HF4188 (Legislative Session 94 (2025-2026))
Various consumer protections for insurance and financial products modified, virtual-currency kiosks prohibited, student loan borrower protections added, mortgage loan servicing standards provided, commissioner of commerce notices required, and mortgage protections provided.
Related bill: SF4365
AI Generated Summary
Purpose
- Strengthen protections for consumers in financial services, insurance, and related products.
- Tighten rules for mortgage loan servicing, add student loan lender provisions, and address virtual currency interfaces.
- Update and unify several Minnesota statutes to reflect new protections and requirements.
Key Provisions
Virtual currency kiosks - Definition: A self-serve, unstaffed terminal that exchanges virtual currency for money, bank credit, or other currency. - Prohibition: Starting January 1, 2027, it becomes illegal to install, operate, or maintain a virtual currency kiosk in Minnesota. - Phase-out: Operators must remove kiosks from public locations by December 31, 2026. - Penalty: Violating the prohibition can result in civil penalties of $1,000 per day. - Consumer refunds: By December 31, 2026, kiosk operators who conduct transactions only through kiosks must refund customers for money or virtual currency held or owed. If alternative access to virtual currency is available at all times, refunds may not be required. - Refund options: Customers can choose to receive refunds in U.S. dollars or to a designated virtual currency wallet. - Refund recording: Refunds must be recorded on the applicable blockchain, and operators must keep proof of transfers and provide it to the commissioner if asked.
Mortgage loan servicing standards - Definitions and basics: Clarifies terms such as authorized representatives, third-party providers, transferee/transferor servicers, and other key servicing concepts; references RESPA, GLBA, TILA, FCRA, and federal protections. - General requirements: Servicers must comply with all applicable laws and regulations beyond Minnesota rules. - Transfers of servicing: When servicing is transferred, the new servicer must continue loan modification processing and honor modification agreements; homeowners should be treated as third-party beneficiaries where allowed. - Payments and fees: Payments must be credited promptly; if money is held in a suspense account, the servicer must apply it when full payment is available; any fees must be disclosed and explained within specific timelines. - Third-party providers: Servicers must have written policies to oversee foreclosing firms, subservicers, and other contractors; keep these policies in records. - Escrow accounts: Servicers must manage escrow funds for taxes and insurance, disclose required reserves annually, and notify borrowers of escrow changes (e.g., insurance, taxes) within 10 business days. - Borrower information requests: Servicers must respond to borrower requests for information, provide loan histories, current balances, and details about the loan holder; respond within defined timelines; provide at least one free statement per year with certain limits. - Complaints and inquiries: Requires processes for handling complaints, a toll-free number, and a path to escalate to supervisory review. - Prohibitions and fair dealing: Prohibits unfair, deceptive, or abusive practices; requires good faith, reasonable care, and consideration of affordable loan modifications when financially needed. - Notices and communications: Notices must be sent by first-class mail and by email if the borrower opts in; provide contact options and agency information for complaints. - Recordkeeping: Requires long-term retention of complaint files, loan history, and related documentation (60 months for many records). - Accessibility of information: Requires clear and detailed responses to borrowers and easy-to-understand explanations of fees and actions. - Mortgage servicing prohibitions: Servicers must avoid misrepresentation, overcharging, or withholding information; must cooperate with authorized representatives.
Residential mortgage servicing updates (additional details) - detailed timelines for notifying borrowers about uncredited payments and changes to escrow accounts; - rules for when an escrow shortage or increase occurs and how borrowers are informed; - requirements around handling and disclosing suspense accounts and font-level clarity in notices.
Repeal and cross-references - Repeals Minnesota Statutes 2024 section 53B.75.1.15 (specific repeal details not repeated here). - Cross-references to existing state and federal laws and to RESPA/Reg X and other regulations.
Student loans and lenders - Income-driven repayment: Adds income-driven repayment programs to the definitions used for evaluating student loan criteria (e.g., income-based, pay-as-you-earn plans, etc.). - Lender definitions and exclusions: Clarifies who counts as a lender; lists exclusions such as certain banks, credit unions, government-funded entities, and small-scale lenders. - Written communication: Expands what counts as written communications (mail, email, or designated websites) between lenders/servicers and borrowers. - Annual lender reporting: Requires annual reports from student loan lenders on Minnesota borrowers, including school attendance, outstanding debt, number of loans, defaults, interest rate ranges, and other lender-specific data. - Privacy and data handling: References to protections under federal law for lenders and servicers.
Telecommunications and recordkeeping - Telephone recordings: Requires residential mortgage loan servicers with 500+ MN loans to record conversations with borrowers and keep recordings for 60 months. - Trust accounts and records: Increases emphasis on maintaining trust accounts for mortgage originators/servicers and preserving records for a set period (60 months).
Exemptions - Banks, savings banks, savings associations, and credit unions may be exempt from some provisions, but exemptions depend on the type of loan and servicing arrangement.
Timeline and Implementation
- Virtual currency kiosks: Ban takes effect January 1, 2027; removal required by December 31, 2026; refunds required for kiosks operating solely through kiosks by end of 2026.
- Mortgage servicing provisions: Implemented as part of this act; enforcement and compliance will align with the new standards and the amended statutes.
- Student loan lender reporting: Annual reporting begins by March 15, 2025, for the prior calendar year data.
- Other recordkeeping and notice requirements: Effective as specified in the statute text, with transitional references to the year of enactment.
Impact on Consumers
- Consumers will experience stronger protections against hidden fees, delayed credits, and unfair practices in mortgage servicing.
- Mortgage servicers will need to provide clearer disclosures, timely notices, and detailed information in response to borrower requests.
- Borrowers will have improved access to loan modification information and potential loss mitigation options.
- The government will receive more data on student loan lending and borrower outcomes to monitor trends and defaults.
- The virtual currency kiosk prohibition protects consumers from unregulated kiosk operations and ensures refunds and recordkeeping are regulated.
Summary of Significant Changes to Law
- New prohibition on virtual currency kiosks, with robust refund and recordkeeping requirements.
- Comprehensive overhaul of residential mortgage loan servicing standards, including:
- Enhanced modification processing obligations and third-party oversight.
- Clear payment processing, escrow management, and fee disclosure rules.
- Stronger borrower information access, complaint handling, and dispute resolution processes.
- Explicit fair dealing and anti-abuse language.
- Mandatory notices via mail and email, plus document transfer capabilities.
- Long-term record retention and mandatory telephone recordings for large servicers.
- Expanded definitions and requirements around student loans:
- Income-driven repayment program concepts and lender definitions.
- Expanded written communication rules and annual lender reporting with detailed borrower data.
Relevant Terms virtual currency kiosk; refunds; blockchain; civil penalty; mortgage loan servicing; transferee servicer; transferor servicer; modification; loss mitigation; third-party providers; escrow account; escrow notice; suspense account; payment crediting; RESPA; Regulation X; Gramm-Leach-Bliley Act; Truth in Lending Act; Fair Credit Reporting Act; borrower requests; loss mitigation programs; borrower complaints; customer service; written communication; annual report; lender; income-driven repayment; Pay As You Earn; Revised Pay As You Earn; Income Based Repayment; school data; default rate; interest rate ranges; file transfers; requester; authorized representative; broker/foreclosure firm; trust accounts; telephone recordings.
Bill text versions
- Introduction PDF PDF file
Actions
| Date | Chamber | Where | Type | Name | Committee Name |
|---|---|---|---|---|---|
| March 12, 2026 | House | Action | Introduction and first reading, referred to | Commerce Finance and Policy |
Citations
[
{
"analysis": {
"added": [
"Defines 'Person' to include individual, general partnership, limited partnership, limited liability company, corporation, trust, association, joint stock corporation, or other corporate entity identified by the commissioner."
],
"removed": [],
"summary": "Adds a definitional subd.3d defining 'Person' as various corporate entities identified by the commissioner.",
"modified": [
"Expands the definitional scope of 'Person' in section 53B.69."
]
},
"citation": "53B.69 Subd.3d",
"subdivision": "Subd.3d"
},
{
"analysis": {
"added": [
"Defines 'Virtual currency kiosk' (the automated, unstaffed terminal) and its function in facilitating the exchange of virtual currency for money, bank credit, or other virtual currency, including connections to external exchangers."
],
"removed": [],
"summary": "Amends Subd.10 to add or modify the definition for 'Virtual currency kiosk'.",
"modified": [
"Expands the terminology relating to virtual currency kiosk within 53B.69."
]
},
"citation": "53B.69 Subd.10",
"subdivision": "Subd.10"
},
{
"analysis": {
"added": [
"Definitions for Authorized representative, Clearly and conspicuously, Government-sponsored enterprise, Real Estate Settlement Procedures Act (RESPA), Third-party provider, Transferee servicer, and Transferor servicer."
],
"removed": [],
"summary": "Initializing definitions for the Residential Mortgage Loan Servicing Standards in 58.131.",
"modified": [
"Introduces key terms used throughout 58.131 and references to RESPA and related concepts."
]
},
"citation": "58.131 Subd.1",
"subdivision": "Subd.1"
},
{
"analysis": {
"added": [
"Requires compliance with applicable state law, federal law, and RESPA; directs adherence to other sections and federal statutes/regulations (e.g., GLBA, TILA, FCRA)."
],
"removed": [],
"summary": "General requirements for servicing; cross-references to other laws.",
"modified": [
"Codifies that violations include those of federal law and RESPA, reinforcing cross-compliance."
]
},
"citation": "58.131 Subd.2",
"subdivision": "Subd.2"
},
{
"analysis": {
"added": [
"Obligates transferee servicers to continue processing loan modification requests, honor trial and permanent modifications, and designate the homeowner as a third-party intended beneficiary in relevant contracts."
],
"removed": [],
"summary": "Servicing and ownership transfers or sales provisions.",
"modified": [
"Imposes transfer-related protections to modify and preserve borrower rights during servicing transfers."
]
},
"citation": "58.131 Subd.3",
"subdivision": "Subd.3"
},
{
"analysis": {
"added": [
"Transferor servicers must inform the transferee if a loan modification is pending and ensure the transferee accepts and continues processing modifications and honors modification agreements."
],
"removed": [],
"summary": "Additional transferor/transferee transfer rules (notice and obligations).",
"modified": [
"Expands duties in the transfer process to protect borrowers' modification rights."
]
},
"citation": "58.131 Subd.3",
"subdivision": "Subd.3"
},
{
"analysis": {
"added": [
"Requires prompt crediting of payments and adherence to loan documents; permits specific payment handling arrangements in writing."
],
"removed": [],
"summary": "Payment processing and fees.",
"modified": [
"Clarifies payment application timing and the ability to suspend and credit payments."
]
},
"citation": "58.131 Subd.4",
"subdivision": "Subd.4"
},
{
"analysis": {
"added": [
"Mandates written policies governing oversight of third-party providers (foreclosure firms, subservicers, agents, etc.)."
],
"removed": [],
"summary": "Contracting with third-party providers.",
"modified": [
"Formalizes oversight and documentation requirements for third-party providers."
]
},
"citation": "58.131 Subd.5",
"subdivision": "Subd.5"
},
{
"analysis": {
"added": [
"Escrow management requirements, including timely payments from escrow for insurance, taxes, and charges; penalties avoided if not applicable."
],
"removed": [],
"summary": "Maintenance of the escrow account.",
"modified": [
"Ensures escrow account controls and borrower protections in escrows."
]
},
"citation": "58.131 Subd.6",
"subdivision": "Subd.6"
},
{
"analysis": {
"added": [
"Servicer must make a reasonable effort to comply with information requests and respond within specified timelines; detailed records required; include payoff history, identity of current holder, and contact information."
],
"removed": [],
"summary": "Borrower requests for information.",
"modified": [
"Standardizes response timelines and information to be provided to borrowers."
]
},
"citation": "58.131 Subd.7",
"subdivision": "Subd.7"
},
{
"analysis": {
"added": [
"Requirements for complaint handling procedures, customer service staffing, and escalation processes."
],
"removed": [],
"summary": "Borrower complaints and inquiries.",
"modified": [
"Strengthens borrower support and complaint escalation mechanisms."
]
},
"citation": "58.131 Subd.8",
"subdivision": "Subd.8"
},
{
"analysis": {
"added": [
"Prohibits unfair or deceptive practices, misrepresentation, and coercive payment practices; requires good-faith handling of borrower communications."
],
"removed": [],
"summary": "Fair dealing duty and prohibitions in servicing.",
"modified": [
"Imposes affirmative standards of conduct for servicers in mortgage loan servicing."
]
},
"citation": "58.131 Subd.9",
"subdivision": "Subd.9"
},
{
"analysis": {
"added": [
"Details requirements for notice by mail and electronic communication, and recordkeeping for notices."
],
"removed": [],
"summary": "Notices, mailings, and receipt of communications.",
"modified": [
"Strengthens verification and documentation of borrower communications."
]
},
"citation": "58.131 Subd.10",
"subdivision": "Subd.10"
},
{
"analysis": {
"added": [
"Requires documentation and resolution of complaints with 60-month retention; cross-reference to 58.131 subdivisions."
],
"removed": [],
"summary": "Amendment to the documentation and resolution of complaints; retention.",
"modified": []
},
"citation": "58.14 Subd.3",
"subdivision": "Subd.3"
},
{
"analysis": {
"added": [
"Duty to keep trust funds records for 60 months identifying transaction date, source, disbursement, and related details."
],
"removed": [],
"summary": "Trust account records for mortgage originators.",
"modified": []
},
"citation": "58.14 Subd.4",
"subdivision": "Subd.4"
},
{
"analysis": {
"added": [
"Requires 60-month retention of business records, including emails, records of advertising, and communications."
],
"removed": [],
"summary": "Record retention requirements.",
"modified": []
},
"citation": "58.14 Subd.5",
"subdivision": "Subd.5"
},
{
"analysis": {
"added": [
"Requires residential mortgage loan servicers with 500+ Minnesota loans to record telephone conversations and retain recordings for 60 months."
],
"removed": [],
"summary": "Telephone recordings (new Subd.6).",
"modified": []
},
"citation": "58.14 Subd.6",
"subdivision": "Subd.6"
},
{
"analysis": {
"added": [
"Specifies exemptions from this section for residential mortgage loans originated by federally or state-chartered banks, savings banks, or credit unions if not serviced by a residential mortgage servicer."
],
"removed": [],
"summary": "Exemption for certain federally or state-chartered banks/savings institutions.",
"modified": []
},
"citation": "58.18 Subd.4",
"subdivision": "Subd.4"
},
{
"analysis": {
"added": [
"Defines 'Income-driven repayment program' and lists various plans (Income Contingent/Based/PAYE/IBR, etc.) used to evaluate borrower eligibility."
],
"removed": [],
"summary": "Income-driven repayment program definition (new).",
"modified": []
},
"citation": "58B.02 Subd.4a",
"subdivision": "Subd.4a"
},
{
"analysis": {
"added": [
"Defines 'Lender' as an entity engaged in making or securing student loans, with specified exclusions (banks, credit unions, certain subsidiaries, U.S. government programs, etc.)."
],
"removed": [],
"summary": "Lender definition (in Supplemental HEA context).",
"modified": []
},
"citation": "58B.02 Subd.8a",
"subdivision": "Subd.8a"
},
{
"analysis": {
"added": [
"Defines 'Written communication' as a written correspondence transmitted via mail, fax, or designated email/website."
],
"removed": [],
"summary": "Written communication (student loans) – definition.",
"modified": []
},
"citation": "58B.02 Subd.10",
"subdivision": "Subd.10"
},
{
"analysis": {
"added": [
"Requires annual reporting by March 15, including lists of Minnesota borrowers and schools, outstanding debt, and other lender metrics."
],
"removed": [],
"summary": "Annual report requirement for student loan lenders.",
"modified": []
},
"citation": "58B.03 Subd.10",
"subdivision": "Subd.10"
},
{
"analysis": {
"added": [],
"removed": [],
"summary": "Repeal of Minnesota Statutes 2024 sections 53B.75.1.15, 53B.75.1.16, and 53B.75.1.17 (historic sections).",
"modified": []
},
"citation": "53B.75.1.15",
"subdivision": ""
},
{
"analysis": {
"added": [],
"removed": [],
"summary": "Repeal of Minnesota Statutes 2024 sections 53B.75.1.15, 1.16, 1.17 (historic sections).",
"modified": []
},
"citation": "53B.75.1.16",
"subdivision": ""
},
{
"analysis": {
"added": [],
"removed": [],
"summary": "Repeal of Minnesota Statutes 2024 sections 53B.75.1.15, 1.16, 1.17 (historic sections).",
"modified": []
},
"citation": "53B.75.1.17",
"subdivision": ""
},
{
"analysis": {
"added": [],
"removed": [],
"summary": "Real Estate Settlement Procedures Act (RESPA) reference cited in the bill.",
"modified": [
"Bill invokes RESPA as part of mortgage servicing standards, tying to 12 U.S.C. §2601 et seq."
]
},
"citation": "12 U.S.C. § 2601 et seq.",
"subdivision": ""
},
{
"analysis": {
"added": [],
"removed": [],
"summary": "RESPA Regulation X reference (CFReg).",
"modified": [
"Bill references Regulation X (12 C.F.R. Part 1024) as amended."
]
},
"citation": "12 C.F.R. Part 1024",
"subdivision": ""
},
{
"analysis": {
"added": [],
"removed": [],
"summary": "References GLBA in 58.131 Subd.2 general requirements.",
"modified": [
"Bill incorporates GLBA provisions as applicable to mortgage servicing."
]
},
"citation": "Gramm-Leach-Bliley Act, Public Law 106-102",
"subdivision": ""
},
{
"analysis": {
"added": [],
"removed": [],
"summary": "Truth in Lending Act (TILA) reference.",
"modified": [
"Bill references TILA as part of the federal law compliance requirements."
]
},
"citation": "15 U.S.C. § 1601 et seq.",
"subdivision": ""
},
{
"analysis": {
"added": [],
"removed": [],
"summary": "Fair Credit Reporting Act (FCRA) reference.",
"modified": [
"Bill references FCRA as part of the federal law compliance requirements."
]
},
"citation": "15 U.S.C. § 1681 et seq.",
"subdivision": ""
},
{
"analysis": {
"added": [],
"removed": [],
"summary": "Higher Education Act, Title IV, reference for income-driven repayment contexts.",
"modified": [
"Bill references HEA Title IV as administered in relation to student loan provisions."
]
},
"citation": "20 U.S.C. Title IV",
"subdivision": ""
},
{
"analysis": {
"added": [
"Cites 47.59 Subd.9a as applicable in the mortgage servicing context."
],
"removed": [],
"summary": "Cross-reference to Minnesota Statutes regarding prompt crediting of payments.",
"modified": []
},
"citation": "47.59 Subd.9a",
"subdivision": "Subd.9a"
}
]