1.1                          A bill for an act 
  1.2             relating to commerce; regulating foreclosure 
  1.3             consultants and equity purchasers; regulating contract 
  1.4             provisions and notice requirements; providing criminal 
  1.5             penalties and civil remedies; amending Minnesota 
  1.6             Statutes 2002, section 580.03; proposing coding for 
  1.7             new law in Minnesota Statutes, chapter 580; proposing 
  1.8             coding for new law as Minnesota Statutes, chapter 325N.
  1.9   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.10                      FORECLOSURE CONSULTANTS 
  1.11     Section 1.  [325N.01] [INTENT AND PURPOSE.] 
  1.12     (a) The legislature finds and declares that homeowners 
  1.13  whose residences are in foreclosure are subject to fraud, 
  1.14  deception, harassment, and unfair dealing by foreclosure 
  1.15  consultants from the time of the beginning of foreclosure 
  1.16  proceedings until the time of the foreclosure sale.  Foreclosure 
  1.17  consultants represent that they can assist homeowners who have 
  1.18  defaulted on obligations secured by their residences.  These 
  1.19  foreclosure consultants, however, often charge high fees, the 
  1.20  payment of which is often secured by a mortgage on the residence 
  1.21  to be saved, and perform no service or essentially a worthless 
  1.22  service.  Homeowners, relying on the foreclosure consultants' 
  1.23  promises of help, take no other action, are diverted from lawful 
  1.24  businesses which could render beneficial services, and often 
  1.25  lose their homes, sometimes to the foreclosure consultants who 
  1.26  purchase homes at a fraction of their value before the sale. 
  1.27     (b) The legislature further finds and declares that 
  2.1   foreclosure consultants have a significant impact on the economy 
  2.2   of this state and on the welfare of its citizens. 
  2.3      (c) The intent and purposes of sections 325N.01 to 325N.10 
  2.4   are to require that foreclosure consultant service agreements be 
  2.5   expressed in writing, to safeguard the public against deceit and 
  2.6   financial hardship, to permit rescission of foreclosure 
  2.7   consultation contracts, to prohibit representations that tend to 
  2.8   mislead, and to encourage fair dealing in the rendition of 
  2.9   foreclosure services. 
  2.10     (d) Sections 325N.01 to 325N.10 must be liberally construed 
  2.11  to effectuate this intent and to achieve these purposes. 
  2.12     Sec. 2.  [325N.02] [DEFINITIONS.] 
  2.13     The definitions in paragraphs (a) to (g) apply to sections 
  2.14  325N.01 to 325N.10. 
  2.15     (a) "Foreclosure consultant" means any person who, directly 
  2.16  or indirectly, makes any solicitation, representation, or offer 
  2.17  to any owner to perform for compensation or who, for 
  2.18  compensation, performs any service which the person in any 
  2.19  manner represents will in any manner do any of the following: 
  2.20     (1) stop or postpone the foreclosure sale; 
  2.21     (2) obtain any forbearance from any beneficiary or 
  2.22  mortgagee; 
  2.23     (3) assist the owner to exercise the right or reinstatement 
  2.24  provided in section 580.30; 
  2.25     (4) obtain any extension of the period within which the 
  2.26  owner may reinstate the owner's obligation; 
  2.27     (5) obtain any waiver of an acceleration clause contained 
  2.28  in any promissory note or contract secured by a mortgage on a 
  2.29  residence in foreclosure or contained in the mortgage; 
  2.30     (6) assist the owner to obtain a loan or advance of funds; 
  2.31     (7) avoid or ameliorate the impairment of the owner's 
  2.32  credit resulting from the recording of a notice of default or 
  2.33  the conduct of a foreclosure sale; or 
  2.34     (8) save the owner's residence from foreclosure. 
  2.35     (b) A foreclosure consultant does not include any of the 
  2.36  following: 
  3.1      (1) a person licensed to practice law in this state when 
  3.2   the person renders service in the course of his or her practice 
  3.3   as an attorney-at-law; 
  3.4      (2) a person licensed as a debt prorater under sections 
  3.5   332.12 to 332.29, when the person is acting as a debt prorater 
  3.6   as defined in these sections; 
  3.7      (3) a person licensed as a real estate broker or 
  3.8   salesperson under chapter 82 when the person engages in acts 
  3.9   whose performance requires licensure under that chapter unless 
  3.10  the person is engaged in offering services designed to, or 
  3.11  purportedly designed to, enable the owner to retain possession 
  3.12  of the residence in foreclosure; 
  3.13     (4) a person licensed as an accountant under chapter 326A 
  3.14  when the person is acting in any capacity for which the person 
  3.15  is licensed under those provisions; 
  3.16     (5) a person or the person's authorized agent acting under 
  3.17  the express authority or written approval of the Department of 
  3.18  Housing and Urban Development or other department or agency of 
  3.19  the United States or this state to provide services; 
  3.20     (6) a person who holds or is owed an obligation secured by 
  3.21  a lien on any residence in foreclosure when the person performs 
  3.22  services in connection with this obligation or lien; 
  3.23     (7) any person or entity doing business under any law of 
  3.24  this state, or of the United States relating to banks, trust 
  3.25  companies, savings and loan associations, industrial loan and 
  3.26  thrift companies, regulated lenders, credit unions, insurance 
  3.27  companies, or a mortgagee which is a United States Department of 
  3.28  Housing and Urban Development approved mortgagee and any 
  3.29  subsidiary or affiliate of these persons or entities, and any 
  3.30  agent or employee of these persons or entities while engaged in 
  3.31  the business of these persons or entities; and 
  3.32     (8) a person licensed as a residential mortgage lender or 
  3.33  servicer pursuant to chapter 58, when acting under the authority 
  3.34  of that license. 
  3.35     (c) "Person" means any individual, partnership, 
  3.36  corporation, limited liability company, association, or other 
  4.1   group, however organized. 
  4.2      (d) "Service" means and includes, but is not limited to, 
  4.3   any of the following: 
  4.4      (1) debt, budget, or financial counseling of any type; 
  4.5      (2) receiving money for the purpose of distributing it to 
  4.6   creditors in payment or partial payment of any obligation 
  4.7   secured by a lien on a residence in foreclosure; 
  4.8      (3) contacting creditors on behalf of an owner of a 
  4.9   residence in foreclosure; 
  4.10     (4) arranging or attempting to arrange for an extension of 
  4.11  the period within which the owner of a residence in foreclosure 
  4.12  may cure the owner's default and reinstate his or her obligation 
  4.13  pursuant to section 580.30; 
  4.14     (5) arranging or attempting to arrange for any delay or 
  4.15  postponement of the time of sale of the residence in 
  4.16  foreclosure; 
  4.17     (6) advising the filing of any document or assisting in any 
  4.18  manner in the preparation of any document for filing with any 
  4.19  bankruptcy court; or 
  4.20     (7) giving any advice, explanation, or instruction to an 
  4.21  owner of a residence in foreclosure, which in any manner relates 
  4.22  to the cure of a default in or the reinstatement of an 
  4.23  obligation secured by a lien on the residence in foreclosure, 
  4.24  the full satisfaction of that obligation, or the postponement or 
  4.25  avoidance of a sale of a residence in foreclosure, pursuant to a 
  4.26  power of sale contained in any mortgage. 
  4.27     (e) "Residence in foreclosure" means residential real 
  4.28  property consisting of one to four family dwelling units, one of 
  4.29  which the owner occupies as his or her principal place of 
  4.30  residence, and against which there is an outstanding notice of 
  4.31  pendency of foreclosure, recorded pursuant to section 580.032, 
  4.32  or against which a summons and complaint has been served under 
  4.33  chapter 581. 
  4.34     (f) "Owner" means the record owner of the residential real 
  4.35  property in foreclosure at the time the notice of pendency was 
  4.36  recorded, or the summons and complaint served. 
  5.1      (g) "Contract" means any agreement, or any term in any 
  5.2   agreement, between a foreclosure consultant and an owner for the 
  5.3   rendition of any service as defined in paragraph (d). 
  5.4      Sec. 3.  [325N.03] [RESCISSION OF FORECLOSURE CONSULTANT 
  5.5   CONTRACT.] 
  5.6      (a) In addition to any other right under law to rescind a 
  5.7   contract, an owner has the right to cancel such a contract until 
  5.8   midnight of the third business day after the day on which the 
  5.9   owner signs a contract which complies with section 325N.04. 
  5.10     (b) Cancellation occurs when the owner gives written notice 
  5.11  of cancellation to the foreclosure consultant at the address 
  5.12  specified in the contract. 
  5.13     (c) Notice of cancellation, if given by mail, is effective 
  5.14  when deposited in the mail properly addressed with postage 
  5.15  prepaid. 
  5.16     (d) Notice of cancellation given by the owner need not take 
  5.17  the particular form as provided with the contract and, however 
  5.18  expressed, is effective if it indicates the intention of the 
  5.19  owner not to be bound by the contract. 
  5.20     Sec. 4.  [325N.04] [CONTRACT.] 
  5.21     (a) Every contract must be in writing and must fully 
  5.22  disclose the exact nature of the foreclosure consultant's 
  5.23  services and the total amount and terms of compensation. 
  5.24     (b) The following notice, printed in at least 14-point 
  5.25  boldface type and completed with the name of the foreclosure 
  5.26  consultant, must be printed immediately above the statement 
  5.27  required by paragraph (c): 
  5.28                "NOTICE REQUIRED BY MINNESOTA LAW 
  5.29                    .............. (Name) or anyone working
  5.30                    for him or her CANNOT:
  5.31                    (1) Take any money from you or ask you 
  5.32                    for money until ................ (Name)
  5.33                    has completely finished doing everything
  5.34                    he or she said he or she would do; and
  5.35                    (2) Ask you to sign or have you sign any  
  5.36                    lien, mortgage, or deed."
  6.1      (c) The contract must be written in the same language as 
  6.2   principally used by the foreclosure consultant to describe his 
  6.3   or her services or to negotiate the contract, must be dated and 
  6.4   signed by the owner, and must contain in immediate proximity to 
  6.5   the space reserved for the owner's signature a conspicuous 
  6.6   statement in a size equal to at least 10-point bold type, as 
  6.7   follows: 
  6.8      "You, the owner, may cancel this transaction at any time 
  6.9      prior to midnight of the third business day after the date 
  6.10     of this transaction.  See the attached notice of 
  6.11     cancellation form for an explanation of this right." 
  6.12     (d) The contract must contain on the first page, in a type 
  6.13  size no smaller than that generally used in the body of the 
  6.14  document, each of the following: 
  6.15     (1) the name and address of the foreclosure consultant to 
  6.16  which the notice of cancellation is to be mailed; and 
  6.17     (2) the date the owner signed the contract. 
  6.18     (e) The contract must be accompanied by a completed form in 
  6.19  duplicate, captioned "notice of cancellation," which must be 
  6.20  attached to the contract, must be easily detachable, and must 
  6.21  contain in at least ten-point type the following statement 
  6.22  written in the same language as used in the contract: 
  6.23                     "NOTICE OF CANCELLATION 
  6.24                ....................................
  6.25                 (Enter date of transaction) (Date)
  6.26               You may cancel this transaction, without
  6.27            any penalty or obligation, within three 
  6.28            business days from the above date.
  6.29                To cancel this transaction, mail or deliver
  6.30            a signed and dated copy of this cancellation
  6.31            notice, or any other written notice
  6.32            to ...................................... 
  6.33                 (Name of foreclosure consultant)
  6.34            at .................................................. 
  6.35           (Address of foreclosure consultant's place of business)
  6.36            NOT LATER THAN MIDNIGHT OF ..........................
  7.1                                                    (Date)
  7.2             I hereby cancel this transaction .................. 
  7.3                                                    (Date)
  7.4                       ............................. 
  7.5                            (Owner's signature)"
  7.6      (f) The foreclosure consultant shall provide the owner with 
  7.7   a copy of the contract and the attached notice of cancellation 
  7.8   immediately upon execution of the contract. 
  7.9      (g) The three business days during which the owner may 
  7.10  cancel the contract shall not begin to run until the foreclosure 
  7.11  consultant has complied with this section. 
  7.12     Sec. 5.  [325N.05] [VIOLATIONS.] 
  7.13     It is a violation for a foreclosure consultant to: 
  7.14     (1) claim, demand, charge, collect, or receive any 
  7.15  compensation until after the foreclosure consultant has fully 
  7.16  performed each and every service the foreclosure consultant 
  7.17  contracted to perform or represented he or she would perform; 
  7.18     (2) claim, demand, charge, collect, or receive any fee, 
  7.19  interest, or any other compensation for any reason which exceeds 
  7.20  eight percent per annum of the amount of any loan which the 
  7.21  foreclosure consultant may make to the owner; 
  7.22     (3) take any wage assignment, any lien of any type on real 
  7.23  or personal property, or other security to secure the payment of 
  7.24  compensation.  Any such security is void and unenforceable; 
  7.25     (4) receive any consideration from any third party in 
  7.26  connection with services rendered to an owner unless the 
  7.27  consideration is first fully disclosed to the owner; 
  7.28     (5) acquire any interest, directly or indirectly, or by 
  7.29  means of a subsidiary or affiliate in a residence in foreclosure 
  7.30  from an owner with whom the foreclosure consultant has 
  7.31  contracted; 
  7.32     (6) take any power of attorney from an owner for any 
  7.33  purpose, except to inspect documents as provided by law; or 
  7.34     (7) induce or attempt to induce any owner to enter a 
  7.35  contract which does not comply in all respects with sections 
  7.36  325N.03 and 325N.04. 
  8.1      Sec. 6.  [325N.06] [WAIVER NOT ALLOWED.] 
  8.2      Any waiver by an owner of the provisions of sections 
  8.3   325N.01 to 325N.10 is void and unenforceable as contrary to 
  8.4   public policy.  Any attempt by a foreclosure consultant to 
  8.5   induce an owner to waive the owner's rights is a violation of 
  8.6   sections 325N.01 to 325N.10. 
  8.7      Sec. 7.  [325N.07] [REMEDIES.] 
  8.8      (a) An owner may bring an action against a foreclosure 
  8.9   consultant for any violation of sections 325N.01 to 325N.10.  
  8.10  Judgment must be entered for actual damages, reasonable attorney 
  8.11  fees and costs, and appropriate equitable relief.  The court 
  8.12  also may, in its discretion, award exemplary damages and shall 
  8.13  award exemplary damages equivalent to at least three times the 
  8.14  compensation received by the foreclosure consultant in violation 
  8.15  of section 325N.05, paragraph (1), (2), or (4), and three times 
  8.16  the owner's actual damages for any violation of section 325N.05, 
  8.17  paragraph (3), (5), or (7), in addition to any other award of 
  8.18  actual or exemplary damages.  
  8.19     (b) The rights and remedies provided in paragraph (a) are 
  8.20  cumulative to, and not a limitation of, any other rights and 
  8.21  remedies provided by law.  Any action brought pursuant to this 
  8.22  section must be commenced within four years from the date of the 
  8.23  alleged violation. 
  8.24     Sec. 8.  [325N.08] [PENALTY.] 
  8.25     Any person who commits any violation described in section 
  8.26  325N.05 may, upon conviction, be fined not more than $10,000 or 
  8.27  imprisoned not more than one year or both.  Prosecution or 
  8.28  conviction for any violation described in section 325N.05 will 
  8.29  not bar prosecution or conviction for any other offenses.  These 
  8.30  penalties are cumulative to any other remedies or penalties 
  8.31  provided by law. 
  8.32     Sec. 9.  [325N.09] [PROVISIONS SEVERABLE.] 
  8.33     If any provision of sections 325N.01 to 325N.10 or the 
  8.34  application of any of these provisions to any person or 
  8.35  circumstance is held to be unconstitutional and void, the 
  8.36  remainder of sections 325N.01 to 325N.10 remains valid. 
  9.1      Sec. 10.  [325N.10] [LIABILITY.] 
  9.2      (a) Any provision in a contract which attempts or purports 
  9.3   to require arbitration of any dispute arising under sections 
  9.4   325N.01 to 325N.10 is void at the option of the owner. 
  9.5      (b) This section applies to any contract entered into on or 
  9.6   after August 1, 2004. 
  9.7                          EQUITY PURCHASERS 
  9.8      Sec. 11.  [325N.11] [INTENT AND PURPOSE.] 
  9.9      (a) The legislature finds and declares that homeowners 
  9.10  whose residences are in foreclosure have been subjected to 
  9.11  fraud, deception, and unfair dealing by home equity purchasers.  
  9.12  The recent rapid escalation of home values, particularly in the 
  9.13  metropolitan areas, has resulted in a significant increase in 
  9.14  home equities which are usually the greatest financial asset 
  9.15  held by the homeowners of this state.  During the time period 
  9.16  between the commencement of foreclosure proceedings and the 
  9.17  scheduled foreclosure sale date, homeowners in financial 
  9.18  distress, especially the poor, elderly, and financially 
  9.19  unsophisticated, are vulnerable to the importunities of equity 
  9.20  purchasers who induce homeowners to sell their homes for a small 
  9.21  fraction of their fair market values through the use of schemes 
  9.22  which often involve oral and written misrepresentations, deceit, 
  9.23  intimidation, and other unreasonable commercial practices. 
  9.24     (b) The legislature declares that it is the express policy 
  9.25  of the state to preserve and guard the precious asset of home 
  9.26  equity, and the social as well as the economic value of 
  9.27  homeownership. 
  9.28     (c) The legislature further finds that equity purchasers 
  9.29  have a significant impact upon the economy and well-being of 
  9.30  this state and its local communities, and therefore the 
  9.31  provisions of sections 325N.11 to 325N.26 are necessary to 
  9.32  promote the public welfare. 
  9.33     (d) The intent and purposes of sections 325N.11 to 325N.26 
  9.34  are to provide each homeowner with information necessary to make 
  9.35  an informed and intelligent decision regarding the sale of his 
  9.36  or her home to an equity purchaser; to require that the sales 
 10.1   agreement be expressed in writing; to safeguard the public 
 10.2   against deceit and financial hardship; to insure, foster, and 
 10.3   encourage fair dealing in the sale and purchase of homes in 
 10.4   foreclosure; to prohibit representations that tend to mislead; 
 10.5   to prohibit or restrict unfair contract terms; to afford 
 10.6   homeowners a reasonable and meaningful opportunity to rescind 
 10.7   sales to equity purchasers; and to preserve and protect home 
 10.8   equities for the homeowners of this state. 
 10.9      (e) Sections 325N.11 to 325N.26 must be liberally construed 
 10.10  to effectuate this intent and to achieve these purposes. 
 10.11     Sec. 12.  [325N.12] [DEFINITIONS.] 
 10.12     (a) The definitions in paragraphs (b) to (g) apply to 
 10.13  sections 325N.11 to 325N.26. 
 10.14     (b) "Equity purchaser" means any person who, directly or 
 10.15  indirectly, or by means of a subsidiary or affiliate, acquires 
 10.16  title to any residence in foreclosure, except a person who 
 10.17  acquires title as follows: 
 10.18     (1) for the purpose of using the property as the person's 
 10.19  own residence; 
 10.20     (2) by a deed in lieu of foreclosure of any voluntary lien 
 10.21  or encumbrance of record; 
 10.22     (3) by a deed from a trustee acting under the power of sale 
 10.23  contained in a mortgage at a foreclosure sale conducted pursuant 
 10.24  to statute; 
 10.25     (4) at any sale of property authorized by statute; 
 10.26     (5) by order or judgment of any court; or 
 10.27     (6) from a relative, a spouse, or a relative of a spouse.  
 10.28  "Relative" means an individual related within the third degree 
 10.29  as determined under common law. 
 10.30     (c) "Residence in foreclosure" and "residential real 
 10.31  property in foreclosure" means residential real property 
 10.32  consisting of one to four family dwelling units, one of which 
 10.33  the owner occupies as his or her principal place of residence, 
 10.34  and against which there is an outstanding notice of pendency of 
 10.35  foreclosure, recorded pursuant to section 580.032, or against 
 10.36  which a summons and complaint has been served under chapter 581. 
 11.1      (d) "Equity seller" means any seller of a residence in 
 11.2   foreclosure. 
 11.3      (e) "Business day" means any day other than a Saturday, 
 11.4   Sunday, or holiday as defined in section 645.44. 
 11.5      (f) "Contract" means any offer or any contract, agreement, 
 11.6   or arrangement, or any term of the contract, agreement, or 
 11.7   arrangement, between an equity purchaser and equity seller 
 11.8   incident to the sale of a residence in foreclosure. 
 11.9      (g) "Property owner" means the record title owner of the 
 11.10  residential real property in foreclosure at the time the notice 
 11.11  of default was recorded. 
 11.12     Sec. 13.  [325N.13] [CONTRACT FORM AND LANGUAGE.] 
 11.13     Every contract must be written in letters of a size equal 
 11.14  to at least ten-point bold type, in the same language 
 11.15  principally used by the equity purchaser and equity seller to 
 11.16  negotiate the sale of the residence in foreclosure and must be 
 11.17  fully completed and signed and dated by the equity seller and 
 11.18  equity purchaser before the execution of any instrument of 
 11.19  conveyance of the residence in foreclosure. 
 11.20     Sec. 14.  [325N.14] [CONTRACT TERMS.] 
 11.21     Every contract must contain the entire agreement of the 
 11.22  parties and must include the following terms: 
 11.23     (1) the name, business address, and the telephone number of 
 11.24  the equity purchaser; 
 11.25     (2) the address of the residence in foreclosure; 
 11.26     (3) the total consideration to be given by the equity 
 11.27  purchaser in connection with or incident to the sale; 
 11.28     (4) a complete description of the terms of payment or other 
 11.29  consideration including, but not limited to, any services of any 
 11.30  nature that the equity purchaser represents he or she will 
 11.31  perform for the equity seller before or after the sale; 
 11.32     (5) the time at which possession is to be transferred to 
 11.33  the equity purchaser; 
 11.34     (6) a complete description of the terms of any related 
 11.35  agreement designed to allow the equity seller to remain in the 
 11.36  home, such as a rental agreement, repurchase agreement, contract 
 12.1   for deed, or lease with option to buy; 
 12.2      (7) a notice of cancellation as provided in section 
 12.3   325N.16, paragraph (b); and 
 12.4      (8) the following notice in at least 14-point boldface 
 12.5   type, if the contract is printed or in capital letters if the 
 12.6   contract is typed, and completed with the name of the equity 
 12.7   purchaser, immediately above the statement required by section 
 12.8   325N.16, paragraph (a): 
 12.9                 "NOTICE REQUIRED BY MINNESOTA LAW 
 12.10     Until your right to cancel this contract has ended, ....... 
 12.11     (Name) or anyone working for ....... (Name) CANNOT ask you 
 12.12     to sign or have you sign any deed or any other document." 
 12.13     The contract required by this section survives delivery of 
 12.14     any instrument of conveyance of the residence in 
 12.15     foreclosure, and has no effect on persons other than the 
 12.16     parties to the contract. 
 12.17     Sec. 15.  [325N.15] [CONTRACT CANCELLATION.] 
 12.18     (a) In addition to any other right of rescission, the 
 12.19  equity seller has the right to cancel any contract with an 
 12.20  equity purchaser until midnight of the fifth business day 
 12.21  following the day on which the equity seller signs a contract 
 12.22  that complies with sections 325N.11 to 325N.26 or until 8 a.m. 
 12.23  on the day scheduled for the sale of the property pursuant to a 
 12.24  power of sale contained in a mortgage, whichever occurs first. 
 12.25     (b) Cancellation occurs when the equity seller personally 
 12.26  delivers written notice of cancellation to the address specified 
 12.27  in the contract. 
 12.28     (c) A notice of cancellation given by the equity seller 
 12.29  need not take the particular form as provided with the contract 
 12.30  and, however expressed, is effective if it indicates the 
 12.31  intention of the equity seller not to be bound by the contract. 
 12.32     Sec. 16.  [325N.16] [NOTICE OF CANCELLATION.] 
 12.33     (a) The contract must contain in immediate proximity to the 
 12.34  space reserved for the equity seller's signature a conspicuous 
 12.35  statement in a size equal to at least 12-point bold type, if the 
 12.36  contract is printed, or in capital letters, if the contract is 
 13.1   typed, as follows: 
 13.2                "You may cancel this contract for the sale
 13.3             of your house without any penalty or obligation
 13.4             at any time before
 13.5             ..............................................
 13.6                       (Date and time of day)
 13.7             See the attached notice of cancellation form
 13.8             for an explanation of this right."
 13.9   The equity purchaser shall accurately enter the date and time of 
 13.10  day on which the rescission right ends. 
 13.11     (b) The contract must be accompanied by a completed form in 
 13.12  duplicate, captioned "notice of cancellation" in a size equal to 
 13.13  a 12-point bold type, if the contract is printed, or in capital 
 13.14  letters, if the contract is typed, followed by a space in which 
 13.15  the equity purchaser shall enter the date on which the equity 
 13.16  seller executes any contract.  This form must be attached to the 
 13.17  contract, must be easily detachable, and must contain in type of 
 13.18  at least ten points, if the contract is printed or in capital 
 13.19  letters if the contract is typed, the following statement 
 13.20  written in the same language as used in the contract: 
 13.21                     "NOTICE OF CANCELLATION 
 13.22                ....................................
 13.23                        (Enter date contract signed)
 13.24               You may cancel this contract for the sale
 13.25            of your house, without any penalty or
 13.26            obligation, at any time before
 13.27            ...........................................
 13.28                   (Enter date and time of day)
 13.29                To cancel this transaction, personally
 13.30            deliver a signed and dated copy of this
 13.31            cancellation notice
 13.32            to ...................................... 
 13.33                       (Name of purchaser)
 13.34            at ............................................... 
 13.35             (Street address of purchaser's place of business)
 13.36            NOT LATER THAN ............................
 14.1                            (Enter date and time of day)
 14.2             I hereby cancel this transaction .................... 
 14.3                                                    (Date)
 14.4                         ............................. 
 14.5                             (Seller's signature)"
 14.6      (c) The equity purchaser shall provide the equity seller 
 14.7   with a copy of the contract and the attached notice of 
 14.8   cancellation. 
 14.9      (d) The five business days during which the equity seller 
 14.10  may cancel the contract must not begin to run until the equity 
 14.11  purchaser has complied with this section. 
 14.12     Sec. 17.  [325N.17] [VIOLATIONS.] 
 14.13     (a) The contract as required by sections 325N.13, 325N.14, 
 14.14  and 325N.16, must be provided and completed in conformity with 
 14.15  those sections by the equity purchaser. 
 14.16     (b) Until the time within which the equity seller may 
 14.17  cancel the transaction has fully elapsed, the equity purchaser 
 14.18  must not do any of the following: 
 14.19     (1) accept from any equity seller an execution of, or 
 14.20  induce any equity seller to execute, any instrument of 
 14.21  conveyance of any interest in the residence in foreclosure; 
 14.22     (2) record with the county recorder or file with the 
 14.23  registrar of titles any document, including but not limited to, 
 14.24  any instrument of conveyance, signed by the equity seller; 
 14.25     (3) transfer or encumber or purport to transfer or encumber 
 14.26  any interest in the residence in foreclosure to any third party, 
 14.27  provided no grant of any interest or encumbrance is defeated or 
 14.28  affected as against a bona fide purchaser or encumbrancer for 
 14.29  value and without notice of a violation of sections 325N.11 to 
 14.30  325N.26, and knowledge on the part of any such person or entity 
 14.31  that the property was "residential real property in foreclosure" 
 14.32  does not constitute notice of a violation of sections 325N.11 to 
 14.33  325N.26.  This section does not abrogate any duty of inquiry 
 14.34  which exists as to rights or interests of persons in possession 
 14.35  of the residential real property in foreclosure; or 
 14.36     (4) pay the equity seller any consideration. 
 15.1      (c) Within ten days following receipt of a notice of 
 15.2   cancellation given in accordance with sections 325N.15 and 
 15.3   325N.16, the equity purchaser shall return without condition any 
 15.4   original contract and any other documents signed by the equity 
 15.5   seller. 
 15.6      (d) An equity purchaser shall make no untrue or misleading 
 15.7   statements regarding the value of the residence in foreclosure, 
 15.8   the amount of proceeds the equity seller will receive after a 
 15.9   foreclosure sale, any contract term, the equity seller's rights 
 15.10  or obligations incident to or arising out of the sale 
 15.11  transaction, the nature of any document which the equity 
 15.12  purchaser induces the equity seller to sign, or any other untrue 
 15.13  or misleading statement concerning the sale of the residence in 
 15.14  foreclosure to the equity purchaser. 
 15.15     (e) Whenever any equity purchaser purports to hold title as 
 15.16  a result of any transaction in which the equity seller grants 
 15.17  the residence in foreclosure by any instrument which purports to 
 15.18  be an absolute conveyance, and where the equity seller has 
 15.19  reserved or been given by the equity purchaser any interest in 
 15.20  the home by means of a rental agreement, repurchase agreement, 
 15.21  contract for deed, or lease with option to buy, the equity 
 15.22  purchaser shall not cause any encumbrance or encumbrances to be 
 15.23  placed on the property or grant any interest in the property to 
 15.24  any other person without the written consent of the equity 
 15.25  seller.  Nothing in this paragraph precludes the application of 
 15.26  paragraph (b), clause (3). 
 15.27     Sec. 18.  [325N.18] [REMEDIES.] 
 15.28     An equity seller may bring an action for the recovery of 
 15.29  damages or other equitable relief against an equity purchaser 
 15.30  for a violation of any paragraph of section 325N.17 or 325N.24.  
 15.31  The equity seller shall recover actual damages plus reasonable 
 15.32  attorney fees and costs.  In addition, the court shall award 
 15.33  exemplary damages or equitable relief, or both, if the court 
 15.34  considers the award proper, but in any event shall award 
 15.35  exemplary damages in an amount not less than three times the 
 15.36  equity seller's actual damages for any violation of section 
 16.1   325N.17 or 325N.24.  Any action brought pursuant to this section 
 16.2   must be commenced within four years after the date of the 
 16.3   alleged violation. 
 16.4      Sec. 19.  [325N.19] [PENALTY.] 
 16.5      Any equity purchaser who violates any provision of section 
 16.6   325N.17 or who engages in any practice which would operate as a 
 16.7   fraud or deceit upon an equity seller may, upon conviction, be 
 16.8   fined not more than $10,000 or imprisoned not more than one year 
 16.9   or both.  Prosecution or conviction for any one of the 
 16.10  violations does not bar prosecution or conviction for any other 
 16.11  offenses. 
 16.12     Sec. 20.  [325N.20] [REMEDIES NOT EXCLUSIVE.] 
 16.13     The provisions of sections 325N.11 to 325N.26 are not 
 16.14  exclusive and are in addition to any other requirements, rights, 
 16.15  remedies, and penalties provided by law. 
 16.16     Sec. 21.  [325N.21] [WAIVER NOT ALLOWED.] 
 16.17     Any waiver of the provisions of sections 325N.11 to 325N.26 
 16.18  is void and unenforceable as contrary to public policy. 
 16.19     Sec. 22.  [325N.22] [PROVISIONS SEVERABLE.] 
 16.20     If any provision of sections 325N.11 to 325N.26, or if any 
 16.21  application thereof to any person or circumstance is held 
 16.22  unconstitutional and void, the remainder of sections 325N.11 to 
 16.23  325N.26 remains valid. 
 16.24     Sec. 23.  [325N.23] [EQUITABLE MORTGAGE.] 
 16.25     In any transaction in which an equity seller purports to 
 16.26  grant a residence in foreclosure to an equity purchaser by any 
 16.27  instrument which appears to be an absolute conveyance and 
 16.28  reserves to himself or herself or is given by the equity 
 16.29  purchaser an option to repurchase, the transaction creates a 
 16.30  presumption affecting the burden of proof, which may be overcome 
 16.31  by clear and convincing evidence to the contrary that the 
 16.32  transaction is a loan transaction, and the purported absolute 
 16.33  conveyance is a mortgage.  However, this presumption does not 
 16.34  apply to a bona fide purchaser or encumbrancer for value without 
 16.35  notice of a violation of sections 325N.11 to 325N.26, and 
 16.36  knowledge on the part of any such person or entity that the 
 17.1   property was "residential real property in foreclosure" does not 
 17.2   constitute notice of a violation of sections 325N.11 to 325N.26. 
 17.3   This section does not abrogate any duty of inquiry which exists 
 17.4   as to rights or interests of persons in possession of the 
 17.5   residential real property in foreclosure. 
 17.6      Sec. 24.  [325N.24] [UNCONSCIONABLE CONDUCT PROHIBITED.] 
 17.7      It is unlawful for any person to initiate, enter into, 
 17.8   negotiate, or consummate any transaction involving residential 
 17.9   real property in foreclosure, as defined in section 325N.12, if 
 17.10  the person, by the terms of the transaction, takes 
 17.11  unconscionable advantage of the property owner in foreclosure.  
 17.12     Sec. 25.  [325N.25] [LIABLE FOR ACTS OF REPRESENTATIVE.] 
 17.13     (a) An equity purchaser is liable for all damages resulting 
 17.14  from any statement made or act committed by the equity 
 17.15  purchaser's representative in any manner connected with the 
 17.16  equity purchaser's acquisition of a residence in foreclosure, 
 17.17  receipt of any consideration or property from or on behalf of 
 17.18  the equity seller, or the performance of any act prohibited by 
 17.19  sections 325N.11 to 325N.26. 
 17.20     (b) "Representative" for the purposes of this section means 
 17.21  a person who in any manner solicits, induces, or causes any 
 17.22  property owner to transfer title or solicits any member of the 
 17.23  property owner's family or household to induce or cause any 
 17.24  property owner to transfer title to the residence in foreclosure 
 17.25  to the equity purchaser. 
 17.26     Sec. 26.  [325N.26] [LIMITATION OF LIABILITY RESTRICTED.] 
 17.27     (a) Any provision of a contract which attempts or purports 
 17.28  to limit the liability of the equity purchaser under section 
 17.29  325N.16 is void and renders the equity purchase contract 
 17.30  voidable by the equity seller.  The equity purchaser is liable 
 17.31  to the equity seller for all damages proximately caused by that 
 17.32  provision.  Any provision in a contract which attempts or 
 17.33  purports to require arbitration of any dispute arising under 
 17.34  sections 325N.11 to 325N.26 is voidable at the option of the 
 17.35  equity seller. 
 17.36     (b) This section applies to any contract entered into on or 
 18.1   after August 1, 2004. 
 18.2      Sec. 27.  Minnesota Statutes 2002, section 580.03, is 
 18.3   amended to read: 
 18.4      580.03 [NOTICE OF SALE; SERVICE ON OCCUPANT.] 
 18.5      Six weeks' published notice shall be given that such 
 18.6   mortgage will be foreclosed by sale of the mortgaged premises or 
 18.7   some part thereof, and at least four weeks before the appointed 
 18.8   time of sale a copy of such notice shall be served in like 
 18.9   manner as a summons in a civil action in the district court upon 
 18.10  the person in possession of the mortgaged premises, if the same 
 18.11  are actually occupied.  If there be a building on such premises 
 18.12  used by a church or religious corporation, for its usual 
 18.13  meetings, service upon any officer or trustee of such 
 18.14  corporation shall be a sufficient service upon it.  The notice 
 18.15  required by section 580.041 must be served simultaneously with 
 18.16  the notice of foreclosure required by this section. 
 18.17     Sec. 28.  [580.041] [FORECLOSURE ADVICE NOTICE.] 
 18.18     Subdivision 1.  [FORM AND DELIVERY OF NOTICE.] The notice 
 18.19  required by this section must be in bold, 14-point type and must 
 18.20  be printed on colored paper that is other than the color of the 
 18.21  notice of foreclosure and that does not obscure or overshadow 
 18.22  the content of this notice.  The title of the notice must be in 
 18.23  bold, 20-point type.  The notice must be on its own page.  The 
 18.24  notice required by this section must be delivered with the 
 18.25  notice of foreclosure required by sections 580.03 and 580.04.  
 18.26  The notice required by this section also must be delivered with 
 18.27  each subsequent written communication mailed to the mortgagor by 
 18.28  the foreclosing party up to the day of redemption.  The notice 
 18.29  required by this section must not be published. 
 18.30     Subd. 2.  [CONTENT OF NOTICE.] The notice required by this 
 18.31  section must appear substantially as follows: 
 18.32               "Help For Homeowners in Foreclosure
 18.33  Minnesota law requires that we send you this notice about the 
 18.34  foreclosure process.  Please read it carefully.  Mortgage 
 18.35  foreclosure is a complex process. 
 18.36     Some people may approach you about "saving" your home.  You 
 19.1   should be careful about any such promises. 
 19.2      The state encourages you to become informed about your 
 19.3   options in foreclosure before entering into any agreements with 
 19.4   anyone in connection with the foreclosure of your home. 
 19.5      There are government agencies and nonprofit organizations 
 19.6   that you may contact for helpful information about the 
 19.7   foreclosure process.  For the name and telephone number of an 
 19.8   organization near you please call the Minnesota Home Finance 
 19.9   Agency (MHFA) at [insert telephone number].  The state does not 
 19.10  guarantee the advice of these agencies. 
 19.11     Do not delay dealing with the foreclosure because your 
 19.12  options may become more limited as time passes."