2006 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 record keeping 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;
(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; or
(22) violate section 82.49, relating to table funding.
    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.
History: 1998 c 343 art 1 s 13; 2004 c 203 art 1 s 1; art 2 s 61