal 
 67.26  Truth in Lending Act, United States Code, title 15, sections 
 67.27  1601 to 1693, in connection with a consumer loan or credit sale 
 67.28  for a consumer purpose where the federal Truth in Lending Act is 
 67.29  applicable.  
 67.30     (b) Financial institutions shall comply with the following 
 67.31  consumer protection provisions in connection with a consumer 
 67.32  loan or credit sale for a consumer purpose:  sections 325G.02 to 
 67.33  325G.05; 325G.06 to 325G.11; 325G.15 to 325G.22; and 325G.29 to 
 67.34  325G.36, and Code of Federal Regulations, title 12, part 535, 
 67.35  where those statutes or regulations are applicable.  
 67.36     (c) An assignment of a consumer's earnings by the consumer 
 68.1   to a financial institution as payment or as security for payment 
 68.2   of a debt arising out of a consumer loan or consumer credit sale 
 68.3   is unenforceable by the financial institution and revocable by 
 68.4   the consumer.  
 68.5      Subd. 13.  [LOANS AND CONTRACTS OTHER THAN CONSUMER LOANS 
 68.6   AND CONTRACTS.] Loans and credit sale contracts other than 
 68.7   consumer loans and consumer credit sale contracts are not 
 68.8   subject to the provisions and limitations of subdivisions 9, 10, 
 68.9   11, paragraph (b), and 12, and this section.  
 68.10     Subd. 14.  [EFFECT OF VIOLATIONS ON RIGHTS OF PARTIES.] (a) 
 68.11  If a financial institution has violated any provision of this 
 68.12  section applying to collection of finance or other charges, the 
 68.13  borrower or purchaser under a credit sale contract may recover 
 68.14  damages and a penalty from the financial institution in an 
 68.15  amount determined by the court but not less than $100 nor more 
 68.16  than $1,000.  With respect to violations arising from other than 
 68.17  open-end credit transactions, no action may be brought according 
 68.18  to this paragraph and no set-off or recoupment may be asserted 
 68.19  according to this paragraph more than one year after the making 
 68.20  of the debt.  
 68.21     (b) A borrower or purchaser under a credit sale contract is 
 68.22  not obligated to pay a charge in excess of that allowed by this 
 68.23  section and has a right of refund of any excess charge paid.  A 
 68.24  refund may not be made by reducing the borrower's or purchaser's 
 68.25  obligation by the amount of the excess charge, unless the 
 68.26  financial institution has notified the borrower or purchaser 
 68.27  that the borrower or purchaser may request a refund and the 
 68.28  borrower or purchaser has not so requested within 30 days 
 68.29  thereafter.  If the borrower or purchaser has paid an amount in 
 68.30  excess of the lawful obligation under the agreement, the 
 68.31  borrower or purchaser may recover the excess amount from the 
 68.32  financial institution who made the excess charge or from an 
 68.33  assignee of the financial institution's rights who undertakes 
 68.34  direct collection of payments from or enforcement of rights 
 68.35  against borrowers or purchasers arising from the debt.  
 68.36     (c) If a financial institution has contracted for or 
 69.1   received a charge in excess of that allowed by this section, or 
 69.2   if a borrower or purchaser under a credit sale contract is 
 69.3   entitled to a refund and a person liable to the borrower or 
 69.4   purchaser refuses to make a refund within a reasonable time 
 69.5   after demand, the borrower or purchaser may recover from the 
 69.6   financial institution or the person liable in an action other 
 69.7   than a class action a penalty in an amount determined by the 
 69.8   court but not less than $100 nor more than $1,000.  With respect 
 69.9   to excess charges arising from other than open-end credit 
 69.10  transactions, no action according to this paragraph may be 
 69.11  brought more than one year after the making of the debt.  For 
 69.12  purposes of this paragraph, a reasonable time is presumed to be 
 69.13  30 days.  
 69.14     (d) A violation of this section does not impair rights on a 
 69.15  debt.  
 69.16     (e) A financial institution is not liable for a penalty 
 69.17  under paragraph (a) or (c) if it notifies the borrower or 
 69.18  purchaser under a credit sale contract of a violation before the 
 69.19  financial institution receives from the borrower or purchaser 
 69.20  written notice of the violation or the borrower or purchaser has 
 69.21  brought an action under this section, and the financial 
 69.22  institution corrects the violation within 45 days after 
 69.23  notifying the borrower or purchaser.  If the violation consists 
 69.24  of a prohibited agreement, giving the borrower or purchaser a 
 69.25  corrected copy of the writing containing the violation is 
 69.26  sufficient notification and correction.  If the violation 
 69.27  consists of an excess charge, correction must be made by an 
 69.28  adjustment or refund.  
 69.29     (f) A financial institution may not be held liable in an 
 69.30  action brought under this section for a violation of this 
 69.31  section if the financial institution shows by a preponderance of 
 69.32  evidence that the violation was not intentional and resulted 
 69.33  from a bona fide error notwithstanding the maintenance of 
 69.34  procedures reasonably adopted to avoid the error.  
 69.35     (g) In an action in which it is found that a financial 
 69.36  institution has violated this section, the court shall award to 
 70.1   the borrower or the purchaser under a credit sale contract the 
 70.2   costs of the action and to the borrower's or purchaser's 
 70.3   attorneys their reasonable fees.  
 70.4      Sec. 2.  [47.60] [CONSUMER SMALL LOANS.] 
 70.5      Subdivision 1.  [DEFINITIONS.] For purposes of this 
 70.6   section, the terms defined have the meanings given them:  
 70.7      (a) "Consumer small loan" is a loan transaction in which 
 70.8   cash is advanced to a borrower for the borrower's own personal, 
 70.9   family, or household purpose.  A consumer small loan is a 
 70.10  short-term, unsecured loan to be repaid in a single 
 70.11  installment.  The cash advance of a consumer small loan is equal 
 70.12  to or less than $350. A consumer small loan includes an 
 70.13  indebtedness evidenced by but not limited to a promissory note 
 70.14  or agreement to defer the presentation of a personal check for a 
 70.15  fee.  
 70.16     (b) "Consumer small loan lender" is a financial institution 
 70.17  as defined in section 47.59 or a person registered with the 
 70.18  commissioner and engaged in the business of making consumer 
 70.19  small loans.  
 70.20     Subd. 2.  [AUTHORIZATION, TERMS, CONDITIONS, AND 
 70.21  PROHIBITIONS.] (a) In lieu of the interest, finance charges, or 
 70.22  fees in any other law, a consumer small loan lender may charge 
 70.23  the following:  
 70.24     (i) on any amount up to and including $50, a charge of 
 70.25  $5.50 may be added; 
 70.26     (ii) on amounts in excess of $50, but not more than $100, a 
 70.27  charge may be added equal to ten percent of the loan proceeds 
 70.28  plus a $5 administrative fee; 
 70.29     (iii) on amounts in excess of $100, but not more than $250, 
 70.30  a charge may be added equal to seven percent of the loan 
 70.31  proceeds with a minimum of $10 plus a $5 administrative fee; 
 70.32     (iv) for amounts in excess of $250 and not greater than the 
 70.33  maximum in subdivision 1, paragraph (a), a charge may be added 
 70.34  equal to six percent of the loan proceeds with a minimum of 
 70.35  $17.50 plus a $5 administrative fee.  
 70.36     (b) The term of a loan made under this section shall be 30 
 71.1   days.  
 71.2      (c) After maturity, the contract rate must not exceed 2.75 
 71.3   percent per month of the remaining loan proceeds after the 
 71.4   maturity date calculated at a rate of 1/30 of the monthly rate 
 71.5   in the contract for each calendar day the balance is outstanding.
 71.6      (d) No insurance charges or other charges must be permitted 
 71.7   to be charged, collected, or imposed on a consumer small loan 
 71.8   except as authorized in this section.  
 71.9      (e) On a loan transaction in which cash is advanced in 
 71.10  exchange for a personal check, a return check charge may be 
 71.11  charged as authorized by section 332.50, subdivision 2, 
 71.12  paragraph (d).  
 71.13     (f) A loan made under this section must not be repaid by 
 71.14  the proceeds of another loan made under this section by the same 
 71.15  lender or related interest.  The proceeds from a loan made under 
 71.16  this section must not be applied to another loan from the same 
 71.17  lender or related interest.  No loan to a single borrower made 
 71.18  pursuant to this section shall be split or divided and no single 
 71.19  borrower shall have outstanding more than one loan with the 
 71.20  result of collecting a higher charge than permitted by this 
 71.21  section or in an aggregate amount of principal exceed at any one 
 71.22  time the maximum of $350.  
 71.23     Subd. 3.  [FILING.] Before a person other than a financial 
 71.24  institution as defined by section 47.59 engages in the business 
 71.25  of making consumer small loans, the person shall file with the 
 71.26  commissioner as a consumer small loan lender.  The filing must 
 71.27  be on a form prescribed by the commissioner together with a fee 
 71.28  of $150 for each place of business and contain the following 
 71.29  information in addition to the information required by the 
 71.30  commissioner:  
 71.31     (1) evidence that the filer has available for the operation 
 71.32  of the business at the location specified, liquid assets of at 
 71.33  least $50,000; and 
 71.34     (2) a biographical statement on the principal person 
 71.35  responsible for the operation and management of the business to 
 71.36  be certified.  
 72.1      Revocation of the filing and the right to engage in the 
 72.2   business of a consumer small loan lender is the same as in the 
 72.3   case of a regulated lender license in section 56.09.  
 72.4      Subd. 4.  [BOOKS OF ACCOUNT; ANNUAL REPORT; SCHEDULE OF 
 72.5   CHARGES; DISCLOSURES.] (a) A lender filing under subdivision 3 
 72.6   shall keep and use in the business books, accounts, and records 
 72.7   as will enable the commissioner to determine whether the filer 
 72.8   is complying with this section. 
 72.9      (b) A lender filing under subdivision 3 shall annually on 
 72.10  or before March 15 file a report to the commissioner giving the 
 72.11  information the commissioner reasonably requires concerning the 
 72.12  business and operations during the preceding calendar year.  
 72.13     (c) A lender filing under subdivision 3 shall display 
 72.14  prominently in each place of business a full and accurate 
 72.15  schedule, to be approved by the commissioner, of the charges to 
 72.16  be made and the method of computing those charges; furnish a 
 72.17  copy of the contract of loan to a person obligated on it or who 
 72.18  may become obligated on it at any time upon the request of that 
 72.19  person.  This is in addition to any disclosures required by the 
 72.20  federal Truth in Lending Act, United States Code, title 15.  
 72.21     (d) Upon repayment of the loan in full, mark indelibly 
 72.22  every obligation signed by the borrower with the word "Paid" or 
 72.23  "Canceled" within 20 days after repayment.  
 72.24     Subd. 5.  [COMPLAINTS ALLEGING VIOLATION.] A person 
 72.25  obligated to or having been obligated to a consumer small loan 
 72.26  lender filing under subdivision 3 and having reason to believe 
 72.27  that this section has been violated may file with the 
 72.28  commissioner a written complaint setting forth the details of 
 72.29  the alleged violation.  The commissioner, upon receipt of the 
 72.30  complaint, may inspect the pertinent books, records, letters, 
 72.31  and contracts of the lender and borrower involved.  The 
 72.32  commissioner may assess against the lender a fee covering the 
 72.33  necessary costs of an investigation under this section.  The 
 72.34  commissioner may maintain an action for the recovery of the 
 72.35  costs in a court of competent jurisdiction. 
 72.36     Subd. 6.  [PENALTIES FOR VIOLATION.] A person or the 
 73.1   person's members, officers, directors, agents, and employees who 
 73.2   violate or participate in the violation of any of the provisions 
 73.3   of this section may be liable in the same manner as in section 
 73.4   56.19. 
 73.5      Sec. 3.  Minnesota Statutes 1994, section 48.194, is 
 73.6   amended to read: 
 73.7      48.194 [INSTALLMENT SALES CONTRACTS; LOANS.] 
 73.8      A person may enter into a credit sale or service contract 
 73.9   for sale to a state or national bank doing business in this 
 73.10  state, and a bank may purchase and enforce the contract under 
 73.11  the terms and conditions set forth in ~~section 51A.385,~~ 
 73.12  ~~subdivisions 2 and 5 to 13~~ sections 47.59, subdivisions 2 and 4 
 73.13  to 14; and 51A.386, subdivision 4.  A state bank or national 
 73.14  bank may extend credit pursuant to the terms and conditions set 
 73.15  forth in ~~section 51A.385~~ sections 47.59, 47.60, and 51A.386, 
 73.16  subdivision 4. 
 73.17     Sec. 4.  Minnesota Statutes 1994, section 51A.02, 
 73.18  subdivision 6, is amended to read: 
 73.19     Subd. 6.  [ANNUAL PERCENTAGE RATE.] "Annual percentage 
 73.20  rate" has the meaning given the term in the Code of Federal 
 73.21  Regulations, title 12, part 226, but using the definition of 
 73.22  "finance charge" used in this section. 
 73.23     Sec. 5.  Minnesota Statutes 1994, section 51A.02, 
 73.24  subdivision 26, is amended to read: 
 73.25     Subd. 26.  [FINANCE CHARGE.] "Finance charge" has the 
 73.26  meaning given the term in the Code of Federal Regulations, title 
 73.27  12, part 226, except that the following will not in any event be 
 73.28  considered a finance charge: 
 73.29     (1) a charge as a result of default or delinquency under 
 73.30  section ~~51A.385~~ 47.59 if made for actual unanticipated late 
 73.31  payment, delinquency, default, or other similar occurrence, and 
 73.32  a charge for an extension or deferment under section 47.59, 
 73.33  unless the parties agree that these charges are finance charges; 
 73.34     (2) any additional charge under section ~~51A.385~~ 47.59, 
 73.35  subdivision ~~5~~ 6; or 
 73.36     (3) a discount, if an association purchases a contract 
 74.1   evidencing a contract sale or loan at less than the face amount 
 74.2   of the obligation or purchases or satisfies obligations of a 
 74.3   cardholder pursuant to a credit card and the purchase or 
 74.4   satisfaction is made at less than the face amount of the 
 74.5   obligation. 
 74.6      Sec. 6.  Minnesota Statutes 1994, section 51A.02, 
 74.7   subdivision 40, is amended to read: 
 74.8      Subd. 40.  [OFFICIAL FEES.] "Official fees" means: 
 74.9      (1) fees and charges which actually are or will be paid to 
 74.10  public officials for determining the existence of or for 
 74.11  perfecting, releasing, terminating, or satisfying a security 
 74.12  interest or mortgage related to a loan or credit sale, and any 
 74.13  separate fees or charges which actually are or will be paid to 
 74.14  public officials for recording a notice described in section 
 74.15  580.032, subdivision 1; and 
 74.16     (2) premiums payable for insurance in lieu of perfecting a 
 74.17  security interest or mortgage otherwise required by an 
 74.18  association in connection with a loan or credit sale, if the 
 74.19  premium does not exceed the fees and charges described in clause 
 74.20  (1) which would otherwise be payable. 
 74.21     Sec. 7.  Minnesota Statutes 1994, section 51A.19, 
 74.22  subdivision 9, is amended to read: 
 74.23     Subd. 9.  [MAINTENANCE OF LOAN AND INVESTMENT RECORDS.] 
 74.24  Every association shall maintain complete loan and investment 
 74.25  records, and shall do so in a manner satisfactory to the 
 74.26  commissioner.  Detailed records necessary to make determinations 
 74.27  of compliance by an association with the requirements of 
 74.28  sections 47.59 and 51A.35 to ~~51A.385~~ 51A.386, and other 
 74.29  provisions of sections 51A.01 to 51A.57 shall be maintained 
 74.30  consistently and at all times, the record of each real estate 
 74.31  loan or other secured loan or investment containing 
 74.32  documentation to the satisfaction of the commissioner of the 
 74.33  type, adequacy, and complexion of the security. 
 74.34     Sec. 8.  [51A.386] [TERMS AND CONDITIONS OF LOANS, 
 74.35  CONTRACTS, AND EXTENSIONS OF CREDIT.] 
 74.36     Subdivision 1.  [APPLICATION.] Except as otherwise provided 
 75.1   in this section, this section applies to loans made and 
 75.2   contracts purchased by federal and state associations, and 
 75.3   "association" as used in this section applies to federal and 
 75.4   state associations. 
 75.5      Subd. 2.  [FINANCE CHARGE FOR CREDIT SALES MADE BY A THIRD 
 75.6   PARTY.] A person may enter into a credit sale contract for sale 
 75.7   to an association and an association may purchase and enforce a 
 75.8   contract evidencing the sale, if the annual percentage rate 
 75.9   provided for in the contract does not exceed that permitted in 
 75.10  section 47.59 or, in the case of contracts governed by sections 
 75.11  168.66 to 168.77, the rates permitted by those sections. 
 75.12     Subd. 3.  [FINANCE CHARGE FOR LOANS.] An association may 
 75.13  make loans and extend credit at the rates and on the terms 
 75.14  provided for in section 47.59. 
 75.15     Subd. 4.  [ADDITIONAL AUTHORITY.] Extensions of credit, and 
 75.16  purchases of extensions of credit, authorized by sections 47.20, 
 75.17  subdivision 1, 3, or 4a; 47.204; 47.21; 47.58; 47.60; 47.69; 
 75.18  48.153; 48.185; 48.195; 59A.01 to 59A.15; 168.66 to 168.77; 
 75.19  334.01; 334.011; and 334.012 may, but need not, be made 
 75.20  according to those sections in lieu of the authority set forth 
 75.21  in subdivisions 1 to 3, and if so, are subject to those 
 75.22  sections, and not this section, except this subdivision.  An 
 75.23  association may also charge an organization a rate of interest 
 75.24  and any charges agreed to by the organization and may calculate 
 75.25  and collect finance and other charges in any manner agreed to by 
 75.26  that organization.  Except for extensions of credit the 
 75.27  association elects to make under section 334.01; 334.011; or 
 75.28  334.012, the provisions of chapter 334 do not apply to 
 75.29  extensions of credit made according to this section or the 
 75.30  sections mentioned in this subdivision. 
 75.31     Subd. 5.  [ADDITIONAL CHARGES.] In addition to the finance 
 75.32  charges permitted by this section, an association, or a person 
 75.33  described in subdivision 2, to the extent not otherwise 
 75.34  prohibited by law, may contract for and receive the additional 
 75.35  charges that may be included in the amount financed provided for 
 75.36  in section 47.59. 
 76.1      Sec. 9.  Minnesota Statutes 1994, section 51A.50, is 
 76.2   amended to read: 
 76.3      51A.50 [FEDERAL ASSOCIATIONS.] 
 76.4      The following sections apply to federal associations, 
 76.5   except to the extent they are inconsistent with federal law or 
 76.6   regulations:  sections 47.59; 51A.01; 51A.02; 51A.065; 51A.15, 
 76.7   subdivision 6; 51A.21, subdivisions 6a, 15, 16, 22, 25, 27, and 
 76.8   28; 51A.23, subdivision 1; 51A.24; 51A.251; 51A.261; 51A.262; 
 76.9   51A.27; 51A.28; 51A.29; 51A.30; 51A.31; 51A.37, subdivisions 1, 
 76.10  2, 3, paragraphs (a), (c), (d), 4, 5, 6, 7, 8, 9, 10, 11, and 
 76.11  12; 51A.38; ~~51A.385~~ 51A.386; 51A.40; 51A.50; 51A.52; 51A.56; and 
 76.12  51A.57. 
 76.13     Sec. 10.  Minnesota Statutes 1994, section 52.04, 
 76.14  subdivision 2a, is amended to read: 
 76.15     Subd. 2a.  A person may enter into a credit sale or service 
 76.16  contract for sale to a state or federal credit union doing 
 76.17  business in this state, and a credit union may purchase and 
 76.18  enforce the contract under the terms and conditions set forth in 
 76.19  section ~~51A.385~~ 47.59, subdivisions ~~2~~ 4 and ~~5~~ 6 to 
 76.20  ~~13~~ 14. 
 76.21     Sec. 11.  Minnesota Statutes 1994, section 53.04, 
 76.22  subdivision 3a, is amended to read: 
 76.23     Subd. 3a.  (a) The right to make loans, secured or 
 76.24  unsecured, at the rates and on the terms and other conditions 
 76.25  permitted ~~licensees under chapter 56.  Loans made under the~~ 
 76.26  ~~authority of section 56.125~~ in section 47.59.  Loans made under 
 76.27  this authority must be in amounts in compliance with section 
 76.28  53.05, clause (7).  ~~All other loans made under the authority of~~ 
 76.29  ~~chapter 56 must be in amounts in compliance with section 53.05,~~ 
 76.30  ~~clause (7), or 56.131, subdivision 1, paragraph (a), whichever~~ 
 76.31  ~~is less.~~  The right to extend credit or lend money and to 
 76.32  collect and receive charges therefor as provided by chapter 334~~,~~ 
 76.33  ~~or in lieu thereof to charge, collect, and receive interest at~~ 
 76.34  ~~the rate of 21.75 percent per annum, including the right to~~ 
 76.35  ~~contract for, charge, and collect all other charges including~~ 
 76.36  ~~discount points, fees, late payment charges, and insurance~~ 
 77.1   ~~premiums on the loans to the same extent permitted on loans made~~ 
 77.2   ~~under the authority of chapter 56, regardless of the amount of~~ 
 77.3   ~~the loan~~.  The provisions of sections 47.20 and 47.21 do not 
 77.4   apply to loans made under this subdivision, except as 
 77.5   specifically provided in this subdivision.  Nothing in this 
 77.6   subdivision is deemed to supersede, repeal, or amend any 
 77.7   provision of section 53.05.  A licensee making a loan under this 
 77.8   chapter secured by a lien on real estate shall comply with the 
 77.9   requirements of section 47.20, subdivision 8.  
 77.10     (b) Loans made under this subdivision at a rate of interest 
 77.11  not in excess of that provided for in paragraph (a) may be 
 77.12  secured by real or personal property, or both.  If the proceeds 
 77.13  of a loan secured by a first lien on the borrower's primary 
 77.14  residence are used to finance the purchase of the borrower's 
 77.15  primary residence, the loan must comply with the provisions of 
 77.16  section 47.20.  
 77.17     (c) A loan made under this subdivision that is secured by 
 77.18  real estate and that is in a principal amount of $7,500 or more 
 77.19  and a maturity of 60 months or more may contain a provision 
 77.20  permitting discount points, if the loan does not provide a loan 
 77.21  yield in excess of the maximum rate of interest permitted by 
 77.22  this subdivision.  ~~Loan yield means the annual rate of return~~ 
 77.23  ~~obtained by a licensee computed as the annual percentage rate is~~ 
 77.24  ~~computed under Federal Regulation Z.  If the loan is prepaid in~~ 
 77.25  ~~full, the licensee must make a refund to the borrower to the~~ 
 77.26  ~~extent that the loan yield will exceed the maximum rate of~~ 
 77.27  ~~interest provided by this subdivision when the prepayment is~~ 
 77.28  ~~taken into account.~~  
 77.29     (d) An agency or instrumentality of the United States 
 77.30  government or a corporation otherwise created by an act of the 
 77.31  United States Congress or a lender approved or certified by the 
 77.32  secretary of housing and urban development, or approved or 
 77.33  certified by the administrator of veterans affairs, or approved 
 77.34  or certified by the administrator of the farmers home 
 77.35  administration, or approved or certified by the federal home 
 77.36  loan mortgage corporation, or approved or certified by the 
 78.1   federal national mortgage association, that engages in the 
 78.2   business of purchasing or taking assignments of mortgage loans 
 78.3   and undertakes direct collection of payments from or enforcement 
 78.4   of rights against borrowers arising from mortgage loans, is not 
 78.5   required to obtain a certificate of authorization under this 
 78.6   chapter in order to purchase or take assignments of mortgage 
 78.7   loans from persons holding a certificate of authorization under 
 78.8   this chapter. 
 78.9      Sec. 12.  Minnesota Statutes 1994, section 53.04, 
 78.10  subdivision 3c, is amended to read: 
 78.11     Subd. 3c.  The right to extend credit and make loans under 
 78.12  ~~chapter 51A~~ sections 47.59 and 47.60 on the same terms and 
 78.13  subject to the same conditions as apply to other lenders under 
 78.14  ~~that chapter~~ those sections.  This subdivision does not 
 78.15  authorize an industrial loan and thrift company to make loans 
 78.16  under ~~a credit card or~~ an overdraft checking plan. 
 78.17     Sec. 13.  Minnesota Statutes 1994, section 53.04, 
 78.18  subdivision 4a, is amended to read: 
 78.19     Subd. 4a.  [DISCLOSURE, AUTHORIZED INTEREST, AND OTHER 
 78.20  CHARGES.] The documentation of loans made pursuant to this 
 78.21  section must include in the promissory note clear reference to 
 78.22  the provisions of Minnesota Statutes under which the rate of 
 78.23  interest and other charges are authorized.  The references must 
 78.24  be to the ~~chapter number in the case of this chapter or chapter~~ 
 78.25  ~~56, or to the~~ particular section or sections ~~in the case of~~ 
 78.26  ~~chapter 47 or 334~~.  ~~On loans made under the authority of~~ 
 78.27  ~~subdivision 3a and not under the authority of chapter 334, other~~ 
 78.28  ~~charges including discount points, fees, late payment charges,~~ 
 78.29  ~~and insurance premiums not specifically authorized by this~~ 
 78.30  ~~chapter or any other state statute are controlled by chapter 56.~~ 
 78.31     Sec. 14.  Minnesota Statutes 1994, section 53.04, 
 78.32  subdivision 5a, is amended to read: 
 78.33     Subd. 5a.  A person may enter into a credit sale or service 
 78.34  contract for sale to an industrial loan and thrift company 
 78.35  operating under this chapter in this state, and an industrial 
 78.36  loan and thrift company may purchase and enforce the contract 
 79.1   under the terms and conditions set forth in section ~~51A.385,~~ 
 79.2   ~~subdivisions 2 and 5 to 13~~ 47.59, subdivisions 2 and 4 to 14. 
 79.3      Sec. 15.  Minnesota Statutes 1994, section 56.125, 
 79.4   subdivision 1, is amended to read: 
 79.5      Subdivision 1.  [AUTHORIZATION.] A licensee may make 
 79.6   open-end loans under this chapter other than loans under ~~a~~ 
 79.7   ~~credit card or~~ an overdraft checking plan and may charge a 
 79.8   daily, monthly, or other periodic rate of finance charge on 
 79.9   unpaid balances not in excess of the maximum rate of interest 
 79.10  permitted by section 56.131, subdivision 1, paragraph 
 79.11  (a), ~~clause (2)~~ under section 47.59, subdivision 3, paragraph 
 79.12  (a), clause (1).  For purposes of this section "open-end loan" 
 79.13  means an agreement whereby:  (1) the licensee pursuant to 
 79.14  written agreement permits the borrower to obtain advances of 
 79.15  money from the licensee from time to time or the licensee 
 79.16  advances money on behalf of the borrower from time to time as 
 79.17  directed by the borrower; (2) the borrower has the option of 
 79.18  paying the balance in full at any time without penalty; (3) the 
 79.19  amount of each advance and permitted charges and costs are 
 79.20  debited to the borrower's account and payments and other credits 
 79.21  are credited to the same account; and (4) the charges are 
 79.22  computed on the unpaid principal balance of the account from 
 79.23  time to time.  A finance charge imposed on a transaction subject 
 79.24  to this section must be computed on:  (1) the previous balance 
 79.25  after deducting all payments on accounts received by the 
 79.26  licensee during the cycle and all credits to the account during 
 79.27  the cycle applicable to any transaction reflected in the 
 79.28  previous balance; (2) the average daily balance determined by 
 79.29  adding the daily balances on the account for each day in the 
 79.30  billing cycle and dividing the total by the number of days in 
 79.31  the billing cycle; or (3) daily balances.  The daily balance is 
 79.32  figured by taking the beginning balance of the account each day, 
 79.33  adding any new advances, subtracting any principal payments or 
 79.34  credits, and any unpaid interest.  The average daily balance is 
 79.35  calculated by adding together all of the daily balances for the 
 79.36  billing cycle, and the sum is then divided by the total number 
 80.1   of days in the billing cycle.  A billing cycle is considered to 
 80.2   be monthly if the billing dates are on the same day of each 
 80.3   month or do not vary by more than four days from that day.  If a 
 80.4   licensee makes loans under a credit card plan, it may do so only 
 80.5   on the same terms and subject to the same conditions as apply to 
 80.6   lenders under section 47.59. 
 80.7      Sec. 16.  Minnesota Statutes 1994, section 56.125, 
 80.8   subdivision 3, is amended to read: 
 80.9      Subd. 3.  [CHARGES.] In addition to the charges authorized 
 80.10  in subdivision 1, a licensee may contract for and receive in 
 80.11  connection with an open-end loan agreement the additional 
 80.12  charges, fees, costs, and expenses with respect to the line of 
 80.13  credit limit permitted by sections 47.59, subdivisions 5 and 6, 
 80.14  paragraph (a), clause (4); 56.131, subdivisions ~~1, paragraph~~ 
 80.15  ~~(f), clauses (4) and (5),~~ 2, 5, and 6; and 56.155 with respect 
 80.16  to other loans, with the following variations:  
 80.17     (1) If credit life, disability, or involuntary unemployment 
 80.18  insurance is provided and if the insured dies, becomes disabled, 
 80.19  or becomes involuntarily unemployed when there is an outstanding 
 80.20  open-end loan indebtedness, the amount of the insurance may not 
 80.21  exceed the total balance of the loan due on the date of the 
 80.22  borrower's death or on the date of the last billing statement in 
 80.23  the case of credit life insurance, or all minimum payments which 
 80.24  become due on the loan during the covered period of disability 
 80.25  in the case of credit disability insurance, or during the 
 80.26  covered period of involuntary unemployment in the case of credit 
 80.27  involuntary unemployment insurance.  The additional charge for 
 80.28  credit life insurance, credit disability insurance, or credit 
 80.29  involuntary unemployment insurance must be calculated in each 
 80.30  billing cycle by applying the current monthly premium rate for 
 80.31  the insurance to the unpaid balances in the borrower's account.  
 80.32     (2) The amount, terms, and conditions of any credit 
 80.33  insurance against loss or damage to property must be reasonable 
 80.34  in relation to the character and value of the property insured.  
 80.35     Sec. 17.  Minnesota Statutes 1994, section 56.131, 
 80.36  subdivision 1, is amended to read: 
 81.1      Subdivision 1.  [INTEREST RATES AND CHARGES.] (a) On any 
 81.2   loan in a principal amount not exceeding ~~$35,000~~ $56,000 or 15 
 81.3   percent of a Minnesota corporate licensee's capital stock and 
 81.4   surplus as defined in section 53.015, if greater, a licensee may 
 81.5   contract for and receive interest, ~~calculated according to the~~ 
 81.6   ~~actuarial method, not exceeding the equivalent of the greater of~~ 
 81.7   ~~any of the following:~~ 
 81.8      ~~(1) the total of:  (i) 33 percent per year on that part of~~ 
 81.9   ~~the unpaid balance of the principal amount not exceeding $750;~~ 
 81.10  ~~and (ii) 19 percent per year on that part of the unpaid balance~~ 
 81.11  ~~of the principal amount exceeding $750; or~~ 
 81.12     ~~(2) 21.75 percent per year on the unpaid balance of the~~ 
 81.13  ~~principal amount~~ finance charges, and other charges as provided 
 81.14  in section 47.59. 
 81.15     ~~(b) On any loan where interest has been calculated~~ 
 81.16  ~~according to the method provided for in paragraph (a), clause~~ 
 81.17  ~~(1), interest must be contracted for and earned as provided in~~ 
 81.18  ~~that provision or at the single annual percentage rate computed~~ 
 81.19  ~~to the nearest 1/100 of one percent that would earn the same~~ 
 81.20  ~~total interest at maturity of the contract as would be earned by~~ 
 81.21  ~~the application of the graduated rates provided in paragraph~~ 
 81.22  ~~(a), clause (1), when the debt is paid according to the agreed~~ 
 81.23  ~~terms and the calculations are made according to the actuarial~~ 
 81.24  ~~method.~~  
 81.25     ~~(c)~~ (b) Loans may be interest-bearing or precomputed. 
 81.26     ~~(d)~~ (c) Notwithstanding section 47.59 to the contrary, to 
 81.27  compute time on interest-bearing and precomputed loans, 
 81.28  including, but not limited to the calculation of interest, a day 
 81.29  is considered 1/30 of a month when calculation is made for a 
 81.30  fraction of a calendar month.  A year is 12 calendar months.  A 
 81.31  calendar month is that period from a given date in one month to 
 81.32  the same numbered date in the following month, and if there is 
 81.33  no same numbered date, to the last day of the following month.  
 81.34  When a period of time includes a whole month and a fraction of a 
 81.35  month, the fraction of a month is considered to follow the whole 
 81.36  month.  
 82.1      In the alternative, for interest-bearing loans, a licensee 
 82.2   may charge interest at the rate of 1/365 of the agreed annual 
 82.3   rate for each actual day elapsed.  
 82.4      ~~(e)~~ (d) With respect to interest-bearing loans and 
 82.5   notwithstanding section 47.59: 
 82.6      (1) Interest must be computed on unpaid principal balances 
 82.7   outstanding from time to time, for the time outstanding.  Each 
 82.8   payment must be applied first to the accumulated interest and 
 82.9   the remainder of the payment applied to the unpaid principal 
 82.10  balance; provided however, that if the amount of the payment is 
 82.11  insufficient to pay the accumulated interest, the unpaid 
 82.12  interest continues to accumulate to be paid from the proceeds of 
 82.13  subsequent payments and is not added to the principal balance. 
 82.14     (2) Interest must not be payable in advance or compounded.  
 82.15  However, if part or all of the consideration for a new loan 
 82.16  contract is the unpaid principal balance of a prior loan, then 
 82.17  the principal amount payable under the new loan contract may 
 82.18  include any unpaid interest which has accrued.  The unpaid 
 82.19  principal balance of a precomputed loan is the balance due after 
 82.20  refund or credit of unearned interest as provided in paragraph 
 82.21  ~~(f)~~ (e), clause (3).  The resulting loan contract is deemed a 
 82.22  new and separate loan transaction for all purposes. 
 82.23     ~~(f)~~ (e) With respect to precomputed loans and 
 82.24  notwithstanding section 47.59 to the contrary: 
 82.25     (1) Loans must be repayable in substantially equal and 
 82.26  consecutive monthly installments of principal and interest 
 82.27  combined, except that the first installment period may be more 
 82.28  or less than one month by not more than 15 days, and the first 
 82.29  installment payment amount may be larger than the remaining 
 82.30  payments by the amount of interest charged for the extra days 
 82.31  and must be reduced by the amount of interest for the number of 
 82.32  days less than one month to the first installment payment; and 
 82.33  monthly installment payment dates may be omitted to accommodate 
 82.34  borrowers with seasonal income. 
 82.35     (2) Payments may be applied to the combined total of 
 82.36  principal and precomputed interest until the loan is fully 
 83.1   paid.  Payments must be applied in the order in which they 
 83.2   become due. 
 83.3      (3) ~~When any loan contract is paid in full by cash, renewal~~ 
 83.4   ~~or refinancing, or a new loan, one month or more before the~~ 
 83.5   ~~final installment due date, a licensee shall refund or credit~~ 
 83.6   ~~the borrower with the total of the applicable charges for all~~ 
 83.7   ~~fully unexpired installment periods, as originally scheduled or~~ 
 83.8   ~~as deferred, which follow the day of prepayment; if the~~ 
 83.9   ~~prepayment is made other than on a scheduled payment date, the~~ 
 83.10  ~~nearest scheduled installment payment date must be used in the~~ 
 83.11  ~~computation; provided further, if the prepayment occurs prior to~~ 
 83.12  ~~the first installment due date, the licensee may retain 1/30 of~~ 
 83.13  ~~the applicable charge for a first installment period of one~~ 
 83.14  ~~month for each day from the date of the loan to the date of~~ 
 83.15  ~~prepayment, and shall refund or credit the borrower with the~~ 
 83.16  ~~balance of the total interest contracted for.~~  If the maturity 
 83.17  of the loan is accelerated for any reason and judgment is 
 83.18  entered, the licensee shall credit the borrower with the same 
 83.19  refund as if prepayment in full had been made on the date the 
 83.20  judgment is entered. 
 83.21     ~~(4) If an installment, other than the final installment, is~~ 
 83.22  ~~not paid in full within ten days of its scheduled due date, a~~ 
 83.23  ~~licensee may contract for and receive a default charge not~~ 
 83.24  ~~exceeding five percent of the amount of the installment, but not~~ 
 83.25  ~~less than $4.~~ 
 83.26     ~~A default charge under this subdivision may not be~~ 
 83.27  ~~collected on an installment paid in full within ten days of its~~ 
 83.28  ~~scheduled due date, or deferred installment due date with~~ 
 83.29  ~~respect to deferred installments, even though a default or~~ 
 83.30  ~~deferral charge on an earlier installment has not been paid in~~ 
 83.31  ~~full.  A default charge may be collected at the time it accrues~~ 
 83.32  ~~or at any time thereafter.~~ 
 83.33     ~~(5) If the parties agree in writing, either in the loan~~ 
 83.34  ~~contract or in a subsequent agreement, to a deferment of wholly~~ 
 83.35  ~~unpaid installments, a licensee may grant a deferment and may~~ 
 83.36  ~~collect a deferment charge as provided in this section.  A~~ 
 84.1   ~~deferment postpones the scheduled due date of the earliest~~ 
 84.2   ~~unpaid installment and all subsequent installments as originally~~ 
 84.3   ~~scheduled, or as previously deferred, for a period equal to the~~ 
 84.4   ~~deferment period.  The deferment period is that period during~~ 
 84.5   ~~which no installment is scheduled to be paid by reason of the~~ 
 84.6   ~~deferment.  The deferment charge for a one-month period may not~~ 
 84.7   ~~exceed the applicable charge for the installment period~~ 
 84.8   ~~immediately following the due date of the last undeferred~~ 
 84.9   ~~payment.  A proportionate charge may be made for deferment for~~ 
 84.10  ~~periods of more or less than one month.  A deferment charge is~~ 
 84.11  ~~earned pro rata during the deferment period and is fully earned~~ 
 84.12  ~~on the last day of the deferment period.  Should a loan be~~ 
 84.13  ~~prepaid in full during a deferment period, the licensee shall~~ 
 84.14  ~~make or credit to the borrower a refund of the unearned~~ 
 84.15  ~~deferment charge in addition to any other refund or credit made~~ 
 84.16  ~~for prepayment of the loan in full.~~ 
 84.17     ~~(6)~~ (4) If two or more installments are delinquent one full 
 84.18  month or more on any due date, and if the contract so provides, 
 84.19  the licensee may reduce the unpaid balance by the refund credit 
 84.20  which would be required for prepayment in full on the due date 
 84.21  of the most recent maturing installment in default.  Thereafter, 
 84.22  and in lieu of any other default or deferment charges, the 
 84.23  single annual percentage rate permitted by this subdivision may 
 84.24  be charged on the unpaid balance until fully paid. 
 84.25     ~~(7)~~ (5) Following the final installment as originally 
 84.26  scheduled or deferred, the licensee, for any loan contract which 
 84.27  has not previously been converted to interest-bearing under 
 84.28  clause ~~(6)~~ (4), may charge interest on any balance remaining 
 84.29  unpaid, including unpaid default or deferment charges, at the 
 84.30  single annual percentage rate permitted by this subdivision 
 84.31  until fully paid.  
 84.32     ~~(8)~~ (6) With respect to a loan secured by an interest in 
 84.33  real estate, and having a maturity of more than 60 months, the 
 84.34  original schedule of installment payments must fully amortize 
 84.35  the principal and interest on the loan.  The original schedule 
 84.36  of installment payments for any other loan secured by an 
 85.1   interest in real estate must provide for payment amounts that 
 85.2   are sufficient to pay all interest scheduled to be due on the 
 85.3   loan. 
 85.4      Sec. 18.  Minnesota Statutes 1994, section 56.131, 
 85.5   subdivision 2, is amended to read: 
 85.6      Subd. 2.  [ADDITIONAL CHARGES.] In addition to the charges 
 85.7   provided for by this section and section 56.155, and 
 85.8   notwithstanding section 47.59, subdivision 5, to the contrary, 
 85.9   no further or other amount whatsoever, shall be directly or 
 85.10  indirectly charged, contracted for, or received for the loan 
 85.11  made, except actual out of pocket expenses of the licensee to 
 85.12  realize on a security after default, and except for the 
 85.13  following additional charges which may be included in the 
 85.14  principal amount of the loan:  
 85.15     (a) lawful fees and taxes paid to any public officer to 
 85.16  record, file, or release security; 
 85.17     (b) with respect to a loan secured by an interest in real 
 85.18  estate, the following closing costs, if they are bona fide, 
 85.19  reasonable in amount, and not for the purpose of circumvention 
 85.20  or evasion of this section; provided the costs do not exceed one 
 85.21  percent of the principal amount or ~~$250~~ $400, whichever is 
 85.22  greater: 
 85.23     (1) fees or premiums for title examination, abstract of 
 85.24  title, title insurance, surveys, or similar purposes; 
 85.25     (2) fees, if not paid to the licensee, an employee of the 
 85.26  licensee, or a person related to the licensee, for preparation 
 85.27  of a mortgage, settlement statement, or other documents, fees 
 85.28  for notarizing mortgages and other documents, and appraisal 
 85.29  fees; 
 85.30     (c) the premium for insurance in lieu of perfecting and 
 85.31  releasing a security interest to the extent that the premium 
 85.32  does not exceed the fees described in paragraph (a); 
 85.33     (d) discount points and appraisal fees may not be included 
 85.34  in the principal amount of a loan secured by an interest in real 
 85.35  estate when the loan is a refinancing for the purpose of 
 85.36  bringing the refinanced loan current and is made within 24 
 86.1   months of the original date of the refinanced loan.  For 
 86.2   purposes of this paragraph, a refinancing is not considered to 
 86.3   be for the purpose of bringing the refinanced loan current if 
 86.4   new funds advanced to the customer, not including closing costs 
 86.5   or delinquent installments, exceed $1,000.  
 86.6      Sec. 19.  Minnesota Statutes 1994, section 56.132, is 
 86.7   amended to read: 
 86.8      56.132 [INSTALLMENT SALES CONTRACTS.] 
 86.9      A person may enter into a credit sale or service contract 
 86.10  for sale to a licensee under this chapter doing business in this 
 86.11  state, and a licensee may purchase and enforce the contract 
 86.12  under the terms and conditions set forth in section ~~51A.385,~~ 
 86.13  ~~subdivisions 2 and 5 to 13~~ 47.59, subdivisions 2 and 4 to 14. 
 86.14     Sec. 20.  Minnesota Statutes 1994, section 56.155, 
 86.15  subdivision 1, is amended to read: 
 86.16     Subdivision 1.  [AUTHORIZATION.] Notwithstanding section 
 86.17  47.59 to the contrary, no licensee shall, directly or 
 86.18  indirectly, sell or offer for sale any insurance in connection 
 86.19  with any loan made under this chapter except as and to the 
 86.20  extent authorized by this section.  The sale of credit life, 
 86.21  credit accident and health, and credit involuntary unemployment 
 86.22  insurance is subject to the provisions of chapter 62B, except 
 86.23  that the term of the insurance may exceed 60 months if the term 
 86.24  of the loan exceeds 60 months.  Life, accident, health, and 
 86.25  involuntary unemployment insurance, or any of them, may be 
 86.26  written upon or in connection with any loan but must not be 
 86.27  required as additional security for the indebtedness.  If the 
 86.28  debtor chooses to procure credit life insurance, credit accident 
 86.29  and health insurance, or credit involuntary unemployment 
 86.30  insurance as security for the indebtedness, the debtor shall 
 86.31  have the option of furnishing this security through existing 
 86.32  policies of insurance that the debtor owns or controls, or of 
 86.33  furnishing the coverage through any insurer authorized to 
 86.34  transact business in this state.  A statement in substantially 
 86.35  the following form must be made orally, except for loans by mail 
 86.36  pursuant to section 56.12, and provided in writing in bold face 
 87.1   type of a minimum size of 12 points to the borrower before the 
 87.2   transaction is completed for each credit life, accident and 
 87.3   health, and involuntary unemployment insurance coverage sold: 
 87.4      CREDIT LIFE INSURANCE, CREDIT DISABILITY INSURANCE, AND 
 87.5      CREDIT INVOLUNTARY UNEMPLOYMENT INSURANCE ARE NOT REQUIRED 
 87.6      TO OBTAIN CREDIT.  YOU MAY BUY ANY INSURANCE FROM ANYONE 
 87.7      YOU CHOOSE OR YOU MAY USE EXISTING INSURANCE.  
 87.8      The licensee shall disclose whether or not the benefits 
 87.9   commence as of the first day of disability or involuntary 
 87.10  unemployment and shall further disclose the number of days that 
 87.11  an insured obligor must be disabled or involuntarily unemployed, 
 87.12  as defined in the policy, before benefits, whether retroactive 
 87.13  or nonretroactive, commence.  In case there are multiple 
 87.14  obligors under a transaction subject to this chapter, no policy 
 87.15  or certificate of insurance providing credit unemployment 
 87.16  benefits may be procured by or through a licensee upon more than 
 87.17  one of the obligors.  In case there are multiple obligors under 
 87.18  a transaction subject to this chapter, no policy or certificate 
 87.19  of insurance providing credit accident and health or credit life 
 87.20  insurance may be procured by or through a licensee upon more 
 87.21  than two of the obligors in which case they shall be insured 
 87.22  jointly.  The premium or identifiable charge for the insurance 
 87.23  must not exceed that filed by the insurer with the department of 
 87.24  commerce.  The charge, computed at the time the loan is made for 
 87.25  a period not to exceed the full term of the loan contract on an 
 87.26  amount not to exceed the total amount required to pay principal 
 87.27  and charges, may be deducted from the proceeds or may be 
 87.28  included as part of the principal of any loan.  If a borrower 
 87.29  procures insurance by or through a licensee, the statement 
 87.30  required by section 56.14 must disclose the cost to the borrower 
 87.31  and the type of insurance, and the licensee shall cause to be 
 87.32  delivered to the borrower a copy of the policy, certificate, or 
 87.33  other evidence thereof, within a reasonable time.  No licensee 
 87.34  shall decline new or existing insurance which meets the 
 87.35  standards set out in this section nor prevent any obligor from 
 87.36  obtaining this insurance coverage from other sources.  
 88.1   Notwithstanding any other provision of this chapter, any gain or 
 88.2   advantage to the licensee or to any employee, affiliate, or 
 88.3   associate of the licensee from this insurance or the sale or 
 88.4   provision thereof is not an additional or further charge in 
 88.5   connection with the loan; nor are any of the provisions 
 88.6   pertaining to insurance contained in this section prohibited by 
 88.7   any other provision of this chapter. 
 88.8      Sec. 21.  Minnesota Statutes 1994, section 61A.09, 
 88.9   subdivision 3, is amended to read: 
 88.10     Subd. 3.  Group life insurance policies may be issued to 
 88.11  cover groups of not less than ten debtors of a creditor written 
 88.12  under a master policy issued to a creditor to insure its debtors 
 88.13  in connection with real estate mortgage loans, in an amount not 
 88.14  to exceed the actual or scheduled amount of their 
 88.15  indebtedness except that section 62B.04, subdivision 1, clause 
 88.16  (2), may be applied.  Each application for group mortgage 
 88.17  insurance offered prior to or at the time of loan closing shall 
 88.18  contain a clear and conspicuous notice that the insurance is 
 88.19  optional and is not a condition for obtaining the loan.  Each 
 88.20  person insured under a group insurance policy issued under this 
 88.21  subdivision shall be furnished a certificate of insurance which 
 88.22  conforms to the requirements of section 62B.06, subdivision 2, 
 88.23  and which includes a conversion privilege permitting an insured 
 88.24  debtor to convert, without evidence of insurability, to an 
 88.25  individual policy of decreasing term insurance within 30 days of 
 88.26  the date the insured debtor's group coverage is terminated for 
 88.27  any reason other than the nonpayment of premiums.  The initial 
 88.28  amount of coverage under the individual policy shall be an 
 88.29  amount equal to the amount of coverage terminated under the 
 88.30  group policy and shall decrease over a term not to exceed the 
 88.31  term that corresponds with the scheduled term of the insured 
 88.32  debtor's mortgage loan.  The premium for the individual policy 
 88.33  shall be the same premium the insured debtor was paying under 
 88.34  the group policy.  If the mortgage loan provides for a variable 
 88.35  rate of finance charge or interest, the initial rate shall be 
 88.36  used in determining the scheduled amount of indebtedness. 
 89.1      Sec. 22.  Minnesota Statutes 1994, section 325F.91, 
 89.2   subdivision 2, is amended to read: 
 89.3      Subd. 2.  [CASH PRICE ~~LIMITS RULES~~, DECEPTIVE TRADE 
 89.4   PRACTICE.] ~~The commissioner of commerce shall adopt rules~~ 
 89.5   ~~governing cash price limits for rental-purchase agreements.~~  
 89.6   ~~Notwithstanding section 14.18, the rules are effective 45~~ 
 89.7   ~~working days after the notice of adoption is published in the~~ 
 89.8   ~~State Register.~~  (a) It is an unlawful and deceptive trade 
 89.9   practice for a lessor to disclose as the "cash price" of the 
 89.10  merchandise under section 325F.86, paragraph (k), an amount that 
 89.11  is 150 percent or more of the fair market value of the goods.  
 89.12     Disclosure of the cash price stated in a rental-purchase 
 89.13  agreement materially fails to be the equivalent of the fair 
 89.14  market value of the goods offered and is considered to be a 
 89.15  deceptive trade practice if:  
 89.16     (1) the personal property that is the subject of a 
 89.17  rental-purchase agreement with terms providing for the 
 89.18  acquisition of ownership of the property by the lessee is 
 89.19  available for retail sale on a cash basis at locations within 50 
 89.20  miles of the lessor location at which the agreement was entered 
 89.21  into; 
 89.22     (2) the personal property available for retail sale under 
 89.23  clause (1) is substantially the same in terms of model equipment 
 89.24  and the same manufacturer at the date of the agreement or no 
 89.25  more than 60 days after that date; and 
 89.26     (3) the personal property was generally advertised to the 
 89.27  public at retail cash price of less than 50 percent of the cash 
 89.28  price in the agreement.  
 89.29     (b) A person violating this subdivision is subject to the 
 89.30  penalties and remedies in section 325F.97 and the 60 days 
 89.31  prescribed in paragraph (a), clause (2), do not limit the time 
 89.32  within which a claim or action may be brought to an agreement 
 89.33  under generally applicable law. 
 89.34     Sec. 23.  [334.171] [OPEN END CREDIT PLANS; DELINQUENCIES 
 89.35  AND COLLECTION CHARGES.] 
 89.36     If an open end credit plan, agreement, or arrangement 
 90.1   between the buyer and seller so provides, a seller or holder may 
 90.2   collect a delinquency and collection charge on each installment 
 90.3   in arrears for a period of not less than ten days in an amount 
 90.4   not in excess of any such charge which may be imposed on 
 90.5   residents of this state by any institution defined in subsection 
 90.6   (c)(2)(F) of section 101(a) of the Competitive Equality 
 90.7   Amendments of 1987 and the Bank Holding Company Act of 1956, 
 90.8   United States Code, title 12, section 1841(c)(2)(F), by any 
 90.9   national banking association under section 85 of the National 
 90.10  Bank Act of 1864, United States Code, title 12, section 85, or 
 90.11  by any state chartered insured depository institution under 
 90.12  section 521 of the Depository Institutions Deregulation and 
 90.13  Monetary Control Act of 1980, United States Code, title 12, 
 90.14  section 1813d(a). 
 90.15     Sec. 24.  [REPEALER.] 
 90.16     Minnesota Statutes 1994, section 51A.385, is repealed. 
 90.17                             ARTICLE 4 
 90.18          INTERSTATE MARKET DEVELOPMENT AND FEDERALIZATION 
 90.19                       OF INTERSTATE BANKING 
 90.20     Section 1.  Minnesota Statutes 1994, section 46.048, 
 90.21  subdivision 1, is amended to read: 
 90.22     Subdivision 1.  [REQUIREMENT.] Whenever a change in the 
 90.23  outstanding voting stock of a banking institution will result in 
 90.24  control or in a change in the control of the banking 
 90.25  institution, the person acquiring control of the banking 
 90.26  institution, including an out-of-state bank holding company, 
 90.27  shall file notice of the proposed acquisition of control with 
 90.28  the commissioner of commerce at least 60 days before the actual 
 90.29  effective date of the change, except that the commissioner may 
 90.30  extend the 60-day period an additional 30 days if in the 
 90.31  commissioner's judgment any material information submitted is 
 90.32  substantially inaccurate or the acquiring party has not 
 90.33  furnished all the information required.  As used in this 
 90.34  section, the term "control" means the power to directly or 
 90.35  indirectly direct or cause the direction of the management or 
 90.36  policies of the banking institution.  A change in ownership of 
 91.1   capital stock that would result in direct or indirect ownership 
 91.2   by a stockholder or an affiliated group of stockholders of less 
 91.3   than 25 percent of the outstanding capital stock is not 
 91.4   considered a change of control.  If there is any doubt as to 
 91.5   whether a change in the outstanding voting stock is sufficient 
 91.6   to result in control or to effect a change in the control, the 
 91.7   doubt shall be resolved in favor of reporting the facts to the 
 91.8   commissioner.  The commissioner shall use the criteria 
 91.9   established by the Financial Institution Regulatory and Interest 
 91.10  Rate Control Act of 1978, United States Code, title 12, section 
 91.11  1817(j), and the regulations adopted under it, when reviewing 
 91.12  the acquisition and determining if the acquisition should or 
 91.13  should not be disapproved.  Within three days after making the 
 91.14  decision to disapprove a proposed acquisition, the commissioner 
 91.15  shall notify the acquiring party in writing of the disapproval.  
 91.16  The notice must provide a statement of the basis for the 
 91.17  disapproval. 
 91.18     Sec. 2.  Minnesota Statutes 1994, section 46.048, is 
 91.19  amended by adding a subdivision to read: 
 91.20     Subd. 2a.  [CONTENTS.] The notice required by subdivision 1 
 91.21  must contain the following information to the extent that it is 
 91.22  known by the person making the notice:  
 91.23     (1) the identity, personal history, business background, 
 91.24  and experience of each person by whom or on whose behalf the 
 91.25  acquisition is to be made, including the person's material 
 91.26  business activities and affiliations during the past five years, 
 91.27  and a description of any material pending legal or 
 91.28  administrative proceedings in which the person is a party and 
 91.29  any criminal indictment or conviction of that person by a state 
 91.30  or federal court; 
 91.31     (2) a statement of the assets and liabilities of each 
 91.32  person by whom or on whose behalf the acquisition is to be made, 
 91.33  as of the end of the fiscal year for each of the five years 
 91.34  immediately preceding the date of the notice, together with 
 91.35  related statements of income, sources, and application of funds 
 91.36  for each of the fiscal years then concluded, all prepared in 
 92.1   accordance with generally accepted accounting principles 
 92.2   consistently applied, and an interim statement of the assets and 
 92.3   liabilities for each person, together with related statements of 
 92.4   income, source, and application of funds as of a date not more 
 92.5   than 90 days before the date of the filing of the notice; 
 92.6      (3) the terms and conditions of the proposed acquisition 
 92.7   and the manner in which the acquisition is to be made; 
 92.8      (4) the identity, source, and amount of the funds or other 
 92.9   consideration to be used in making the acquisition, and if any 
 92.10  part of these funds or other consideration has been or is to be 
 92.11  borrowed or otherwise obtained for the purpose of making the 
 92.12  acquisition, a description of the transaction, the names of the 
 92.13  parties, and any arrangements, agreements, or understandings 
 92.14  with those persons; 
 92.15     (5) any plans or proposals that an acquiring party making 
 92.16  the acquisition may have to liquidate the bank, to sell its 
 92.17  assets or merge it, or make any other major change in its 
 92.18  business or corporate structure or management; 
 92.19     (6) the identification of any person employed, retained, or 
 92.20  to be compensated by the acquiring party, or by any person on 
 92.21  the acquiring party's behalf, to make solicitations or 
 92.22  recommendations to stockholders for the purpose of assisting in 
 92.23  the acquisition, and a brief description of the terms of the 
 92.24  employment, retainer, or arrangement for compensation; 
 92.25     (7) copies of all invitations, tenders, or advertisements 
 92.26  making tender offers to stockholders for purchase of their stock 
 92.27  to be used in connection with the proposed acquisition; and 
 92.28     (8) any additional relevant information in the form the 
 92.29  commissioner requires by rule or by specific request in 
 92.30  connection with any particular notice. 
 92.31     Sec. 3.  Minnesota Statutes 1994, section 46.048, is 
 92.32  amended by adding a subdivision to read: 
 92.33     Subd. 2b.  [NOTICE.] Upon the filing of an application:  
 92.34     (1) an applicant shall publish in a newspaper of general 
 92.35  circulation notice of the proposed acquisition in a form 
 92.36  acceptable to the commissioner; and 
 93.1      (2) the commissioner shall accept public comment on an 
 93.2   application for a period of not less than 30 days from the date 
 93.3   of the final publication required by clause (1). 
 93.4      Sec. 4.  Minnesota Statutes 1994, section 46.048, is 
 93.5   amended by adding a subdivision to read: 
 93.6      Subd. 4.  [HEARINGS.] Within ten days of receipt of notice 
 93.7   of disapproval according to subdivision 1, the acquiring party 
 93.8   may request an agency hearing on the proposed acquisition.  At 
 93.9   the hearing, all issues must be determined on the record 
 93.10  according to chapter 14 and the rules issued by the department.  
 93.11  At the conclusion of the hearing, the commissioner shall by 
 93.12  order approve or disapprove the proposed acquisition on the 
 93.13  basis of the record made at the hearing. 
 93.14     Sec. 5.  Minnesota Statutes 1994, section 47.52, is amended 
 93.15  to read: 
 93.16     47.52 [AUTHORIZATION.] 
 93.17     (a) With the prior approval of the commissioner, any bank 
 93.18  doing business in this state may establish and maintain not more 
 93.19  than five detached facilities provided the facilities are 
 93.20  located within the municipality in which the principal office of 
 93.21  the applicant bank is located; or within 5,000 feet of its 
 93.22  principal office measured in a straight line from the closest 
 93.23  points of the closest structures involved; or within 100 miles 
 93.24  of its principal office measured in a straight line from the 
 93.25  closest points of the closest structures involved, if the 
 93.26  detached facility is within any municipality in which no bank is 
 93.27  located at the time of application or if the detached facility 
 93.28  is in a municipality having a population of more than 10,000, or 
 93.29  if the detached facility is located in a municipality having a 
 93.30  population of 10,000 or less, as determined by the commissioner 
 93.31  from the latest available data from the state demographer, or 
 93.32  for municipalities located in the seven-county metropolitan area 
 93.33  from the metropolitan council, and all the banks having a 
 93.34  principal office in the municipality have consented in writing 
 93.35  to the establishment of the facility. 
 93.36     (b) A detached facility shall not be closer than 50 feet to 
 94.1   a detached facility operated by any other bank and shall not be 
 94.2   closer than 100 feet to the principal office of any other bank, 
 94.3   the measurement to be made in the same manner as provided 
 94.4   above.  This paragraph shall not be applicable if the proximity 
 94.5   to the facility or the bank is waived in writing by the other 
 94.6   bank and filed with the application to establish a detached 
 94.7   facility. 
 94.8      (c) Any bank is allowed, in addition to other facilities, 
 94.9   one drive-in or walk-up facility located between 150 to 1,500 
 94.10  feet of the main banking house or within 1,500 feet from a 
 94.11  detached facility.  The drive-in or walk-up facility permitted 
 94.12  by this clause is subject to paragraph (b) and section 47.53. 
 94.13     (d) A bank whose home state is Minnesota as defined in 
 94.14  section 48.92 is allowed, in addition to other facilities, to 
 94.15  establish and operate a de novo detached facility in a location 
 94.16  in the host states of Iowa, North Dakota, South Dakota, and 
 94.17  Wisconsin not more than 30 miles from its principal office 
 94.18  measured in a straight line from the closest points of the 
 94.19  closest structures involved and subject to requirements of 
 94.20  sections 47.54 and 47.561 and the following additional 
 94.21  requirements and conditions: 
 94.22     (1) there is in effect in the host state a law, rule, or 
 94.23  ruling that permits Minnesota home state banks to establish de 
 94.24  novo branches in the host state under conditions substantially 
 94.25  similar to those imposed by the laws of Minnesota as determined 
 94.26  by the commissioner; and 
 94.27     (2) there is in effect a cooperative agreement between the 
 94.28  home and host state banking regulators to facilitate their 
 94.29  respective regulation and supervision of the bank including the 
 94.30  coordination of examinations. 
 94.31     Sec. 6.  Minnesota Statutes 1994, section 47.78, is amended 
 94.32  to read: 
 94.33     47.78 [CONTRACTS TO ACCEPT AND RECEIVE DEPOSITS-HONOR AND 
 94.34  PAY WITHDRAWALS.] 
 94.35     (a) Notwithstanding any other law to the contrary, a 
 94.36  financial institution, the "customer institution," may contract 
 95.1   with another financial institution, the "service institution," 
 95.2   to grant the service institution the authority to render 
 95.3   services to the customer institution's depositors, borrowers or 
 95.4   other customers, provided notice of the proposed contract is 
 95.5   given to the commissioner and the commissioner does not object 
 95.6   to the contract within 30 days of the notice. 
 95.7      (b) For purposes of this section:  "Financial institution" 
 95.8   means a national banking association, federal savings ~~and loan~~ 
 95.9   association, or federal credit union having its main office in 
 95.10  this state, or a bank, savings bank, savings ~~and loan~~ 
 95.11  association or credit union established and operating under the 
 95.12  laws of this state; and "services" means accepting and receiving 
 95.13  deposits, honoring and paying withdrawals, issuing money orders, 
 95.14  cashiers' checks, and travelers' checks or similar instruments, 
 95.15  cashing checks or drafts, receiving loan payments, receiving or 
 95.16  delivering cash and instruments and securities, disbursing loan 
 95.17  proceeds by machine, and any other transactions authorized by 
 95.18  section 47.63. 
 95.19     The term also includes a bank subsidiary of a bank holding 
 95.20  company or affiliated savings association to the extent agency 
 95.21  activities are permitted under section 18 of the Federal Deposit 
 95.22  Insurance Act, United States Code, title 12, section 1828, as 
 95.23  amended, effective September 29, 1995, and title I, Riegle-Neal 
 95.24  Interstate Banking and Branching Efficiency Act of 1994. 
 95.25     (c) A contract entered into pursuant to this section may 
 95.26  include authority to conduct transactions at or through any 
 95.27  principal office, branch, or detached facility of either 
 95.28  financial institution which is a party to the contract, and the 
 95.29  service institution is not considered a branch of the customer 
 95.30  institution for purposes of section 48.34. 
 95.31     Sec. 7.  Minnesota Statutes 1994, section 48.90, 
 95.32  subdivision 1, is amended to read: 
 95.33     Subdivision 1.  [SEVERABILITY.] It is the express intention 
 95.34  of the Minnesota legislature to act pursuant to the United 
 95.35  States Code, title 12, section 1842(d) ~~to provide an orderly~~ 
 95.36  ~~transition to interstate banking by initially permitting limited~~ 
 96.1   ~~interstate banking on a regional basis~~ as amended by title I of 
 96.2   the Riegle-Neal Interstate Banking and Branching Efficiency Act 
 96.3   of 1994 to provide for interstate banking on a nationwide basis 
 96.4   and to preserve certain state law, policy, and practices.  
 96.5   Therefore, notwithstanding the provisions of section 645.20, if 
 96.6   any provision of ~~Laws 1986, chapter 339, other than Laws 1986,~~ 
 96.7   ~~chapter 339, sections 1 to 3, and 14,~~ this act providing for the 
 96.8   supervisory powers of the commissioner or limiting expansion 
 96.9   into this state ~~to~~ by bank holding companies located in other 
 96.10  states ~~defined as "reciprocating states"~~ is determined by final, 
 96.11  nonappealable order of any Minnesota or federal court of 
 96.12  competent jurisdiction to be invalid or unconstitutional, ~~Laws~~ 
 96.13  ~~1986, chapter 339,~~ this act is null and void and of no further 
 96.14  force and effect from the effective date of the final 
 96.15  determination.  
 96.16     Sec. 8.  Minnesota Statutes 1994, section 48.91, is amended 
 96.17  to read: 
 96.18     48.91 [TITLE.] 
 96.19     ~~Laws 1986, chapter 339~~ Section 48.90 may be cited as the 
 96.20  "~~reciprocal~~ interstate banking act."  
 96.21     Sec. 9.  Minnesota Statutes 1994, section 48.92, 
 96.22  subdivision 2, is amended to read: 
 96.23     Subd. 2.  [CONTROL.] "Control," ~~means,~~ with respect to a 
 96.24  bank holding company, bank, or bank to be organized pursuant to 
 96.25  chapters 46, 47, 48, and 300, ~~(1) the ownership, directly or~~ 
 96.26  ~~indirectly or acting through one or more other persons, control~~ 
 96.27  ~~of or the power to vote 25 percent or more of any class of~~ 
 96.28  ~~voting securities; (2) control in any manner over the election~~ 
 96.29  ~~of a majority of the directors; or (3) the power to exercise,~~ 
 96.30  ~~directly or indirectly, a controlling influence over management~~ 
 96.31  ~~and policies~~ is defined in section 46.048, subdivision 1. 
 96.32     Sec. 10.  Minnesota Statutes 1994, section 48.92, 
 96.33  subdivision 6, is amended to read: 
 96.34     Subd. 6.  [~~LOCATED IN THIS~~ HOME STATE.] "~~Located in~~ 
 96.35  ~~this~~ Home state" means:  (1) ~~a bank whose organizational~~ 
 96.36  ~~certificate identifies an address in this state as the principal~~ 
 97.1   ~~place of conducting the business of banking; or (2) a bank~~ 
 97.2   ~~holding company as defined in the Bank Holding Company Act of~~ 
 97.3   ~~1956, as amended, with banking subsidiaries, the majority of~~ 
 97.4   ~~whose deposits are in Minnesota.~~ with respect to a national 
 97.5   bank, the state in which the main office of the bank is located; 
 97.6   (2) with respect to a state bank, the state by which the bank is 
 97.7   chartered; and (3) with respect to a bank holding company, the 
 97.8   state in which the total deposits of all banking subsidiaries of 
 97.9   the company are the largest on the later of (i) July 1, 1996, or 
 97.10  (ii) the date on which the company becomes a bank holding 
 97.11  company under the Bank Holding Company Act of 1956, as amended, 
 97.12  United States Code, title 12, section 1842. 
 97.13     Sec. 11.  Minnesota Statutes 1994, section 48.92, 
 97.14  subdivision 7, is amended to read: 
 97.15     Subd. 7.  [~~RECIPROCATING~~ HOST STATE.] "~~Reciprocating~~ Host 
 97.16  state" is a state ~~that authorizes the acquisition, directly or~~ 
 97.17  ~~indirectly, or control of, banks in that state by a bank or bank~~ 
 97.18  ~~holding company located in this state under conditions~~ 
 97.19  ~~substantially similar to those imposed by the laws of Minnesota~~ 
 97.20  ~~as determined by the commissioner.~~ other than the home state of 
 97.21  the bank holding company, in which the company controls, or 
 97.22  seeks to control, a bank subsidiary. 
 97.23     Sec. 12.  Minnesota Statutes 1994, section 48.92, 
 97.24  subdivision 8, is amended to read: 
 97.25     Subd. 8.  [~~RECIPROCATING STATE~~ OUT-OF-STATE BANK HOLDING 
 97.26  COMPANY.] "~~Reciprocating state~~ Out-of-state bank holding 
 97.27  company" means a bank holding company as defined in the Bank 
 97.28  Holding Company Act of 1956, as amended, whose operations are 
 97.29  principally conducted in a ~~reciprocating~~ home state other than 
 97.30  Minnesota ~~and is that state in which the operations of its~~ 
 97.31  ~~banking subsidiaries are the largest in terms of total deposits~~. 
 97.32     Sec. 13.  Minnesota Statutes 1994, section 48.92, 
 97.33  subdivision 9, is amended to read: 
 97.34     Subd. 9.  [INTERSTATE BANK HOLDING COMPANY.] "Interstate 
 97.35  bank holding company" means (a) a bank holding company ~~located~~ 
 97.36  ~~in this state,~~ whose home state is Minnesota and is engaging in 
 98.1   interstate banking ~~under reciprocal legislation~~, and (b) ~~a~~ 
 98.2   ~~reciprocating state~~ an out-of-state bank holding company engaged 
 98.3   in banking in this state~~, and (c) other out-of-state bank~~ 
 98.4   ~~holding companies operating an institution located in this state~~ 
 98.5   ~~having deposits insured by the Federal Deposit Insurance~~ 
 98.6   ~~Corporation~~. 
 98.7      Sec. 14.  Minnesota Statutes 1994, section 48.92, is 
 98.8   amended by adding a subdivision to read: 
 98.9      Subd. 11.  [OUT-OF-STATE BANK.] "Out-of-state bank" means a 
 98.10  bank whose home state is other than Minnesota. 
 98.11     Sec. 15.  Minnesota Statutes 1994, section 48.93, 
 98.12  subdivision 1, is amended to read: 
 98.13     Subdivision 1.  [APPLICATION.] ~~A reciprocating state~~ An 
 98.14  out-of-state bank holding company may, through a purchase of 
 98.15  stock or assets of a bank, or through a purchase of stock or 
 98.16  assets of or merger with a bank holding company, acquire ~~an~~ 
 98.17  ~~interest~~ control in an existing bank or banks ~~located in this~~ 
 98.18  whose home state is Minnesota if it meets the conditions in this 
 98.19  section, sections 46.047 and 46.048 and~~, if the interest will~~ 
 98.20  ~~result in control of the bank or banks,~~ it files an application 
 98.21  in writing with the commissioner on forms provided by the 
 98.22  department.  The commissioner, upon receipt of the application, 
 98.23  shall act upon it ~~within 30 days of the end of the public~~ 
 98.24  ~~comment period provided by section 48.98, and, unless the~~ 
 98.25  ~~proposed acquisition is disapproved within that period of time,~~ 
 98.26  ~~it becomes effective without approval~~ in the manner provided for 
 98.27  in sections 46.047 and 46.048, except that the commissioner may 
 98.28  extend the ~~30-day~~ 60-day period an additional 30 days if in the 
 98.29  commissioner's judgment any material information submitted is 
 98.30  substantially inaccurate or the acquiring party has not 
 98.31  furnished all the information required by ~~subdivision 3~~ law, 
 98.32  rule, or the commissioner.  ~~No application for approval required~~ 
 98.33  ~~by this section is complete unless accompanied by an application~~ 
 98.34  ~~fee of $5,000 payable to the state treasurer.  Compliance with~~ 
 98.35  ~~the requirements of this section satisfies the requirements of~~ 
 98.36  ~~section 48.03, subdivision 4.~~  Within three days after making 
 99.1   the decision to disapprove any proposed acquisition, the 
 99.2   commissioner shall notify the acquiring party in writing of the 
 99.3   disapproval.  The notice must provide a statement of the basis 
 99.4   for the disapproval.  
 99.5      Sec. 16.  Minnesota Statutes 1994, section 48.93, 
 99.6   subdivision 3, is amended to read: 
 99.7      Subd. 3.  [CRITERIA FOR APPROVAL.] Except as otherwise 
 99.8   provided by rule of the department, an application filed 
 99.9   pursuant to subdivision 1 must contain the ~~following~~ 
 99.10  information~~:~~ required by sections 46.047 and 46.048. 
 99.11     ~~(1) the identity, personal history, business background,~~ 
 99.12  ~~and experience of each person by whom or on whose behalf the~~ 
 99.13  ~~acquisition is to be made, including the person's material~~ 
 99.14  ~~business activities and affiliations during the past five years,~~ 
 99.15  ~~and a description of any material pending legal or~~ 
 99.16  ~~administrative proceedings in which the person is a party and~~ 
 99.17  ~~any criminal indictment or conviction of that person by a state~~ 
 99.18  ~~or federal court;~~ 
 99.19     ~~(2) a statement of the assets and liabilities of each~~ 
 99.20  ~~person by whom or on whose behalf the acquisition is to be made,~~ 
 99.21  ~~as of the end of the fiscal year for each of the five years~~ 
 99.22  ~~immediately preceding the date of the notice, together with~~ 
 99.23  ~~related statements of income, sources, and application of funds~~ 
 99.24  ~~for each of the fiscal years then concluded, all prepared in~~ 
 99.25  ~~accordance with generally accepted accounting principles~~ 
 99.26  ~~consistently applied, and an interim statement of the assets and~~ 
 99.27  ~~liabilities for each person, together with related statements of~~ 
 99.28  ~~income, source, and application of funds as of a date not more~~ 
 99.29  ~~than 90 days prior to the date of the filing of the notice;~~ 
 99.30     ~~(3) the terms and conditions of the proposed acquisition~~ 
 99.31  ~~and the manner in which the acquisition is to be made;~~ 
 99.32     ~~(4) the identity, source, and amount of the funds or other~~ 
 99.33  ~~consideration to be used in making the acquisition, and if any~~ 
 99.34  ~~part of these funds or other consideration has been or is to be~~ 
 99.35  ~~borrowed or otherwise obtained for the purpose of making the~~ 
 99.36  ~~acquisition, a description of the transaction, the names of the~~