Minnesota Legislature
Office of the Revisor of Statutes
Minnesota Session Laws - 1997, Regular Session
Key: (1) language to be deleted (2) new language
CHAPTER 157-H.F.No. 753
An act relating to financial institutions; authorizing
facsimile or electronic filings and certifications;
regulating the powers and structure of certain
institutions; regulating consumer credit; modifying
lending authority; regulating fees and charges; making
technical and conforming changes; amending Minnesota
Statutes 1996, sections 46.04, by adding a
subdivision; 46.044, by adding a subdivision; 46.046,
by adding a subdivision; 46.047, subdivision 2; 46.07,
subdivision 2; 46.131, subdivision 2; 47.20,
subdivisions 9 and 14; 47.206, subdivision 6; 47.55,
subdivision 1; 47.56; 47.59, subdivisions 1, 4, 5, 6,
and 12; 47.61, subdivision 3; 47.64, by adding a
subdivision; 47.75, subdivision 1; 48.01, subdivision
2; 48.09, by adding a subdivision; 48.15, subdivisions
2 and 4; 48.24, subdivision 2, and by adding a
subdivision; 48.512, by adding a subdivision; 48.61,
subdivision 7, and by adding a subdivision; 49.215,
subdivision 3; 49.33; 49.36, subdivision 4; 49.42;
50.245; 51A.38, subdivision 1; 52.04, subdivision 2a,
and by adding a subdivision; 52.062, subdivision 1,
and by adding a subdivision; 52.063; 52.064, by adding
a subdivision; 52.13; 52.201; 53.04, by adding a
subdivision; 53.05; 53.09, subdivision 2a; 55.06,
subdivision 1; 56.07; 56.10, subdivision 1; 56.131,
subdivisions 1 and 4; 59A.08, subdivision 3, and by
adding a subdivision; 59A.11, subdivisions 2 and 3;
62B.04, subdivision 1; 300.20, subdivision 2; 303.02,
subdivision 4; 303.25, subdivision 5; 325F.68,
subdivision 2; 332.21; 332.23, subdivisions 1, 2, and
5; and 332.50, subdivisions 1 and 2; Laws 1996,
chapter 414, article 1, section 45; proposing coding
for new law in Minnesota Statutes, chapter 48;
repealing Minnesota Statutes 1996, sections 13.99,
subdivision 13; 47.29; 47.31; 47.32; 49.47; 49.48;
50.03; 50.23; and 59A.14.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
Section 1. Minnesota Statutes 1996, section 46.04, is
amended by adding a subdivision to read:
Subd. 4. [APPLICATIONS, FACSIMILE OR ELECTRONIC MEDIA.] (a)
The commissioner when providing forms and procedural guidance to
persons governed by or seeking approval to operate under the
chapters referred to in this section may prescribe alternatives
to paper forms and delivery in person or by mail. In
considering accepting filings by facsimile or electronic media,
the commissioner may accept fees and reimbursement for costs
associated with the applications and notices by wire transfer
and debit card.
(b) Certifications required to authenticate, officiate, or
establish standing of the application or notice as a matter of
law, rule, or sound business practice may be authenticated in an
alternative to paper-based original signatures or notarial seals
on facsimile or electronic media submissions in a technically
competent means at the discretion of the commissioner, including
but not limited to, document imaging meeting the standard in
subdivision 3, bar coding, personal identification numbers, or
other reliable communicated verification technique.
Sec. 2. Minnesota Statutes 1996, section 46.044, is
amended by adding a subdivision to read:
Subd. 3. [SPECIAL PURPOSE BANKS, EXCEPTIONS.] For purposes
of applications to organize and operate special purpose banks as
defined in section 46.046, subdivision 5, the conditions in
subdivision 1, clauses (2) and (4), do not apply.
Sec. 3. Minnesota Statutes 1996, section 46.046, is
amended by adding a subdivision to read:
Subd. 5. [SPECIAL PURPOSE BANK.] Special purpose bank
means a bank as defined in subdivision 2 that:
(1) engages only in credit card operations as authorized in
section 47.59;
(2) does not accept demand deposits or deposits that the
depositor may withdraw by check or similar means for payment to
third parties or others;
(3) does not accept savings or time deposits of less than
$100,000;
(4) maintains only one office that accepts deposits; and
(5) does not engage in the business of making commercial
loans.
Sec. 4. Minnesota Statutes 1996, section 46.047,
subdivision 2, is amended to read:
Subd. 2. [BANKING INSTITUTION.] The term "banking
institution" means a bank, trust company, bank and trust
company, savings bank, or industrial loan and thrift institution
operating under section 53.04, subdivision 5, that is organized
under the laws of this state, or a holding company which owns or
otherwise controls the banking institution.
Sec. 5. Minnesota Statutes 1996, section 46.07,
subdivision 2, is amended to read:
Subd. 2. [CONFIDENTIAL RECORDS.] The commissioner shall
divulge facts and information obtained in the course of
examining financial institutions under the commissioner's
supervision only when and to the extent required or permitted by
law to report upon or take special action regarding the affairs
of an institution, or ordered by a court of law to testify or
produce evidence in a civil or criminal proceeding, except that
the commissioner may furnish information as to matters of mutual
interest to an official or examiner of the federal reserve
system, the Federal Deposit Insurance Corporation, the Federal
Office of Thrift Supervision, the Federal Home Loan Bank System,
the National Credit Union Administration, comptroller of the
currency, a legally constituted state credit union share
insurance corporation approved under section 52.24 other state
bank supervisory agencies subject to cooperative agreements
authorized by section 49.411, subdivision 7, the United States
Small Business Administration, for purposes of sections 53.09,
subdivision 2a, and 56.10, subdivision 1, or state and federal
law enforcement agencies. The commissioner shall not be
required to disclose the name of a debtor of a financial
institution under the commissioner's supervision, or anything
relative to the private accounts, ownership, or transactions of
an institution, or any fact obtained in the course of an
examination thereof, except as herein provided. For purposes of
this subdivision, a subpoena is not an order of a court of law.
These records are classified confidential or protected nonpublic
for purposes of the Minnesota government data practices act and
their destruction, as prescribed in section 46.21, is exempt
from the provisions of chapter 138 and Laws 1971, chapter 529,
so far as their deposit with the state archives.
Sec. 6. Minnesota Statutes 1996, section 46.131,
subdivision 2, is amended to read:
Subd. 2. Each bank, trust company, savings bank, savings
association, small loan company regulated lender, industrial
loan and thrift company, credit union, motor vehicle sales
finance company, debt prorating agency and insurance premium
finance company organized under the laws of this state or
required to be administered by the commissioner of commerce
shall pay into the state treasury its proportionate share of the
cost of maintaining the department of commerce.
Sec. 7. Minnesota Statutes 1996, section 47.20,
subdivision 9, is amended to read:
Subd. 9. For purposes of this subdivision the term
"mortgagee" shall mean all state banks and trust companies,
national banking associations, state and federally chartered
savings associations, mortgage banks, savings banks, insurance
companies, credit unions or assignees of the above.
(a) Each mortgagee requiring funds of a mortgagor to be
paid into an escrow, agency or similar account for the payment
of taxes or homeowner's insurance premiums with respect to a
mortgaged one-to-four family, owner occupied residence located
in this state, unless the account is required by federal law or
regulation or maintained in connection with a conventional loan
in an original principal amount in excess of 80 percent of the
lender's appraised value of the residential unit at the time the
loan is made or maintained in connection with loans insured or
guaranteed by the secretary of housing and urban development, by
the administrator of veterans affairs, or by the administrator
of the farmers home administration or any successor, shall
calculate interest on such funds at a rate of not less than
three percent per annum. Such interest shall be computed on the
average monthly balance in such account on the first of each
month for the immediately preceding 12 months of the calendar
year or such other fiscal year as may be uniformly adopted by
the mortgagee for such purposes and shall be annually credited
to the remaining principal balance on the mortgage, or at the
election of the mortgagee, paid to the mortgagor or credited to
the mortgagor's account. If the interest exceeds the remaining
balance, the excess shall be paid to the mortgagor or vendee.
The requirement to pay interest shall apply to such accounts
created in conjunction with mortgage loans made prior to July 1,
1996.
(b) Unless the account is exempt from the requirements of
paragraph (a), a mortgagee shall allow a mortgagor to elect to
discontinue the escrow account escrowing for taxes and
homeowner's insurance after the seventh anniversary of the date
of the mortgage, unless the mortgagor has been more than 30 days
delinquent in the previous 12 months. This paragraph shall
apply to accounts created prior to July 1, 1996, as well as to
accounts created on or after July 1, 1996. The mortgagor's
election shall be in writing. The lender or mortgage broker
shall, with respect to mortgages made on or after August 1,
1997, notify an applicant for a mortgage of the applicant's
rights under this paragraph. This notice shall be given at or
prior to the closing of the mortgage loan and shall read
substantially as follows:
"NOTICE OF RIGHT TO DISCONTINUE ESCROW
If your mortgage loan involves an escrow account for taxes
and homeowner's insurance, you may have the right in five years
to discontinue the account and pay your own taxes and homeowners
insurance. If you are eligible to discontinue the escrow
account, you will be notified in five years."
If the escrow account has a negative balance or a shortage
at the time the mortgagor requests discontinuance, the mortgagee
is not obligated to allow discontinuance until the escrow
account is balanced or the shortage has been repaid.
(c) The mortgagee shall notify the mortgagor within 60 days
after the seventh anniversary of the date of the mortgage if the
right to discontinue the escrow account is in accordance with
paragraph (b). For mortgage loans entered into, on or prior to
July 1, 1989, the notice required by this paragraph shall be
provided to the mortgagor by January 1, 1997.
(d) Effective January 1, 1998, the requirements of
paragraph (b), regarding the mortgagor's election to discontinue
the escrow account, and paragraph (c), regarding notification to
mortgagor, shall apply when the fifth anniversary of the date of
the mortgage has been reached.
(d) (e) A mortgagee may require the mortgagor to
reestablish the escrow account if the mortgagor has failed to
make timely payments for two consecutive payment periods at any
time during the remaining term of the mortgage, or if the
mortgagor has failed to pay taxes or insurance premiums when
due. A payment received during a grace period shall be deemed
timely.
(e) (f) The mortgagee shall, subject to paragraph (b),
return any funds remaining in the account to the mortgagor
within 60 days after receipt of the mortgagor's written notice
of election to discontinue the escrow account.
(f) (g) The mortgagee shall not charge a direct fee for the
administration of the escrow account, nor shall the mortgagee
charge a fee or other consideration for allowing the mortgagor
to discontinue the escrow account.
Sec. 8. Minnesota Statutes 1996, section 47.20,
subdivision 14, is amended to read:
Subd. 14. (a) A lender requiring or offering private
mortgage insurance shall make available to the borrower or other
person paying the insurance premium the same premium payment
plans as are available to the lender in paying the private
mortgage insurance premium.
(b) Any refund or rebate for unearned private mortgage
insurance premiums shall be paid to the borrower or other person
actually providing the funds for payment of the premium.
(c) With regard to first mortgage loans made before, on, or
after January 1, 1997, the mortgagor shall have the right to
elect, in writing, to cancel borrower-purchased private mortgage
insurance if all of the following terms and conditions have been
met:
(1) if the current unpaid principal balance of a first
mortgage is 75 percent or less of the current fair market
appraised value of the property. "Current fair market appraised
value" shall be based upon a current appraisal by a real estate
appraiser licensed or certified by the appropriate state or
federal agency and reasonably acceptable to the lender. The
lender may require the mortgagor to pay for the appraisal;
(2) the mortgagor's monthly installments of principal,
interest, and escrow obligations have not been more than 30 days
past due over the 24-month period immediately preceding the
request for cancellation and all accrued late charges have been
paid;
(3) the mortgage was made at least 24 months prior to the
receipt of a request for cancellation of private mortgage
insurance;
(4) the property securing the mortgage is owner-occupied;
and
(5) the mortgage has not been pooled with other mortgages
in order to constitute, in whole or in part, collateral for
bonds issued by the state of Minnesota or any political
subdivision of the state of Minnesota or of any agency of any
political subdivision of the state of Minnesota.
(d) Other than the appraisal fee allowed pursuant to
paragraph (c), clause (1), the lender shall not charge the
borrower a fee or other consideration for cancellation of the
private mortgage insurance.
(e) With respect to all existing or future first mortgage
loans, a lender requiring private mortgage insurance shall,
after the payment of the 24th monthly premium installment of
private mortgage insurance, provide an annual written notice to
each mortgagor currently paying premiums for private mortgage
insurance. The notice may be included in the annual statement
or may be included in other regular mailings to the mortgagor.
For mortgage loans made prior to January 1, 1996, the first
required annual notice must be provided no later than January
31, 1998. The annual notice shall be on its own page, unless
included in a private mortgage insurance notice required under
the federal Real Estate Settlement Procedures Act, and shall
appear substantially as follows:
"NOTICE OF RIGHT TO CANCEL PRIVATE MORTGAGE INSURANCE
If you currently pay private mortgage insurance premiums,
you may have the right to cancel the insurance and cease paying
premiums. This would permit you to make a lower total monthly
mortgage payment. In most cases, you have the right to cancel
private mortgage insurance if the principal balance of your loan
is 80 percent or less of the current fair market appraised value
of your home. If you wish to learn whether you are eligible to
cancel this insurance, please contact us at (address/phone)."
(f) If a mortgage loan governed by paragraph (c) is
serviced in accordance with the guidelines of either the Federal
National Mortgage Association or the Federal Home Loan Mortgage
Corporation, the lender shall cancel private mortgage insurance
in accordance with the cancellation guidelines of the applicable
entity in effect at the time the request for cancellation is
received.
Sec. 9. Minnesota Statutes 1996, section 47.206,
subdivision 6, is amended to read:
Subd. 6. [PROHIBITED ACTS.] A person, including a lender,
may not advise, encourage, or induce a borrower or third party
to misrepresent information that is the subject of a loan
application or to violate the terms of the agreement. Neither a
mortgage lender nor a mortgage broker shall advertise mortgage
terms, including interest rate and discount points, which were
not available from the lender or broker on the date or dates
specified in the advertisement. For purposes of this section,
"advertisement" shall include a list or sampler of mortgage
terms compiled from information provided by the lender or
broker, with or without charge to the lender or broker, by a
newspaper, and shall also include advertising on the Internet.
Sec. 10. Minnesota Statutes 1996, section 47.55,
subdivision 1, is amended to read:
Subdivision 1. [BANKING FACILITIES IN OPERATION PRIOR TO
MAY 1, 1971.] A bank may retain and operate one detached
facility as it may have had in operation prior to May 1, 1971
without requirement of approval hereunder, provided that its
function is limited as provided in section 47.53 and its
location conforms with the provisions of section 47.52. A bank
having such a retained detached facility shall be limited to
operating five additional detached facilities.
Sec. 11. Minnesota Statutes 1996, section 47.56, is
amended to read:
47.56 [TRANSFER OF LOCATION.]
The location of a detached facility transferred to another
location outside of a radius of three miles measured in a
straight line is subject to the same procedures and approval as
required hereunder for establishing a new detached facility,
except that. The location of a detached facility transferred to
another location within the lesser of a radius of three miles
measured in a straight line from the existing location or the
municipality, as defined in section 47.51, in which it is
located is subject to the same procedures and approval as are
required in section 47.101, subdivision 2. The relocation of a
detached facility within a municipality of 10,000 or less
population shall not require consent of other banks required in
section 47.52.
Sec. 12. Minnesota Statutes 1996, section 47.59,
subdivision 1, is amended to read:
Subdivision 1. [DEFINITIONS.] For purposes of this
section, the following definitions shall apply.
(a) "Actuarial method" has the meaning given the term in
the Code of Federal Regulations, title 12, part 226, and
appendix J thereto.
(b) "Annual percentage rate" has the meaning given the term
in the Code of Federal Regulations, title 12, part 226, but
using the definition of "finance charge" used in this section.
(c) "Borrower" means a debtor under a loan or a purchaser
or debtor under a credit sale contract.
(d) "Business purpose" means a purpose other than a
personal, family, household, or agricultural purpose.
(e) "Cardholder" means a person to whom a credit card is
issued or who has agreed with the financial institution to pay
obligations arising from the issuance to or use of the card by
another person.
(f) "Consumer loan" means a loan made by a financial
institution in which:
(1) the debtor is a person other than an organization;
(2) the debt is incurred primarily for a personal, family,
or household purpose; and
(3) the debt is payable in installments or a finance charge
is made.
(g) "Credit" means the right granted by a financial
institution to a borrower to defer payment of a debt, to incur
debt and defer its payment, or to purchase property or services
and defer payment.
(h) "Credit card" means a card or device issued under an
arrangement pursuant to which a financial institution gives to a
cardholder the privilege of obtaining credit from the financial
institution or other person in purchasing or leasing property or
services, obtaining loans, or otherwise. A transaction is
"pursuant to a credit card" only if credit is obtained according
to the terms of the arrangement by transmitting information
contained on the card or device orally, in writing, by
mechanical or electronic methods, or in any other manner. A
transaction is not "pursuant to a credit card" if the card or
device is used solely in that transaction to:
(1) identify the cardholder or evidence the cardholder's
creditworthiness and credit is not obtained according to the
terms of the arrangement;
(2) obtain a guarantee of payment from the cardholder's
deposit account, whether or not the payment results in a credit
extension to the cardholder by the financial institution; or
(3) effect an immediate transfer of funds from the
cardholder's deposit account by electronic or other means,
whether or not the transfer results in a credit extension to the
cardholder by the financial institution.
(i) "Credit sale contract" means a contract evidencing a
credit sale. "Credit sale" means a sale of goods or services,
or an interest in land, in which:
(1) credit is granted by a seller who regularly engages as
a seller in credit transactions of the same kind; and
(2) the debt is payable in installments or a finance charge
is made.
(j) "Finance charge" has the meaning given in the Code of
Federal Regulations, title 12, part 226, except that the
following will not in any event be considered a finance charge:
(1) a charge as a result of default or delinquency under
subdivision 6 if made for actual unanticipated late payment,
delinquency, default, or other similar occurrence, and a charge
made for an extension or deferment under subdivision 5, unless
the parties agree that these charges are finance charges;
(2) an additional charge under subdivision 6; or
(3) a discount, if a financial institution purchases a loan
at less than the face amount of the obligation or purchases or
satisfies obligations of a cardholder pursuant to a credit card
and the purchase or satisfaction is made at less than the face
amount of the obligation.;
(4) fees paid by a borrower to a broker, provided the
financial institution or a person described in subdivision 4
does not require use of the broker to obtain credit; or
(5) a commission, expense reimbursement, or other sum
received by a financial institution or a person described in
subdivision 4 in connection with insurance described in
subdivision 6.
(k) "Financial institution" means a state or federally
chartered bank, a state or federally chartered bank and trust, a
trust company with banking powers, a state or federally
chartered saving bank, a state or federally chartered savings
association, an industrial loan and thrift company, or a
regulated lender.
(l) "Loan" means:
(1) the creation of debt by the financial institution's
payment of money to the borrower or a third person for the
account of the borrower;
(2) the creation of debt pursuant to a credit card in any
manner, including a cash advance or the financial institution's
honoring a draft or similar order for the payment of money drawn
or accepted by the borrower, paying or agreeing to pay the
borrower's obligation, or purchasing or otherwise acquiring the
borrower's obligation from the obligee or the borrower's
assignee;
(3) the creation of debt by a cash advance to a borrower
pursuant to an overdraft line of credit arrangement;
(4) the creation of debt by a credit to an account with the
financial institution upon which the borrower is entitled to
draw immediately;
(5) the forbearance of debt arising from a loan; and
(6) the creation of debt pursuant to open-end credit.
"Loan" does not include the forbearance of debt arising
from a sale or lease, a credit sale contract, or an overdraft
from a person's deposit account with a financial institution
which is not pursuant to a written agreement to pay overdrafts
with the right to defer repayment thereof.
(m) "Official fees" means:
(1) fees and charges which actually are or will be paid to
public officials for determining the existence of or for
perfecting, releasing, terminating, or satisfying a security
interest or mortgage relating to a loan or credit sale, and any
separate fees or charges which actually are or will be paid to
public officials for recording a notice described in section
580.032, subdivision 1; and
(2) premiums payable for insurance in lieu of perfecting a
security interest or mortgage otherwise required by a financial
institution in connection with a loan or credit sale, if the
premium does not exceed the fees and charges described in clause
(1), which would otherwise be payable.
(n) "Organization" means a corporation, government,
government subdivision or agency, trust, estate, partnership,
joint venture, cooperative, limited liability company, limited
liability partnership, or association.
(o) "Person" means a natural person or an organization.
(p) "Principal" means the total of:
(1) the amount paid to, received by, or paid or repayable
for the account of, the borrower; and
(2) to the extent that payment is deferred:
(i) the amount actually paid or to be paid by the financial
institution for additional charges permitted under this section;
and
(ii) prepaid finance charges.
Sec. 13. Minnesota Statutes 1996, section 47.59,
subdivision 4, is amended to read:
Subd. 4. [FINANCE CHARGE FOR CREDIT SALES MADE BY A THIRD
PARTY.] (a) A person may enter into a credit sale contract for
sale to a financial institution and a financial institution may
purchase and enforce the contract, if the annual percentage rate
provided for in the contract does not exceed that permitted in
this section, or, in the case of contracts governed by sections
168.66 to 168.77 a retail installment sale of a motor vehicle as
defined in section 168.66, the annual percentage rates permitted
by subdivision 4a.
(b) The annual percentage rate may not exceed the
equivalent of the greater of either of the following:
(1) the total of:
(i) 36 percent per year on that part of the unpaid balances
of the amount financed that is $300 or less;
(ii) 21 percent per year on that part of the unpaid
balances of the amount financed which exceeds $300 but does not
exceed $1,000; and
(iii) 15 percent per year on that part of the unpaid
balances of the amount financed which exceeds $1,000; or
(2) 19 percent per year on the unpaid balances of the
amount financed.
(c) This subdivision does not limit or restrict the manner
of calculating the finance charge whether by way of add-on,
discount, discount points, single annual percentage rate,
precomputed charges, variable rate, interest in advance,
compounding, or otherwise, if the annual percentage rate
calculated under paragraph (d) does not exceed that permitted by
this section. The finance charge may be contracted for and
earned at the single annual percentage rate that would earn the
same finance charge as the graduated rates when the debt is paid
according to the agreed terms and the finance charge is
calculated under paragraph (d). If the finance charge is
calculated and collected in advance, or included in the
principal amount of the contract, and the borrower prepays the
contract in full, the financial institution shall credit the
borrower with a refund of the charge to the extent the annual
percentage rate yield on the contract would exceed the annual
percentage rate on the contract as originally determined under
paragraph (d) and taking into account the prepayment. For the
purpose of calculating the refund under this subdivision, the
financial institution may assume that the contract was paid
before the date of prepayment according to the schedule of
payments under the contract and that all payments were paid on
their due dates. For contracts repayable in substantially equal
successive monthly installments, the financial institution may
calculate the refund as the portion of the finance charge
allocable on an actuarial basis to all wholly unexpired payment
periods following the date of prepayment, based on the annual
percentage rate on the contract as originally determined under
paragraph (d), and for the purpose of calculating the refund may
assume that all payments are made on the due date.
(d) The annual percentage rate must be calculated in
accordance with Code of Federal Regulations, title 12, part 226,
except that the following will not in any event be considered a
finance charge:
(1) a charge as a result of delinquency or default under
subdivision 6 if made for actual unanticipated late payment,
delinquency, default, or other similar occurrence, and a charge
made for an extension or deferment under subdivision 5, unless
the parties agree that these charges are finance charges;
(2) an additional charge under subdivision 6; or
(3) a discount, if a financial institution purchases a
contract evidencing a credit sale at less than the face amount
of the obligation or purchases or satisfies obligations of a
cardholder according to a credit card and the purchase or
satisfaction is made at less than the face amount of the
obligation.
Sec. 14. Minnesota Statutes 1996, section 47.59,
subdivision 5, is amended to read:
Subd. 5. [EXTENSIONS, DEFERMENTS, AND CONVERSION TO
INTEREST BEARING.] (a) The parties may agree in writing, either
in the loan contract or credit sale contract or in a subsequent
agreement, to a deferment of wholly unpaid installments. For
precomputed loans and credit sale contracts, the manner of
deferment charge shall be determined as provided for in this
section. A deferment postpones the scheduled due date of the
earliest unpaid installment and all subsequent installments as
originally scheduled, or as previously deferred, for a period
equal to the deferment period. The deferment period is that
period during which no installment is scheduled to be paid by
reason of the deferment. The deferment charge for a one-month
period may not exceed the applicable charge for the installment
period immediately following the due date of the last undeferred
payment. A proportionate charge may be made for deferment
periods of more or less than one month. A deferment charge is
earned pro rata during the deferment period and is fully earned
on the last day of the deferment period. If a loan or credit
sale is prepaid in full during a deferment period, the financial
institution shall make or credit to the borrower a refund of the
unearned deferment charge in addition to any other refund or
credit made for prepayment of the loan or credit sale in full.
For the purpose of this subdivision, "applicable charge"
means the amount of finance charge attributable to each monthly
installment period for the loan or credit sale contract. The
applicable charge is computed as if each installment period were
one month and any charge for extending the first installment
period beyond the one month, or reduction in charge for a first
installment less than one month, is ignored. The applicable
charge for any installment period is that which would have been
made for the period had the loan been made on an
interest-bearing basis at the single annual percentage rate
provided for in the contract based upon the assumption that all
payments were made according to schedule. For convenience in
computation, the financial institution may round the single
annual rate to the nearest one quarter of one percent.
(b) Subject to a refund of unearned finance or deferment
charge required by this section, a financial institution may
convert a loan or credit sale contract to an interest bearing
balance, if:
(1) the loan contract or credit sale contract so provides
and is subject to a change of the terms of the written agreement
between the parties; or
(2) the loan contract so provides and two or more
installments are delinquent one full month or more on any due
date.
Thereafter, and in lieu of any other default, extension, or
deferment charges, the single annual percentage rate must be
determined under the applicable charge provisions of this
subdivision the single annual percentage rate and other charges
must be determined as provided under this section for
interest-bearing transactions.
Sec. 15. Minnesota Statutes 1996, section 47.59,
subdivision 6, is amended to read:
Subd. 6. [ADDITIONAL CHARGES.] (a) For purposes of this
subdivision, "financial institution" includes a person described
in subdivision 4, paragraph (a). In addition to the finance
charges permitted by this section, a financial institution may
contract for and receive the following additional charges that
may be included in the principal amount of the loan or credit
sale unpaid balances:
(1) official fees and taxes;
(2) charges for insurance as described in paragraph (b);
(3) with respect to a loan or credit sale contract secured
by real estate, the following "closing costs," if they are bona
fide, reasonable in amount, and not for the purpose of
circumvention or evasion of this section:
(i) fees or premiums for title examination, abstract of
title, title insurance, surveys, or similar purposes;
(ii) fees for preparation of a deed, mortgage, settlement
statement, or other documents, if not paid to the financial
institution;
(iii) escrows for future payments of taxes, including
assessments for improvements, insurance, and water, sewer, and
land rents;
(iv) fees for notarizing deeds and other documents;
(v) appraisal and credit report fees; and
(vi) fees for determining whether any portion of the
property is located in a flood zone and fees for ongoing
monitoring of the property to determine changes, if any, in
flood zone status;
(4) a delinquency charge on a payment, including the
minimum payment due in connection with the open-end credit, not
paid in full on or before the tenth day after its due date in an
amount not to exceed five percent of the amount of the payment
or $5.20, whichever is greater;
(5) for a returned check or returned automatic payment
withdrawal request, an amount not in excess of the service
charge limitation in section 332.50; and
(6) charges for other benefits, including insurance,
conferred on the borrower that are of a type that is not for
credit.
(b) An additional charge may be made for insurance written
in connection with the loan or credit sale contract, which may
be included in the principal amount of the loan or credit sale
unpaid balances:
(1) with respect to insurance against loss of or damage to
property, or against liability arising out of the ownership or
use of property, if the financial institution furnishes a clear,
conspicuous, and specific statement in writing to the borrower
setting forth the cost of the insurance if obtained from or
through the financial institution and stating that the borrower
may choose the person through whom the insurance is to be
obtained;
(2) with respect to credit insurance or mortgage insurance
providing life, accident, health, or unemployment coverage, if
the insurance coverage is not required by the financial
institution, and this fact is clearly and conspicuously
disclosed in writing to the borrower, and the borrower gives
specific, dated, and separately signed affirmative written
indication of the borrower's desire to do so after written
disclosure to the borrower of the cost of the insurance; and
(3) with respect to the vendor's single interest insurance,
but only (i) to the extent that the insurer has no right of
subrogation against the borrower; and (ii) to the extent that
the insurance does not duplicate the coverage of other insurance
under which loss is payable to the financial institution as its
interest may appear, against loss of or damage to property for
which a separate charge is made to the borrower according to
clause (1); and (iii) if a clear, conspicuous, and specific
statement in writing is furnished by the financial institution
to the borrower setting forth the cost of the insurance if
obtained from or through the financial institution and stating
that the borrower may choose the person through whom the
insurance is to be obtained.
(c) In addition to the finance charges and other additional
charges permitted by this section, a financial institution may
contract for and receive the following additional charges in
connection with open-end credit, which may be included in the
principal amount of the loan or balance upon which the finance
charge is computed:
(1) annual charges, not to exceed $50 per annum, payable in
advance, for the privilege of opening and maintaining open-end
credit;
(2) charges for the use of an automated teller machine;
(3) charges for any monthly or other periodic payment
period in which the borrower has exceeded or, except for the
financial institution's dishonor would have exceeded, the
maximum approved credit limit, in an amount not in excess of the
service charge permitted in section 332.50;
(4) charges for obtaining a cash advance in an amount not
to exceed the service charge permitted in section 332.50; and
(5) charges for check and draft copies and for the
replacement of lost or stolen credit cards.
(d) In addition to the finance charges and other additional
charges permitted by this section, a financial institution may
contract for and receive a one-time loan administrative fee not
exceeding $25 in connection with closed-end credit, which may be
included in the principal balance upon which the finance charge
is computed. This paragraph applies only to closed-end credit
in an original principal amount of $4,320 or less. The
determination of an original principal amount must exclude the
administrative fee contracted for and received according to this
paragraph.
Sec. 16. Minnesota Statutes 1996, section 47.59,
subdivision 12, is amended to read:
Subd. 12. [CONSUMER PROTECTIONS.] (a) Financial
institutions shall comply with the requirements of the federal
Truth in Lending Act, United States Code, title 15, sections
1601 to 1693, in connection with a consumer loan or credit sale
for a consumer purpose where the federal Truth in Lending Act is
applicable. A financial institution shall give the following
disclosure to the borrower in writing at the time an open-end
credit account is established if the financial institution
imposes a loan fee, points, or similar charge that relates to
the opening of the account which is not included in the annual
percentage rate given pursuant to the federal Truth in Lending
Act: "YOU HAVE BEEN ASSESSED FINANCE CHARGES, OR POINTS, WHICH
ARE NOT INCLUDED IN THE ANNUAL PERCENTAGE RATE. THESE CHARGES
MAY BE REFUNDED, IN WHOLE OR IN PART, IF YOU DO NOT USE YOUR
LINE OF CREDIT OR IF YOU REPAY YOUR LINE OF CREDIT EARLY. THESE
CHARGES INCREASE THE COST OF YOUR CREDIT."
(b) Financial institutions shall comply with the following
consumer protection provisions in connection with a consumer
loan or credit sale for a consumer purpose: sections 325G.02 to
325G.05; 325G.06 to 325G.11; 325G.15 to 325G.22; and 325G.29 to
325G.36, and Code of Federal Regulations, title 12, part 535,
where those statutes or regulations are applicable.
(c) An assignment of a consumer's earnings by the consumer
to a financial institution as payment or as security for payment
of a debt arising out of a consumer loan or consumer credit sale
is unenforceable by the financial institution and revocable by
the consumer except where the assignment: (1) by its terms is
revocable at the will of the consumer; (2) is a payroll
deduction plan or preauthorized payment plan, beginning at the
time of the transaction, in which the consumer authorizes a
series of wage deductions as a method of making each payment; or
(3) applies only to wages or other earnings already earned at
the time of the assignment.
Sec. 17. Minnesota Statutes 1996, section 47.61,
subdivision 3, is amended to read:
Subd. 3. (a) "Electronic financial terminal" means an
electronic information processing device that is established to
do either or both of the following:
(1) capture the data necessary to initiate financial
transactions; or
(2) through its attendant support system, store or initiate
the transmission of the information necessary to consummate a
financial transaction.
(b) "Electronic financial terminal" does not include:
(1) a telephone;
(2) an electronic information processing device that is
used internally by a financial institution to conduct the
business activities of the institution; or
(3) an electronic point-of-sale terminal operated by a
retailer that is used to process payments for the purchase of
goods and services by consumers, and which also may be used to
obtain cash advances or cash back not to exceed $25 and only if
incidental to the retail sale transactions, through the use of
credit cards or debit cards, provided that the payment
transactions using debit cards are subject to the federal
Electronic Funds Transfer Act, United States Code, title 12,
sections 1693 et seq., and Regulation E of the Federal Reserve
Board, Code of Federal Regulations, title 12, subpart 205.2;
this clause does not exempt the retailer from liability for
negligent conduct or intentional misconduct of the operator
under section 47.69, subdivision 5;
(4) stored-value cards to only process transactions other
than those authorized by this section. Stored-value cards are
transaction cards having magnetic stripes or computer chips that
enable electronic value to be added or deducted as needed; or
(5) a personal computer possessed by and operated
exclusively by the account holder.
Sec. 18. Minnesota Statutes 1996, section 47.64, is
amended by adding a subdivision to read:
Subd. 7. [PROHIBITION.] An agreement to share electronic
financial terminals may not contain provisions distinguishing
between cards issued by United States financial institutions and
cards issued by Canadian financial institutions relative to a
fee that may be charged to a card holder by the owner or
operator of an electronic financial terminal, if the terminal is
located within 50 miles of the Canadian border, and the
enforcement of any such provision is prohibited.
Sec. 19. Minnesota Statutes 1996, section 47.75,
subdivision 1, is amended to read:
Subdivision 1. [RETIREMENT AND MEDICAL SAVINGS ACCOUNTS.]
A commercial bank, savings bank, savings association, credit
union, or industrial loan and thrift company may act as trustee
or custodian under the Federal Self-Employed Individual Tax
Retirement Act of 1962, as amended, of a medical savings account
under the Federal Health Insurance Portability and
Accountability Act of 1996, as amended, and also under the
Federal Employee Retirement Income Security Act of 1974, as
amended. The trustee or custodian may accept the trust funds if
the funds are invested only in savings accounts or time deposits
in the commercial bank, savings bank, savings association,
credit union, or industrial loan and thrift company. All funds
held in the fiduciary capacity may be commingled by the
financial institution in the conduct of its business, but
individual records shall be maintained by the fiduciary for each
participant and shall show in detail all transactions engaged
under authority of this subdivision.
Sec. 20. Minnesota Statutes 1996, section 48.01,
subdivision 2, is amended to read:
Subd. 2. [BANKING INSTITUTION.] The term "banking
institution" means any bank, trust company, bank and trust
company, or savings bank which is now or may hereafter be
organized under the laws of this state. For purposes of
sections 48.38, 48.84, and 501B.10 501B.151, subdivision 6 11,
and to the extent permitted by federal law, "banking
institution" includes any national banking association or
affiliate exercising trust powers in this state.
Sec. 21. Minnesota Statutes 1996, section 48.09, is
amended by adding a subdivision to read:
Subd. 3. [QUALIFIED SUBCHAPTER S SUBSIDIARY.] A bank that
has met the eligibility requirements under title I, subtitle C
of the Small Business Job Protection Act of 1996 or related
state of Minnesota tax law may apply to the commissioner for
approval of a plan and agreement for a distribution of earnings
to the shareholder(s) of the bank on a basis other than a
dividend under subdivisions 1 and 2. Approval of a plan of
distribution under this subdivision may be rescinded by the
commissioner upon 90-day prior notice to the bank. Failure to
comply with this notice or qualification of a distribution under
subdivisions 1 and 2 is considered a violation subject to the
commissioner's action under section 45.027 or 46.24.
Sec. 22. Minnesota Statutes 1996, section 48.15,
subdivision 2, is amended to read:
Subd. 2. The commissioner of commerce may authorize banks,
bank and trust companies, or trust companies organized under the
laws of this state to engage in any banking or trust activity in
which banks subject to the jurisdiction of the federal
government may hereafter be authorized to engage by federal
legislation, ruling, or regulation and those activities
authorized in section 48.61, subdivision 7, paragraph (a),
clause (3). The commissioner may not authorize state banks as
defined by section 48.01, to engage in any banking activity
prohibited by the laws of this state.
Sec. 23. Minnesota Statutes 1996, section 48.15,
subdivision 4, is amended to read:
Subd. 4. [RETIREMENT AND MEDICAL SAVINGS ACCOUNTS.] A
state bank may act as trustee or custodian of a self-employed
retirement plan under the Federal Self-Employed Individual Tax
Retirement Act of 1962, as amended, of a medical savings account
under the Federal Health Insurance Portability and
Accountability Act of 1996, as amended, and of an individual
retirement account under the Federal Employee Retirement Income
Security Act of 1974, as amended, if the bank's duties as
trustee or custodian are essentially ministerial or custodial in
nature and the funds are invested only (1) in the bank's own
savings or time deposits; or (2) in any other assets at the
direction of the customer if the bank does not exercise any
investment discretion, invest the funds in collective investment
funds administered by it, or provide any investment advice with
respect to those account assets.
Affiliated discount brokers may be utilized by the bank
acting as trustee or custodian for self-directed IRAs, if
specifically authorized and directed in appropriate documents.
The relationship between the affiliated broker and the bank must
be fully disclosed. Brokerage commissions to be charged to the
IRA by the affiliated broker should be accurately disclosed.
Provisions should be made for disclosure of any changes in
commission rates prior to their becoming effective. The
affiliated broker may not provide investment advice to the
customer. All funds held in the fiduciary capacity may be
commingled by the financial institution in the conduct of its
business, but individual records shall be maintained by the
fiduciary for each participant and shall show in detail all
transactions engaged under authority of this subdivision. The
authority granted by this section is in addition to, and not
limited by, section 47.75.
Sec. 24. Minnesota Statutes 1996, section 48.24,
subdivision 2, is amended to read:
Subd. 2. Loans not exceeding 25 percent of such capital
and surplus made upon first mortgage security on improved real
estate in the any state in which the bank or a branch
established under section 49.411 is located, or in an adjoining
any state within 20 miles of the place where the bank adjoining
a state in which the bank or a branch established under section
49.411 is located, shall not constitute a liability of the maker
of the notes secured by such mortgages within the meaning of the
foregoing provision limiting liability, but shall be an actual
liability of the maker. These mortgage loans shall be limited
to, and in no case exceed, 50 percent of the cash value of the
security covered by the mortgage, except mortgage loans
guaranteed as provided by the servicemen's readjustment act of
1944, as now or hereafter amended, or for which there is a
commitment to so guarantee or for which a conditional guarantee
has been issued, which loans shall in no case exceed 60 percent
of the cash value of the security covered by such mortgage. For
the purposes of this subdivision, real estate is improved when
substantial and permanent development or construction has
contributed substantially to its value, and agricultural land is
improved when farm crops are regularly raised on such land
without further substantial improvements.
Sec. 25. Minnesota Statutes 1996, section 48.24, is
amended by adding a subdivision to read:
Subd. 9. [RIGHT TO ACT TO AVOID LOSS.] This section does
not prohibit the bank from advancing funds that may be
reasonably necessary to avoid loss on a loan or investment made
subject to this section or an obligation created in good faith.
The rights under this subdivision are in addition to and not
inconsistent with section 48.21.
Sec. 26. [48.476] [REPRESENTATIVE TRUST OFFICE.]
Subdivision 1. [DEFINITIONS.] For purposes of this
section, the terms in this subdivision have the meanings given.
(a) "Representative trust office" means an office at which
a trust company or bank with trust powers has been authorized by
the commissioner to engage in a trust business other than acting
as a fiduciary.
(b) "Acting as a fiduciary" means to:
(1) accept or execute trusts, including to:
(i) act as trustee under a written agreement;
(ii) receive money or other property in its capacity as a
trustee for investment in real or personal property;
(iii) act as trustee and perform the fiduciary duties
committed or transferred to it by order of court of competent
jurisdiction;
(iv) act as trustee of the estate of a deceased person; or
(v) act as trustee for a minor or incapacitated person;
(2) administer in any other fiduciary capacity real or
personal property; or
(3) act according to order of court of competent
jurisdiction as executor or administrator of the estate of a
deceased person or as a guardian or conservator for a minor or
incapacitated person.
Subd. 2. [AUTHORITY FOR REPRESENTATIVE TRUST OFFICES;
PRIOR WRITTEN NOTICE.] (a) A state trust institution may
establish or acquire and maintain representative trust offices
anywhere in this state. A state trust institution desiring to
establish or acquire and maintain such an office shall file a
written notice with the commissioner setting forth the name of
the state trust institution and the location of the proposed
additional office and furnish a copy of the resolution adopted
by the board authorizing the additional office.
(b) The state trust institution may begin business at the
additional office on the 31st day after the date the
commissioner receives the notice, unless the commissioner
specifies an earlier or later date.
(c) The 30-day period of review may be extended by the
commissioner on a determination that the written notice raises
issues that require additional information or additional time
for analysis. If the period of review is extended, the state
trust institution may establish the additional office only on
prior written approval by the commissioner.
(d) The commissioner may deny approval of the additional
office if the commissioner finds that the state trust
institution lacks sufficient financial resources to undertake
the proposed expansion without adversely affecting its safety or
soundness or that the proposed office would be contrary to the
public interest.
Subd. 3. [AUTHORITY FOR OUT-OF-STATE TRUST OFFICES; PRIOR
WRITTEN NOTICE.] (a) A state trust institution may establish and
maintain representative trust office or acquire and maintain an
office in a state other than this state. A state trust
institution desiring to establish or acquire and maintain an
office in another state under this section shall file a notice
on a form prescribed by the commissioner, which shall set forth
the name of the state trust institution, the location of the
proposed office, and whether the laws of the jurisdiction where
the office will be located permit the office to be maintained by
the state trust institution; and furnish a copy of the
resolution adopted by the board authorizing the out-of-state
office.
(b) The state trust institution may begin business at the
additional office on the 31st day after the date the
commissioner receives the notice, unless the commissioner
specifies an earlier or later date.
(c) The 30-day period of review may be extended by the
commissioner on a determination that the written notice raises
issues that require additional information or additional time
for analysis. If the period of review is extended, the state
trust institution may establish the additional office only on
prior written approval by the commissioner.
(d) The commissioner may deny approval of the additional
office if the commissioner finds that the state trust
institution lacks sufficient financial resources to undertake
the proposed expansion without adversely affecting its safety or
soundness or that the proposed office would be contrary to the
public interest. In acting on the notice, the commissioner
shall consider the views of the appropriate bank supervisory
agencies.
Sec. 27. Minnesota Statutes 1996, section 48.512, is
amended by adding a subdivision to read:
Subd. 4a. [IDENTIFICATION NOT REQUIRED FOR DEBIT CARD
TRANSACTIONS.] The identification requirements of subdivision 4
do not apply to a transaction account that is accessible
exclusively by debit card. A debit card activates a transaction
account at a financial intermediary by means of an electronic
information processing device and contemporaneously completes
the debt to the account only on the condition that funds are
available and confirmed.
Sec. 28. Minnesota Statutes 1996, section 48.61,
subdivision 7, is amended to read:
Subd. 7. [SUBSIDIARIES.] (a) A state bank or trust company
may organize, acquire, or invest in a subsidiary located in this
state for the purposes of engaging in one or more of the
following activities, subject to the prior written approval of
the commissioner:
(1) any activity, not including receiving deposits or
paying checks, that a state bank is authorized to engage in
under state law or rule or under federal law or regulation
unless the activity is prohibited by the laws of this state;
(2) any activity that a bank clerical service corporation
is authorized to engage in under section 48.89; and
(3) any other activity authorized for a national bank, a
bank holding company, or a subsidiary of a national bank or bank
holding company under federal law or regulation of general
applicability, and approved by the commissioner by rule.
(b) A bank or trust company subsidiary may engage in an
activity under this section only upon application together with
a filing fee of $250 and with the prior written approval of the
commissioner. In approving or denying a proposed activity, the
commissioner shall consider the financial and management
strength of the bank or trust company, the current written
operating plan and policies of the proposed subsidiary
corporation, the bank or trust company's community reinvestment
record, and whether the proposed activity should be conducted
through a subsidiary of the bank or trust company.
(c) The aggregate amount of funds invested in either an
equity or loan capacity in all of the subsidiaries of the bank
or trust company authorized under this subdivision shall not
exceed 25 percent of the capital stock and paid in surplus of
the bank or trust company.
(d) A subsidiary organized or acquired under this
subdivision is subject to the examination and enforcement
authority of the commissioner under chapters 45 and 46 to the
same extent as a state bank or trust company.
(e) For the purposes of this section, "subsidiary" means a
corporation of which more than 50 percent of the voting shares
are owned or controlled by the bank or trust company.
Sec. 29. Minnesota Statutes 1996, section 48.61, is
amended by adding a subdivision to read:
Subd. 10. [SUBSIDIARIES ORGANIZED FOR PURPOSES OF
CORPORATE REORGANIZATION.] A subsidiary may be organized solely
for purposes of liquidating assets in a reorganization subject
to the following conditions:
(1) the subsidiary must be a bank holding company whose
assets and liabilities and subsidiary bank control have been
removed; and
(2) the operations of the subsidiary must be limited to the
time period reasonably related to the completion of the
reorganization.
Sec. 30. Minnesota Statutes 1996, section 49.215,
subdivision 3, is amended to read:
Subd. 3. [CERTIFICATE OF LIQUIDATION.] Upon compliance
with the foregoing and upon filing with the commissioner an
affidavit of the president and cashier or vice president
conducting the duties of cashier of said financial institution
that the provisions of subdivision 4 have been complied with and
that all depositors and other creditors have been paid in full,
or, if any dividends or any moneys set apart for the payment of
claims remain unpaid and the places of residence of the
depositors or other creditors are unknown to the persons making
the affidavit, that sufficient funds have been turned over to
the commissioner for payment into the state treasury to pay said
depositors and other creditors, in the manner provided by
subdivision 5, the commissioner shall issue a certificate of
liquidation, and, upon the filing for record of said certificate
of liquidation in the office of the secretary of state and in
the office of the county recorder of the county of the principal
place of business of such financial institution immediately
prior to its voluntary liquidation, the liquidation of said
financial institution shall be complete, and its corporate
existence shall thereupon terminate.
Sec. 31. Minnesota Statutes 1996, section 49.33, is
amended to read:
49.33 [CONSOLIDATION AND MERGER, WHEN AUTHORIZED.]
Subject to the provisions of sections 49.33 to 49.41, with
the written consent of the commissioner of commerce, any bank of
discount and deposit, savings bank, or trust company may effect
a transfer of its assets and liabilities to another bank,
savings bank, or trust company for the purpose of consolidating
or merging, but the same shall be without prejudice to the
creditors of either.
Sec. 32. Minnesota Statutes 1996, section 49.36,
subdivision 4, is amended to read:
Subd. 4. [NOTICE OF PROPOSED ACQUISITION.] The successor
bank shall give reasonable notice of the acquisition to each of
the depositors and creditors of an acquired bank or savings
association within 30 days after the order is activated at a
time and in a form determined in the discretion of the
commissioner. This notice may be coordinated to include federal
regulator concerns for impact on deposit insurance of accounts
and information designed to alert depositors and creditors of
any changes in procedures or practices. If detached facilities
are to be closed as a result of transactions authorized by this
section, adequate notice shall be provided by the bank prior to
closing, unless the commissioner has acted to prevent the
probable failure of the bank or savings association, and then as
soon as practicable after the acquisition date.
Sec. 33. Minnesota Statutes 1996, section 49.42, is
amended to read:
49.42 [STATE BANK.]
As used in sections 49.42 to 49.46:
"State bank" means any bank, savings bank, trust company,
or bank and trust company which is now or may hereafter be
organized under the laws of this state.
"National banking association" means a bank, savings bank,
bank and trust company, or bank exclusively exercising trust
powers organized under the laws of the United States.
Sec. 34. Minnesota Statutes 1996, section 50.245, is
amended to read:
50.245 [BRANCHES; ACQUISITIONS.]
Subdivision 1. [AUTHORITY FOR BRANCH OFFICES.] A savings
bank may establish any number of detached facilities as may be
approved by the commissioner of commerce pursuant to sections
47.51 to 47.57. The savings bank shall not change the location
of a detached facility without prior written approval of the
commissioner of commerce. A savings bank may establish a loan
production office, without restriction as to geographical
location, upon written notice to the commissioner of commerce.
Subd. 2. [AUTHORITY FOR BRANCH OFFICES IN OTHER STATES.]
The authorization contained in subdivision 1 is in addition to
the authority granted savings banks in section 47.52. A savings
bank chartered in this state, whether or not the subsidiary of a
savings bank holding company, may, by acquisition, merger,
purchase, and assumption of some or all assets and liabilities,
consolidation, or de novo formation, establish or operate
detached facilities in another state on the same terms and
conditions and subject to the same limitations and restrictions
as are applicable to the establishment of branches by national
banks located in Minnesota, except that approval of the
comptroller of the currency shall not be required for such
detached facilities has the same authority as a bank to conduct
interstate mergers affecting interstate branching under section
49.411. The merger may be between banks and with other banks or
savings banks.
Subd. 3. [RECIPROCATING STATE INTERSTATE ACQUISITIONS.] A
savings bank chartered in this state and a savings bank holding
company with its principal offices in this state may acquire
control of a financial institution chartered in a reciprocating
state or, subject to applicable federal law, any other state or
a financial institution holding company with principal offices
in a reciprocating state or, subject to applicable federal law,
any other state. A savings bank chartered in a reciprocating
state or, subject to applicable federal law, any other state and
a savings bank holding company with principal offices in a
reciprocating state or, subject to applicable federal law, any
other state may acquire control of a savings bank chartered in
this state or a savings bank holding company with principal
offices in this state.
Subd. 4. [PROCEDURAL REQUIREMENTS.] Procedural
requirements equivalent to those contained in sections 48.90 to
48.995 48.99 apply to reciprocal interstate branching and
acquisitions by savings banks and savings bank holding companies.
Subd. 5. [DEFINITIONS.] For the purpose of this section,
the terms defined in this subdivision have the meanings given
them.
(a) "Financial institution" means a bank, savings bank,
savings association, or trust company, or credit union, whether
chartered under the laws of this state, another state or
territory, or under the laws of the United States.
(b) "Loan production office" means a place of business at
which a savings bank provides lending if the loans are approved
at the main office or detached facility of the savings bank, but
at which a savings bank may not accept deposits except through a
remote service unit.
(c) "Reciprocating state" means a state that authorizes the
acquisition of control of financial institutions chartered in
that state and financial institution holding companies with
principal offices in that state by a savings bank chartered in
this state or savings bank holding company with principal
offices in this state under conditions substantially similar to
those imposed by the laws of Minnesota, as determined by the
commissioner of commerce.
(d) "Remote service unit" means an electronic financial
terminal as defined in section 47.61.
Subd. 6. [COMMISSIONER'S AUTHORITY.] The authority of the
commissioner of commerce to approve a transaction under this
section is in addition to that provided for in section 49.48.
Sec. 35. Minnesota Statutes 1996, section 51A.38,
subdivision 1, is amended to read:
Subdivision 1. [GENERALLY.] Real estate loans and other
loans secured by a mortgage on real estate that are eligible for
investment by an association under sections 51A.01 to 51A.57 may
be written according to this section and section
51A.385 51A.386, or upon any other plan approved by the
commissioner.
Sec. 36. Minnesota Statutes 1996, section 52.04,
subdivision 2a, is amended to read:
Subd. 2a. [CREDIT SALES OR SERVICE CONTRACTS.] A person
may enter into a credit sale or service contract for sale to a
state or federal credit union doing business in this state, and
a credit union may purchase and enforce the contract under the
terms and conditions set forth in section 47.59, subdivisions
4 and 6 to 14.
Sec. 37. Minnesota Statutes 1996, section 52.04, is
amended by adding a subdivision to read:
Subd. 3. [COMPARABILITY WITH FEDERAL CREDIT UNIONS.] The
commissioner of commerce may authorize credit union activity in
which credit unions subject to the jurisdiction of the federal
government may be authorized to engage by federal legislation,
ruling, or regulation. The commissioner may not authorize state
credit unions subject to this chapter to engage in credit union
activity prohibited by the laws of this state.
Sec. 38. Minnesota Statutes 1996, section 52.062,
subdivision 1, is amended to read:
Subdivision 1. [REASONS FOR COMMISSIONER'S ACTION.]
Whenever the commissioner of commerce shall find that a credit
union is engaged in unsafe or unsound practices in conducting
its business or that the shares of the members are impaired or
are in immediate danger of becoming impaired, or that such
credit union has knowingly or negligently permitted any of its
officers, directors, committee members, or employees to violate
any material provision of any law, bylaw, or rule to which the
credit union is subject, the commissioner of commerce may
proceed in the manner provided by either subdivision 2 or, 3, or
4.
Sec. 39. Minnesota Statutes 1996, section 52.062, is
amended by adding a subdivision to read:
Subd. 4. [CONSENT CEASE AND DESIST ORDER.] In lieu of
suspension of the operation of the credit union, the
commissioner of commerce and the board of directors of the
credit union may agree to execute a consent cease and desist
order in which the parties agree to waive the right to a hearing
and agree that the credit union shall cease and desist from
unsafe or unsound practices, or violations. The order must
specify whether credit union operation may continue, and if
operation may continue, the conditions under which operation may
continue.
Sec. 40. Minnesota Statutes 1996, section 52.063, is
amended to read:
52.063 [PROCEEDINGS FOLLOWING SUSPENSION OR, CONTINUATION
OF SUSPENSION, OR CONSENT CEASE AND DESIST ORDER; APPOINTMENT OF
NATIONAL CREDIT UNION ADMINISTRATION BOARD AS RECEIVER.]
Subdivision 1. [PROCEEDINGS FOLLOWING SUSPENSION OR
CONTINUATION OF SUSPENSION.] Upon receipt of the suspension
notice or the notice of the continuation of suspension under
section 52.062, subdivision 2 or 3, the credit union shall
immediately cease or continue cessation of all operations except
those operations specifically authorized by the commissioner of
commerce. If the notice is given pursuant to determination by
the commissioner of commerce after a hearing, the board of
directors shall have 60 days from the receipt of said notice in
which to file with the commissioner of commerce a proposed plan
of corrective actions or to request that a receiver be appointed
for the credit union. The commissioner of commerce shall have
30 days from the receipt of the proposed plan of corrective
actions to determine if the proposed corrective actions are
sufficient to correct the deficiencies which formed the basis
for the suspension. If the commissioner of commerce determines
that the proposed corrective actions are sufficient, the
suspension shall be lifted and the credit union returned to
normal operations under its board of directors. If the
commissioner of commerce believes the proposed corrective
actions insufficient, or if the board has failed to answer the
suspension notice, or has requested that a receiver be
appointed, then the commissioner of commerce shall apply to the
district court for appointment of a receiver. The credit union
shall have the right, within six months of the receipt of any
notice of suspension or continuation of suspension pursuant to a
determination by the commissioner of commerce after hearing, to
appeal to the district court for a ruling as to the validity of
such notice.
Subd. 2. [PROCEEDINGS FOLLOWING CONSENT CEASE AND DESIST
ORDER.] If the commissioner of commerce and the board of
directors of the credit union execute a consent cease and desist
order in lieu of a suspension under section 52.062, subdivision
4, the board of directors of the credit union may request that
the commissioner of commerce seek court appointment of a
receiver for the credit union. The consent cease and desist
order must state that the credit union has requested that the
commissioner seek appointment of a receiver.
Subd. 3. [APPOINTMENT OF NATIONAL CREDIT UNION
ADMINISTRATION BOARD AS RECEIVER.] Upon a request by the
commissioner of commerce, the court may appoint the National
Credit Union Administration Board, created by section 3 of the
Federal Credit Union Act, as amended, as receiver of a credit
union, without bond, when the deposits of the credit union are
to any extent insured by the National Credit Union
Administration Board, and the credit union has had its
operations suspended or has executed a consent cease and desist
order with the commissioner in lieu of a suspension under
section 52.062. Notwithstanding any other provisions of law,
the commissioner of commerce may, in the event of the suspension
or consent cease and desist order, tender to the National Credit
Union Administration Board the proposed appointment as receiver
of the credit union. If the National Credit Union
Administration Board accepts the proposed appointment and the
court appoints the National Credit Union Administration Board as
receiver upon a request by the commissioner, the National Credit
Union Administration Board shall have and possess all the powers
and privileges provided by the laws of this state and section
207 of the Federal Credit Union Act, as amended, with respect to
a receiver of a credit union, the board of directors of the
credit union, and its members.
Sec. 41. Minnesota Statutes 1996, section 52.064, is
amended by adding a subdivision to read:
Subd. 3. [WAIVER WHEN CREDIT UNION REQUESTS APPOINTMENT OF
NATIONAL CREDIT UNION ADMINISTRATION BOARD AS RECEIVER.] If the
board of directors of the credit union has made a request to the
commissioner of commerce to seek court appointment of the
National Credit Union Administration Board as its receiver, and
the commissioner elects to seek this appointment, then the board
of directors of the credit union may waive the right to apply to
the court for permission to file, and the right to file, a plan
of reorganization, merger, or consolidation for the credit union
within 90 days of the appointment of the receiver under
subdivision 1. The board of directors of the credit union may
waive this right on behalf of itself, and on behalf of the
members of the credit union, when the board of directors of the
credit union determines that such action is in the best
interests of the credit union and its members, so that the
deposit insurer may proceed expeditiously to wind up the affairs
of the credit union upon appointment as receiver.
Sec. 42. Minnesota Statutes 1996, section 52.13, is
amended to read:
52.13 [DEPOSITS IN NAME OF MINOR.]
Any deposit made in the name of a minor, or shares issued
in a minor's name, shall be held for the exclusive right and
benefit of the minor, free from the control or lien of all other
persons except creditors, and together with the dividends or
interest thereon shall be paid to the minor; and the minor's
receipt, check, or acquittance in any form shall be a sufficient
release and discharge of the depository for the deposits or
shares, or any part thereof, until a conservator or guardian
appointed for the minor shall have delivered a certificate of
appointment to the depository. Deposits may be accepted
pursuant to the authority set forth in chapter 527, provided
that either the custodian or the minor is a member of the credit
union accepting the deposit.
Sec. 43. Minnesota Statutes 1996, section 52.201, is
amended to read:
52.201 [REORGANIZING FEDERAL CREDIT UNION INTO STATE CREDIT
UNION.]
When any federal credit union authorized to convert to a
state charter has taken the necessary steps under the federal
law for that purpose, seven or more members, upon authority of
two-thirds of the members present and entitled to vote and who
shall have voted for such conversion at a regular or special
meeting upon 14 days mailed written notice to each member at the
member's last known address clearly stating that such conversion
is to be acted upon, and upon approval of the commissioner of
commerce, may execute a certificate of incorporation under the
provisions of the state credit union act, which, in addition to
the other requirements of law, shall state the authority derived
from the shareholders of such federal credit union; and upon
recording such certificate as required by law, it shall become a
legal state credit union and the members of the federal credit
union shall without further action be members of the state
credit union. This includes members of the federal credit union
on the basis of acceptance of small employer groups provided the
commissioner may require contemporaneous filing of applications
under section 52.05, subdivision 2. Thereupon the assets of the
federal credit union, subject to its liabilities not liquidated
under the federal law before such incorporation, shall vest in
and become the property of such state credit union and the
members upon request shall be entitled to a new passbook showing
existing share and loan balances. The commissioner of commerce
shall approve or disapprove of the conversion within 60 days of
the date the proposal is presented.
Sec. 44. Minnesota Statutes 1996, section 53.04, is
amended by adding a subdivision to read:
Subd. 5b. [NEGOTIABLE ORDER OF WITHDRAWAL
ACCOUNTS.] Notwithstanding section 53.05, clause (1), and
consistent with United States Code, title 12, section 1832,
issue negotiable order of withdrawal accounts, which may not be
referred to as checking accounts and may include the following
transactions:
(1) automatic (preauthorized) transfers for the purpose of
paying loans at the same institution;
(2) transfers or withdrawals made by mail, messenger,
automated teller machine, or in person as withdrawals or
transfers to another account of the depositor at the same
institution;
(3) withdrawals initiated by telephone and consummated by
an official check mailed to the depository;
(4) automated clearinghouse debits;
(5) transfers from a customer's account under a
preauthorized agreement to cover overdrafts on another
transaction account;
(6) drafts payable to third parties; and
(7) debit card transactions.
Agreements establishing negotiable order of withdrawal
accounts must include a prominent disclosure of the following:
"We reserve the right to at any time require not less than
seven days' notice in writing before each withdrawal from this
account."
A negotiable order of withdrawal account may be with or
without interest and is considered a transaction account for
purposes of section 48.512.
Before exercising this power, the company must submit a
plan to the commissioner detailing implementation of the power.
Sec. 45. Minnesota Statutes 1996, section 53.05, is
amended to read:
53.05 [POWERS, LIMITATION.]
No industrial loan and thrift company may do any of the
following:
(1) carry demand banking accounts; use the word "savings"
unless the institution's investment certificates, savings
accounts, and savings deposits are insured by the Federal
Deposit Insurance Corporation and then only if the word is not
followed by the words "and loan" in its corporate name; use the
word "bank" or "banking" in its corporate name; operate as a
savings bank;
(2) have outstanding at any one time certificates of
indebtedness, savings accounts, and savings deposits 30 times
the sum of capital stock and surplus of the company;
(3) accept trusts, except as provided in section 47.75,
subdivision 1, or act as guardian, administrator, or judicial
trustee in any form;
(4) deposit any of its funds in any banking corporation,
unless that corporation has been designated by vote of a
majority of directors or of the executive committee present at a
meeting duly called, at which a quorum was in attendance;
(5) change any allocation of capital made pursuant to
section 53.03 or reduce or withdraw in any way any portion of
the capital stock and surplus without prior written approval of
the commissioner of commerce;
(6) take any instrument in which blanks are left to be
filled in after execution;
(7) lend money in excess of 20 percent of the total of its
capital stock and surplus at all its authorized locations to a
person primarily liable. Companies not issuing investment
certificates of indebtedness under section 53.04 need not comply
with the requirement if the amount of money lent does not exceed
$100,000 of principal as defined by section 47.59, subdivision
1, paragraph (p).
However, industrial loan and thrift companies with deposit
liabilities must comply with the provisions of section 48.24; or
(8) issue cashier's checks pursuant to section 48.151,
unless and at all times the aggregate liability to all creditors
on these instruments is protected by a special fund in cash or
due from banks to be used solely for payment of the cashier's
checks.
Sec. 46. Minnesota Statutes 1996, section 53.09,
subdivision 2a, is amended to read:
Subd. 2a. [COMPLIANCE EXAMINATIONS.] For the purpose of
discovering violations of this chapter or securing information
lawfully required by the commissioner under this chapter, the
commissioner may, at any time, either personally or by a person
or persons duly designated, investigate the loans and business,
and examine the books, accounts, records, and files used in the
business, of every licensee and of every person engaged in the
business whether or not the person acts or claims to act as
principal or agent, or under the authority of this chapter. For
the purposes of this subdivision, the commissioner and duly
designated representatives have free access to the offices and
places of business, books, accounts, papers, records, files,
safes, and vaults of all these persons. The commissioner and
all persons duly designated may require the attendance of and
examine, under oath, all persons whose testimony the
commissioner may require relative to the loans or business or to
the subject matter of an examination, investigation, or
hearing. Upon written agreement with the company, the
commissioner may conduct examinations applying the procedures
for purposes of subdivision 1, and section 46.04, subdivision 1,
to facilitate the qualifications of the company to participate
in the United States Small Business Administration loan
guarantee or similar programs.
Each licensee shall pay to the commissioner the amount
required under section 46.131, and the commissioner may maintain
an action for the recovery of the costs in a court of competent
jurisdiction.
Sec. 47. Minnesota Statutes 1996, section 55.06,
subdivision 1, is amended to read:
Subdivision 1. [PROHIBITION.] No person except a bank, a
savings bank, a credit union, a savings association, industrial
loan and thrift company issuing investment certificates of
indebtedness, or a trust company may let out or rent as lessor,
for hire, safe deposit boxes or take or receive valuable
personal property for safekeeping and storage, as bailee, for
hire, without procuring a license and giving a bond, as required
by this chapter, except as otherwise authorized by law so to do.
Sec. 48. Minnesota Statutes 1996, section 56.07, is
amended to read:
56.07 [CONTROL OVER LOCATION.]
Subdivision 1. [GENERAL.] Not more than one place of
business shall be maintained under the same license, but the
commissioner may issue more than one license to the same
licensee upon compliance with all the provisions of this chapter
governing an original issuance of a license, for each such new
license. To the extent that previously filed applicable
information remains substantially unchanged, the applicant need
not refile this information, unless requested.
When a licensee shall wish to change a place of business,
the licensee shall give written notice thereof 30 days in
advance to the commissioner, who shall within 30 days of receipt
of such notice, issue an amended license approving the change.
No change in the place of business of a licensee to a location
outside of its current trade area or more than 25 miles from its
present location, whichever distance is greater, shall be
permitted under the same license unless all of the requirements
of section 56.04 have been met.
A licensed place of business shall be open during regular
business hours each weekday, except for legal holidays and for
any weekday the commissioner grants approval to the licensee to
remain closed. A licensed place of business may be open on
Saturday, but shall be closed on Sunday. A licensed location
must be open for business and examination purposes on a schedule
provided to and approved by the commissioner. This schedule of
regular business must be conspicuously posted at the licensed
location.
Subd. 2. [INTERACTIVE KIOSK LOCATIONS.] Licensed locations
providing limited services on an interactive telephone-customer
service communications terminal are required to comply with
paragraphs (a) to (c).
(a) The licensee must maintain business books, accounts,
and records on a suitable alternative system of maintenance
approved by the commissioner.
(b) The license required to be posted under section 56.05
may be displayed on the customer service communications terminal
screen for a period of no less than 15 seconds.
(c) The full and accurate schedule of charges required by
section 56.14, clause (5), may be displayed on the customer
service communications terminal screen for no less than 20
seconds.
Sec. 49. Minnesota Statutes 1996, section 56.10,
subdivision 1, is amended to read:
Subdivision 1. For the purpose of discovering violations
of this chapter or securing information lawfully required by the
commissioner hereunder, the commissioner may, at any time,
either personally or by a person or persons duly designated,
investigate the loans and business and examine the books,
accounts, records, and files used therein, of every licensee and
of every person who shall be engaged in the business described
in section 56.01, whether the person shall act or claim to act
as principal or agent, or under or without the authority of this
chapter. For that purpose the commissioner and a duly
designated representative shall have free access to the offices
and places of business, books, accounts, papers, records, files,
safes, and vaults of all such persons. The commissioner and all
persons duly designated shall have authority to require the
attendance of and to examine, under oath, all persons whomsoever
whose testimony the commissioner may require relative to the
loan or the business or to the subject matter of any
examination, investigation, or hearing. Upon written agreement
with the licensee, the commissioner may conduct examinations
applying the procedures for purposes of this subdivision and
section 46.04, subdivision 1, to facilitate the qualifications
of the licensee to participate in the United States Small
Business Administration loan guarantee or similar programs.
Each licensee shall pay to the commissioner such amount as
may be required under section 46.131, and the commissioner may
maintain an action for the recovery of such costs in any court
of competent jurisdiction.
Sec. 50. Minnesota Statutes 1996, section 56.131,
subdivision 1, is amended to read:
Subdivision 1. [INTEREST RATES AND CHARGES.] (a) On any
loan in a principal amount not exceeding $56,000 $100,000 or 15
percent of a Minnesota corporate licensee's capital stock and
surplus as defined in section 53.015, if greater, a licensee may
contract for and receive interest, finance charges, and other
charges as provided in section 47.59.
(b) Loans may be interest-bearing or precomputed.
(c) Notwithstanding section 47.59 to the contrary, to
compute time on interest-bearing and precomputed loans,
including, but not limited to the calculation of interest, a day
is considered 1/30 of a month when calculation is made for a
fraction of a calendar month. A year is 12 calendar months. A
calendar month is that period from a given date in one month to
the same numbered date in the following month, and if there is
no same numbered date, to the last day of the following month.
When a period of time includes a whole month and a fraction of a
month, the fraction of a month is considered to follow the whole
month.
In the alternative, for interest-bearing loans, a licensee
may charge interest at the rate of 1/365 of the agreed annual
rate for each actual day elapsed.
(d) With respect to interest-bearing loans and
notwithstanding section 47.59:
(1) Interest must be computed on unpaid principal balances
outstanding from time to time, for the time outstanding. Each
payment must be applied first to the accumulated interest and
the remainder of the payment applied to the unpaid principal
balance; provided however, that if the amount of the payment is
insufficient to pay the accumulated interest, the unpaid
interest continues to accumulate to be paid from the proceeds of
subsequent payments and is not added to the principal balance.
(2) Interest must not be payable in advance or compounded.
However, if part or all of the consideration for a new loan
contract is the unpaid principal balance of a prior loan, then
the principal amount payable under the new loan contract may
include any unpaid interest which has accrued. The unpaid
principal balance of a precomputed loan is the balance due after
refund or credit of unearned interest as provided in paragraph
(e), clause (3). The resulting loan contract is deemed a new
and separate loan transaction for all purposes.
(e) With respect to precomputed loans and notwithstanding
section 47.59 to the contrary:
(1) Loans must be repayable in substantially equal and
consecutive monthly installments of principal and interest
combined, except that the first installment period may be more
or less than one month by not more than 15 days, and the first
installment payment amount may be larger than the remaining
payments by the amount of interest charged for the extra days
and must be reduced by the amount of interest for the number of
days less than one month to the first installment payment; and
monthly installment payment dates may be omitted to accommodate
borrowers with seasonal income.
(2) Payments may be applied to the combined total of
principal and precomputed interest until the loan is fully
paid. Payments must be applied in the order in which they
become due.
(3) If the maturity of the loan is accelerated for any
reason and judgment is entered, the licensee shall credit the
borrower with the same refund as if prepayment in full had been
made on the date the judgment is entered.
(4) If two or more installments are delinquent one full
month or more on any due date, and if the contract so provides,
the licensee may reduce the unpaid balance by the refund credit
which would be required for prepayment in full on the due date
of the most recent maturing installment in default. Thereafter,
and in lieu of any other default or deferment charges, the
single annual percentage rate permitted by this subdivision may
be charged on the unpaid balance until fully paid.
(5) Following the final installment as originally scheduled
or deferred, the licensee, for any loan contract which has not
previously been converted to interest-bearing under
clause (4) (7), may charge interest on any balance remaining
unpaid, including unpaid default or deferment charges, at the
single annual percentage rate permitted by this subdivision
until fully paid.
(6) (5) With respect to a loan secured by an interest in
real estate, and having a maturity of more than 60 months, the
original schedule of installment payments must fully amortize
the principal and interest on the loan. The original schedule
of installment payments for any other loan secured by an
interest in real estate must provide for payment amounts that
are sufficient to pay all interest scheduled to be due on the
loan.
(6) A delinquency charge as provided for in section 47.59,
subdivision 6, paragraph (a), clause (4).
(7) Grant extensions, deferments, or conversions to
interest-bearing as provided in section 47.59, subdivision 5.
Sec. 51. Minnesota Statutes 1996, section 56.131,
subdivision 4, is amended to read:
Subd. 4. [ADJUSTMENT OF DOLLAR AMOUNTS.] The dollar
amounts in this section subdivisions 2 and 6, sections 53.04,
subdivision 3a, paragraph (c), 56.01, 56.12, and 56.125 shall
change periodically, as provided in section 47.59, subdivision 3.
Sec. 52. Minnesota Statutes 1996, section 59A.08,
subdivision 3, is amended to read:
Subd. 3. The information required by subdivision 1 shall
only be required in the initial insurance premium finance
agreement entered into if said agreement is open end. An
insurance premium finance agreement is open end if it provides
that additional or subsequent insurance premiums may be financed
and added to the initial insurance premium finance agreement
from time to time.
Additional or subsequent premiums may be added to an open
end insurance premium finance agreement from time to time,
provided that:
(a) The additional or subsequent insurance premium to be
added results from additional premiums required under policies
presently being financed under the open end insurance premium
finance agreement or from a renewal of a policy or from other
policies owned or purchased by the insured.
(b) The insurance premium finance company receives written
notice or advice from an insurer authorized to do business in
this state or from an insurance agent licensed in this state
acknowledging that the premium on an existing financed policy
has been increased or that a policy has been renewed or that
additional policies have or will be issued to the insured. The
notice or advice shall contain the amount of the additional
premium, the down payment collected by the insurer or agent, if
any, and the amount of premium to be added to the open end
insurance premium finance agreement.
(c) If the additional premiums to be added to the open end
insurance premium finance agreement result from additional
premiums required on policies presently financed under the
agreement which are to be financed beyond the scheduled maturity
of the original financing, the renewal of a policy or from an
additional policy owned or purchased by the insured, the
insurance premium finance company shall mail a notice to the
insured at the address shown in the policy. Said notice shall
contain:
(1) The information required by subdivision 1,
notwithstanding that the notice is not signed by, nor on behalf
of the insured;
(2) A conspicuous statement to the insured stating that the
insured may tender the premiums in full or disaffirm the
financing of the premium on the renewal or additional policies
by mailing to the insurance premium finance company notice of
intention to do so within ten days after the insurance premium
finance company mails to the insured the notice required by this
subdivision;
(3) A conspicuous statement to the insured that the
insurance premium finance company may, in event of default in
payment of the additional premium, or any installment thereof,
cause the insured's insurance contract or contracts to be
canceled as provided in section 59A.11.
(d) At the time the notice of additional premium to be
added to the open end insurance premium finance agreement is
mailed to the insured as provided in clause (c), an employee of
the insurance premium finance company shall prepare and sign a
certificate or affidavit of mailing setting forth the following:
(1) The name of the employee who mailed the notice of the
additional premium to be financed.
(2) That the employee mailing the notice is over 18 years
of age.
(3) The date and place of the deposit of the notice in the
mail.
(4) The name and address of the person to whom the notice
was mailed as shown on the envelope containing the notice.
(5) That the envelope containing the notice was sealed and
deposited in the mail with the proper postage thereon.
A certificate or affidavit of mailing, prepared and signed
as prescribed in this subdivision shall raise rebuttable
presumption that the notice was mailed to the insured at the
address shown in the certificate or affidavit of mailing.
(e) The insurance premium finance company may make a
finance charge in accordance with section 59A.09 for additional
premiums financed and added to an open end insurance premium
finance agreement; however, only one flat rate service fee may
be made or charged for each insurance premium finance agreement
entered into and no additional flat service fee may be made or
charged for adding additional or subsequent premiums to an open
end insurance premium finance agreement for which a flat service
fee was previously made or charged. or from a renewal of a
policy or from other policies owned or purchased by the insured,
a written notice must be mailed, faxed, or delivered to the
insured outlining any changes to the information required by
subdivision 1 along with a conspicuous statement to the insured
that the insured may tender the premiums in full or affirm the
proposed changes by tendering either an additional down payment
or tendering the proposed revised installment amount, or
disaffirm the financing of the additional premium by continuing
the original payment amount as agreed to in the initial
agreement.
If the proposed revisions in paragraph (c) are affirmed by
the insured, the finance company may make an additional finance
charge according to section 59A.09 for the additional premium
financed and added to the open-end agreement; however, no
additional flat service fee may be made or charged for adding
additional or subsequent premiums to an open-end insurance
premium finance agreement for which a flat service fee was
previously made or charged.
Sec. 53. Minnesota Statutes 1996, section 59A.08, is
amended by adding a subdivision to read:
Subd. 5. [COMPETITIVE EQUALITY.] No insurance agent,
insurance broker, or insurer may require a person to use a
particular insurance premium finance company or other
installment payment plan for which a finance charge or other fee
in connection with an installment payment has been or will be
imposed or refuse to accept premium payment from a company
licensed under sections 59A.01 to 59A.15.
Sec. 54. Minnesota Statutes 1996, section 59A.11,
subdivision 2, is amended to read:
Subd. 2. Not less than ten days' written notice shall be
mailed to the insured setting forth the intent of the insurance
premium finance company to cancel the insurance contract unless
the default is cured prior to the date stated in the notice.
The insurance agent or insurance broker indicated on the premium
finance agreement shall also be mailed given ten days' notice of
this action in a manner agreed upon between the insurance
premium finance company and insurance agent or insurance broker.
Sec. 55. Minnesota Statutes 1996, section 59A.11,
subdivision 3, is amended to read:
Subd. 3. (a) Pursuant to the power of attorney or other
authority referred to above, the insurance premium finance
company may cancel on behalf of the insured by mailing to the
insurer written notice stating when thereafter the cancellation
shall be effective, and the insurance contract shall be canceled
as if such notice of cancellation had been submitted by the
insured personally, but without requiring the return of the
insurance contract. In the event that the insurer or its agent
does not provide the insurance premium finance company with a
specific mailing address for the purposes of receipt of the
above notice, then mailing by the insurance premium finance
company to the insurer at the address which is on file and of
record with the commissioner of commerce pursuant to the
provisions of chapters 60A and 72A shall be considered
sufficient notice under this section. The notice requirements
of this paragraph only apply if an insurance premium finance
company and an insurer have not agreed on a method of providing
notice of cancellation.
(b) The insurance premium finance company shall also mail a
notice of cancellation to the insured at the insured's last
known address and.
(c) Written notice of the cancellation must also be given
to the insurance agent or insurance broker indicated on the
premium finance agreement. Written notice to the insurance
agent or broker required by this paragraph may be given in a
manner agreed upon between the insurance premium finance
company, insurer, agent, or broker.
Sec. 56. Minnesota Statutes 1996, section 62B.04,
subdivision 1, is amended to read:
Subdivision 1. [CREDIT LIFE INSURANCE.] (1) The initial
amount of credit life insurance shall not exceed the amount of
principal repayable under the contract of indebtedness plus an
amount equal to one monthly payment. Thereafter, if the
indebtedness is repayable in substantially equal installments
according to a predetermined schedule, the amount of insurance
on which the premium is calculated shall be equal to not exceed
the scheduled indebtedness plus one monthly payment or actual
amount of indebtedness, whichever is greater. If the contract
of indebtedness provides for a variable rate of finance charge
or interest, the initial rate or the scheduled rates based on
the initial index must be used in determining the scheduled
amount of indebtedness and subsequent changes to the rate must
be disregarded in determining whether the contract is repayable
in substantially equal installments according to a predetermined
schedule.
(2) Notwithstanding clause (1), the amount of credit life
insurance written in connection with credit transactions
repayable over a specified term exceeding 63 months shall not
exceed the greater of: (i) the actual amount of unpaid
indebtedness as it exists from time to time; or (ii) where an
indebtedness is repayable in substantially equal installments
according to a predetermined schedule, the scheduled amount of
unpaid indebtedness, less any unearned interest or finance
charges, plus an amount equal to two monthly payments. If the
credit transaction provides for a variable rate of finance
charge or interest, the initial rate or the scheduled rates
based on the initial index must be used in determining the
scheduled amount of unpaid indebtedness and subsequent changes
in the rate must be disregarded in determining whether the
contract is repayable in substantially equal installments
according to a predetermined schedule.
(3) Notwithstanding clauses (1) and (2), insurance on
educational, agricultural, and horticultural credit transaction
commitments may be written on a nondecreasing or level term plan
for the amount of the loan commitment.
(4) If the contract of indebtedness provides for a variable
rate of finance charge or interest, the initial rate or the
scheduled rates based on the initial index shall be used in
determining the scheduled amount of indebtedness, and subsequent
changes to the rate shall be disregarded in determining whether
the contract is repayable in substantially equal installments
according to a predetermined schedule.
Sec. 57. Minnesota Statutes 1996, section 300.20,
subdivision 2, is amended to read:
Subd. 2. [VACANCIES.] If the certificate of incorporation
or the bylaws so provides, a vacancy in the board of directors
may be filled by the remaining directors. Not more than
one-third of the members of the board may be so filled in any
one year except any number may be appointed to provide for at
least three five directors until any subsequent meeting of the
stockholders.
Sec. 58. Minnesota Statutes 1996, section 303.02,
subdivision 4, is amended to read:
Subd. 4. [FOREIGN CORPORATION.] "Foreign corporation" does
not include any corporation which, under the constitution and
statutes of the United States, may transact business in this
state without first obtaining a certificate of authority so to
do, insurance companies as defined by section 60A.02, and any
banking or trust association or corporation or national banking
association acting in this state as an executor, administrator,
trustee, or guardian, or conservator under section 303.25.
Sec. 59. Minnesota Statutes 1996, section 303.25,
subdivision 5, is amended to read:
Subd. 5. [SOLICITATION OF BUSINESS.] A foreign trust
association may not maintain an office within this state, but it
may solicit business within this state if banking or trust
associations or corporations organized under the laws of this
state or national banking associations maintaining their
principal offices in this state may solicit business in the
state in which the foreign trust association maintains its
principal office. For purposes of this subdivision,
solicitation of business includes the activities authorized for
state or national banking associations exercising fiduciary
powers maintaining their principal offices in this state
considered a representative trust office established under
section 48.476.
Sec. 60. Minnesota Statutes 1996, section 325F.68,
subdivision 2, is amended to read:
Subd. 2. "Merchandise" means any objects, wares, goods,
commodities, intangibles, real estate, loans, or services.
Sec. 61. Minnesota Statutes 1996, section 332.21, is
amended to read:
332.21 [CONTRACTS.]
(a) Each contract entered into by the licensee and the
debtor shall be in writing and signed by both parties. The
licensee shall furnish the debtor with a copy of the signed
contract. Each such contract shall set forth:
(1) the dollar charges agreed upon for the services of the
licensee, clearly disclosing to such debtor the total amount
which may be retained by licensee for services if the contract
is fully performed, which maximum amount would be the
origination fee together with 15 percent of the amount scheduled
to be liquidated by such contract,. This disclosure must state
that if the amount of debt owed is increased by interest, late
fees, over the limit fees, and other amounts imposed by the
creditor or by reason of the events under paragraph (c), the
length of the contract would be extended and remain in force and
that the total dollar charges agreed upon may increase at the
rate agreed upon in the original contract;
(2) the terms upon which the debtor may cancel the contract
as set out in section 332.23,;
(3) all debts which are to be managed by the licensee,
including the name of the creditor and the amount of the debt,;
and
(4) such other matter as the commissioner may require by
rule.
(b) A contract shall not be effective until a payment has
been made to the licensee for distribution to creditors or until
three business days after the signing thereof, whichever is
later. Within such period an individual may disaffirm said
contract and upon such disaffirmance said contract shall be null
and void.
(c) Total fees contained in the contract may be exceeded in
relation to creditors under open-end agreements if it is agreed
to in the contract and the additional debts so contracted to be
prorated do not exceed ten percent of the original debts in the
contract or written revisions to the original contract.
Sec. 62. Minnesota Statutes 1996, section 332.23,
subdivision 1, is amended to read:
Subdivision 1. [ORIGINATION FEE, CREDIT BACKGROUND REPORT
COST.] The licensee may charge an origination fee of not more
than $25 and collect from the debtor the actual cost of a credit
background report obtained from a credit reporting agency not
related to or affiliated with the licensee or if affiliated, the
total cost of the report may not exceed $8. The costs to the
debtor of said origination fee and credit background report may
be made from the originating amount paid by the debtor to the
licensee. The cost of only one credit background report may be
collected from the debtor in any 12-month period.
Sec. 63. Minnesota Statutes 1996, section 332.23,
subdivision 2, is amended to read:
Subd. 2. [WITHDRAWAL OF FEE.] The licensee may withdraw
and retain as partial payment of the licensee's total fee not
more than 15 percent of any sum deposited with the licensee by
the debtor for distribution. The remaining 85 percent must be
disbursed to listed creditors pursuant to and in accordance with
the contract between the debtor and the licensee within 35 days
after receipt unless the reasonable payment of one or more of
the debtor's obligations requires that the funds be held for a
longer period so as to accumulate a sum certain or where the
debtor's payment is returned for nonsufficient funds, then no
longer than 42 days. Total payment to licensee for services
rendered, excluding the origination fee and any credit
background report, shall not exceed 15 percent of funds
deposited with licensee by debtor for distribution.
Sec. 64. Minnesota Statutes 1996, section 332.23,
subdivision 5, is amended to read:
Subd. 5. [ADVANCE PAYMENTS.] Notwithstanding anything
herein to the contrary no fees or charges shall be received or
retained for any payments by the debtor made more than the
following number of days in advance of the date specified in the
contract on which they are due: (a) 30 42 days in the case of
contracts requiring monthly payments; (b) 15 days in the case of
contracts requiring biweekly payments; or (c) seven days in the
case of contracts requiring weekly payments. For those
contracts which do not require payments in specified amounts, a
payment shall be deemed an advance payment to the extent it
exceeds twice the average regular payment theretofore made by
the debtor pursuant to that contract. This subdivision shall
not apply when it is the intention of the debtor to use such
advance payments to satisfy future payment of obligations due
within 30 days under the contract.
Sec. 65. Minnesota Statutes 1996, section 332.50,
subdivision 1, is amended to read:
Subdivision 1. [DEFINITIONS.] "Check" means a check,
draft, order of withdrawal, or similar negotiable or
nonnegotiable instrument.
"Credit" means an arrangement or understanding with the
drawee for the payment of the check.
"Dishonor" has the meaning given in section 336.3-502, but
does not include dishonor due to a stop payment order requested
by an issuer who has a good faith defense to payment on the
check. "Dishonor" does include a stop payment order requested
by an issuer if the account did not have sufficient funds for
payment of the check at the time of presentment, except for stop
payment orders on a check found to be stolen.
Sec. 66. Minnesota Statutes 1996, section 332.50,
subdivision 2, is amended to read:
Subd. 2. [ACTS CONSTITUTING.] (a) Whoever issues any check
that is dishonored and is not paid within 30 days after mailing
a notice of dishonor that includes a citation to this section
and section 609.535, and a description of the penalties
contained in these sections, in compliance with subdivision 3,
is liable to the payee, holder, or agent of the holder for the
following penalties: (1) the amount of the check plus a civil
penalty of up to $100 or up to 100 percent of the value of the
check, whichever is greater; (2) interest at the rate payable on
judgments pursuant to section 549.09 on the face amount of the
check from the date of dishonor; and (3) reasonable attorney
fees if the aggregate amount of dishonored checks issued by the
issuer to all payees within a six-month period is over $1,250.
(b) If the amount of the dishonored check plus any service
charges that have been incurred under paragraph (d) or (e) have
not been paid within 30 days after having mailed a notice of
dishonor in compliance with subdivision 3 but before bringing an
action, a payee, holder, or agent of the holder may make a
written demand for payment for the liability imposed by
paragraph (a) by sending a copy of this section and a
description of the liability contained in this section to the
issuer's last known address.
(c) After notice has been sent but before an action under
this section is heard by the court, the plaintiff shall settle
the claim if the defendant gives the plaintiff the amount of the
check plus court costs, any service charge owed under paragraph
(d), and reasonable attorney fees if provided for under
paragraph (a), clause (3).
(d) A service charge may be imposed immediately on any
dishonored check, regardless of mailing a notice of dishonor, if
written notice of the service charge was conspicuously displayed
on the premises when the check was issued. The service charge
may not exceed $20, except that if the payee uses the services
of a law enforcement agency to obtain payment of a dishonored
check, a service charge of up to $25 may be imposed if the
service charge is used to reimburse the law enforcement agency
for its expenses. A payee may impose only one service charge
under this paragraph for each dishonored check.
(e) This subdivision prevails over any provision of law
limiting, prohibiting, or otherwise regulating service charges
authorized by this subdivision, but does not nullify charges for
dishonored checks, which do not exceed the charges in paragraph
(d) or the actual cost of collection, but in no case more than
$30, or terms or conditions for imposing the charges which have
been agreed to by the parties to an express contract.
(a) A service charge of up to $20, or actual costs of
collection not to exceed $30, may be imposed immediately on any
dishonored check, regardless of mailing a notice of dishonor, if
notice of the service charge was conspicuously displayed on the
premises when the check was issued. If a law enforcement agency
obtains payment of a dishonored check, a service charge not to
exceed $25 may be imposed if the service charge is retained by
the law enforcement agency for its expenses. Only one service
charge may be imposed under this paragraph for each dishonored
check.
(b) If the amount of the dishonored check is not paid
within 30 days after the payee or holder has mailed notice of
dishonor pursuant to section 609.535 and a description of the
penalties contained in this subdivision, whoever issued the
dishonored check is liable to the payee or holder of the check
for:
(1) the amount of the check, the service charge as provided
in paragraph (a), plus a civil penalty of up to $100 or the
value of the check, whichever is greater. The civil penalty may
not be imposed until 30 days following the mailing of the notice
of dishonor. A payee or holder of the check may make a written
demand for payment of the civil liability by sending a copy of
this section and a description of the liability contained in
this section to the issuer's last known address. Notice as
provided in paragraph (a) must also include notification that
additional civil penalties will be imposed for dishonored checks
for nonpayment after 30 days;
(2) interest at the rate payable on judgments pursuant to
section 549.09 on the face amount of the check from the date of
dishonor; and
(3) reasonable attorney fees if the aggregate amount of
dishonored checks issued by the issuer to all payees within a
six-month period is over $1,250.
(c) This subdivision prevails over any provision of law
limiting, prohibiting, or otherwise regulating service charges
authorized by this subdivision, but does not nullify charges for
dishonored checks, which do not exceed the charges in paragraph
(a) or terms or conditions for imposing the charges which have
been agreed to by the parties in an express contract.
(d) A sight draft may not be used as a means of collecting
the civil penalties provided in this section without prior
consent of the issuer.
Sec. 67. Laws 1996, chapter 414, article 1, section 45, is
amended to read:
Sec. 45. [EFFECTIVE DATE.]
Sections 1 to 5, 7 to 9, 11, 12, 16, 20 to 27, 30, 33, 35,
42, 43, and 44, paragraphs (b) and (c), are effective the day
following final enactment. Section 44, paragraph (a), is
effective July 1, 1998 1999.
Sections 10, 14, 15, 19, and 36 are effective on the
effective date of the repeals in section 44, paragraph (a).
Sec. 68. [TOWN OF HASSAN; DETACHED BANKING FACILITY.]
With the prior approval of the commissioner of commerce, a
bank operating its main banking office within six miles of the
town of Hassan may establish and maintain not more than one
detached facility in the town of Hassan. A bank desiring to
establish a detached facility must follow the approval procedure
prescribed in Minnesota Statutes, section 47.54. The
establishment of a detached facility according to this section
is subject to the provisions of Minnesota Statutes, sections
47.51 to 47.57, except to the extent those sections are
inconsistent with this section.
Sec. 69. [TOWN OF THOMSON; DETACHED BANKING FACILITY.]
With the prior approval of the commissioner of commerce, a
bank operating its main office within 20 miles of the town of
Thomson may establish and maintain not more than one detached
facility in the town of Thomson. A bank desiring to establish a
detached facility must follow the approval procedure prescribed
in Minnesota Statutes, section 47.54. The establishment of a
detached facility pursuant to this section is subject to the
provisions of Minnesota Statutes, sections 47.51 to 47.57,
except to the extent those sections are inconsistent with this
section.
Sec. 70. [TRANSACTION ACCOUNT CUSTOMER INFORMATION;
INFORMAL WORKING GROUP.]
The commissioner of commerce shall select and convene an
informal working group to make recommendation to financial
intermediaries for notices to transaction account customers
regarding:
(1) risks and effects of account closing due to misuse by
customers as a means to enforce the deterrence objectives of
Minnesota Statutes, section 48.512, subdivision 7;
(2) risks related to providing account identification to
third parties for purposes of or resulting in their issuance of
sight drafts; and
(3) informing the customers of the privacy terms related to
the financial intermediaries' use of customer information.
The informal working group must include persons representing
financial intermediaries, transaction account clearing
organizations, retailers, and consumers. The commissioner shall
accept recommendations from the working group for distribution
to financial intermediaries to effect voluntary implementation
of transaction account customer information notices prior to
September 1, 1997.
Sec. 71. [SCHOOL BANK PILOT PROJECT.]
(a) A school bank sponsored by independent school district
No. 31, Bemidji, that meets all requirements of paragraph (b) is
not subject to Minnesota Statutes, section 47.03, subdivision 1,
or to any other statute or rule that regulates banks, other
financial institutions, or currency exchanges.
(b) To qualify under paragraph (a), the school bank must:
(1) be operated as part of a high school educational
program and under guidelines adopted by the school board;
(2) be advised on a regular basis by a state-chartered or
federally-chartered financial institution, but not owned or
operated by that financial institution;
(3) be located on school premises and have as customers
only students enrolled in, or employees of, the school in which
it is located; and
(4) have a written commitment from the school board,
guaranteeing reimbursement of any depositor's funds lost due to
insolvency of the school bank.
(c) Funds of a school bank that meets the requirements of
this section are not school district or other public funds for
purposes of any state law governing the use or investment of
school district or other public funds.
(d) The school district shall annually file with the
commissioner of commerce a report, prepared by the students and
teachers involved, summarizing the operation of the school bank.
(e) This section expires June 30, 2000. The commissioner
of commerce shall, no later than December 15, 1999, provide a
written report to the legislature regarding this pilot project
and any recommended legislation regarding school banks.
Sec. 72. [REPEALER.]
Minnesota Statutes 1996, sections 13.99, subdivision 13;
47.29; 47.31; 47.32; 49.47; 49.48; 50.03; 50.23; and 59A.14, are
repealed.
Sec. 73. [EFFECTIVE DATE; APPLICABILITY.]
Sections 1, 4 to 6, 8, 10, 11, 17, 19 to 25, 28 to 31, 33
to 56, 59, 61, 63, 64, 71, and 72 are effective the day
following final enactment.
Section 68 takes effect the day after compliance by the
town board of the town of Hassan with Minnesota Statutes,
section 645.021, subdivision 3.
Section 69 takes effect the day after compliance by the
town board of the town of Thomson with Minnesota Statutes,
section 645.021, subdivision 3.
Section 70 is effective June 1, 1997.
Presented to the governor May 15, 1997
Signed by the governor May 16, 1997, 2:15 p.m.
Official Publication of the State of Minnesota
Revisor of Statutes