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471.15
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Chapter 15. State Agencies in General
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Section Headnote
15.001 Application of Laws 2005, Chapter 56, Terminology Changes
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46 - 59 BANKING
- BANKING CHAPTERS
- Minnesota Statute §56 REGULATED LOANS
- 56.01 NECESSITY OF LICENSE.
- 56.01 NECESSITY OF LICENSE.
(a) Except as authorized by this chapter and without first obtaining a license from the
commissioner, no person shall engage in the business of making loans of money, credit, goods,
or things in action, in an amount or of a value not exceeding that specified in section 56.131,
subdivision 1, and charge, contract for, or receive on the loan a greater rate of interest, discount,
or consideration than the lender would be permitted by law to charge if not a licensee under
this chapter.
- 56.131 MAXIMUM RATES AND CHARGES.
- Subdivision 1. Interest rates and charges. (a) On any loan in a principal amount not
exceeding $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) 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 paragraph (g),
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.
(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.
(f) A licensee may contract for and collect a delinquency charge as provided for in section
47.59, subdivision 6, paragraph (a), clause (4).
(g) A licensee may grant extensions, deferments, or conversions to interest-bearing as
provided in section 47.59, subdivision 5.
- 56.01 NECESSITY OF LICENSE.
(b) An agency or instrumentality of the United States government or a corporation otherwise
created by an act of the United States Congress or a lender approved or certified by the secretary of
housing and urban development, or approved or certified by the administrator of veterans affairs,
or approved or certified by the administrator of the Farmers Home Administration, or approved or
certified by the Federal Home Loan Mortgage Corporation, or approved or certified by the Federal
National Mortgage Association, that engages in the business of purchasing or taking assignments
of mortgage loans and undertakes direct collection of payments from or enforcement of rights
against borrowers arising from mortgage loans, is not required to be licensed under this chapter in
order to purchase or take assignments of mortgage loans from licensees under this chapter.
- GOVERNMENT CONTROLLED PRIVATE ENTITY
- 56.02 APPLICATION FEE.
- 56.02 APPLICATION FEE.
Application for license shall be in writing, under oath, and in the form prescribed by the
commissioner, and contain the name and the address, both of the residence and place of business,
of the applicant and, if the applicant is a copartnership or association, of every member thereof,
and if a corporation, of each officer and director thereof; also the county and municipality, with
street and number, if any, where the business is to be conducted, and such further information as
the commissioner may require. The applicant at the time of making application, shall pay to the
commissioner the sum of $500 as a fee for investigating the application, and the additional sum
of $250 as an annual license fee for a period terminating on the last day of the current calendar
year. In addition to the annual license fee, every licensee hereunder shall pay to the commissioner
the actual costs of each examination, as provided for in section 56.10. All moneys collected by
the commissioner under this chapter shall be turned over to the commissioner of management
and budget and credited by the commissioner of management and budget to the general fund of
the state.
Every applicant shall also prove, in form satisfactory to the commissioner, that the applicant
has available for the operation of the business at the location specified in the application, liquid
assets of at least $50,000.
- 56.10 GENERAL OVERSIGHT AND ADMINISTRATION.
Subdivision 1. Examinations. 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.
Subd. 2. Interpretive opinions. The commissioner may honor requests from interested
parties for interpretive opinions in connection with the administration of this chapter. No
provision of this chapter or of any other chapter to which this chapter refers which imposes
any penalty shall apply to any act done or omitted to be done in conformity with any written
interpretive opinion of the commissioner, notwithstanding that such written interpretive opinion
may, after such act or omission, be amended or rescinded or be determined by judicial or other
authority to be invalid for any reason.
- 56.001 DEFINITIONS.
- Subdivision 1. Terms. When used in this chapter, the terms defined in this section have the
meanings given them, unless their context requires a different meaning.
- Subd. 2. Actuarial method. "Actuarial method" means the method of allocating payments
made on a loan between the principal amount and interest whereby a payment is applied first to
the accumulated interest and then to the unpaid principal amount.
- Subd. 3. Applicable charge. "Applicable charge" means the amount of interest attributable
to each monthly installment period of the loan contract. The applicable charge is computed as if
each installment period were one month and any charge for extending the first installment period
beyond 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
permitted by section 56.131, subdivision 1, based upon the assumption that all payments were
made according to schedule. For convenience in computation, the licensee may round the single
annual rate to the nearest one quarter of one percent.
- Subd. 4. Commissioner. "Commissioner" means the commissioner of commerce.
- Subd. 5. Interest. "Interest" means all charges payable directly or indirectly by a borrower
which are imposed directly or indirectly by the licensee as an incident to the loan, however
denominated, including interest, discount, loan fee, or credit or investigation fee, but shall not
include permissible default or deferment charges, lawful fees for any security taken, insurance
charges or premiums, court costs, or other charges specifically authorized by law.
- Subd. 6. Interest-bearing loan. "Interest-bearing loan" means a loan in which the debt is
expressed as the principal amount and interest is computed, charged, and collected on unpaid
principal balances outstanding from time to time, for the time outstanding.
- Subd. 7. Precomputed loan. "Precomputed loan" means a loan in which the debt is a sum
comprising the principal amount and the amount of interest computed actuarially in advance on
the assumption that all scheduled payments will be made when due.
- Subd. 8. Person. "Person" includes individuals, copartnerships, associations, and
corporations.
- Subd. 9. Principal amount. "Principal amount" means the amount of cash paid to, or paid
or payable for, the account of the borrower.