Minnesota Session Laws - 2000, Regular Session

                            CHAPTER 427-S.F.No. 2870 
                  An act relating to financial institutions; regulating 
                  certain loan charges and payments; establishing a 
                  foundation loan portfolio pilot project; regulating 
                  detached banking facilities; making various technical 
                  changes; appropriating money; amending Minnesota 
                  Statutes 1998, sections 47.59, subdivisions 1, 7, 10, 
                  and by adding a subdivision; 47.60, subdivision 2; 
                  48.56; 52.04, subdivision 1; 56.131, subdivision 4; 
                  58.02, subdivision 10; 58.04, subdivisions 2 and 3; 
                  58.05, by adding a subdivision; 58.08, as amended; 
                  58.10, subdivision 1; and 168.72, by adding a 
                  subdivision; Minnesota Statutes 1999 Supplement, 
                  sections 47.52; and 58.04, subdivision 1; proposing 
                  coding for new law in Minnesota Statutes, chapter 58; 
                  repealing Minnesota Statutes 1998, sections 58.02, 
                  subdivision 15; and 58.05, subdivision 2; Minnesota 
                  Rules, parts 2675.4180; and 2675.6141, subpart 1. 
        BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
           Section 1.  Minnesota Statutes 1999 Supplement, section 
        47.52, is amended to read: 
           47.52 [AUTHORIZATION.] 
           (a) With the prior approval of the commissioner, any bank 
        doing business in this state may establish and maintain detached 
        facilities provided the facilities are located within:  (1) the 
        municipality in which the principal office of the applicant bank 
        is located; or (2) 5,000 feet of its principal office measured 
        in a straight line from the closest points of the closest 
        structures involved; or (3) a municipality in which no bank is 
        located at the time of application; or (4) a municipality having 
        a population of more than 10,000; or (5) a municipality having a 
        population of 10,000 or less, as determined by the commissioner 
        from the latest available data from the state demographer, or 
        for municipalities located in the seven-county metropolitan area 
        from the metropolitan council, and all the banks having a 
        principal office in the municipality have consented in writing 
        to the establishment of the facility. 
           (b) A detached facility shall not be closer than 50 feet to 
        a detached facility operated by any other bank and shall not be 
        closer than 100 feet to the principal office of any other bank, 
        the measurement to be made in the same manner as provided 
        above.  This paragraph shall not be applicable if the proximity 
        to the facility or the bank is waived in writing by the other 
        bank and filed with the application to establish a detached 
        facility. 
           (c) A bank is allowed, in addition to other facilities, 
        part-time deposit-taking locations at elementary and secondary 
        schools located within the municipality in which the main 
        banking house or a detached facility is located if they are 
        established in connection with student education programs 
        approved by the school administration and consistent with safe, 
        sound banking practices. 
           (d) In addition to other facilities, a bank may operate 
        part-time locations at nursing homes and senior citizen housing 
        facilities located within the municipality in which the main 
        banking house or a detached facility is located, or within the 
        seven-county metropolitan area if the bank's main banking 
        facility or a detached facility is located within the 
        seven-county metropolitan area, if they are operated in a manner 
        consistent with safe, sound banking practices. 
           Sec. 2.  Minnesota Statutes 1998, 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; 
           (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, or an operating subsidiary of any such 
        institution. 
           (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. 3.  Minnesota Statutes 1998, section 47.59, 
        subdivision 7, is amended to read: 
           Subd. 7.  [ADVANCES TO PERFORM COVENANTS OF BORROWER OR 
        PURCHASER.] (a) If the agreement with respect to a loan or 
        credit sale contract contains covenants by the borrower or 
        purchaser to perform certain duties pertaining to insuring or 
        preserving collateral and the financial institution according to 
        the agreement pays for performance of the duties on behalf of 
        the borrower or purchaser, the financial institution may add to 
        the debt or contract balance the amounts so advanced.  Before or 
        within a reasonable time not less more than 30 days after 
        advancing any sums, the financial institution shall state to the 
        borrower or purchaser in writing the amount of sums advanced or 
        to be advanced, any charges with respect to this amount, and any 
        revised payment schedule and, if the duties of the borrower or 
        purchaser performed by the financial institution pertain to 
        insurance, a brief description of the insurance paid for or to 
        be paid for by the financial institution including the type and 
        amount of coverages.  Additional information need not be given.  
        The actions of the financial institution pursuant to this 
        subdivision shall not be deemed to cure the borrower's failure 
        to perform covenants in the loan or credit sale contract, unless 
        the loan or credit sale contract expressly provides otherwise. 
           (b) A finance charge equal to that specified in the loan 
        agreement or credit sale contract may be made for sums advanced 
        under paragraph (a). 
           Sec. 4.  Minnesota Statutes 1998, section 47.59, is amended 
        by adding a subdivision to read: 
           Subd. 9a.  [PROMPT CREDITING OF PAYMENTS.] (a) A financial 
        institution shall credit a payment to the consumer's account as 
        of the date of receipt except when a delay in crediting does not 
        result in a finance or other charge or except as provided in 
        paragraph (b). 
           (b) If a financial institution, in the loan agreement or, 
        in the case of open-end credit, on or with a periodic statement 
        or similar document, specifies requirements for the consumer to 
        follow in making payments, but accepts a payment that does not 
        conform to the requirements, the creditor shall credit the 
        payment within five days of receipt. 
           (c) If a financial institution fails to credit a payment, 
        as required by paragraph (a) or (b) in time to avoid the 
        imposition of finance or other charges, the financial 
        institution shall adjust the consumer's account so that the 
        charges imposed are credited to the consumer's account promptly 
        or, in the case of open-end credit, no later than during the 
        next billing cycle. 
           Sec. 5.  Minnesota Statutes 1998, section 47.59, 
        subdivision 10, is amended to read: 
           Subd. 10.  [CREDIT INSURANCE.] (a) The sale of credit 
        insurance or mortgage insurance is subject to chapters 61A, 62A, 
        and 62B, as applicable, and the rules adopted under those 
        chapters, if any.  In case there are multiple consumers 
        obligated under a transaction subject to this chapter, no policy 
        or certificate of insurance providing credit life insurance may 
        be procured by or through a financial institution or person 
        described in subdivision 2 upon more than two of the consumers, 
        in which case they may be insured jointly.  
           (b) A financial institution that provides credit insurance 
        in relation to open-end credit may calculate the charge to the 
        borrower in each billing cycle by applying the current premium 
        rate to the balance in the manner permitted with respect to 
        finance charges by the provisions on finance charge in this 
        section.  
           (c) Upon prepayment in full of a consumer loan or credit 
        sale contract by the proceeds of credit insurance or mortgage 
        insurance, the consumer or the consumer's estate is entitled to 
        a refund of any portion of a separate charge for insurance that 
        by reason of prepayment is retained by the financial institution 
        or returned to it by the insurer, unless the charge was computed 
        from time to time on the basis of the balances of the consumer's 
        loan or credit sale contract.  
           (d) This section does not require a financial institution 
        to grant a refund to the consumer if all refunds due to the 
        consumer under paragraph (c) amount to less than $5 and, except 
        as provided in paragraph (c), does not require the financial 
        institution to account to the consumer for any portion of a 
        separate charge for insurance because:  
           (1) the insurance is terminated by performance of the 
        insurer's obligation; 
           (2) the financial institution pays or accounts for premiums 
        to the insurer in amounts and at times determined by the 
        agreement between them; or 
           (3) the financial institution receives directly or 
        indirectly under a policy of insurance a gain or advantage not 
        prohibited by law.  
           (e) Except as provided in paragraph (d), the financial 
        institution shall promptly make or cause to be made an 
        appropriate refund to the consumer with respect to a separate 
        charge made to the consumer for insurance if:  
           (1) the insurance is not provided or is provided for a 
        shorter term than for which the charge to the borrower for 
        insurance was computed; or 
           (2) the insurance terminates before the end of the term for 
        which it was written because of prepayment in full or otherwise. 
           (f) If a financial institution requires insurance, upon 
        notice to the borrower, the borrower has the option of providing 
        the required insurance through an existing policy of insurance 
        owned or controlled by the borrower, or through a policy to be 
        obtained and paid for by the borrower, but the financial 
        institution for reasonable cause may decline the insurance 
        provided by the borrower.  
           Sec. 6.  Minnesota Statutes 1998, section 47.60, 
        subdivision 2, is amended to read: 
           Subd. 2.  [AUTHORIZATION, TERMS, CONDITIONS, AND 
        PROHIBITIONS.] (a) In lieu of the interest, finance charges, or 
        fees in any other law, a consumer small loan lender may charge 
        the following:  
           (1) on any amount up to and including $50, a charge of 
        $5.50 may be added; 
           (2) on amounts in excess of $50, but not more than $100, a 
        charge may be added equal to ten percent of the loan proceeds 
        plus a $5 administrative fee; 
           (3) on amounts in excess of $100, but not more than $250, a 
        charge may be added equal to seven percent of the loan proceeds 
        with a minimum of $10 plus a $5 administrative fee; 
           (4) for amounts in excess of $250 and not greater than the 
        maximum in subdivision 1, paragraph (a), a charge may be added 
        equal to six percent of the loan proceeds with a minimum of 
        $17.50 plus a $5 administrative fee.  
           (b) The term of a loan made under this section shall be for 
        no more than 30 calendar days.  
           (c) After maturity, the contract rate must not exceed 2.75 
        percent per month of the remaining loan proceeds after the 
        maturity date calculated at a rate of 1/30 of the monthly rate 
        in the contract for each calendar day the balance is outstanding.
           (d) No insurance charges or other charges must be permitted 
        to be charged, collected, or imposed on a consumer small loan 
        except as authorized in this section.  
           (e) On a loan transaction in which cash is advanced in 
        exchange for a personal check, a return check charge may be 
        charged as authorized by section 332.50, subdivision 2, 
        paragraph (d) (a).  
           (f) A loan made under this section must not be repaid by 
        the proceeds of another loan made under this section by the same 
        lender or related interest.  The proceeds from a loan made under 
        this section must not be applied to another loan from the same 
        lender or related interest.  No loan to a single borrower made 
        pursuant to this section shall be split or divided and no single 
        borrower shall have outstanding more than one loan with the 
        result of collecting a higher charge than permitted by this 
        section or in an aggregate amount of principal exceed at any one 
        time the maximum of $350.  
           Sec. 7.  Minnesota Statutes 1998, section 48.56, is amended 
        to read: 
           48.56 [BANKING INSTITUTIONS MAY USE FEDERAL BANKING ACT 
        LAWS.] 
           Any banking institution now or hereafter organized under 
        the laws of this state is hereby empowered, on the authority of 
        its board of directors, or a majority thereof, to enter into 
        such contracts, incur such obligations and generally to do and 
        perform any and all such acts and things as may be necessary or 
        appropriate in order to take advantage of any and all 
        memberships, loans, subscriptions, contracts, grants, rights, or 
        privileges which may at any time be available or enure to 
        banking institutions or to their depositors, creditors, 
        stockholders, receivers, or liquidators, by virtue of those 
        provisions of Section 8 of the federal "Banking Acts of 1933" 
        (Section 12B of the Federal Reserve Act, as amended (Mason's 
        United States Code Annotated, title 12, s 264)), which establish 
        the Federal Deposit Insurance Corporation and provide for the 
        insurance of deposits, or of any other provisions of that or of 
        any other act or resolution of Congress to aid, regulate, or 
        safeguard banking institutions and their depositors, including 
        any amendments of the same or any substitutions therefor; and to 
        subscribe for and acquire any stock, debentures, bonds, or other 
        types of securities of the Federal Deposit Insurance 
        Corporation, and to comply with the lawful regulations and 
        requirements from time to time issued or made by such 
        corporation.  Subdivision 1.  [GENERAL POWERS.] The board of 
        directors of a banking institution may enter into a contract, 
        incur an obligation, or generally do what is necessary or 
        appropriate to make use of United States Code, title 12, section 
        1811, or any act or resolution of Congress enacted or resolved 
        to aid, regulate, or safeguard banking institutions and their 
        depositors.  
           Subd. 2.  [GENERAL RIGHTS AND PRIVILEGES.] Memberships, 
        loans, subscriptions, contracts, grants, rights, or privileges 
        that, under the act or resolution, are available to or enure to 
        banking institutions, or their depositors, creditors, 
        stockholders, receivers, or liquidators may be taken advantage 
        of under this section. 
           Subd. 3.  [PURCHASE OF FDIC SECURITIES.] The board may 
        subscribe for and acquire securities of the Federal Deposit 
        Insurance Corporation. 
           Subd. 4.  [COMPLYING WITH FDIC REQUIREMENTS.] The board may 
        comply with the corporation's requirements. 
           Sec. 8.  Minnesota Statutes 1998, section 52.04, 
        subdivision 1, is amended to read: 
           Subdivision 1.  A credit union has the following powers: 
           (1) to offer its members and other credit unions various 
        classes of shares, share certificates, deposits, or deposit 
        certificates; 
           (2) to receive the savings of its members either as payment 
        on shares or as deposits, including the right to conduct 
        Christmas clubs, vacation clubs, and other thrift organizations 
        within its membership.  Trust funds received by a real estate 
        broker or the broker's salespersons in trust may be deposited in 
        a credit union; 
           (3) to make loans to members for provident or productive 
        purposes as provided in section 52.16; 
           (4) to make loans to a cooperative society or other 
        organization having membership in the credit union; 
           (5) to deposit in state and national banks and trust 
        companies authorized to receive deposits; 
           (6) to invest in any investment legal for savings banks or 
        for trust funds in the state and, notwithstanding clause (3), to 
        invest in and make loans of unsecured days funds (federal funds 
        or similar unsecured loans) to financial institutions insured by 
        an agency of the federal government and a member of the Federal 
        Reserve System or required to maintain reserves at the Federal 
        Reserve; 
           (7) to borrow money as hereinafter indicated; 
           (8) to adopt and use a common seal and alter the same at 
        pleasure; 
           (9) to make payments on shares of and deposit with any 
        other credit union chartered by this or any other state or 
        operating under the provisions of the Federal Credit Union Act, 
        in amounts not exceeding in the aggregate 25 percent of its 
        unimpaired assets.  However, payments on shares of and deposit 
        with credit unions chartered by other states are restricted to 
        credit unions insured by the National Credit Union 
        Administration.  The restrictions imposed by this clause do not 
        apply to share accounts and deposit accounts of the Minnesota 
        corporate credit union in United States central credit union or 
        to share accounts and deposit accounts of credit unions in the 
        Minnesota corporate credit union; 
           (10) to contract with any licensed insurance company or 
        society to insure the lives of members to the extent of their 
        share accounts, in whole or in part, and to pay all or a portion 
        of the premium therefor; 
           (11) to indemnify each director, officer, or committee 
        member, or former director, officer, or committee member against 
        all expenses, including attorney's fees but excluding amounts 
        paid pursuant to a judgment or settlement agreement, reasonably 
        incurred in connection with or arising out of any action, suit, 
        or proceeding to which that person is a party by reason of being 
        or having been a director, officer, or committee member of the 
        credit union, except with respect to matters as to which that 
        person is finally adjudged in the action, suit, or proceeding to 
        be liable for negligence or misconduct in the performance of 
        duties.  The indemnification is not exclusive of any other 
        rights to which that person may be entitled under any bylaw, 
        agreement, vote of members, or otherwise; 
           (12) upon written authorization from a member, retained at 
        the credit union, to make payments to third parties by 
        withdrawals from the member's share or deposit accounts or 
        through proceeds of loans made to such member, or by permitting 
        the credit union to make those payments from the member's funds 
        prior to deposit; to permit draft withdrawals from member 
        accounts, but a credit union proposing to permit draft 
        withdrawals shall notify the commissioner of commerce, in the 
        form prescribed, of its intent not less than 90 days prior to 
        authorizing draft withdrawals.  The board of directors of a 
        credit union may restrict one class of shares to the extent that 
        it may not be redeemed, withdrawn, or transferred except upon 
        termination of membership in the credit union; 
           (13) to inform its members as to the availability of 
        various group purchasing plans which are related to the 
        promotion of thrift or the borrowing of money for provident and 
        productive purposes by means of informational materials placed 
        in the credit union's office, through its publications, or by 
        direct mailings to members by the credit union; 
           (14) to facilitate its members' voluntary purchase of types 
        of insurance incidental to promotion of thrift or the borrowing 
        of money for provident and productive purposes including, but 
        not limited to the following types of group or individual 
        insurance:  Fire, theft, automobile, life and temporary 
        disability; to be the policy holder of a group insurance plan or 
        a subgroup under a master policy plan and to disseminate 
        information to its members concerning the insurance provided 
        thereunder; to remit premiums to an insurer or the holder of a 
        master policy on behalf of a credit union member, if the credit 
        union obtains written authorization from the member for 
        remittance by share or deposit withdrawals or through proceeds 
        of loans made by the members, or by permitting the credit union 
        to make the payments from the member's funds prior to deposit; 
        and to accept from the insurer reimbursement for expenses 
        incurred or in the case of credit life, accident and health, and 
        involuntary unemployment insurance within the meaning of chapter 
        62B commissions for the handling of the insurance.  The amount 
        reimbursed or the commissions received may constitute the 
        general income of the credit union.  The directors, officers, 
        committee members and employees of a credit union shall not 
        profit on any insurance sale facilitated through the credit 
        unions; 
           (15) to contract with another credit union to furnish 
        services which either could otherwise perform.  Contracted 
        services under this clause are subject to regulation and 
        examination by the commissioner of commerce like other services; 
           (16) in furtherance of the twofold purpose of promoting 
        thrift among its members and creating a source of credit for 
        them at legitimate rates of interest for provident purposes, and 
        not in limitation of the specific powers hereinbefore conferred, 
        to have all the powers enumerated, authorized, and permitted by 
        this chapter, and such other rights, privileges and powers 
        incidental to, or necessary for, the accomplishment of the 
        objectives and purposes of the credit union; 
           (17) to rent safe deposit boxes to its members if the 
        credit union obtains adequate insurance or bonding coverage for 
        losses which might result from the rental of safe deposit boxes; 
           (18) notwithstanding the provisions of section 52.05, to 
        accept deposits of public funds in an amount secured by 
        insurance or other means pursuant to chapter 118 or section 
        9.031 or other applicable law and to receive deposits of trust 
        funds provided that either the provider or the beneficial owner 
        of the funds is a member of the credit union accepting the 
        deposit; 
           (19) to accept and maintain treasury tax and loan accounts 
        of the United States and to pledge collateral to secure the 
        treasury tax or loan accounts, in accordance with the 
        regulations of the Department of Treasury of the United States; 
           (20) to accept deposits pursuant to section 149A.97, 
        subdivision 5, notwithstanding the provisions of section 52.05, 
        if the deposits represent funding of prepaid funeral plans of 
        members; 
           (21) to sell, in whole or in part, real estate secured 
        loans provided that:  
           (a) the loan is secured by a first lien; 
           (b) the board of directors approves the sale; 
           (c) if the sale is partial, the agreement to sell a partial 
        interest shall, at a minimum:  
           (i) identify the loan or loans covered by the agreement; 
           (ii) provide for the collection, processing, remittance of 
        payments of principal and interest, taxes and insurance premiums 
        and other charges or escrows, if any; 
           (iii) define the responsibilities of each party in the 
        event the loan becomes subject to collection, loss or 
        foreclosure; 
           (iv) provide that in the event of loss, each owner shall 
        share in the loss in proportion to its interest in the loan or 
        loans; 
           (v) provide for the distribution of payments of principal 
        to each owner proportionate to its interest in the loan or 
        loans; 
           (vi) provide for loan status reports; 
           (vii) state the terms and conditions under which the 
        agreement may be terminated or modified; and 
           (d) the sale is without recourse or repurchase unless the 
        agreement:  
           (i) requires repurchase of a loan because of any breach of 
        warranty or misrepresentation; 
           (ii) allows the seller to repurchase at its discretion; or 
           (iii) allows substitution of one loan for another; 
           (22) in addition to the sale of loans secured by a first 
        lien on real estate, to sell, pledge, discount, or otherwise 
        dispose of, in whole or in part, to any source, a loan or group 
        of loans, other than a self-replenishing line of credit; 
        provided, that within a calendar year beginning January 1 the 
        total dollar value of loans sold, other than loans secured by 
        real estate or insured by a state or federal agency, shall not 
        exceed 25 percent of the dollar amount of all loans and 
        participating interests in loans held by the credit union at the 
        beginning of the calendar year, unless otherwise authorized in 
        writing by the commissioner; 
           (23) to designate the par value of the shares of the credit 
        union by board resolution; 
           (24) to exercise by resolution the powers set forth in 
        United States Code, title 12, section 1757, as amended through 
        December 31, 1992.  Before exercising each power, the board must 
        submit a plan to the commissioner of commerce detailing 
        implementation of the power to be used; 
           (25) to offer self-directed individual retirement accounts 
        and Keogh accounts and act as custodian and trustee of these 
        accounts if: 
           (1) all contributions of funds are initially made to a 
        deposit, share or share certificate account in the credit union; 
           (2) any subsequent transfer of funds to other assets is 
        solely at the direction of the member and the credit union 
        exercises no investment discretion and provides no investment 
        advice with respect to plan assets; and 
           (3) the member is clearly notified of the fact that 
        National Credit Union Share Insurance Fund coverage is limited 
        to funds held in deposit, share or share certificate accounts of 
        National Credit Union Share Insurance Fund-insured credit unions.
           Sec. 9.  Minnesota Statutes 1998, section 56.131, 
        subdivision 4, is amended to read: 
           Subd. 4.  [ADJUSTMENT OF DOLLAR AMOUNTS.] The dollar 
        amounts in 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. 10.  Minnesota Statutes 1998, section 58.02, 
        subdivision 10, is amended to read: 
           Subd. 10.  [FINANCIAL INSTITUTION.] "Financial institution" 
        means a bank, bank and trust, trust company with banking powers, 
        savings bank, savings association, or credit union, organized 
        under the laws of this state, any other state, or the United 
        States; a Minnesota host state branch of an out-of-state 
        state-chartered bank as provided for in section 49.411; an 
        industrial loan and thrift under chapter 53; or a regulated 
        lender under chapter 56.  The term "financial institution" also 
        includes a subsidiary or operating subsidiary of a financial 
        institution or of a bank holding company as defined in the 
        federal Bank Holding Company Act, United States Code, title 12, 
        section 1841 et seq., if the subsidiary or operating subsidiary 
        can demonstrate to the satisfaction of the commissioner that it 
        is regulated and subject to active and ongoing oversight and 
        supervision by a federal banking agency, as defined in the 
        Federal Deposit Insurance Act, United States Code, title 12, 
        section 1811 et seq., or the commissioner.  
           Sec. 11.  Minnesota Statutes 1999 Supplement, section 
        58.04, subdivision 1, is amended to read: 
           Subdivision 1.  [RESIDENTIAL MORTGAGE ORIGINATOR LICENSING 
        REQUIREMENTS.] (a) Beginning August 1, 1999, no person shall act 
        as a residential mortgage originator, or make residential 
        mortgage loans without first obtaining a license from the 
        commissioner according to the licensing procedures provided in 
        this chapter. 
           (b) The following persons are exempt from the residential 
        mortgage originator licensing requirements: 
           (1) an employee of one mortgage originator licensee or one 
        person holding a certificate of exemption; 
           (2) a person engaged solely in commercial mortgage 
        activities; 
           (3) a person licensed as a real estate broker under chapter 
        82, and who is not licensed to another real estate broker; 
           (3) an individual real estate licensee who is licensed to 
        the a real estate broker as described in clause (2) if: 
           (i) the individual licensee acts only under the name, 
        authority, and supervision of the broker to whom the licensee is 
        licensed; 
           (ii) the broker to whom the licensee is licensed obtains a 
        certificate of exemption according to section 58.05, subdivision 
        2; 
           (iii) the broker does not collect an advance fee for its 
        residential mortgage-related activities; and 
           (iv) the residential mortgage origination activities are 
        incidental to the real estate licensee's primary activities as a 
        real estate broker or salesperson; 
           (4) an individual licensed as a property/casualty or 
        life/health insurance agent under chapter 60K if: 
           (i) the insurance agent acts on behalf of only one 
        residential mortgage originator, which is in compliance with 
        chapter 58; 
           (ii) the insurance agent has entered into a written 
        contract with the mortgage originator under the terms of which 
        the mortgage originator agrees to accept responsibility for the 
        insurance agent's residential mortgage-related activities; 
           (iii) the insurance agent obtains a certificate of 
        exemption under section 58.05, subdivision 2; and 
           (iv) the insurance agent does not collect an advance fee 
        for the insurance agent's residential mortgage-related 
        activities; 
           (5) a person making who is not in the business of making 
        residential mortgage loans and who makes no more than five 
        residential mortgage three such loans, with its own funds, 
        during any 12-month period; 
           (6) a financial institution as defined in section 58.02, 
        subdivision 10; 
           (7) an agency of the federal government, or of a state or 
        municipal government; 
           (8) an employee or employer pension plan making loans only 
        to its participants; 
           (9) a person acting in a fiduciary capacity, such as a 
        trustee or receiver, as a result of a specific order issued by a 
        court of competent jurisdiction; or 
           (10) a person exempted by order of the commissioner.  
           Sec. 12.  Minnesota Statutes 1998, section 58.04, 
        subdivision 2, is amended to read: 
           Subd. 2.  [RESIDENTIAL MORTGAGE SERVICER LICENSING 
        REQUIREMENTS.] (a) Beginning August 1, 1999, no person shall 
        engage in activities or practices that fall within the 
        definition of "servicing a residential mortgage loan" under 
        section 58.02, subdivision 22, without first obtaining a license 
        from the commissioner according to the licensing procedures 
        provided in this chapter. 
           (b) The following persons are exempt from the residential 
        mortgage servicer licensing requirements: 
           (1) a person licensed as a residential mortgage originator; 
           (2) an employee of one licensee or one person holding a 
        certificate of exemption based on an exemption under this 
        subdivision; 
           (3) a person engaged solely in commercial mortgage 
        activities; 
           (4) a person servicing loans made with its own funds, if no 
        more than five three such loans are made in any 12-month period; 
           (5) (4) a financial institution as defined in section 
        58.02, subdivision 10; 
           (6) (5) an agency of the federal government, or of a state 
        or municipal government; 
           (7) (6) an employee or employer pension plan making loans 
        only to its participants; 
           (8) (7) a person acting in a fiduciary capacity, such as a 
        trustee or receiver, as a result of a specific order issued by a 
        court of competent jurisdiction; or 
           (9) (8) a person exempted by order of the commissioner. 
           Sec. 13.  Minnesota Statutes 1998, section 58.04, 
        subdivision 3, is amended to read: 
           Subd. 3.  [CONDUCTING BUSINESS UNDER LICENSE.] No person 
        required to be licensed under this chapter may, without a 
        license, do business under a name or title or circulate or use 
        advertising or make representations or give information to a 
        person, that indicates or reasonably implies activity within the 
        scope of this chapter. 
           No person licensed under this chapter may do business under 
        more than one name or title. 
           Sec. 14.  Minnesota Statutes 1998, section 58.05, is 
        amended by adding a subdivision to read: 
           Subd. 3.  [CERTIFICATE OF EXEMPTION.] A person must obtain 
        a certificate of exemption from the commissioner to qualify as 
        an exempt person under section 58.04, subdivision 1, paragraph 
        (b), as a real estate broker under clause (2), an insurance 
        agent under clause (4), a financial institution under clause 
        (6), or by order of the commissioner under clause (10); or under 
        section 58.04, subdivision 2, paragraph (b), as a financial 
        institution under clause (4), or by order of the commissioner 
        under clause (8). 
           Sec. 15.  Minnesota Statutes 1998, section 58.08, as 
        amended by Laws 1999, chapter 151, section 36, is amended to 
        read: 
           58.08 [BONDS; LETTERS OF CREDIT.] 
           Subdivision 1.  [REQUIREMENT OF RESIDENTIAL MORTGAGE 
        ORIGINATORS.] A residential mortgage originator licensee 
        engaging in servicing a residential mortgage loan shall 
        continuously maintain a surety bond or irrevocable letter of 
        credit in an amount not less than $50,000 in a form approved by 
        the commissioner, issued by an insurance company or bank 
        authorized to do so in this state.  The bond or irrevocable 
        letter of credit must be available for the recovery of expenses, 
        fines, and fees levied by the commissioner under this chapter 
        relating to servicing, and for losses or damages incurred by 
        borrowers as the result of a licensee's servicing-related 
        noncompliance with the requirements of this chapter, sections 
        325D.43 to 325D.48, and 325F.67 to 325F.69, or breach of 
        contract. 
           The bond or irrevocable letter of credit must be submitted 
        with the originator's license application, and evidence of 
        continued coverage must be submitted with each renewal.  Any 
        change in the bond or letter of credit must be submitted for 
        approval by the commissioner, within ten days of its execution. 
           Subd. 2.  [REQUIREMENT OF RESIDENTIAL MORTGAGE SERVICERS.] 
        A residential mortgage servicer licensee shall continuously 
        maintain a surety bond or irrevocable letter of credit in an 
        amount not less than $100,000 in a form approved by the 
        commissioner, issued by an insurance company or bank authorized 
        to do so in this state.  The bond or irrevocable letter of 
        credit must be available for the recovery of expenses, fines, 
        and fees levied by the commissioner under this chapter, and for 
        losses or damages incurred by borrowers or other aggrieved 
        parties as the result of a licensee's noncompliance with the 
        requirements of this chapter, sections 325D.43 to 325D.48, and 
        325F.67 to 325F.69, or breach of contract relating to activities 
        regulated by this chapter.  
           The bond or irrevocable letter of credit must be submitted 
        with the servicer's license application and evidence of 
        continued coverage must be submitted with each renewal.  Any 
        change in the bond or letter of credit must be submitted for 
        approval by the commissioner, within ten days of its execution. 
           Subd. 3.  [EXEMPTION.] Subdivisions 1 and 2 do not apply to 
        mortgage originators or mortgage servicers who are approved as 
        seller/servicers by the Federal National Mortgage Association or 
        the Federal Home Loan Mortgage Corporation. 
           Subd. 4.  [IRREVOCABLE LETTER OF CREDIT.] As used in this 
        chapter, an irrevocable letter of credit must be accepted only 
        if it is clean, irrevocable, and contains an evergreen clause. 
           (a) "Clean" means a letter of credit that is not 
        conditioned on the delivery of any other documents or materials. 
           (b) "Irrevocable" means a letter of credit that cannot be 
        modified or revoked without the consent of the beneficiary once 
        the beneficiary is established. 
           (c) "Evergreen clause" means one that specifically states 
        the expiration of a letter of credit will not take place without 
        a 60-day notice by the issuer and one that allows the issuer to 
        conduct an annual review of the account party's financial 
        condition.  If prior notice of expiration is not given by the 
        issuer, the letter of credit is automatically extended for one 
        year. 
           A clean irrevocable letter of credit must be accepted only 
        if it is issued by a financial institution that is authorized to 
        engage in banking in any of the 50 states or under the laws of 
        the United States, and whose business is substantially confined 
        to banking and supervised by the state commissioner of commerce 
        or similar official, and that has a long-term debt rating by a 
        recognized national rating agency of investment grade or 
        better.  If no long-term debt rating is available, the financial 
        institution must have the equivalent investment grade financial 
        characteristics. 
           Sec. 16.  Minnesota Statutes 1998, section 58.10, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [AMOUNTS.] The following fees must be paid 
        to the commissioner: 
           (1) for an initial residential mortgage originator license, 
        $800; 
           (2) for a renewal license, $400; 
           (3) for an initial residential mortgage servicer's license, 
        $1,000; 
           (4) for a renewal license, $500; and 
           (5) license service fees as set forth in chapter 45; and 
           (6) for a certificate of exemption, $100. 
           Sec. 17.  [58.135] [RATES AND CHARGES.] 
           Subdivision 1.  [FIRST LIEN MORTGAGES.] A residential 
        mortgage originator making first lien residential mortgage loans 
        must comply with the applicable limits on residential mortgage 
        loan rates, fees, and charges as found in sections 47.20 and 
        47.204. 
           Nothing in this subdivision prevents a financial 
        institution under section 47.59, subdivision 1, paragraph (k), 
        from making first lien residential mortgage loans under section 
        47.59 or other provisions of law available to financial 
        institutions under that section. 
           Subd. 2.  [JUNIOR LIEN MORTGAGES.] (a) A residential 
        mortgage originator that is a bank, bank and trust, trust 
        company with banking powers, savings bank, savings association, 
        or credit union organized under the laws of this or any other 
        state or the United States, or an industrial loan and thrift 
        company under chapter 53 or a regulated lender under chapter 56 
        or an entity in another state subject to regulation 
        substantially similar to chapter 53 or 56, making junior lien 
        residential loans, must comply with the limits on residential 
        mortgage loan rates, fees, and charges as found in section 47.59.
           Nothing in this subdivision authorizes a mortgage 
        originator to make loans on terms and conditions that would not 
        be available to it in the absence of this section. 
           (b) A residential mortgage originator other than an entity 
        designated in paragraph (a) making junior lien residential 
        loans, must comply with the limits on residential mortgage loan 
        rates, fees, and charges as found in section 47.20. 
           Sec. 18.  Minnesota Statutes 1998, section 168.72, is 
        amended by adding a subdivision to read: 
           Subd. 1a.  [PROMPT CREDITING OF PAYMENTS.] (a) A contract 
        holder shall credit a payment to the customer's account as of 
        the date of receipt except when a delay in crediting does not 
        result in a finance or other charge or except as provided in 
        paragraph (b). 
           (b) If a retail installment contract or other instructions 
        specify requirements for the consumer to follow in making 
        payments, but the contract holder accepts a payment that does 
        not conform to the requirements, the contract holder shall 
        credit the payment within five days of receipt. 
           (c) If a contract holder fails to credit a payment, as 
        required by paragraphs (a) and (b), in time to avoid the 
        imposition of finance or other charges, the contract holder 
        shall adjust the consumer's account so that the charges imposed 
        are credited to the consumer's account promptly. 
           Sec. 19.  [COMMERCE DEPARTMENT EXAMINATION; FOUNDATION LOAN 
        PORTFOLIO PILOT PROJECT.] 
           (a) Any nonprofit charitable organization recognized as 
        exempt from federal income taxation under section 501(c) (3) of 
        the federal Internal Revenue Code of 1986, as amended, 
        participating as a regional organization under the challenge 
        grant program established under Minnesota Statutes, section 
        116J.415, and serving the counties of Aitkin, Cook, Lake, St. 
        Louis, Carlton, Itasca, and Koochiching as of the effective date 
        of this section, may enter into an agreement with the 
        commissioner of commerce to facilitate the charitable 
        organization's participation in the United States Small Business 
        Administration guaranteed lender program. 
           (b) The agreement referred to in paragraph (a) shall 
        provide for a level of examination and supervision by the 
        department of commerce necessary for the charitable organization 
        to meet United States Small Business Administration requirements 
        for guaranteed lender status, including an annual examination of 
        the books, accounts, records, and files related to the 
        charitable organization's portfolio of guaranteed loans.  
        Reports of the commissioner's annual examination shall be made 
        available to the United States Small Business Administration 
        upon request. 
           (c) The charitable organization shall pay the department's 
        cost, as determined by the commissioner of commerce, of the 
        supervision and examination required under an agreement entered 
        into pursuant to this section.  The charitable organization 
        shall also pay the department's cost, as determined by the 
        commissioner, of negotiating the agreement.  Money received by 
        the department under this subdivision must be deposited in the 
        state treasury and credited to an account in the special revenue 
        fund.  Money in this account is annually appropriated to the 
        commissioner for purposes of administering this section. 
           (d) This section expires December 31, 2003. 
           Sec. 20.  [VASA TOWNSHIP; DETACHED BANKING FACILITY.] 
           With the prior approval of the commissioner of commerce, a 
        bank operating its principal office in Cannon Falls may 
        establish and maintain not more than one detached facility in 
        Vasa township.  A bank desiring to establish such a detached 
        facility must follow the approval procedure prescribed in 
        Minnesota Statutes, section 47.54.  The establishment of a 
        detached facility under this section is subject to Minnesota 
        Statutes, sections 47.51 to 47.57, except to the extent those 
        sections are inconsistent with this section. 
           Sec. 21.  [REPEALER.] 
           (a) Minnesota Statutes 1998, sections 58.02, subdivision 
        15; and 58.05, subdivision 2, are repealed. 
           (b) Minnesota Rules, part 2675.4180, is repealed. 
           (c) Minnesota Rules, part 2675.6141, subpart 1, is repealed 
        effective the day following final enactment. 
           Sec. 22.  [EFFECTIVE DATES.] 
           Sections 1 to 3, 5 to 16, 19, and 21 are effective the day 
        after final enactment.  Sections 4, 17, and 18 are effective 
        July 1, 2000.  Section 20 is effective the day after compliance 
        by the governing body of Vasa township with Minnesota Statutes, 
        section 645.021, subdivision 3. 
           Presented to the governor April 17, 2000 
           Signed by the governor April 20, 2000, 10:19 a.m.