1.1                          A bill for an act 
  1.2             relating to financial institutions; enacting 
  1.3             restrictions on home loans; proposing coding for new 
  1.4             law in Minnesota Statutes, chapter 58. 
  1.5   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.6      Section 1.  [58.31] [CITATION.] 
  1.7      Sections 58.31 to 58.41 may be cited as "The Home Loan 
  1.8   Protection Act of 2003."  
  1.9      Sec. 2.  [58.32] [DEFINITIONS.] 
  1.10     Subdivision 1.  [SCOPE.] For the purposes of sections 58.31 
  1.11  to 58.41, the terms defined in this section have the meanings 
  1.12  given them.  
  1.13     Subd. 2.  [AFFILIATE.] "Affiliate" has the meaning given in 
  1.14  section 302A.011, subdivision 43.  
  1.15     Subd. 3.  [ASSIGNEE.] "Assignee" means a person who 
  1.16  purchases or otherwise voluntarily acquires a loan or an 
  1.17  interest in a loan.  
  1.18     Subd. 4.  [AUTHORIZED INDEPENDENT HOME LOAN 
  1.19  COUNSELOR.] "Authorized independent home loan counselor" means 
  1.20  an individual or organization authorized by either the housing 
  1.21  finance agency or the Department of Housing and Urban 
  1.22  Development.  
  1.23     Subd. 5.  [BONA FIDE ERROR.] "Bona fide error" means an 
  1.24  error that occurs notwithstanding maintenance of reasonable 
  1.25  procedures to avoid such errors.  Examples of bona fide errors 
  2.1   include clerical, calculation, computer malfunction and 
  2.2   programming, and printing errors.  An error of legal judgment is 
  2.3   not a bona fide error.  
  2.4      Subd. 6.  [BONA FIDE LOAN DISCOUNT POINTS.] "Bona fide loan 
  2.5   discount points" means loan discount points knowingly paid by 
  2.6   the borrower that actually reduce the interest rate; provided 
  2.7   that the undiscounted interest rate does not exceed by more than 
  2.8   one percentage point the required net yield for a 90-day 
  2.9   standard mandatory commitment for a loan with a reasonably 
  2.10  comparable term from Fannie Mae or Freddie Mac, whichever is 
  2.11  greater.  
  2.12     Subd. 7.  [BORROWER.] "Borrower" means any natural person 
  2.13  obligated to repay the loan, including a coborrower, cosigner, 
  2.14  or guarantor. 
  2.15     Subd. 8.  [COMMISSIONER.] "Commissioner" means the 
  2.16  commissioner of commerce.  
  2.17     Subd. 9.  [HIGH-COST HOME LOAN.] "High-cost home loan" 
  2.18  means a home loan that meets or exceeds one or more of the 
  2.19  thresholds as defined in subdivision 17.  
  2.20     Subd. 10.  [HOME LOAN.] "Home loan" means a loan, including 
  2.21  a home equity line of credit or an open-end credit plan but not 
  2.22  including a reverse mortgage, where the loan is: 
  2.23     (1) a residential mortgage loan as defined in section 
  2.24  58.02, subdivision 18; 
  2.25     (2) secured by a mortgage or deed on real property that is 
  2.26  used as a borrower's primary residence; and 
  2.27     (3) equal to or less than the maximum amount for loans 
  2.28  eligible for sale to Fannie Mae or Freddie Mac.  
  2.29     For the purposes of this chapter, a home loan includes a 
  2.30  loan that is secured by a security interest in a manufactured 
  2.31  home, as defined in section 327B.01, subdivision 13, which is 
  2.32  used as a borrower's primary residence.  
  2.33     Subd. 11.  [INTEREST RATE.] "Interest rate" means:  
  2.34     (1) for a fixed rate loan, the interest rate as of the date 
  2.35  of closing; 
  2.36     (2) for an indexed variable rate loan, the sum of the index 
  3.1   rate as of the date of closing plus the maximum margin permitted 
  3.2   at any time under the loan agreement; or 
  3.3      (3) for all other variable rate loans, the maximum rate 
  3.4   that may be charged during the term of the loan.  
  3.5      Subd. 12.  [LENDER.] "Lender" means any person who is or 
  3.6   should be licensed, regulated, or authorized to do business 
  3.7   under chapter 47, 48, 50, 51A, 52, 53, 56, or 58, or who is 
  3.8   regulated by the federal Comptroller of the Currency, the 
  3.9   federal Office of Thrift Supervision, or the National Credit 
  3.10  Union Administration.  "Lender" includes a "mortgage broker," as 
  3.11  defined in section 58.02, subdivision 13.  
  3.12     Subd. 13.  [LENDER FEES.] "Lender fees" means:  
  3.13     (1) points, other than up to two bona fide discount points, 
  3.14  fees, compensation, premiums, or any amounts paid or payable, 
  3.15  directly or indirectly, other than taxes and interest, to the 
  3.16  lender or a third party in connection with the loan transaction; 
  3.17     (2) the maximum prepayment fees and penalties that may be 
  3.18  charged or collected under the terms of the loan; and 
  3.19     (3) all prepayment fees or penalties that are charged to 
  3.20  the borrower if the loan refinances a previous loan made by the 
  3.21  same lender or an affiliate of the lender.  
  3.22     For open-ended loans, the lender fees are calculated by 
  3.23  adding the total fees charged at closing and the maximum 
  3.24  additional fees that may be charged pursuant to the loan 
  3.25  documents during the term of the loan.  
  3.26     Subd. 14.  [PERSON.] "Person" means an individual, 
  3.27  corporation, business trust, partnership or association, or any 
  3.28  other legal entity.  
  3.29     Subd. 15.  [RATE.] "Rate" means the interest rate charged 
  3.30  on the home loan, based on an annual simple interest yield.  
  3.31     Subd. 16.  [SPECIAL MORTGAGE.] "Special mortgage" means a 
  3.32  home loan that is originated, subsidized, or guaranteed by or 
  3.33  through a federal, state, local, or tribal government or 
  3.34  nonprofit organization and that has zero or below-market 
  3.35  interest; is forgivable; or has one or more payment terms more 
  3.36  favorable to the borrower, including, but not limited to, 
  4.1   payments that are limited to a percentage of income or payments 
  4.2   that vary with income.  
  4.3      Subd. 17.  [THRESHOLDS.] "Thresholds" means any one of the 
  4.4   following:  
  4.5      (1) for a first lien mortgage, an interest rate that equals 
  4.6   or exceeds six percentage points over the weekly average yield 
  4.7   on five-year United States Treasury securities; or 
  4.8      (2) for a second lien mortgage, an interest rate that 
  4.9   equals or exceeds eight percentage points over the weekly 
  4.10  average yield on five-year United States Treasury securities; or 
  4.11     (3) lender fees that exceed: 
  4.12     (i) for loans in which the total loan amount is $30,000 or 
  4.13  more, the lender fees exceed three percent of the total loan 
  4.14  amount; or 
  4.15     (ii) for loans in which the total loan amount is less than 
  4.16  $30,000, the lender fees exceed the lesser of five percent of 
  4.17  the total loan amount or $900.  
  4.18     Subd. 18.  [TOTAL LOAN AMOUNT.] "Total loan amount" means 
  4.19  the principal of the loan minus lender fees that are included in 
  4.20  the principal amount of the loan.  For open-end loans, the total 
  4.21  loan amount must be calculated using the total line of credit 
  4.22  allowed under the home loan.  
  4.23     Sec. 3.  [58.33] [PROHIBITED ACTS AND PRACTICES FOR HOME 
  4.24  LOANS.] 
  4.25     Subdivision 1.  [ACCELERATION.] No home loan may contain a 
  4.26  provision that permits the lender, in its sole discretion, to 
  4.27  accelerate the indebtedness for any reason other than the 
  4.28  borrower's failure to abide by the material terms of the loan.  
  4.29     Subd. 2.  [ENCOURAGING DEFAULT.] No lender may encourage, 
  4.30  recommend, or induce default of an existing loan or other debt 
  4.31  prior to and in connection with the closing or planned closing 
  4.32  of a home loan that refinances all or any portion of the 
  4.33  existing loan or debt.  
  4.34     Subd. 3.  [FINANCING OF CREDIT INSURANCE.] No lender making 
  4.35  a home loan may finance, directly or indirectly, any credit 
  4.36  life, credit disability, credit unemployment, or credit property 
  5.1   insurance, or any other life or health insurance, or any 
  5.2   payments, directly or indirectly, for any debt cancellation or 
  5.3   suspension, or any debt forgiveness contract, as part of the 
  5.4   home loan.  Insurance premiums calculated and paid separately on 
  5.5   a monthly basis must not be considered financed by the lender.  
  5.6      Subd. 4.  [LOAN FLIPPING.] No lender may make a home loan 
  5.7   that refinances an existing home loan when the new home loan 
  5.8   does not have a reasonable, tangible net benefit to the borrower 
  5.9   considering all of the circumstances, including the terms of 
  5.10  both the new and refinanced loans, the cost of the new loan, and 
  5.11  the borrower's circumstances.  It is presumed that the new loan 
  5.12  does not have a reasonable, tangible net benefit to the borrower 
  5.13  if:  
  5.14     (1) the primary tangible benefit to the borrower is an 
  5.15  interest rate lower than the interest rate(s) on debts satisfied 
  5.16  or refinanced in connection with the home loan, and it will take 
  5.17  more than four years for the borrower to recoup the costs of the 
  5.18  lender fees, charges, and other closing costs of the new home 
  5.19  loan through savings resulting from a lower interest rate on the 
  5.20  new home loan; or 
  5.21     (2) the new loan refinances a special mortgage and the 
  5.22  lender has not received certification from an authorized 
  5.23  independent home loan counselor or the lender who originally 
  5.24  made the special mortgage indicating that the borrower has 
  5.25  received home loan counseling in which the advantages and 
  5.26  disadvantages of the refinancing have been reviewed with the 
  5.27  borrower.  
  5.28     Subd. 5.  [PAYOFF BALANCE REQUIREMENTS.] No lender may 
  5.29  charge a fee for informing or transmitting to any borrower the 
  5.30  balance due to pay off a home loan or to provide a mortgage 
  5.31  release upon repayment.  A lender shall provide a mortgage 
  5.32  amount as soon as possible, but in no event later than five 
  5.33  business days after a request from the borrower or the 
  5.34  borrower's representative is made.  
  5.35     Subd. 6.  [REASONABLENESS OF FEES.] Fees for goods and 
  5.36  services furnished or provided in connection with a home loan 
  6.1   must be bona fide and bear a reasonable relationship to the 
  6.2   value of the good or service.  
  6.3      Sec. 4.  [58.34] [PROHIBITED ACTS AND PRACTICES FOR 
  6.4   HIGH-COST LOANS.] 
  6.5      Subdivision 1.  [ABILITY TO PAY.] No lender may make a 
  6.6   high-cost home loan to a borrower without due regard to 
  6.7   repayment ability.  A lender who follows the debt-to-income 
  6.8   ratio listed in Code of Federal Regulations, title 38, section 
  6.9   36.4337(c)(1), and as defined in Code of Federal Regulations, 
  6.10  title 38, section 36.4337(d), and follows the residual income 
  6.11  guidelines established in Code of Federal Regulations, title 38, 
  6.12  section 36.4337(e), and VA Form 26-6393 shall benefit from a 
  6.13  rebuttable presumption that the lender made the loan with due 
  6.14  regard to repayment ability.  
  6.15     Subd. 2.  [ADVANCE PAYMENTS.] No high-cost home loan may 
  6.16  include terms under which any periodic payments required under 
  6.17  the loan are paid in advance from the loan proceeds provided to 
  6.18  the borrower.  
  6.19     Subd. 3.  [BALLOON PAYMENT.] No high-cost home loan may 
  6.20  contain a scheduled payment that is more than twice as large as 
  6.21  the average of earlier scheduled payments.  This provision does 
  6.22  not apply when the payment schedule is adjusted to the seasonal 
  6.23  or irregular income of the borrower.  
  6.24     Subd. 4.  [COUNSELING.] A lender may not make a high-cost 
  6.25  home loan unless it first receives certification from an 
  6.26  authorized independent home loan counselor that the borrower has 
  6.27  received counseling on the advisability of the loan transaction. 
  6.28     Subd. 5.  [FINANCING OF LENDER FEES.] No lender making a 
  6.29  high-cost home loan may finance, directly or indirectly, any 
  6.30  lender fees.  
  6.31     Subd. 6.  [HOME IMPROVEMENT CONTRACTORS.] No lender may pay 
  6.32  a home improvement contractor under a home improvement contract 
  6.33  from the proceeds of a high-cost home loan unless: 
  6.34     (1) the lender is presented with a completion certificate 
  6.35  signed and dated by the borrower and the contractor; and 
  6.36     (2) the instrument is payable to the borrower or jointly to 
  7.1   the borrower and the contractor, or, at the election of the 
  7.2   borrower, through a third-party escrow agent in accordance with 
  7.3   the terms established in a written agreement signed by the 
  7.4   borrower, the lender, and the contractor prior to the 
  7.5   disbursement.  
  7.6      Subd. 7.  [INCREASING INTEREST RATE AFTER DEFAULT.] No 
  7.7   high-cost home loan may contain a provision that increases the 
  7.8   interest rate after default.  This provision does not apply to 
  7.9   interest changes under a variable rate loan otherwise consistent 
  7.10  with the provisions of the loan documents, provided that the 
  7.11  change in the interest rate is not triggered by the event of 
  7.12  default or the acceleration of the indebtedness.  
  7.13     Subd. 8.  [LATE FEES.] No lender may charge a late fee on a 
  7.14  high-cost home loan except in compliance with the following:  
  7.15     (1) the late fee may not be in excess of four percent of 
  7.16  the amount of the payment past due; 
  7.17     (2) the fee may only be assessed for payment past due for 
  7.18  15 days or more; 
  7.19     (3) the fee may not be charged more than once with respect 
  7.20  to a single late payment.  If the late fee is deducted from a 
  7.21  payment made on a high-cost home loan, and the deduction causes 
  7.22  a subsequent default on a subsequent payment, no late fee may be 
  7.23  imposed for the default.  If a late fee has been imposed once 
  7.24  with respect to a particular late payment, no such charge must 
  7.25  be imposed with respect to any future payment that would have 
  7.26  been timely and sufficient, but for the previous default; and 
  7.27     (4) the lender shall treat each and every payment as posted 
  7.28  on the same date as it was received by the lender or received at 
  7.29  the address provided to the borrower by the lender for making 
  7.30  payments.  
  7.31     Subd. 9.  [MODIFICATION AND DEFERRAL FEES.] No lender may 
  7.32  charge any fees or other charges to modify, renew, extend, or 
  7.33  amend a high-cost home loan or to defer any payment due under 
  7.34  the terms of a high-cost home loan.  
  7.35     Subd. 10.  [NEGATIVE AMORTIZATION.] No high-cost home loan 
  7.36  may include payment terms under which the outstanding principal 
  8.1   balance will increase at any time over the course of the loan 
  8.2   because the regular periodic payments do not cover the full 
  8.3   amount of the interest due.  
  8.4      Subd. 11.  [REPORTING TO CREDIT REPORTING AGENCIES.] A 
  8.5   lender reporting unfavorable payment history of a borrower in 
  8.6   connection with a high-cost home loan must also report favorable 
  8.7   payment history at the same reporting intervals.  
  8.8      Subd. 12.  [RESOLUTION OF DISPUTES.] Without regard to 
  8.9   whether a borrower is acting individually or on behalf of others 
  8.10  similarly situated, any provision of a high-cost home loan that 
  8.11  requires the borrower to assert any claim or defense in a forum 
  8.12  that is less convenient, more costly, or more dilatory for the 
  8.13  resolution of the dispute than a judicial forum established in a 
  8.14  state where the borrower may otherwise properly bring a claim or 
  8.15  defense, or limits in any way any claim or defense the borrower 
  8.16  may have, is unconscionable and void.  
  8.17     Sec. 5.  [58.35] [DISCLOSURES.] 
  8.18     Subdivision 1.  [WRITTEN NOTICE REQUIRED; TIMING OF 
  8.19  NOTICE.] A lender shall provide a written disclosure notice to 
  8.20  all applicants for a home loan: 
  8.21     (1) upon determination by the lender that the home loan is 
  8.22  a high-cost home loan; and 
  8.23     (2) again no less than seven days prior to closing. 
  8.24     The disclosure notice must be provided separately from the 
  8.25  provision of any other written document or oral statement.  
  8.26     Subd. 2.  [FORM AND CONTENT OF NOTICE.] (a) The notice, 
  8.27  which must be contained on a single sheet of paper, must contain 
  8.28  a legend, centered at the top of the loan document, in bold, 
  8.29  capital letters and in 28-point type stating, "THIS IS A 
  8.30  HIGH-COST HOME LOAN." 
  8.31     (b) The notice must also contain the following verbatim 
  8.32  statements in capital and small type, in a minimum of 14-point 
  8.33  type, with at least a double space between each statement: 
  8.34     (1) "You could lose your home and all the money you have 
  8.35  put into it if you do not meet the obligations under the loan."; 
  8.36     (2) "Interest rates and fees vary.  You should shop around 
  9.1   for the best terms."; 
  9.2      (3) "You may have to pay property taxes and homeowner's 
  9.3   insurance in addition to your monthly loan payments."; and 
  9.4      (4) "You do not have to complete any loan agreement just 
  9.5   because you have gotten this notice or because you signed a loan 
  9.6   application."  
  9.7      Subd. 3.  [ADDITIONAL DISCLOSURES.] (a) A lender shall 
  9.8   include in the written notice, and read orally to the borrower 
  9.9   at the same intervals required in subdivision 1, disclosure if 
  9.10  the loan transaction includes a yield spread premium or a 
  9.11  prepayment penalty, or both.  The disclosures required in this 
  9.12  subdivision must follow the format requirements provided in 
  9.13  subdivision 2.  
  9.14     (b) If the home loan contains a prepayment penalty, the 
  9.15  notice must state, "This loan requires you to pay a penalty for 
  9.16  early repayment of the loan.  This is called a 'Prepayment 
  9.17  Penalty.' This charge may discourage or prevent future 
  9.18  refinancing."  
  9.19     Sec. 6.  [58.36] [UNINTENTIONAL ERRORS.] 
  9.20     A lender who, when acting in good faith, fails to comply 
  9.21  with any of the provisions of this chapter, must not be deemed 
  9.22  to be in violation if the lender establishes that either: 
  9.23     (1) within 30 days of the loan closing, and prior to 
  9.24  receiving any notice from the borrower of the compliance 
  9.25  failure, appropriate restitution is made to the borrower, and 
  9.26  appropriate adjustments are made to the loan; or 
  9.27     (2) in the case of an unintended compliance failure 
  9.28  resulting from bona fide error, within 60 days of the loan 
  9.29  closing and prior to institution of action by the borrower or 
  9.30  receipt of notice of the error, the borrower is notified of the 
  9.31  compliance failure, appropriate restitution is made to the 
  9.32  borrower, and appropriate adjustments are made to the loan.  
  9.33     Sec. 7.  [58.37] [RIGHT TO CURE; NOTICE.] 
  9.34     Subdivision 1.  [REINSTATEMENT ALLOWED.] If a lender 
  9.35  asserts that grounds for acceleration exist and requires payment 
  9.36  in full of all sums secured by the security instrument, the 
 10.1   borrower, or anyone authorized to act on the borrower's behalf, 
 10.2   shall have the right at any time, up to the time title is 
 10.3   transferred by means of foreclosure to cure the default and 
 10.4   reinstate the home loan by tendering the amount or performance 
 10.5   as specified in this section.  Cure of default as provided in 
 10.6   this section reinstates the borrower to the same position as if 
 10.7   the default had not occurred and nullifies, as of the date of 
 10.8   the cure, any acceleration of any obligation under the security 
 10.9   instrument or note arising from the default.  
 10.10     Subd. 2.  [NOTICE REQUIRED.] Before any action filed to 
 10.11  foreclose upon the home or other action is taken to seize or 
 10.12  transfer ownership of the home, a notice of the right to cure 
 10.13  the default must be delivered to the borrower.  The notice must 
 10.14  contain the following:  
 10.15     (1) the nature of default claimed on the home loan; 
 10.16     (2) the borrower's right to cure the default by paying the 
 10.17  sum of money required to cure the default, provided the lender 
 10.18  may not refuse to accept any partial payment made or tendered in 
 10.19  response to the notice; 
 10.20     (3) the date by which the borrower shall cure the default 
 10.21  to avoid acceleration and initiation of foreclosure or other 
 10.22  action to seize the home, which date must not be less than 30 
 10.23  days after the date the notice is effective, and the name and 
 10.24  address and telephone number of a person to whom the payment or 
 10.25  tender must be made; 
 10.26     (4) sufficient information to enable the borrower to 
 10.27  calculate the amount at any point during the 30-day period if 
 10.28  the amount necessary to cure the default will change during the 
 10.29  30-day period after the effective date of the notice, due to the 
 10.30  application of daily interest or the addition of late fees, as 
 10.31  allowed by this section; 
 10.32     (5) notice that if the borrower does not cure the default 
 10.33  by the date specified, the lender may take steps to terminate 
 10.34  the borrower's ownership in the property by requiring payment in 
 10.35  full of the home loan and commencing a foreclosure proceeding or 
 10.36  other action to seize the home; and 
 11.1      (6) the name and address of the lender and the telephone 
 11.2   number of a representative of the lender whom the borrower may 
 11.3   contact if the borrower disagrees with the lender's assertion 
 11.4   that a default has occurred or the correctness of the lender's 
 11.5   calculation of the amount required to cure the default.  
 11.6      Subd. 3.  [FEES PERMITTED.] To cure a default under this 
 11.7   section, a borrower must not be required to pay any charge, fee, 
 11.8   or penalty attributable to the exercise of the right to cure a 
 11.9   default as provided for in this section, other than the fees 
 11.10  specifically allowed by this section.  The borrower is not 
 11.11  liable for any attorney fees relating to the borrower's default 
 11.12  that are incurred by the lender prior to or during the 30-day 
 11.13  period set forth in subdivision 2, or for any such fees in 
 11.14  excess of $100 that are incurred by the lender after the 
 11.15  expiration of the 30-day period but prior to the time the lender 
 11.16  files a foreclosure action or takes other action to seize or 
 11.17  transfer ownership of the home.  After the lender files a 
 11.18  foreclosure action or takes other action to seize or transfer 
 11.19  ownership of the home, the borrower is only liable for attorney 
 11.20  fees that are reasonable and actually incurred by the lender, 
 11.21  based on a reasonable hourly rate and a reasonable number of 
 11.22  hours.  
 11.23     Subd. 4.  [ENFORCEMENT OF SECURITY INSTRUMENT.] If a 
 11.24  default is cured prior to the initiation of any action to 
 11.25  foreclose or seize the home, the lender shall not institute the 
 11.26  foreclosure proceeding or other action for that default.  If a 
 11.27  default is cured after the initiation of any action to foreclose 
 11.28  or seize the home, the lender shall take such steps as are 
 11.29  necessary to terminate the foreclosure proceeding or other 
 11.30  action.  
 11.31     Sec. 8.  [58.38] [ENFORCEMENT.] 
 11.32     Subdivision 1.  [JURISDICTION; CIVIL PENALTIES.] (a) The 
 11.33  commissioner may bring an enforcement action under chapter 45 
 11.34  against a lender who has violated sections 58.31 to 58.41.  
 11.35     (b) The public and private remedies in section 8.31 apply 
 11.36  to violations of sections 58.31 to 58.41. 
 12.1      Subd. 2.  [CRIMINAL PENALTIES.] Any person, including loan 
 12.2   officers, officers, and directors of the lender, who knowingly 
 12.3   violates any provision of this chapter is guilty of a 
 12.4   misdemeanor.  
 12.5      Subd. 3.  [CONSUMER REMEDIES.] A court in which any action 
 12.6   is brought by a borrower for relief against a lender, upon a 
 12.7   finding of a violation of this chapter, shall award to the 
 12.8   prevailing borrower:  
 12.9      (1) actual damages, including incidental and consequential 
 12.10  damages; a borrower must not be required to demonstrate reliance 
 12.11  in order to receive actual damages; 
 12.12     (2) statutory damages equal to twice the total amount of 
 12.13  finance charges that could be collected under the terms of the 
 12.14  loan; 
 12.15     (3) reasonable attorney fees; and 
 12.16     (4) court costs.  
 12.17     Subd. 4.  [INTENTIONAL VIOLATIONS.] An intentional 
 12.18  violation by the lender of sections 58.31 to 58.41 must:  
 12.19     (1) render the home loan agreement void; 
 12.20     (2) void the right of the lender to collect, receive, or 
 12.21  retain any principal, interest, or other charges whatsoever with 
 12.22  respect to the loan; and 
 12.23     (3) give the borrower the right to recover any payments 
 12.24  made under the agreement. 
 12.25     Subd. 5.  [EQUITABLE RELIEF.] A court in which any action 
 12.26  is brought by a borrower for relief against a lender, upon a 
 12.27  finding of a violation of this chapter, may enjoin foreclosure 
 12.28  and grant declaratory and any other such equitable relief as the 
 12.29  court deems appropriate.  
 12.30     Subd. 6.  [RIGHT OF RESCISSION.] The right of rescission 
 12.31  granted under United States Code, section 1601, et. seq., for 
 12.32  violations of that law and all other remedies provided in this 
 12.33  section are available to a borrower by way of recoupment against 
 12.34  a party foreclosing on the home loan or collecting on the loan, 
 12.35  at any time during the term of the loan.  
 12.36     Subd. 7.  [REMEDIES CUMULATIVE.] The remedies provided in 
 13.1   this section are cumulative and in addition to any other 
 13.2   remedies provided by law.  
 13.3      Sec. 9.  [58.39] [SELLER, CONTRACTOR, AND ASSIGNEE 
 13.4   LIABILITY.] 
 13.5      Subdivision 1.  [SELLER, CONTRACTOR LIABILITY.] 
 13.6   Notwithstanding any other provision of law, where a home loan 
 13.7   was made, arranged, or assigned by a person selling or 
 13.8   refinancing a manufactured home, or making a loan, in whole or 
 13.9   in part, for home improvements to the dwelling of a borrower, 
 13.10  the borrower may assert all affirmative claims and any defenses 
 13.11  that the borrower may have against the person against the 
 13.12  lender, any assignee, or holder, or servicer in any capacity.  
 13.13     Subd. 2.  [ASSIGNEE LIABILITY.] Any person who purchases or 
 13.14  is otherwise assigned a high-cost home loan is subject to all 
 13.15  affirmative claims and any defenses with respect to the loan 
 13.16  that the borrower could assert against the original lender or 
 13.17  broker.  Nothing in this chapter prohibits an assignee from 
 13.18  enforcing an indemnification agreement with an assignor.  
 13.19     Subd. 3.  [LIABILITY OF ASSIGNEE IN FORECLOSURE 
 13.20  ACTION.] Notwithstanding any other provision of law, a borrower 
 13.21  in foreclosure may assert a violation of the chapter by way of 
 13.22  offset: 
 13.23     (1) as an original action; 
 13.24     (2) as a defense or counterclaim to an action to collect 
 13.25  amounts owed; or 
 13.26     (3) to obtain possession of the home secured by the home 
 13.27  loan.  
 13.28     Sec. 10.  [58.40] [EXEMPTIONS.] 
 13.29     Sections 58.31 to 58.41 do not apply to loans made, 
 13.30  purchased, or sponsored by a mortgage revenue bond program or 
 13.31  other loan program sponsored by the federal or state government 
 13.32  or a local unit of government or by a tax-exempt organization 
 13.33  under section 501(c)(3) of the Internal Revenue Code that is 
 13.34  licensed under chapter 58.  
 13.35     Sec. 11.  [58.41] [SEVERABILITY.] 
 13.36     This act is severable and the invalidity of any section or 
 14.1   part of it does not make void any other section or subdivision 
 14.2   or part of it.  
 14.3      Sec. 12.  [EFFECTIVE DATE.] 
 14.4      This act is effective August 1, 2003.