1999 Minnesota Statutes

     58.13 Standards of conduct. 

    Subdivision 1.    Generally.  No person acting as a 
 residential mortgage originator or servicer, including a person 
 required to be licensed under this chapter, and no person exempt 
 from the licensing requirements of this chapter under section 
 58.04, shall: 

    (1) fail to maintain a trust account to hold trust funds 
 received in connection with a residential mortgage loan; 

    (2) fail to deposit all trust funds into a trust account 
 within three business days of receipt; commingle trust funds 
 with funds belonging to the licensee or exempt person; or use 
 trust account funds for any purpose other than that for which 
 they are received; 

    (3) unreasonably delay the processing of a residential 
 mortgage loan application, or the closing of a residential 
 mortgage loan.  For purposes of this clause, evidence of 
 unreasonable delay includes but is not limited to those factors 
 identified in section 47.206, subdivision 7, clause (d); 

    (4) fail to disburse funds according to its contractual or 
 statutory obligations; 

    (5) fail to perform in conformance with its written 
 agreements with borrowers, investors, other licensees, or exempt 
 persons; 

    (6) charge a fee for a product or service where the product 
 or service is not actually provided, or misrepresent the amount 
 charged by or paid to a third party for a product or service; 

    (7) fail to comply with sections 345.31 to 345.60, the 
 Minnesota unclaimed property law; 

    (8) violate any provision of any other applicable state or 
 federal law regulating residential mortgage loans including, 
 without limitation, sections 47.20 to 47.208; 

    (9) make or cause to be made, directly or indirectly, any 
 false, deceptive, or misleading statement or representation in 
 connection with a residential loan transaction including, 
 without limitation, a false, deceptive, or misleading statement 
 or representation regarding the borrower's ability to qualify 
 for any mortgage product; 

    (10) conduct residential mortgage loan business under any 
 name other than that under which the license or certificate of 
 exemption was issued; 

    (11) compensate, whether directly or indirectly, coerce or 
 intimidate an appraiser for the purpose of influencing the 
 independent judgment of the appraiser with respect to the value 
 of real estate that is to be covered by a residential mortgage 
 or is being offered as security according to an application for 
 a residential mortgage loan; 

    (12) issue any document indicating conditional 
 qualification or conditional approval for a residential mortgage 
 loan, unless the document also clearly indicates that final 
 qualification or approval is not guaranteed, and may be subject 
 to additional review; 

    (13) make or assist in making any residential mortgage loan 
 with the intent that the loan will not be repaid and that the 
 residential mortgage originator will obtain title to the 
 property through foreclosure; 

    (14) provide or offer to provide for a borrower, any 
 brokering or lending services under an arrangement with a person 
 other than a licensee or exempt person, provided that a person 
 may rely upon a written representation by the residential 
 mortgage originator that it is in compliance with the licensing 
 requirements of this chapter; 

    (15) claim to represent a licensee or exempt person, unless 
 the person is an employee of the licensee or exempt person or 
 unless the person has entered into a written agency agreement 
 with the licensee or exempt person; 

    (16) fail to comply with the recordkeeping and notification 
 requirements identified in section 58.14 or fail to abide by the 
 affirmations made on the application for licensure; 

    (17) represent that the licensee or exempt person is acting 
 as the borrower's agent after providing the nonagency disclosure 
 required by section 58.15, unless the disclosure is retracted 
 and the licensee or exempt person complies with all of the 
 requirements of section 58.16; 

    (18) make, provide, or arrange for a residential mortgage 
 loan that is of a lower investment grade if the borrower's 
 credit score or, if the originator does not utilize credit 
 scoring or if a credit score is unavailable, then comparable 
 underwriting data, indicates that the borrower may qualify for a 
 residential mortgage loan, available from or through the 
 originator, that is of a higher investment grade, unless the 
 borrower is informed that the borrower may qualify for a higher 
 investment grade loan with a lower interest rate and/or lower 
 discount points, and consents in writing to receipt of the lower 
 investment grade loan. 

    For purposes of this section, "investment grade" refers to 
 a system of categorizing residential mortgage loans in which the 
 loans are:  (i) commonly referred to as "prime" or "subprime"; 
 (ii) commonly designated by an alphabetical character with "A" 
 being the highest investment grade; and (iii) are distinguished 
 by interest rate or discount points or both charged to the 
 borrower, which vary according to the degree of perceived risk 
 of default based on factors such as the borrower's credit, 
 including credit score and credit patterns, income and 
 employment history, debt ratio, loan-to-value ratio, and prior 
 bankruptcy or foreclosure; 

    (19) make, publish, disseminate, circulate, place before 
 the public, or cause to be made, directly or indirectly, any 
 advertisement or marketing materials of any type, or any 
 statement or representation relating to the business of 
 residential mortgage loans that is false, deceptive, or 
 misleading; 

    (20) advertise loan types or terms that are not available 
 from or through the licensee or exempt person on the date 
 advertised, or on the date specified in the advertisement.  For 
 purposes of this clause, advertisement includes, but is not 
 limited to, a list of sample mortgage terms, including interest 
 rates, discount points, and closing costs provided by licensees 
 or exempt persons to a print or electronic medium that presents 
 the information to the public; and 

    (21) use or employ phrases, pictures, return addresses, 
 geographic designations, or other means that create the 
 impression, directly or indirectly, that a licensee or other 
 person is a governmental agency, or is associated with, 
 sponsored by, or in any manner connected to, related to, or 
 endorsed by a governmental agency, if that is not the case. 

    Subd. 2.    Statements, representations, or advertising. 
  A statement, representation, or advertisement is deceptive or 
 misleading if it has the capacity or tendency to deceive or 
 mislead a borrower or potential borrower.  The commissioner 
 shall consider the following factors in deciding whether a 
 statement, representation, or advertisement is deceptive or 
 misleading:  the overall impression that the statement, 
 representation, or advertisement reasonably creates; the 
 particular type of audience to which it is directed; and whether 
 it may be reasonably comprehended by the segment of the public 
 to which it is directed.  

    HIST: 1998 c 343 art 1 s 13 

*   NOTE:  This section, as added by Laws 1998, chapter 343, 
*article 1, section 13, is effective July 1, 1999.  Laws 1998, 
*chapter 343, article 1, section 19.