1.1                          A bill for an act 
  1.2             relating to mortgage foreclosure; providing for 
  1.3             rescission of foreclosure consultant contracts; 
  1.4             regulating foreclosure consultant contracts; providing 
  1.5             remedies for foreclosure violations; requiring 
  1.6             foreclosure purchasers to enter foreclosure 
  1.7             reconveyances in the form of written contracts; 
  1.8             regulating foreclosure contracts; prohibiting certain 
  1.9             foreclosure purchaser practices; providing enforcement 
  1.10            remedies; requiring certain foreclosure notices; 
  1.11            imposing criminal penalties; amending Minnesota 
  1.12            Statutes 2002, section 580.03; proposing coding for 
  1.13            new law in Minnesota Statutes, chapter 580; proposing 
  1.14            coding for new law as Minnesota Statutes, chapter 325N.
  1.15  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.16                      FORECLOSURE CONSULTANTS 
  1.17     Section 1.  [325N.01] [DEFINITIONS.] 
  1.18     The definitions in paragraphs (a) to (h) apply to sections 
  1.19  325N.01 to 325N.09. 
  1.20     (a) "Foreclosure consultant" means any person who, directly 
  1.21  or indirectly, makes any solicitation, representation, or offer 
  1.22  to any owner to perform for compensation or who, for 
  1.23  compensation, performs any service which the person in any 
  1.24  manner represents will in any manner do any of the following: 
  1.25     (1) stop or postpone the foreclosure sale; 
  1.26     (2) obtain any forbearance from any beneficiary or 
  1.27  mortgagee; 
  1.28     (3) assist the owner to exercise the right or reinstatement 
  1.29  provided in section 580.30; 
  1.30     (4) obtain any extension of the period within which the 
  2.1   owner may reinstate the owner's obligation; 
  2.2      (5) obtain any waiver of an acceleration clause contained 
  2.3   in any promissory note or contract secured by a mortgage on a 
  2.4   residence in foreclosure or contained in the mortgage; 
  2.5      (6) assist the owner in foreclosure or loan default to 
  2.6   obtain a loan or advance of funds; 
  2.7      (7) avoid or ameliorate the impairment of the owner's 
  2.8   credit resulting from the recording of a notice of default or 
  2.9   the conduct of a foreclosure sale; or 
  2.10     (8) save the owner's residence from foreclosure. 
  2.11     (b) A foreclosure consultant does not include any of the 
  2.12  following: 
  2.13     (1) a person licensed to practice law in this state when 
  2.14  the person renders service in the course of his or her practice 
  2.15  as an attorney-at-law; 
  2.16     (2) a person licensed as a debt prorater under sections 
  2.17  332.12 to 332.29, when the person is acting as a debt prorater 
  2.18  as defined in these sections; 
  2.19     (3) a person licensed as a real estate broker or 
  2.20  salesperson under chapter 82 when the person engages in acts 
  2.21  whose performance requires licensure under that chapter unless 
  2.22  the person is engaged in offering services designed to, or 
  2.23  purportedly designed to, enable the owner to retain possession 
  2.24  of the residence in foreclosure; 
  2.25     (4) a person licensed as an accountant under chapter 326A 
  2.26  when the person is acting in any capacity for which the person 
  2.27  is licensed under those provisions; 
  2.28     (5) a person or the person's authorized agent acting under 
  2.29  the express authority or written approval of the Department of 
  2.30  Housing and Urban Development or other department or agency of 
  2.31  the United States or this state to provide services; 
  2.32     (6) a person who holds or is owed an obligation secured by 
  2.33  a lien on any residence in foreclosure when the person performs 
  2.34  services in connection with this obligation or lien if the 
  2.35  obligation or lien did not arise as the result of or as part of 
  2.36  a proposed foreclosure reconveyance; 
  3.1      (7) any person or entity doing business under any law of 
  3.2   this state, or of the United States relating to banks, trust 
  3.3   companies, savings and loan associations, industrial loan and 
  3.4   thrift companies, regulated lenders, credit unions, insurance 
  3.5   companies, or a mortgagee which is a United States Department of 
  3.6   Housing and Urban Development approved mortgagee and any 
  3.7   subsidiary or affiliate of these persons or entities, and any 
  3.8   agent or employee of these persons or entities while engaged in 
  3.9   the business of these persons or entities; 
  3.10     (8) a person licensed as a residential mortgage originator 
  3.11  or servicer pursuant to chapter 58, when acting under the 
  3.12  authority of that license or a foreclosure purchaser as defined 
  3.13  in section 325N.10; 
  3.14     (9) a nonprofit agency or organization that offers 
  3.15  counseling or advice to an owner of a home in foreclosure or 
  3.16  loan default if they do not contract for services with 
  3.17  for-profit lenders or foreclosure purchasers; and 
  3.18     (10) a judgment creditor of the owner, to the extent that 
  3.19  the judgment creditor's claim accrued prior to the personal 
  3.20  service of the foreclosure notice required by section 580.03, 
  3.21  but excluding a person who purchased the claim after such 
  3.22  personal service. 
  3.23     (c) "Foreclosure reconveyance" means a transaction 
  3.24  involving: 
  3.25     (1) the transfer of title to real property by a foreclosed 
  3.26  homeowner during a foreclosure proceeding, either by transfer of 
  3.27  interest from the foreclosed homeowner or by creation of a 
  3.28  mortgage or other lien or encumbrance during the foreclosure 
  3.29  process that allows the acquirer to obtain title to the property 
  3.30  by redeeming the property as a junior lienholder; and 
  3.31     (2) the subsequent conveyance, or promise of a subsequent 
  3.32  conveyance, of an interest back to the foreclosed homeowner by 
  3.33  the acquirer or a person acting in participation with the 
  3.34  acquirer that allows the foreclosed homeowner to possess the 
  3.35  real property following the completion of the foreclosure 
  3.36  proceeding, which interest includes, but is not limited to, an 
  4.1   interest in a contract for deed, purchase agreement, option to 
  4.2   purchase, or lease. 
  4.3      (d) "Person" means any individual, partnership, 
  4.4   corporation, limited liability company, association, or other 
  4.5   group, however organized. 
  4.6      (e) "Service" means and includes, but is not limited to, 
  4.7   any of the following: 
  4.8      (1) debt, budget, or financial counseling of any type; 
  4.9      (2) receiving money for the purpose of distributing it to 
  4.10  creditors in payment or partial payment of any obligation 
  4.11  secured by a lien on a residence in foreclosure; 
  4.12     (3) contacting creditors on behalf of an owner of a 
  4.13  residence in foreclosure; 
  4.14     (4) arranging or attempting to arrange for an extension of 
  4.15  the period within which the owner of a residence in foreclosure 
  4.16  may cure the owner's default and reinstate his or her obligation 
  4.17  pursuant to section 580.30; 
  4.18     (5) arranging or attempting to arrange for any delay or 
  4.19  postponement of the time of sale of the residence in 
  4.20  foreclosure; 
  4.21     (6) advising the filing of any document or assisting in any 
  4.22  manner in the preparation of any document for filing with any 
  4.23  bankruptcy court; or 
  4.24     (7) giving any advice, explanation, or instruction to an 
  4.25  owner of a residence in foreclosure, which in any manner relates 
  4.26  to the cure of a default in or the reinstatement of an 
  4.27  obligation secured by a lien on the residence in foreclosure, 
  4.28  the full satisfaction of that obligation, or the postponement or 
  4.29  avoidance of a sale of a residence in foreclosure, pursuant to a 
  4.30  power of sale contained in any mortgage. 
  4.31     (f) "Residence in foreclosure" means residential real 
  4.32  property consisting of one to four family dwelling units, one of 
  4.33  which the owner occupies as his or her principal place of 
  4.34  residence, and against which there is an outstanding notice of 
  4.35  pendency of foreclosure, recorded pursuant to section 580.032, 
  4.36  or against which a summons and complaint has been served under 
  5.1   chapter 581. 
  5.2      (g) "Owner" means the record owner of the residential real 
  5.3   property in foreclosure at the time the notice of pendency was 
  5.4   recorded, or the summons and complaint served. 
  5.5      (h) "Contract" means any agreement, or any term in any 
  5.6   agreement, between a foreclosure consultant and an owner for the 
  5.7   rendition of any service as defined in paragraph (d). 
  5.8      Sec. 2.  [325N.02] [RESCISSION OF FORECLOSURE CONSULTANT 
  5.9   CONTRACT.] 
  5.10     (a) In addition to any other right under law to rescind a 
  5.11  contract, an owner has the right to cancel such a contract until 
  5.12  midnight of the third business day after the day on which the 
  5.13  owner signs a contract which complies with section 325N.03. 
  5.14     (b) Cancellation occurs when the owner gives written notice 
  5.15  of cancellation to the foreclosure consultant at the address 
  5.16  specified in the contract. 
  5.17     (c) Notice of cancellation, if given by mail, is effective 
  5.18  when deposited in the mail properly addressed with postage 
  5.19  prepaid. 
  5.20     (d) Notice of cancellation given by the owner need not take 
  5.21  the particular form as provided with the contract and, however 
  5.22  expressed, is effective if it indicates the intention of the 
  5.23  owner not to be bound by the contract. 
  5.24     Sec. 3.  [325N.03] [CONTRACT.] 
  5.25     (a) Every contract must be in writing and must fully 
  5.26  disclose the exact nature of the foreclosure consultant's 
  5.27  services and the total amount and terms of compensation. 
  5.28     (b) The following notice, printed in at least 14-point 
  5.29  boldface type and completed with the name of the foreclosure 
  5.30  consultant, must be printed immediately above the statement 
  5.31  required by paragraph (c): 
  5.32                "NOTICE REQUIRED BY MINNESOTA LAW 
  5.33                    .............. (Name) or anyone working
  5.34                    for him or her CANNOT:
  5.35                    (1) Take any money from you or ask you 
  5.36                    for money until ................ (Name)
  6.1                     has completely finished doing everything
  6.2                     he or she said he or she would do; and
  6.3                     (2) Ask you to sign or have you sign any  
  6.4                     lien, mortgage, or deed."
  6.5      (c) The contract must be written in the same language as 
  6.6   principally used by the foreclosure consultant to describe his 
  6.7   or her services or to negotiate the contract, must be dated and 
  6.8   signed by the owner, and must contain in immediate proximity to 
  6.9   the space reserved for the owner's signature a conspicuous 
  6.10  statement in a size equal to at least 10-point bold type, as 
  6.11  follows: 
  6.12     "You, the owner, may cancel this transaction at any time 
  6.13     prior to midnight of the third business day after the date 
  6.14     of this transaction.  See the attached notice of 
  6.15     cancellation form for an explanation of this right." 
  6.16     (d) The contract must contain on the first page, in a type 
  6.17  size no smaller than that generally used in the body of the 
  6.18  document, each of the following: 
  6.19     (1) the name and address of the foreclosure consultant to 
  6.20  which the notice of cancellation is to be mailed; and 
  6.21     (2) the date the owner signed the contract. 
  6.22     (e) The contract must be accompanied by a completed form in 
  6.23  duplicate, captioned "notice of cancellation," which must be 
  6.24  attached to the contract, must be easily detachable, and must 
  6.25  contain in at least ten-point type the following statement 
  6.26  written in the same language as used in the contract: 
  6.27                     "NOTICE OF CANCELLATION 
  6.28                ....................................
  6.29                 (Enter date of transaction) (Date)
  6.30               You may cancel this transaction, without
  6.31            any penalty or obligation, within three 
  6.32            business days from the above date.
  6.33                To cancel this transaction, mail or deliver
  6.34            a signed and dated copy of this cancellation
  6.35            notice, or any other written notice
  6.36            to ...................................... 
  7.1                  (Name of foreclosure consultant)
  7.2             at .................................................. 
  7.3            (Address of foreclosure consultant's place of business)
  7.4             NOT LATER THAN MIDNIGHT OF ..........................
  7.5                                                    (Date)
  7.6             I hereby cancel this transaction .................. 
  7.7                                                    (Date)
  7.8                       ............................. 
  7.9                            (Owner's signature)"
  7.10     (f) The foreclosure consultant shall provide the owner with 
  7.11  a copy of the contract and the attached notice of cancellation 
  7.12  immediately upon execution of the contract. 
  7.13     (g) The three business days during which the owner may 
  7.14  cancel the contract shall not begin to run until the foreclosure 
  7.15  consultant has complied with this section. 
  7.16     Sec. 4.  [325N.04] [VIOLATIONS.] 
  7.17     It is a violation for a foreclosure consultant to: 
  7.18     (1) claim, demand, charge, collect, or receive any 
  7.19  compensation until after the foreclosure consultant has fully 
  7.20  performed each and every service the foreclosure consultant 
  7.21  contracted to perform or represented he or she would perform; 
  7.22     (2) claim, demand, charge, collect, or receive any fee, 
  7.23  interest, or any other compensation for any reason which exceeds 
  7.24  eight percent per annum of the amount of any loan which the 
  7.25  foreclosure consultant may make to the owner; 
  7.26     (3) take any wage assignment, any lien of any type on real 
  7.27  or personal property, or other security to secure the payment of 
  7.28  compensation.  Any such security is void and unenforceable; 
  7.29     (4) receive any consideration from any third party in 
  7.30  connection with services rendered to an owner unless the 
  7.31  consideration is first fully disclosed to the owner; 
  7.32     (5) acquire any interest, directly or indirectly, or by 
  7.33  means of a subsidiary or affiliate in a residence in foreclosure 
  7.34  from an owner with whom the foreclosure consultant has 
  7.35  contracted; 
  7.36     (6) take any power of attorney from an owner for any 
  8.1   purpose, except to inspect documents as provided by law; or 
  8.2      (7) induce or attempt to induce any owner to enter a 
  8.3   contract which does not comply in all respects with sections 
  8.4   325N.02 and 325N.03. 
  8.5      Sec. 5.  [325N.05] [WAIVER NOT ALLOWED.] 
  8.6      Any waiver by an owner of the provisions of sections 
  8.7   325N.01 to 325N.09 is void and unenforceable as contrary to 
  8.8   public policy.  Any attempt by a foreclosure consultant to 
  8.9   induce an owner to waive the owner's rights is a violation of 
  8.10  sections 325N.01 to 325N.09. 
  8.11     Sec. 6.  [325N.06] [REMEDIES.] 
  8.12     (a) A violation of sections 325N.01 to 325N.09 is 
  8.13  considered to be a violation of section 325F.69, and all 
  8.14  remedies of section 8.31 are available for such an action.  A 
  8.15  private cause of action under section 8.31 by a foreclosed 
  8.16  homeowner is in the public interest.  An owner may bring an 
  8.17  action against a foreclosure consultant for any violation of 
  8.18  sections 325N.01 to 325N.09.  Judgment must be entered for 
  8.19  actual damages, reasonable attorney fees and costs, and 
  8.20  appropriate equitable relief.  
  8.21     (b) The rights and remedies provided in paragraph (a) are 
  8.22  cumulative to, and not a limitation of, any other rights and 
  8.23  remedies provided by law.  Any action brought pursuant to this 
  8.24  section must be commenced within four years from the date of the 
  8.25  alleged violation. 
  8.26     (c) The court may award exemplary damages up to one and 
  8.27  one-half times the compensation charged by the foreclosure 
  8.28  consultant if the court finds that the foreclosure consultant 
  8.29  violated the provisions of section 325N.04, paragraph (1), (2), 
  8.30  or (4), and the foreclosure consultant's conduct was in bad 
  8.31  faith. 
  8.32     Sec. 7.  [325N.07] [PENALTY.] 
  8.33     Any person who commits any violation described in section 
  8.34  325N.04 may, upon conviction, be fined not more than $10,000 or 
  8.35  imprisoned not more than one year or both.  Prosecution or 
  8.36  conviction for any violation described in section 325N.04 will 
  9.1   not bar prosecution or conviction for any other offenses.  These 
  9.2   penalties are cumulative to any other remedies or penalties 
  9.3   provided by law. 
  9.4      Sec. 8.  [325N.08] [PROVISIONS SEVERABLE.] 
  9.5      If any provision of sections 325N.01 to 325N.09 or the 
  9.6   application of any of these provisions to any person or 
  9.7   circumstance is held to be unconstitutional and void, the 
  9.8   remainder of sections 325N.01 to 325N.09 remains valid. 
  9.9      Sec. 9.  [325N.09] [LIABILITY.] 
  9.10     (a) Any provision in a contract which attempts or purports 
  9.11  to require arbitration of any dispute arising under sections 
  9.12  325N.01 to 325N.09 is void at the option of the owner. 
  9.13     (b) This section applies to any contract entered into on or 
  9.14  after August 1, 2004. 
  9.15                       FORECLOSURE PURCHASERS 
  9.16     Sec. 10.  [325N.10] [DEFINITIONS.] 
  9.17     Subdivision 1.  [SCOPE.] For the purposes of sections 
  9.18  325N.10 to 325N.18, the terms defined in this section have the 
  9.19  meanings given them. 
  9.20     Subd. 2.  [FORECLOSED HOMEOWNER.] "Foreclosed homeowner" 
  9.21  means an owner of residential real property, including a 
  9.22  condominium, that is the primary residence of the owner and 
  9.23  whose mortgage on the real property is or was in foreclosure. 
  9.24     Subd. 3.  [FORECLOSURE RECONVEYANCE.] "Foreclosure 
  9.25  reconveyance" means a transaction involving: 
  9.26     (1) the transfer of title to real property by a foreclosed 
  9.27  homeowner during a foreclosure proceeding, either by transfer of 
  9.28  interest from the foreclosed homeowner or by creation of a 
  9.29  mortgage or other lien or encumbrance during the foreclosure 
  9.30  process that allows the acquirer to obtain title to the property 
  9.31  by redeeming the property as a junior lienholder; and 
  9.32     (2) the subsequent conveyance, or promise of a subsequent 
  9.33  conveyance, of an interest back to the foreclosed homeowner by 
  9.34  the acquirer or a person acting in participation with the 
  9.35  acquirer that allows the foreclosed homeowner to possess the 
  9.36  real property following the completion of the foreclosure 
 10.1   proceeding, which interest includes, but is not limited to, an 
 10.2   interest in a contract for deed, purchase agreement, option to 
 10.3   purchase, or lease. 
 10.4      Subd. 4.  [FORECLOSURE PURCHASER.] "Foreclosure purchaser" 
 10.5   means a person that has acted as the acquirer in more than one 
 10.6   foreclosure reconveyance during any 24-month period.  
 10.7   Foreclosure purchaser also includes a person that has acted in 
 10.8   joint venture or joint enterprise with one or more acquirers in 
 10.9   more than one foreclosure reconveyance during any 24-month 
 10.10  period.  A federal or state chartered bank, savings bank, 
 10.11  thrift, or credit union is not a foreclosure purchaser. 
 10.12     Sec. 11.  [325N.11] [CONTRACT REQUIREMENT; FORM AND 
 10.13  LANGUAGE.] 
 10.14     A foreclosure purchaser shall enter into every foreclosure 
 10.15  reconveyance in the form of a written contract.  Every contract 
 10.16  must be written in letters of a size equal to at least 12-point 
 10.17  boldface type, in the same language principally used by the 
 10.18  foreclosure purchaser and foreclosed homeowner to negotiate the 
 10.19  sale of the residence in foreclosure and must be fully completed 
 10.20  and signed and dated by the foreclosed homeowner and foreclosure 
 10.21  purchaser before the execution of any instrument of conveyance 
 10.22  of the residence in foreclosure. 
 10.23     Sec. 12.  [325N.12] [CONTRACT TERMS.] 
 10.24     Every contract required by section 325N.11 must contain the 
 10.25  entire agreement of the parties and must include the following 
 10.26  terms: 
 10.27     (1) the name, business address, and the telephone number of 
 10.28  the foreclosure purchaser; 
 10.29     (2) the address of the residence in foreclosure; 
 10.30     (3) the total consideration to be given by the foreclosure 
 10.31  purchaser in connection with or incident to the sale; 
 10.32     (4) a complete description of the terms of payment or other 
 10.33  consideration including, but not limited to, any services of any 
 10.34  nature that the foreclosure purchaser represents he or she will 
 10.35  perform for the foreclosed homeowner before or after the sale; 
 10.36     (5) the time at which possession is to be transferred to 
 11.1   the foreclosure purchaser; 
 11.2      (6) a complete description of the terms of any related 
 11.3   agreement designed to allow the foreclosed homeowner to remain 
 11.4   in the home, such as a rental agreement, repurchase agreement, 
 11.5   contract for deed, or lease with option to buy; 
 11.6      (7) a notice of cancellation as provided in section 
 11.7   325N.14, paragraph (b); and 
 11.8      (8) the following notice in at least 14-point boldface 
 11.9   type, if the contract is printed or in capital letters if the 
 11.10  contract is typed, and completed with the name of the 
 11.11  foreclosure purchaser, immediately above the statement required 
 11.12  by section 325N.14, paragraph (a): 
 11.13                "NOTICE REQUIRED BY MINNESOTA LAW 
 11.14     Until your right to cancel this contract has ended, ....... 
 11.15     (Name) or anyone working for ....... (Name) CANNOT ask you 
 11.16     to sign or have you sign any deed or any other document." 
 11.17     The contract required by this section survives delivery of 
 11.18  any instrument of conveyance of the residence in foreclosure, 
 11.19  and has no effect on persons other than the parties to the 
 11.20  contract. 
 11.21     Sec. 13.  [325N.13] [CONTRACT CANCELLATION.] 
 11.22     (a) In addition to any other right of rescission, the 
 11.23  foreclosed homeowner has the right to cancel any contract with a 
 11.24  foreclosure purchaser until midnight of the fifth business day 
 11.25  following the day on which the foreclosed homeowner signs a 
 11.26  contract that complies with sections 325N.10 to 325N.15 or until 
 11.27  8:00 a.m. on the last day of the period during which the 
 11.28  foreclosed homeowner has a right of redemption, whichever occurs 
 11.29  first. 
 11.30     (b) Cancellation occurs when the foreclosed homeowner 
 11.31  delivers, by any means, written notice of cancellation to the 
 11.32  address specified in the contract. 
 11.33     (c) A notice of cancellation given by the foreclosed 
 11.34  homeowner need not take the particular form as provided with the 
 11.35  contract. 
 11.36     (d) Within ten days following receipt of a notice of 
 12.1   cancellation given in accordance with this section, the 
 12.2   foreclosure purchaser shall return without condition any 
 12.3   original contract and any other documents signed by the 
 12.4   foreclosed homeowner. 
 12.5      Sec. 14.  [325N.14] [NOTICE OF CANCELLATION.] 
 12.6      (a) The contract must contain in immediate proximity to the 
 12.7   space reserved for the foreclosed homeowner's signature a 
 12.8   conspicuous statement in a size equal to at least 14-point 
 12.9   boldface type, if the contract is printed, or in capital 
 12.10  letters, if the contract is typed, as follows: 
 12.11               "You may cancel this contract for the sale
 12.12            of your house without any penalty or obligation
 12.13            at any time before
 12.14            ..............................................
 12.15                      (Date and time of day)
 12.16            See the attached notice of cancellation form
 12.17            for an explanation of this right."
 12.18  The foreclosure purchaser shall accurately enter the date and 
 12.19  time of day on which the cancellation right ends. 
 12.20     (b) The contract must be accompanied by a completed form in 
 12.21  duplicate, captioned "notice of cancellation" in a size equal to 
 12.22  a 12-point boldface type if the contract is printed, or in 
 12.23  capital letters, if the contract is typed, followed by a space 
 12.24  in which the foreclosure purchaser shall enter the date on which 
 12.25  the foreclosed homeowner executes any contract.  This form must 
 12.26  be attached to the contract, must be easily detachable, and must 
 12.27  contain in type of at least 10 points, if the contract is 
 12.28  printed or in capital letters if the contract is typed, the 
 12.29  following statement written in the same language as used in the 
 12.30  contract: 
 12.31                     "NOTICE OF CANCELLATION 
 12.32                ....................................
 12.33                     (Enter date contract signed)
 12.34               You may cancel this contract for the sale
 12.35            of your house, without any penalty or
 12.36            obligation, at any time before
 13.1             ...........................................
 13.2                    (Enter date and time of day)
 13.3                 To cancel this transaction, personally
 13.4             deliver a signed and dated copy of this
 13.5             cancellation notice to
 13.6             ......................................... 
 13.7                        (Name of purchaser)
 13.8             at ............................................... 
 13.9              (Street address of purchaser's place of business)
 13.10            NOT LATER THAN ............................
 13.11                           (Enter date and time of day)
 13.12            I hereby cancel this transaction .................... 
 13.13                                                   (Date)
 13.14                        ............................. 
 13.15                            (Seller's signature)"
 13.16     (c) The foreclosure purchaser shall provide the foreclosed 
 13.17  homeowner with a copy of the contract and the attached notice of 
 13.18  cancellation at the time the contract is executed by all parties.
 13.19     (d) The five business days during which the foreclosed 
 13.20  homeowner may cancel the contract must not begin to run until 
 13.21  all parties to the contract have executed the contract and the 
 13.22  foreclosure purchaser has complied with this section. 
 13.23     Sec. 15.  [325N.15] [WAIVER.] 
 13.24     Any waiver of the provisions of sections 325N.10 to 315N.18 
 13.25  is void and unenforceable as contrary to public policy except a 
 13.26  consumer may waive the five-day right to cancel provided in 
 13.27  section 325N.13 if the property is subject to a foreclosure sale 
 13.28  within the five business days, and the foreclosed homeowner 
 13.29  agrees to waive his or her right to cancel in a handwritten 
 13.30  statement signed by all parties holding title to the foreclosed 
 13.31  property. 
 13.32     Sec. 16.  [325N.16] [LIABILITY.] 
 13.33     (a) Any provision in a contract which attempts or purports 
 13.34  to require arbitration of any dispute arising under sections 
 13.35  325N.10 to 325N.18 is void at the option of the owner. 
 13.36     (b) This section applies to any contract entered into on or 
 14.1   after August 1, 2004. 
 14.2      Sec. 17.  [325N.17] [PROHIBITED PRACTICES.] 
 14.3      A foreclosure purchaser shall not: 
 14.4      (a) enter into, or attempt to enter into, a foreclosure 
 14.5   reconveyance with a foreclosed homeowner unless: 
 14.6      (1) the foreclosure purchaser verifies and can demonstrate 
 14.7   that the foreclosed homeowner has a reasonable ability to pay 
 14.8   for the subsequent conveyance of an interest back to the 
 14.9   foreclosed homeowner.  In the case of a lease with an option to 
 14.10  purchase, payment ability also includes the reasonable ability 
 14.11  to make the lease payments and purchase the property within the 
 14.12  term of the option to purchase.  There is a rebuttable 
 14.13  presumption that a homeowner is reasonably able to pay for the 
 14.14  subsequent conveyance if the owner's payments for primary 
 14.15  housing expenses and regular principal and interest payments on 
 14.16  other personal debt, on a monthly basis, do not exceed 60 
 14.17  percent of the owner's monthly gross income.  For the purposes 
 14.18  of this section, "primary housing expenses" means the sum of 
 14.19  payments for regular principal, interest, rent, hazard 
 14.20  insurance, real estate taxes, and association dues; 
 14.21     (2) the foreclosure purchaser and the foreclosed homeowner 
 14.22  complete a closing for any foreclosure reconveyance in which the 
 14.23  foreclosure purchaser obtains a deed or mortgage from a 
 14.24  foreclosed homeowner.  For purposes of this section, "closing" 
 14.25  means an in-person meeting to complete final documents incident 
 14.26  to the sale of the real property or creation of a mortgage on 
 14.27  the real property conducted by a closing agent, as defined in 
 14.28  section 82.17, who is not employed by or an affiliate of the 
 14.29  foreclosure purchaser; 
 14.30     (3) the foreclosure purchaser obtains the written consent 
 14.31  of the foreclosed homeowner to a grant by the foreclosure 
 14.32  purchaser of any interest in the property during such times as 
 14.33  the foreclosed homeowner maintains any interest in the property; 
 14.34  and 
 14.35     (4) the foreclosure purchaser complies with the 
 14.36  requirements of the federal Home Ownership Equity Protection 
 15.1   Act, United States Code, title 15, section 1639, or its 
 15.2   implementing regulation, Code of Federal Regulations, title 12, 
 15.3   sections 226.31 to 226.34, for any foreclosure reconveyance in 
 15.4   which the foreclosed homeowner obtains a vendee interest in a 
 15.5   contract for deed; 
 15.6      (b) fail to either: 
 15.7      (1) ensure that title to the subject dwelling has been 
 15.8   reconveyed to the foreclosed homeowner; or 
 15.9      (2) make a payment to the foreclosed homeowner such that 
 15.10  the foreclosed homeowner has received consideration in an amount 
 15.11  of at least 85 percent of the fair market value of the property 
 15.12  within 120 days of either the eviction or voluntary 
 15.13  relinquishment of possession of the dwelling by the foreclosed 
 15.14  homeowner.  For purposes of this provision, the following 
 15.15  applies: 
 15.16     (i) there is a rebuttable presumption that an appraisal by 
 15.17  a person licensed or certified by an agency of the federal 
 15.18  government or this state to appraise real estate constitutes the 
 15.19  fair market value of the property; 
 15.20     (ii) the fair market value amount shall be determined at 
 15.21  the time of the execution of the foreclosure reconveyance 
 15.22  contract; and 
 15.23     (iii) "consideration" shall mean any payment or thing of 
 15.24  value provided to the foreclosed homeowner, including unpaid 
 15.25  rent or contract for deed payments owed by the foreclosed 
 15.26  homeowner, reasonable costs paid to third parties necessary to 
 15.27  complete the foreclosure reconveyance transaction, payment of 
 15.28  money to satisfy a debt or legal obligation of the foreclosed 
 15.29  homeowner, or the reasonable cost of repairs for damage to the 
 15.30  dwelling caused by the foreclosed homeowner; but 
 15.31     (iv) "consideration" shall not include amounts imputed as a 
 15.32  downpayment or fee to the foreclosure purchaser, or a person 
 15.33  acting in participation with the foreclosure purchaser, incident 
 15.34  to a contract for deed, lease, or option to purchase entered 
 15.35  into as part of the foreclosure reconveyance, except for 
 15.36  reasonable costs paid to third parties necessary to complete the 
 16.1   foreclosure reconveyance; 
 16.2      (c) enter into repurchase or lease terms as part of the 
 16.3   subsequent conveyance that are unfair or commercially 
 16.4   unreasonable, or engages in any other unfair conduct; 
 16.5      (d) represent, directly or indirectly, that: 
 16.6      (1) the foreclosure purchaser is acting as an advisor or a 
 16.7   consultant, or in any other manner represents that the 
 16.8   foreclosure purchaser is acting on behalf of the homeowner; 
 16.9      (2) the foreclosure purchaser has certification or 
 16.10  licensure that the foreclosure purchaser does not have, or that 
 16.11  the foreclosure purchaser is not a member of a licensed 
 16.12  profession if that is untrue; 
 16.13     (3) the foreclosure purchaser is assisting the foreclosed 
 16.14  homeowner to "save the house" or substantially similar phrase; 
 16.15  or 
 16.16     (4) the foreclosure purchaser is assisting the foreclosed 
 16.17  homeowner in preventing a completed foreclosure if the result of 
 16.18  the transaction is that the foreclosed homeowner will not 
 16.19  complete a redemption of the property; 
 16.20     (e) make any other statements, directly or by implication, 
 16.21  or engage in any other conduct that is false, deceptive, or 
 16.22  misleading, or that has the likelihood to cause confusion or 
 16.23  misunderstanding, including, but not limited to, statements 
 16.24  regarding the value of the residence in foreclosure, the amount 
 16.25  of proceeds the foreclosed homeowner will receive after a 
 16.26  foreclosure sale, any contract term, or the foreclosed 
 16.27  homeowner's rights or obligations incident to or arising out of 
 16.28  the foreclosure reconveyance; or 
 16.29     (f) do any of the following until the time during which the 
 16.30  foreclosed homeowner may cancel the transaction has fully 
 16.31  elapsed: 
 16.32     (1) accept from any foreclosed homeowner an execution of, 
 16.33  or induce any foreclosed homeowner to execute, any instrument of 
 16.34  conveyance of any interest in the residence in foreclosure; 
 16.35     (2) record with the county recorder or file with the 
 16.36  registrar of titles any document, including but not limited to, 
 17.1   any instrument of conveyance, signed by the foreclosed 
 17.2   homeowner; 
 17.3      (3) transfer or encumber or purport to transfer or encumber 
 17.4   any interest in the residence in foreclosure to any third party, 
 17.5   provided no grant of any interest or encumbrance is defeated or 
 17.6   affected as against a bona fide purchaser or encumbrance for 
 17.7   value and without notice of a violation of sections 325N.10 to 
 17.8   325N.18, and knowledge on the part of any such person or entity 
 17.9   that the property was "residential real property in foreclosure" 
 17.10  does not constitute notice of a violation of sections 325N.10 to 
 17.11  325N.18.  This section does not abrogate any duty of inquiry 
 17.12  which exists as to rights or interests of persons in possession 
 17.13  of the residential real property in foreclosure; or 
 17.14     (4) pay the foreclosed homeowner any consideration. 
 17.15     Sec. 18.  [325N.18] [ENFORCEMENT.] 
 17.16     Subdivision 1.  [REMEDIES.] A violation of sections 325N.10 
 17.17  to 325N.17 is considered to be a violation of section 325F.69, 
 17.18  and all the remedies of section 8.31 are available for such an 
 17.19  action.  A private right of action under section 8.31 by a 
 17.20  foreclosed homeowner is in the public interest.  
 17.21     Subd. 2.  [EXEMPLARY DAMAGES.] In a private right of action 
 17.22  under section 8.31 for a violation of section 325N.17, the court 
 17.23  may award exemplary damages of any amount.  In the event the 
 17.24  court determines that an award of exemplary damages is 
 17.25  appropriate, the amount of exemplary damages awarded shall not 
 17.26  be less than 1-1/2 times the foreclosed homeowner's actual 
 17.27  damages.  Any claim for exemplary damages brought pursuant to 
 17.28  this section must be commenced within four years after the date 
 17.29  of the alleged violation. 
 17.30     Subd. 3.  [REMEDIES CUMULATIVE.] The remedies provided in 
 17.31  this section are cumulative and do not restrict any remedy that 
 17.32  is otherwise available.  The provisions of sections 325N.10 to 
 17.33  325N.18 are not exclusive and are in addition to any other 
 17.34  requirements, rights, remedies, and penalties provided by law.  
 17.35  No action under this section shall affect the rights in the 
 17.36  foreclosed property held by a good faith purchaser for value 
 18.1   under sections 507.34, 508.48, 508A.48, or other applicable law. 
 18.2      Subd. 4.  [CRIMINAL PENALTY.] Any foreclosure purchaser who 
 18.3   violates any provision of section 325N.17, or who engages in any 
 18.4   practice which would operate as a fraud or deceit upon a 
 18.5   foreclosed homeowner may, upon conviction, be fined not more 
 18.6   than $100,000 or imprisoned not more than one year, or both.  
 18.7   Prosecution or conviction for any one of the violations does not 
 18.8   bar prosecution or conviction for any other offenses. 
 18.9      Sec. 19.  Minnesota Statutes 2002, section 580.03, is 
 18.10  amended to read: 
 18.11     580.03 [NOTICE OF SALE; SERVICE ON OCCUPANT.] 
 18.12     Six weeks' published notice shall be given that such 
 18.13  mortgage will be foreclosed by sale of the mortgaged premises or 
 18.14  some part thereof, and at least four weeks before the appointed 
 18.15  time of sale a copy of such notice shall be served in like 
 18.16  manner as a summons in a civil action in the district court upon 
 18.17  the person in possession of the mortgaged premises, if the same 
 18.18  are actually occupied.  If there be a building on such premises 
 18.19  used by a church or religious corporation, for its usual 
 18.20  meetings, service upon any officer or trustee of such 
 18.21  corporation shall be a sufficient service upon it.  The notice 
 18.22  required by section 580.041 must be served simultaneously with 
 18.23  the notice of foreclosure required by this section. 
 18.24     Sec. 20.  [580.041] [FORECLOSURE ADVICE NOTICE.] 
 18.25     Subdivision 1.  [FORM AND DELIVERY OF NOTICE.] The notice 
 18.26  required by this section must be in 14-point boldface type and 
 18.27  must be printed on colored paper that is other than the color of 
 18.28  the notice of foreclosure and that does not obscure or 
 18.29  overshadow the content of the notice.  The title of the notice 
 18.30  must be in 20-point boldface type.  The notice must be on its 
 18.31  own page.  The notice required by this section must be delivered 
 18.32  with the notice of foreclosure required by sections 580.03 and 
 18.33  580.04.  The notice required by this section also must be 
 18.34  delivered with each subsequent written communication regarding 
 18.35  the foreclosure mailed to the mortgagor by the foreclosing party 
 18.36  up to the day of redemption.  A foreclosing mortgagee will be 
 19.1   deemed to have complied with this section if it sends the notice 
 19.2   required by this section at least once every 60 days during the 
 19.3   period of the foreclosure process.  The notice required by this 
 19.4   section must not be published. 
 19.5      Subd. 2.  [CONTENT OF NOTICE.] The notice required by this 
 19.6   section must appear substantially as follows: 
 19.7                "Help For Homeowners in Foreclosure 
 19.8        Minnesota law requires that we send you this notice 
 19.9      about the foreclosure process.  Please read it carefully. 
 19.10       Mortgage foreclosure is a complex process.  Some 
 19.11     people may approach you about "saving" your home.  You 
 19.12     should be careful about any such promises. 
 19.13       The state encourages you to become informed about your 
 19.14     options in foreclosure before entering into any agreements 
 19.15     with anyone in connection with the foreclosure of your 
 19.16     home.  There are government agencies and nonprofit 
 19.17     organizations that you may contact for helpful information 
 19.18     about the foreclosure process.  For the name and telephone 
 19.19     number of an organization near you please call the 
 19.20     Minnesota Home Finance Agency (MHFA) at (insert telephone 
 19.21     number).  The state does not guarantee the advice of these 
 19.22     agencies. 
 19.23       Do not delay dealing with the foreclosure because your 
 19.24     options may become more limited as time passes." 
 19.25     Sec. 21.  [PROVISIONS SEVERABLE.] 
 19.26     If any provision of this act, or if any application of this 
 19.27  act to any person or circumstances is held unconstitutional and 
 19.28  void, the remainder of this act remains valid.