1.1    .................... moves to amend H. F. No. 931 as follows:
1.2Page 1, after line 6, insert:

1.3    "Section 1. Minnesota Statutes 2006, section 58.02, is amended by adding a subdivision
1.4to read:
1.5    Subd. 27. Investment grade. When used in reference to residential mortgage loans,
1.6"investment grade" refers to a system of categorizing residential mortgage loans in which
1.7the pricing or terms are distinguished by interest rate or discount points or both charged to
1.8the borrower, which vary according to the degree of perceived risk of default based on
1.9factors such as the borrower's credit, including credit score and credit patterns, income and
1.10employment history, debt ratio, loan-to-value ratio, and prior bankruptcy or foreclosure.

1.11    Sec. 2. Minnesota Statutes 2006, section 58.02, is amended by adding a subdivision to
1.12read:
1.13    Subd. 28. Prime loan. "Prime loan" means a residential mortgage loan that is
1.14of the highest investment grade and which is commonly designated by an alphabetical
1.15character of "A."

1.16    Sec. 3. Minnesota Statutes 2006, section 58.02, is amended by adding a subdivision to
1.17read:
1.18    Subd. 29. Subprime loan. "Subprime loan" means a residential mortgage loan
1.19that is of less than the highest investment grade, and which is commonly designated by
1.20an alphabetical character of "A-" to "D.""
1.21Page 4, delete section 2 and insert:

1.22    "Sec. 5. Minnesota Statutes 2006, section 58.137, subdivision 2, is amended to read:
1.23    Subd. 2. Prepayment penalties. (a) A residential mortgage originator making a
1.24residential mortgage loan that is a prime loan to a borrower located in this state shall not
1.25charge, receive, or collect any prepayment penalty, fee, premium, or other charge:
1.26    (1) for any partial prepayment of the residential mortgage loan; or
2.1    (2) for any prepayment of the residential mortgage loan upon the sale of any
2.2residential real property, or the sale of any stock, interest, or lease relating to cooperative
2.3ownership of residential real property, securing the loan; or
2.4    (3) for any prepayment of the residential mortgage loan if the prepayment is made
2.5more than 42 months after the date of the note or other agreement for the residential
2.6mortgage loan; or
2.7    (4) for any prepayment of the residential mortgage loan if the aggregate amount of
2.8all prepayment penalties, fees, premiums, and other charges exceeds the lesser of (i) an
2.9amount equal to two percent of the unpaid principal balance of the residential mortgage
2.10loan at the time of prepayment, or (ii) an amount equal to 60 days' interest, at the interest
2.11rate in effect on the residential mortgage loan at the time of prepayment, on the unpaid
2.12principal balance of the residential mortgage loan at the time of prepayment.
2.13    (b) If a residential mortgage originator offers or makes residential mortgage loans
2.14to any borrowers located in this state with prepayment penalties, fees, premiums, or
2.15other charges exceeding the maximum amount under paragraph (a), clause (4), then the
2.16residential mortgage originator shall provide the following disclosure to each prospective
2.17borrower located in this state that requests a residential mortgage loan from the residential
2.18mortgage originator, whether or not the prospective borrower receives a residential
2.19mortgage loan:
2.21THIS LENDER CHARGES YOU A SUBSTANTIAL PENALTY IF YOU PAY OFF OR
2.22REFINANCE YOUR LOAN BEFORE MATURITY. ASK THE LENDER HOW MUCH
2.23THE PENALTY WILL BE FOR YOUR LOAN.
2.24    The residential mortgage originator shall read the disclosure to the prospective
2.25borrower when the prospective borrower requests a residential mortgage loan, and again
2.26within three days before the borrower signs the note or other agreement for the residential
2.27mortgage loan. The residential mortgage originator also shall provide the disclosure to the
2.28prospective borrower in writing so that it is received by the prospective borrower within
2.29five days after the residential mortgage originator receives the prospective borrower's
2.30request for a residential mortgage loan, and again within three days before the prospective
2.31borrower signs the note or other agreement for the residential mortgage loan. The written
2.32disclosure must be stated in at least 16-point capitalized boldface type on a single sheet of
2.33paper that contains only the disclosure, the date on which the disclosure form is sent or
2.34provided, the name, address, and telephone number of the residential mortgage originator,
2.35the name and address of the prospective borrower, and, at the option of the residential
2.36mortgage originator, the prospective borrower's dated and signed acknowledgment
3.1of receipt of the disclosure form. The provisions of the disclosure form, other than
3.2the disclosure in this subdivision, are not required to be in at least 16-point capitalized
3.3boldface type. The prospective borrower shall be permitted to keep a copy of each written
3.4disclosure form. When a prospective borrower asks a residential mortgage originator for
3.5information about a prepayment penalty, the residential mortgage originator shall give the
3.6prospective borrower the requested information, and shall tell the borrower the highest
3.7aggregate amount of the prepayment penalties, fees, premiums, and other charges that the
3.8residential mortgage originator would charge to the prospective borrower for prepayment
3.9of the residential mortgage loan one year after it is funded, based on a hypothetical
3.10unpaid principal balance of $100,000 and also based on the highest interest rate that the
3.11residential mortgage originator would charge to the prospective borrower. A mortgage
3.12originator responding to requests for residential mortgage loans via the Internet may make
3.13the disclosure in a manner acceptable to the commissioner.
3.14    (c) A residential mortgage originator shall not enter into a subprime loan that
3.15contains a provision requiring or permitting the imposition of a penalty, fee, premium, or
3.16other charge in the event the residential mortgage loan is prepaid in whole or in part."
3.17Renumber the sections in sequence and correct the internal references
3.18Amend the title accordingly