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HB 162: "An Act relating to mortgage lenders, mortgage brokers, mortgage originators, state agents who collect program administration fees, and other persons who engage in activities relating to mortgage lending; relating to mortgage loan activities; relating to an originator fund; relating to fees for mortgage loan transactions; and providing for an effective date."

00                             HOUSE BILL NO. 162                                                                          
01 "An Act relating to mortgage lenders, mortgage brokers, mortgage originators, state                                     
02 agents who collect program administration fees, and other persons who engage in                                         
03 activities relating to mortgage lending; relating to mortgage loan activities; relating to                              
04 an originator fund; relating to fees for mortgage loan transactions; and providing for an                               
05 effective date."                                                                                                        
06 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA:                                                                
07    * Section 1. AS 06.01.050(3) is amended to read:                                                                   
08                 (3)  "financial institution" means an institution subject to the regulation                             
09       of the department under this title; in this paragraph, "institution" includes a                                   
10       commercial bank, savings bank, credit union, premium finance company, small loan                                  
11       company, bank holding company, financial holding company, trust company, savings                                  
12       and loan association, [AND] deferred deposit advance licensee under AS 06.50, and                             
13       licensee under AS 06.60; in this paragraph, "licensee under AS 06.60" has the                                 
01       meaning given to "licensee" in AS 06.60.990;                                                                  
02    * Sec. 2. AS 06 is amended by adding a new chapter to read:                                                        
03                 Chapter 60. Mortgage Lending Regulation Act.                                                          
04                           Article 1. Licensing.                                                                       
05            Sec. 06.60.010. License required. (a) Except as provided under AS 06.60.015,                               
06       a person, including a person doing business from outside this state, may not operate as                           
07       a mortgage lender or mortgage broker in this state unless the person is licensed under                            
08       this chapter.                                                                                                     
09            (b)  A person may not operate as an originator in this state unless the person is                            
10                 (1)  a natural person who                                                                               
11                      (A)  is licensed as an originator under this chapter; and                                          
12                      (B)  works under contract for, or as an employee of, a mortgage                                    
13            licensee; or                                                                                                 
14                 (2)  a mortgage licensee, if an employee of the mortgage lender is                                      
15                      (A)  a principal owner or a manager of the mortgage lender; and                                    
16                      (B)  is licensed as an originator under this chapter.                                              
17            (c)  A license may cover more than one location of the licensee.                                             
18            (d)  A person who operates as both a mortgage lender and a mortgage broker is                                
19       only required to obtain one mortgage license.                                                                     
20            Sec. 06.60.015. Exemptions; requirements of registration. (a) Subject to (b)                               
21       of this section, this chapter does not apply to a person who operates as a mortgage                               
22       lender or mortgage broker if the person is                                                                        
23                 (1)  an individual who grants a mortgage loan for residential property                                  
24       owned by the individual;                                                                                          
25                 (2)  a person who is authorized to engage in business as a bank, savings                                
26       institution, or credit union under the laws of the United States, a state or territory of                         
27       the United States, or the District of Columbia, and whose mortgage loan activity is                               
28       subject to the general supervision, regulation, and examination of a regulatory body or                           
29       agency of the United States, a state or territory of the United States, or the District of                        
30       Columbia;                                                                                                         
31                 (3)  a subsidiary of or an affiliate of a person who is covered by (2) of                               
01       this subsection and who is subject to the general supervision, regulation, and                                    
02       examination of a regulatory body or agency of the United States, a state or territory of                          
03       the United States, or the District of Columbia;                                                                   
04                 (4)  a nonprofit corporation that makes mortgage loans to promote                                       
05       home ownership or home improvements; in this paragraph, "nonprofit corporation"                                   
06       means a corporation that qualifies under 26 U.S.C. 501(c)(3) or (4) (Internal Revenue                             
07       Code) for an exemption from federal income taxation;                                                              
08                 (5)  an agency of the federal government, a state government, a                                         
09       municipality, or a quasi-governmental agency making or brokering mortgage loans                                   
10       under the specific authority of the laws of a state or the United States;                                         
11                 (6)  a person who acts as a fiduciary for an employee pension benefit                                   
12       plan qualified under 26 U.S.C. (Internal Revenue Code) and who makes mortgage                                     
13       loans solely to participants of the plan from assets of the plan;                                                 
14                 (7)  a person who acts in a fiduciary capacity conferred by the authority                               
15       of a court; or                                                                                                    
16                 (8)  a person who is licensed by the United States Small Business                                       
17       Administration as a small business investment company under 15 U.S.C. 661 - 697g                                  
18       (Small Business Investment Act of 1958).                                                                          
19            (b)  A person who is listed in (a)(2) - (8) of this section shall file a registration                        
20       form to obtain an exemption under (a) of this section. The department shall determine                             
21       the form and content of the registration form.                                                                    
22            Sec. 06.60.020. Application for mortgage license. An application for a                                     
23       mortgage license must                                                                                             
24                 (1)  be in writing;                                                                                     
25                 (2)  be signed by the applicant and notarized;                                                          
26                 (3)  be on the form prescribed by the department;                                                       
27                 (4)  contain the name of the applicant;                                                                 
28                 (5)  if the applicant is a partnership or an association not covered by (6)                             
29       or (7) of this section, contain the name and both the residence and business addresses                            
30       of each member of the partnership or association;                                                                 
31                 (6)  if the applicant is a corporation, contain the name and both the                                   
01       residence and business addresses of each officer and director of the corporation and a                            
02       shareholder holding 10 percent or more of the total shares;                                                       
03                 (7)  if the applicant is a limited liability company, contain the name and                              
04       both the residence and business addresses of each member of the company and any                                   
05       manager of the company;                                                                                           
06                 (8)  contain the mailing address of the applicant, the street address and                               
07       city, if any, for each business location that will be covered by the license, and an                              
08       identification of the applicant's principal office;                                                               
09                 (9)  provide the applicant's written consent to an investigation of the                                 
10       applicant under AS 06.60.030;                                                                                     
11                 (10)  contain other information that the department may require                                         
12       concerning the organization and operations of the applicant and the financial                                     
13       responsibility, background, experience, and activities of the applicant and its directors,                        
14       officers, members, owners, and other principals.                                                                  
15            Sec. 06.60.025. Application for originator license. An application for an                                  
16       originator license must                                                                                           
17                 (1)  be in writing;                                                                                     
18                 (2)  be signed by the applicant and notarized;                                                          
19                 (3)  be on a form prescribed by the department;                                                         
20                 (4)  contain the name and residence address of the applicant;                                           
21                 (5)  include a complete set of fingerprints of the applicant; and                                       
22                 (6)  contain other information or supporting material that the                                          
23       department may require concerning the applicant, including other forms of                                         
24       identification of the applicant.                                                                                  
25            Sec. 06.60.030. Investigation. The department shall investigate an applicant                               
26       for a license to determine if the applicant satisfies the requirements of this chapter for                        
27       the license.                                                                                                    
28            Sec. 06.60.035. Fees and expenses. (a) When an applicant submits an                                        
29       application for a license under this chapter to the department, the applicant shall pay to                        
30       the department                                                                                                    
31                 (1)  a nonrefundable application fee of $250 in partial payment of those                                
01       investigation expenses incurred by the department; and                                                            
02                 (2)  a biennial license fee of $500 for the period that terminates two                                  
03       years after the date the license is issued; after this payment, the biennial license fee is                       
04       due every two years on the anniversary date of the original issuance of the license.                              
05            (b)  An applicant shall pay all investigative fees incurred by the department                                
06       before the department issues a license.                                                                           
07            Sec. 06.60.040. Competency testing. (a) A person who applies for an                                        
08       originator license shall pass a competency test conducted and graded by the                                       
09       department. In cooperation with the education committee established under                                         
10       AS 06.60.160(b), the department shall establish the scope and content of the test by                              
11       regulation.                                                                                                       
12            (b)  An individual must score 75 or better to pass the competency test.                                      
13            (c)  If an individual fails the competency test, the individual may take the                                 
14       competency test again. The department may charge an additional $150 fee for each                                  
15       additional competency test that the department provides to the person.                                            
16            Sec. 06.60.045. Bonding. (a) An applicant for a mortgage license shall file                                
17       with the application submitted to the department under AS 06.60.020 a bond with one                               
18       or more sureties in the amount of $25,000 under which the applicant is the obligor.                               
19       The bond must be satisfactory to the department.                                                                  
20            (b)  The bond required by (a) of this section shall be for the use of the                                    
21       department, the Department of Law, or another person to recover for a claim for relief                            
22       against the obligor under this chapter. The bond must state that the obligor will                                 
23       faithfully conform to and abide by the provisions of this chapter and all regulations                             
24       adopted under this chapter and will pay the department, the Department of Law, or                                 
25       another person all money that may become due or owing to the department, the                                      
26       Department of Law, or the other person from the obligor under this chapter.                                       
27            (c)  An applicant for a mortgage license that covers more than one location is                               
28       not required to file more than one bond.                                                                          
29            (d)  The bond required under (a) of this section may be continuous until the                                 
30       department revokes or otherwise terminates the license.                                                           
31            (e)  If the department determines at any time that the bond required under (a)                               
01       of this section is unsatisfactory for any reason, the department may require the                                  
02       mortgage licensee to file with the department, within 10 days after the receipt of a                              
03       written demand from the department, an additional bond that complies with the                                     
04       provisions of this section.                                                                                       
05            Sec. 06.60.050. Issuance of license. Except as otherwise provided in this                                  
06       chapter, the department shall issue a license to an applicant if                                                  
07                 (1)  the application complies with the requirements of this chapter that                                
08       apply to the particular license;                                                                                  
09                 (2)  the applicant                                                                                      
10                      (A)  has not been convicted, including a conviction based on a                                     
11            guilty plea or a plea of nolo contendere, of a felony or another crime involving                             
12            fraud, misrepresentation, or dishonesty within the previous seven years;                                     
13                      (B)  has not had a license for engaging in an occupation                                           
14            suspended or revoked by this state, another state, or the federal government, or                             
15            within the previous seven years; in this subparagraph, "license" means a                                     
16            license issued under this chapter or a similar license issued by another state;                              
17                      (C)  has not made a false statement of material fact on the                                        
18            application;                                                                                                 
19                      (D)  has not violated a provision of this chapter, a regulation                                    
20            adopted under this chapter, or an order of the department under this chapter;                                
21            and                                                                                                          
22                 (3)  the applicant pays all fees required to be paid by an applicant for                                
23       the particular license.                                                                                           
24            Sec. 06.60.055. Decision on application. (a) Within 30 days after the date a                               
25       complete application, the required bond if the application is for a mortgage license,                             
26       and any required fees and investigative costs are received by the department, the                                 
27       department shall either grant or deny the license.                                                                
28            (b)  If the department denies the license, the department shall promptly notify                              
29       the applicant. The notification must indicate the reason for the denial and that the                              
30       applicant is entitled to a hearing on the denial.                                                                 
31            Sec. 06.60.060. Determinations for mortgage licensing. Before granting a                                   
01       mortgage license, the department shall determine that                                                             
02                 (1)  the applicant has complied with the requirements of this chapter for                               
03       obtaining the license;                                                                                            
04                 (2)  the financial responsibility, experience, character, and general                                   
05       fitness of the applicant, and of the applicant's directors, officers, members, owners,                            
06       and other principals, and the organization and operation of the applicant indicate that                           
07       the business will be operated efficiently and fairly, in the public interest, and under the                       
08       law; and                                                                                                          
09                 (3)  the department has not found grounds for denial of a license under                                 
10       AS 06.60.065.                                                                                                     
11            Sec. 06.60.065. Additional grounds for denial of license. In addition to any                               
12       other grounds identified in this chapter for denying a license, the department may deny                           
13       a mortgage license to an applicant if the applicant                                                               
14                 (1)  has liabilities that exceed the applicant's assets, cannot meet the                                
15       applicant's obligations as they mature, or is in a financial condition that indicates that                        
16       the applicant cannot continue in business and safely handle the mortgage loans of the                             
17       applicant's customers;                                                                                            
18                 (2)  is permanently or temporarily enjoined by a court of competent                                     
19       jurisdiction from engaging in or continuing conduct or a practice involving an aspect                             
20       of the business of providing financial services to the public;                                                    
21                 (3)  has been prohibited by a federal or state regulatory agency from                                   
22       engaging in, participating in, or controlling a finance-related activity that provides                            
23       financial services to the public; or                                                                              
24                 (4)  has, within the previous seven years,                                                              
25                      (A)  been convicted, including a conviction based on a guilty                                      
26            plea or a plea of nolo contendere, of a felony or another crime involving fraud,                             
27            misrepresentation, or dishonesty;                                                                            
28                      (B)  committed an act, made an omission, or engaged in a                                           
29            practice that constitutes a breach of a fiduciary duty;                                                      
30                      (C)  had the applicant's participation in the conduct of a                                         
31            business limited by an administrative act of a federal or state agency, including                            
01            the suspension or revocation of a license for engaging in an occupation; or                                  
02                      (D)  had a license for engaging in an occupation suspended or                                      
03            revoked by this state, another state, or the federal government.                                             
04            Sec. 06.60.070. Form and contents of license. A license must be in a form                                  
05       established by the department and must state the full name of the licensee. A mortgage                            
06       license must state the address for each office of the business where the business of the                          
07       licensee is to be conducted. If a mortgage licensee conducts business on the Internet,                            
08       the mortgage license must also state the registered domain address through which the                              
09       mortgage licensee conducts the mortgage licensee's business and the physical location                             
10       of the mortgage licensee's main business office.                                                                  
11            Sec. 06.60.075. License availability. A licensee shall provide a copy of the                               
12       license to a person who requests a copy.                                                                          
13           Article 2. License Duration, Renewal, Inactivity, and Surrender.                                            
14            Sec. 06.60.080. Duration and renewal of license. A license issued under this                               
15       chapter remains in effect for two years after the license is issued unless revoked,                               
16       suspended, surrendered, or made inactive under this chapter.                                                      
17            Sec. 06.60.085. Renewal of license. (a) Unless the department denies the                                   
18       renewal under (b) of this section, a licensee may renew a license by submitting to the                            
19       department                                                                                                        
20                 (1)  a renewal application in the form and manner established by the                                    
21       department;                                                                                                       
22                 (2)  the biennial license fee required by AS 06.60.105;                                                 
23                 (3)  if the renewal is for a mortgage license, a report identifying any                                 
24       changes in the information provided under AS 06.60.020(4) - (8);                                                  
25                 (4)  if the renewal is for an originator license, certificates or other                                 
26       documents that show that the continuing education requirements of AS 06.60.160 have                               
27       been satisfied; and                                                                                               
28                 (5)  if the renewal is for an originator license or for a mortgage licensee                             
29       who is operating as an originator under AS 06.60.010(b)(2), the fund fee required by                              
30       AS 06.60.550.                                                                                                     
31            (b)  A renewal under (a) of this section is considered granted unless, within 30                             
01       days after the department receives the renewal application, the department notifies the                           
02       licensee that the department has denied the renewal application because the licensee is                           
03       not complying with this chapter.                                                                                  
04            Sec. 06.60.090. Inactive license. (a) A license may be made inactive under this                            
05       section.                                                                                                          
06            (b)  To be eligible to have a mortgage license be made inactive, all mortgage                                
07       loans of a licensee must have been paid in full or sold.                                                          
08            (c)  To make a license inactive, a licensee shall provide the department with a                              
09       written request that the license be made inactive and return the license certificate to                           
10       the department. The request must include the licensee's name, address, and other                                  
11       information that the department requires that is necessary for the department to                                  
12       process the request and a statement by the licensee that all mortgage loans of the                                
13       licensee have been paid in full or sold.                                                                          
14            (d)  The department shall issue an inactive license certificate to a person whose                            
15       license becomes inactive under this section.                                                                      
16            (e)  If a person holds a license that becomes inactive under this section, the                               
17       person may not operate as a mortgage lender, mortgage broker, or originator under the                             
18       license in this state until the license is reactivated.                                                           
19            (f)  If a license is made inactive under this section, the license remains inactive                          
20       until the person who holds the inactive license provides the department with a written                            
21       request that the license be reactivated. The request must include the information that                            
22       the department requires is necessary to process the request.                                                      
23            (g)  While a license is inactive, the person holding the inactive license shall                              
24       pay the biennial license fee as required by AS 06.60.105 and inform the department of                             
25       any change that occurs in the name and address of the person, the location of the                                 
26       person's business, or in the business operations or control of the person, but the person                         
27       is not required to maintain the bond required by AS 06.60.045 or to file the annual                               
28       report required by AS 06.60.100.                                                                                  
29            (h)  Notwithstanding AS 06.60.120, while a license is inactive under this                                    
30       section, the person who holds the license may not transfer the license to another                                 
31       person.                                                                                                           
01            (i)  While a license is inactive under this section, the person is not required to                           
02       surrender the license under AS 06.60.097(b) for not having engaged in mortgage loan                               
03       activity for 12 months.                                                                                           
04            (j)  While a license is inactive under this section, the person holding the                                  
05       inactive license shall continue to maintain records as required by AS 06.60.135 for the                           
06       business transactions of the person that occurred before the license became inactive.                             
07            (k)  While a license is inactive under this section, the department may take                                 
08       action against the license, the person holding the inactive license, or both for                                  
09       noncompliance with this chapter before the license became inactive or for                                         
10       noncompliance with this section while the license is inactive.                                                    
11            (l)  A licensee whose license lapses under this chapter is not eligible for an                               
12       inactive license under this section unless the license is reactivated under                                       
13       AS 06.60.095.                                                                                                     
14            (m)  A person holding a license that is inactive under this section may not                                  
15       engage in activities for which the license is required, but may receive commissions or                            
16       other payments from a person who contracted with or employed the licensee for                                     
17       services and the services were performed while the licensee was actively licensed.                                
18            (n)  Except as otherwise provided in this section and by regulations adopted by                              
19       the department, the provisions of this chapter do not apply to a person holding an                                
20       inactive license under this section.                                                                              
21            Sec. 06.60.095. Reactivation of inactive license. (a) Except as provided in (b)                            
22       and (c) of this section, a person who has an inactive license certificate under                                   
23       AS 06.60.090 may reactivate the license by applying to the department for an active                               
24       license and paying the required fees.                                                                             
25            (b)  A person is eligible for reactivation of an inactive license if the person has                          
26       been in an inactive status for less than 24 months from the anniversary date of the                               
27       issuance of the initial inactive license. If the person has been in an inactive status for                        
28       24 months or longer, the person may obtain a license only by satisfying the                                       
29       qualifications applicable to initial licensure.                                                                   
30            (c)  The department shall issue an active license that has been converted from                               
31       inactive status under this section for the remainder of the current 24-month period of                            
01       the inactive license.                                                                                             
02            Sec. 06.60.097. Surrender of license. (a) A licensee may surrender a license                               
03       issued to the licensee by delivering written notice to the department that the licensee                           
04       intends to surrender the license, except that a mortgage licensee may not surrender a                             
05       license until all loans of that mortgage licensee have either been paid in full or sold.                          
06            (b)  A licensee shall surrender a license issued to the licensee if the licensee                             
07       has not engaged in mortgage loan activity for 12 consecutive months.                                              
08            (c)  Surrender of a license under this section does not affect the licensee's civil                          
09       or criminal liability for acts committed before surrender of the license.                                         
10                       Article 3. Licensee Obligations.                                                                
11            Sec. 06.60.100. Annual report. (a) On or before March 15, or on another date                               
12       established by the department by regulation, of each year a mortgage licensee shall file                          
13       a report with the department giving relevant information that the department requires                             
14       concerning the business and operations of each location in the state where business                               
15       was conducted by the mortgage licensee in the state during the preceding calendar                                 
16       year. The mortgage licensee shall make the report under oath or on affirmation. The                               
17       report must be in the form established by the department.                                                         
18            (b)  A mortgage licensee who fails to file a report as required by (a) of this                               
19       section is subject to a civil penalty of $25 for each day's failure to file the report.                           
20            Sec. 06.60.105. Biennial license fee. (a) A licensee shall pay the department a                            
21       biennial license fee of $500.                                                                                     
22            (b)  After the payment of the initial biennial license fee under AS 06.60.035, a                             
23       licensee shall pay the biennial license fee every two years on or before the anniversary                          
24       date of the original issuance the license.                                                                        
25            (c)  A mortgage licensee who is licensed to act as both a mortgage broker and a                              
26       mortgage lender is not required to pay more than one biennial license fee.                                        
27            (d)  The license fee imposed by (a) of this section is in addition to the fee                                
28       imposed under AS 43.70 (Alaska Business License Act).                                                             
29            Sec. 06.60.110. Location of business. A mortgage licensee may not maintain                                 
30       the mortgage licensee's principal place of business or a branch office within an office,                          
31       suite, room, or place of business in which any other business is solicited or engaged in,                         
01       or in association or conjunction with another business, unless the name, ownership,                               
02       and business purpose of the other business is disclosed in the mortgage licensee's                                
03       application for a mortgage license.                                                                               
04            Sec. 06.60.115. Change of place of business. If a mortgage licensee wishes to                              
05       change the mortgage licensee's place of business to another location, the mortgage                                
06       licensee shall submit a written notice to the department at least 10 days before                                  
07       relocating the business. If the mortgage licensee is otherwise in compliance with this                            
08       chapter, the department shall issue a new mortgage license to the mortgage licensee to                            
09       reflect the new location.                                                                                         
10            Sec. 06.60.120. Transfer of business. (a) Except as provided by (b) of this                                
11       section, a mortgage licensee may only transfer or assign the licensee's business if                               
12                 (1)  the transfer is made to another mortgage licensee with the same                                    
13       type of mortgage license as the transferring or assigning mortgage licensee; and                                  
14                 (2)  the mortgage licensee provides the department with written notice                                  
15       at least 30 days before the effective date of the proposed transfer or assignment.                                
16            (b)  A person who holds an originator license may not transfer or assign the                                 
17       originator license.                                                                                               
18            Sec. 06.60.130. Change in business control or operations. (a) The prior                                    
19       written approval of the department is required for the continued operation of a                                   
20       mortgage licensee's business when a change in control of the mortgage licensee is                                 
21       proposed. The department may require the information it considers necessary to                                    
22       determine whether a new application is required. The mortgage licensee requesting                                 
23       approval of the change in control shall pay all reasonable expenses incurred by the                               
24       department to investigate and approve or deny the change in control.                                              
25            (b)  If there is a significant change in the business operations of a mortgage                               
26       licensee not covered by AS 06.60.120, the mortgage licensee shall provide written                                 
27       notice to the department at least 30 days before the effective date of the change in                              
28       business operations.                                                                                              
29            Sec. 06.60.135. Records of mortgage licensee. (a) The requirements of this                                 
30       section apply to the business transactions of a mortgage licensee that occur entirely or                          
31       partially in this state.                                                                                          
01            (b)  A mortgage licensee shall keep and use in the mortgage licensee's business                              
02       the accounting records that are in accord with sound and accepted accounting                                      
03       practices.                                                                                                        
04            (c)  A mortgage licensee shall maintain a record, by electronic record or                                    
05       photocopying, for the account of each borrower and for each loan made to the                                      
06       borrower. This record must contain all documents, notes, electronic correspondence,                               
07       and forms that are produced or prepared for the mortgage loan by the mortgage                                     
08       licensee, and the mortgage licensee shall retain each document, note, electronic                                  
09       correspondence, and form for 25 months.                                                                           
10            (d)  A mortgage licensee shall retain for at least three years after final payment                           
11       is made on a mortgage loan, or three years after a mortgage loan is sold, whichever                               
12       occurs first, the original contract for the mortgage licensee's compensation, copies of                           
13       the note, settlement statement, and truth-in-lending disclosure, an account of fees                               
14       received in connection with the loan, and other papers or records relating to the loan                            
15       that may be required by department order or regulation.                                                           
16            (e)  If a mortgage licensee conducts business as a mortgage loan servicing                                   
17       agent for mortgage loans that the mortgage licensee owns, or as an agent for other                                
18       mortgage lenders or investors, the mortgage licensee shall, in addition to complying                              
19       with (b) and (c) of this section, maintain a record for each mortgage loan. The record                            
20       for each mortgage loan must include, either in electronic or printed format, as well as                           
21       other papers required by department order or regulation, the amount of the mortgage                               
22       loan, the total amount of interest and finance charges on the mortgage loan, the                                  
23       interest rate on the mortgage loan, the amount of each payment to be made on the                                  
24       mortgage loan, a description of the collateral taken for the mortgage loan, a history of                          
25       all payments received by the mortgage licensee on the mortgage loan, a detailed                                   
26       history of the amount of each payment that is applied to the reduction of the mortgage                            
27       loan principal, the interest that accrues on the mortgage loan, and any other fees and                            
28       charges that are related to the mortgage loan. The mortgage licensee shall retain the                             
29       record required by this subsection for three years after the loan is sold to another                              
30       mortgage loan servicing agent or after the mortgage loan is satisfied, whichever occurs                           
31       first.                                                                                                            
01            (f)  In this section, "mortgage loan servicing agent" means a person who acts                                
02       on behalf of the owner of a mortgage loan to collect payments on the mortgage loan                                
03       and enforce the terms of the mortgage loan.                                                                       
04            Sec. 06.60.140. Availability of out-of-state records. A mortgage licensee                                  
05       who operates an office or other place of business outside this state that is licensed                             
06       under this chapter shall, at the request of the department,                                                       
07                 (1)  make the records of the office or place of business available to the                               
08       department at a location within this state; or                                                                    
09                 (2)  reimburse the department its reasonable costs, as provided in                                      
10       AS 06.60.250(c), that are incurred by the department during an investigation or                                   
11       examination conducted at the office or place of business.                                                         
12            Sec. 06.60.145. Disqualified persons. (a) A disqualified person may not be an                              
13       officer, a director, a partner, a member, a sole proprietor, a trustee, an employee of a                          
14       mortgage licensee, or in another position with similar responsibilities. In this                                  
15       subsection, "employee" means an individual who negotiates an agreement with a                                     
16       member of the public for the mortgage licensee or who has access to, or responsibility                            
17       for, escrow accounts or escrow money held by the mortgage licensee.                                               
18            (b)  A mortgage licensee may not permit a disqualified person to obtain an                                   
19       ownership interest of 10 percent or more in the mortgage licensee's business without                              
20       the prior written approval of the department.                                                                     
21            (c)  Before a person may obtain an ownership interest of 10 percent or more in                               
22       the business of a mortgage licensee, the person shall authorize the department to                                 
23       access the person's criminal history information in any state to determine whether the                            
24       person is a disqualified person.                                                                                  
25            (d)  In this section,                                                                                        
26                 (1)  "disqualified person" means a person who                                                           
27                      (A)  has been convicted, including conviction by a guilty plea or                                  
28            a plea of nolo contendere, of an offense that is a felony within the previous                                
29            seven years;                                                                                                 
30                      (B)  has been held liable within the previous seven years for an                                   
31            action that involves dishonesty or fraud by a final judgment in a civil action or                            
01            by an administrative judgment by a public agency; or                                                         
02                      (C)  had a license for engaging in an occupation revoked or                                        
03            terminated for cause by an agency of this state, another state, or the federal                               
04            government within the previous seven years;                                                                  
05                 (2)  "offense" means a criminal offense that involves deception, fraud,                                 
06       misrepresentation, or violation of the public trust.                                                              
07            Sec. 06.60.150. Posting of license. A mortgage licensee shall conspicuously                                
08       post the mortgage license in each place of business of the mortgage licensee.                                     
09            Sec. 06.60.155. Restriction on originator licensee work. An originator                                     
10       licensee may only work as an originator licensee under contract for, or as an employee                            
11       of, one mortgage licensee.                                                                                        
12            Sec. 06.60.160. Continuing education requirements. (a) An originator                                       
13       licensee shall complete and submit to the department evidence of at least 24 hours of                             
14       continuing education for each biennial license period. The originator licensee or                                 
15       mortgage licensee shall submit the evidence when the originator licensee or mortgage                              
16       licensee submits a license renewal application. The 24 hours of continuing education                              
17       must be in a training program approved by the education committee established under                               
18       (b) of this section.                                                                                              
19            (b)  The department shall establish an education committee consisting of seven                               
20       members. The commissioner of commerce, community, and economic development                                        
21       shall appoint two persons employed by the department and five licensees to serve on                               
22       the committee. A licensee may apply to the department to serve on the education                                   
23       committee established under this subsection by submitting an application in the form                              
24       and with the content established by the department.                                                               
25            (c)  The education committee established under (b) of this section shall publish                             
26       on a regular basis a listing of classes, seminars, or other training programs that may be                         
27       used to satisfy the continuing education requirements of this section.                                            
28                    Article 4. Discipline and Investigation.                                                           
29            Sec. 06.60.200. Revocation and suspension of a license. (a) The department                                 
30       may suspend or revoke a license if the department finds that                                                      
31                 (1)  the licensee has failed to                                                                         
01                      (A)  make a payment required by this chapter;                                                      
02                      (B)  maintain a bond required under AS 06.60.045, if the                                           
03            licensee is a mortgage licensee;                                                                             
04                      (C)  satisfy the continuing education requirements, if the                                         
05            licensee is an originator licensee;                                                                          
06                      (D)  comply with an applicable provision of this title, with an                                    
07            applicable regulation adopted under this title, with a lawful demand, ruling,                                
08            order, or requirement of the department, or with another statute or regulation                               
09            applicable to the conduct of the licensee's business;                                                        
10                 (2)  the licensee has, with respect to a mortgage loan transaction,                                     
11                      (A)  made a substantial misrepresentation;                                                         
12                      (B)  made a false promise likely to influence, persuade, or                                        
13            induce another person to take action;                                                                        
14                      (C)  engaged in a serious course of misrepresentation or made a                                    
15            false promise through another licensee;                                                                      
16                      (D)  engaged in conduct that is fraudulent or dishonest;                                           
17                      (E)  procured, or helped another person to procure, a license by                                   
18            deceiving the department;                                                                                    
19                      (F)  engaged in conduct of which the department did not have                                       
20            knowledge when the department issued the license, if the conduct demonstrates                                
21            that the licensee is not fit to engage in the activities for which the licensee was                          
22            licensed;                                                                                                    
23                      (G)  knowingly authorized, directed, planned, or aided in the                                      
24            publishing, distribution, or circulation of a materially false statement or a                                
25            material misrepresentation concerning the licensee's business or concerning                                  
26            mortgage loans originated in the course of the licensee's business in this or                                
27            another state; or                                                                                            
28                 (3)  a fact or condition exists that would have constituted grounds for                                 
29       denial of the initial issuance or the renewal of the license.                                                     
30            (b)  In addition to the bases for revocation under (a) of this section, the                                  
31       department may revoke the license of a licensee who is convicted, including                                       
01       conviction by a plea of not guilty or a plea of nolo contendere, of a felony or another                           
02       crime involving fraud, misrepresentation, or dishonesty committed while licensed                                  
03       under this chapter. A person whose license is revoked under this subsection is not                                
04       qualified to be issued another license until seven years have elapsed since the person                            
05       completed the sentence imposed for the conviction, or, if a sentence was not imposed                              
06       or was suspended, until seven years have elapsed from the conviction.                                             
07            Sec. 06.60.210. Suspension related to fund. (a) When an award is made from                                 
08       the fund, the department may suspend the license of the originator licensee whose                                 
09       actions formed the basis of the award.                                                                            
10            (b)  The department shall lift a suspension made under (a) of this section if the                            
11       originator licensee reaches an agreement with the department on terms and conditions                              
12       for the repayment to the fund of the money awarded to the claimant and the costs of                               
13       hearing the fund claim. The department shall reimpose the suspension if the originator                            
14       licensee violates the terms of a repayment agreement entered into under this                                      
15       subsection.                                                                                                       
16            Sec. 06.60.230. Divestment. If the department has revoked a mortgage license,                              
17       the mortgage licensee shall divest itself of all outstanding loans that were issued under                         
18       this chapter by selling or assigning them to another mortgage licensee, except that the                           
19       divestment must be approved by the department.                                                                    
20            Sec. 06.60.240. Reinstatement of revoked license. The department may                                       
21       reinstate a revoked license if the licensee complies with this chapter or with a demand,                          
22       ruling, or requirement made by the department under this chapter. Before                                          
23       reinstatement of a license, the licensee shall pay the biennial license fee required under                        
24       AS 06.60.105.                                                                                                     
25            Sec. 06.60.250. Investigation and examination. (a) The department may                                      
26       investigate and examine the affairs, business premises, and records of a person                                   
27       required to be licensed under this chapter to determine compliance with this chapter,                             
28       regulations adopted under this chapter, AS 06.01, and applicable regulations adopted                              
29       under AS 06.01. Notwithstanding AS 06.01.015, the department may conduct an                                       
30       examination at least once every 36 months, or sooner, if the examination is part of the                           
31       review of a complaint against the licensee.                                                                       
01            (b)  For the purposes of conducting an examination under this section, the                                   
02       department                                                                                                        
03                 (1)  shall have free access to the place of business, books, accounts,                                  
04       safes, and vaults of the licensee;                                                                                
05                 (2)  may conduct the examination without prior notice to the licensee;                                  
06       and                                                                                                               
07                 (3)  may examine, under oath or affirmation, all persons whose                                          
08       testimony the department may require to conduct the examination.                                                  
09            (c)  A person shall reimburse the department reasonable costs incurred by the                                
10       department to conduct an examination under this section. The reimbursement under                                  
11       this subsection may not exceed the rate of $75 an hour for the examination, plus travel                           
12       costs, including a per diem allowance that does not exceed the per diem allowance for                             
13       employees of the state under AS 39.20.110.                                                                        
14            Sec. 06.60.260. Removal or suspension of originator licensee. If the                                       
15       department finds that an originator licensee is dishonest, reckless, or incompetent                               
16       when operating as an originator, or refuses to comply with the law, rules of the                                  
17       department, or written requirements or instructions of the department relating to the                             
18       originator license, the department may remove or suspend the originator licensee from                             
19       operating as an originator in the state or order a person licensed under this title to                            
20       remove the originator licensee from operating as an originator for the person.                                    
21            Sec. 06.60.270. Removal by entity. A person licensed under this title shall                                
22       remove an originator licensee from operating as an originator for the person if the                               
23       department directs the person to remove the originator licensee under AS 06.60.260.                               
24            Sec. 06.60.280. Department list. The department shall make available to the                                
25       public a list of all licensees who have been prosecuted, barred, or had their licenses                            
26       suspended or revoked under this chapter. The department shall publish the list on a                               
27       monthly basis.                                                                                                    
28            Sec. 06.60.300. Definition. In AS 06.60.200 - 06.60.300, "originator licensee"                             
29       includes a mortgage licensee who is operating as an originator under                                              
30       AS 06.60.010(b)(2).                                                                                               
31                  Article 5. Business Duties and Restrictions.                                                         
01            Sec. 06.60.320. False, misleading, or deceptive advertising prohibited. A                                  
02       person may not advertise, print, display, publish, distribute, broadcast, or cause or                             
03       permit to be advertised, printed, displayed, published, distributed, or broadcast, in any                         
04       manner a statement or representation with regard to the rates, terms, or conditions for                           
05       a mortgage loan that is false, misleading, or deceptive.                                                          
06            Sec. 06.60.330. Compliance with federal requirements. If the regulations                                   
07       apply to the person under federal law, a person shall conduct the person's mortgage                             
08       loan activities under 12 CFR Part 226 and other regulations adopted by the federal                                
09       government under                                                                                                  
10                 (1)  12 U.S.C. 2601 - 2617 (Real Estate Settlement Procedures Act of                                    
11       1974);                                                                                                            
12                 (2)  12 U.S.C. 2801 - 2810 (Home Mortgage Disclosure Act of 1975);                                      
13                 (3)  12 U.S.C. 2901 - 2908 (Community Reinvestment Act of 1977);                                        
14                 (4)  15 U.S.C. 1601 - 1666j and 1671 - 1693r (Consumer Credit                                           
15       Protection Act);                                                                                                  
16                 (5)  42 U.S.C. 3601 - 3631 (Fair Housing Act of 1968); and                                              
17                 (6)  any other federal law or regulation.                                                               
18            Sec. 06.60.340. Prohibited activities. (a) In addition to activities prohibited                          
19       elsewhere in this chapter or by another law, a person who is a licensee and a person                              
20       who is required to be licensed under this chapter may not, in the course of a mortgage                            
21       loan transaction,                                                                                                 
22                 (1)  misrepresent or conceal material facts or make false promises                                      
23       likely to influence, persuade, or induce an applicant for a mortgage loan or a borrower                           
24       to enter into a mortgage loan transaction;                                                                        
25                 (2)  pursue a course of misrepresentation through an agent;                                             
26                 (3)  improperly refuse to issue a satisfaction of a mortgage loan;                                      
27                 (4)  fail to account for or deliver to a person money, a document, or                                   
28       another thing of value obtained in connection with a mortgage loan, including money                               
29       provided for a real estate appraisal or a credit report if the person is not entitled to                          
30       retain the money under the circumstances;                                                                         
31                 (5)  pay, receive, or collect, in whole or in part, a commission, fee, or                               
01       other compensation for brokering a mortgage loan in violation of this chapter,                                    
02       including a mortgage loan brokered by an unlicensed person other than an exempt                                   
03       person;                                                                                                           
04                 (6)  fail to disburse money in accordance with a written commitment or                                  
05       agreement to make a mortgage loan;                                                                                
06                 (7)  engage in a transaction, practice, or course of business that is not                               
07       engaged in by the person in good faith or fair dealing or that constitutes a fraud on a                           
08       person in connection with the brokering, making, purchase, or sale of a mortgage loan;                            
09                 (8)  influence or attempt to influence through coercion, extortion, or                                  
10       bribery the development, reporting, result, or review of a real estate appraisal sought                           
11       in connection with a mortgage loan; this paragraph does not prohibit a person from                                
12       asking an appraiser to                                                                                            
13                      (A)  consider additional appropriate property information;                                         
14                      (B)  provide further detail, substantiation, or explanation for the                                
15            appraiser's value determination; or                                                                          
16                      (C)  correct errors in the appraisal report;                                                       
17                 (9)  in a loan commitment or prequalification letter, make a false or                                   
18       misleading statement, or omit relevant information or conditions that the person knew                             
19       or reasonably should have known from a preliminary examination of the borrower's                                  
20       loan application, credit report, assets, and income, except that this paragraph does not                          
21       apply if                                                                                                          
22                      (A)  the borrower made a false or misleading statement or                                          
23            omitted relevant information in the loan application that the person relied on                               
24            when issuing the loan commitment or prequalification letter; or                                              
25                      (B)  the person funds the loan at the rate, terms, and costs stated                                
26            in the good faith estimate provided to the borrower at the time the                                          
27            prequalification letter was issued or the loan commitment was made;                                          
28                 (10)  engage in a practice or course of business in which the ultimate                                  
29       rates, terms, or costs of mortgage loans are materially worse for the borrowers than                              
30       they are represented to be in the first good faith estimates the person provides to the                           
31       borrowers; this paragraph does not apply if                                                                       
01                      (A)  the person's generally published or advertised rates, terms,                                  
02            or costs, if any, change for a borrower's loan program; or                                                   
03                      (B)  new or changed information from the borrower makes it                                         
04            necessary to change the loan program offered to the borrower.                                                
05            (b)  A licensee may not represent to the public that the licensee holds a title or                           
06       certification if the representation violates 15 U.S.C. 1125.                                                      
07            Sec. 06.60.350. Certain refinancing prohibited. (a) A mortgage licensee may                                
08       not refinance a mortgage loan within 12 months after the date the mortgage loan is                                
09       closed, unless the refinancing is beneficial to the borrower.                                                     
10            (b)  The factors to be considered when determining if refinancing is beneficial                              
11       to the borrower under (a) of this section may include                                                             
12                 (1)  the borrower's new monthly payment is lower than the total of all                                  
13       monthly obligations being refinanced, after taking into account the costs and fees of                             
14       the refinancing;                                                                                                  
15                 (2)  the amortization period of the new mortgage loan is different from                                 
16       the amortization period of the mortgage loan being refinanced;                                                    
17                 (3)  the borrower receives cash in excess of the costs and fees of the                                  
18       refinancing;                                                                                                      
19                 (4)  the rate of interest of the borrower's promissory note is reduced;                                 
20                 (5)  the mortgage loan changes from an adjustable rate loan to a fixed                                  
21       rate loan after taking into account costs and fees;                                                               
22                 (6)  the refinancing is necessary to respond to a bona fide personal need                               
23       or an order of a court of competent jurisdiction;                                                                 
24                 (7)  the original term of the mortgage loan being refinanced is two                                     
25       years or less; and                                                                                                
26                 (8)  the refinancing is being made to prevent a foreclosure on an                                       
27       existing mortgage loan.                                                                                           
28            Sec. 06.60.360. Escrow accounts. (a) A mortgage licensee and a borrower                                    
29       may agree that the mortgage licensee will keep in an escrow account all money that                                
30       the borrower is required to pay to defray future taxes or insurance premiums or for                               
31       other lawful purposes. The escrow account must be segregated from the other accounts                              
01       of the mortgage licensee. The mortgage licensee may not commingle the borrower's                                  
02       money with the general funds of the mortgage licensee.                                                            
03            (b)  A mortgage licensee may not require a borrower to pay money into escrow                                 
04       to defray future taxes, to defray insurance premiums, or for another purpose, in                                  
05       connection with a subordinate mortgage loan, unless an escrow account for that                                    
06       purpose is not being maintained for the mortgage loan that is superior to the                                     
07       subordinate mortgage loan.                                                                                        
08            (c)  If the billing address of a mortgage licensee who is holding money in                                   
09       escrow for insurance premiums changes, the mortgage licensee shall notify the insurer                             
10       in writing about the changed billing address within 30 days after the change, or 60                               
11       days before the renewal date of the insurance policy, whichever is later.                                         
12            (d)  Except as provided by (e) of this section, a mortgage licensee who accepts                              
13       money belonging to a borrower in connection with a mortgage loan shall deposit all of                             
14       the money into an escrow account maintained by the mortgage licensee in a bank or                                 
15       another recognized depository institution. The mortgage licensee may not commingle                                
16       the borrower's money with the general funds of the mortgage licensee. The mortgage                                
17       licensee shall maintain all money deposited in the escrow account by the borrower                                 
18       until the money is paid to the intended third party. In this subsection, "recognized                              
19       depository institution" means a person who is organized as a financial institution under                          
20       the laws of a state or the federal government.                                                                    
21            (e)  A mortgage licensee is not required to deposit and maintain a borrower's                                
22       money in an escrow account under (d) of this section if the mortgage licensee obtains                             
23       a bond or letter of credit payable to the state that covers the anticipated average                               
24       amount that would otherwise be held in an escrow account at any one time under (d)                                
25       of this section.                                                                                                  
26                         Article 6. Enforcement.                                                                       
27            Sec. 06.60.400. Cease and desist orders. The department may issue, under                                   
28       AS 06.01.030, an order directing a person to cease and desist from engaging in an                                 
29       unsafe or unsound practice. The department shall determine the form and content of                                
30       the order.                                                                                                        
31            Sec. 06.60.410. Censure, suspension, or bar. (a) In addition to any other                                  
01       remedy provided under this chapter, the department may, by order after appropriate                                
02       notice and opportunity for a hearing, censure a person, suspend the license of a person                           
03       for a period not to exceed 12 months, or bar a person from a position of employment,                              
04       management, or control of a licensee, if the department finds that                                                
05                 (1)  the censure, suspension, or bar is in the public interest;                                         
06                 (2)  the person has knowingly committed or caused a violation of this                                   
07       chapter or a regulation adopted under this chapter; and                                                           
08                 (3)  the violation has caused material damage to the licensee or to the                                 
09       public.                                                                                                           
10            (b)  When the person who is the subject of a proposed order under this section                               
11       receives a notice of the department's intention to issue an order under this section, the                         
12       person is immediately prohibited from engaging in any activities for which a license is                           
13       required under this chapter.                                                                                      
14            (c)  A person who is suspended or barred under this section is prohibited from                               
15       participating in a business activity of a licensee and from engaging in a business                                
16       activity on the premises where a licensee is conducting the licensee's business. This                             
17       subsection may not be construed to prohibit a suspended or barred person from having                              
18       the person's personal transactions processed by a licensee.                                                       
19            Sec. 06.60.420. Civil penalty for violations. (a) A person who knowingly                                   
20       violates a provision of this chapter or a regulation adopted under this chapter is liable                         
21       for a civil penalty not to exceed $10,000 for each violation.                                                     
22            (b)  The remedies provided by this section and by other sections of this chapter                             
23       are not exclusive and may be used in combination with other remedies allowed under                                
24       law to enforce the provisions of this chapter.                                                                    
25            Sec. 06.60.430. Additional enforcement provisions, actions, and rights. (a)                                
26       The department may treat a licensee as a financial institution under AS 06.01 when                                
27       applying the enforcement provisions of AS 06.01.                                                                  
28            (b)  This chapter may not be interpreted to prevent the attorney general or any                              
29       other person from exercising the rights provided under AS 45.50.471 - 45.50.561.                                  
30            (c)  If the department determines that a licensee or a person acting on the                                  
31       behalf of the licensee is in violation of, or has violated, a provision of this chapter, the                      
01       department may refer the information to the attorney general and request that the                                 
02       attorney general investigate the violation under AS 45.50.495. The attorney general                               
03       may enjoin a violation of this chapter and may seek restitution, rescission, and other                            
04       relief as allowed by law.                                                                                         
05            (d)  In addition to another investigation allowed under this chapter, the                                    
06       department may conduct other examinations, periodic audits, special audits,                                       
07       investigations, and hearings as may be necessary and proper for the efficient                                     
08       administration of this chapter.                                                                                   
09                     Article 7. Originator Surety Fund.                                                                
10            Sec. 06.60.500. Originator surety fund. The originator surety fund is                                      
11       established as a separate account in the general fund.                                                            
12            Sec. 06.60.510. Composition of fund. The fund consists of payments made by                                 
13       originator licensees under AS 06.60.550, filing fees retained under AS 06.60.620,                                 
14       income earned on the investment of the money in the fund, and money deposited in                                  
15       the fund by the department under AS 06.60.740.                                                                    
16            Sec. 06.60.520. Use of fund. The legislature may appropriate the money                                     
17       collected in the fund under AS 06.60.510 to the department to implement                                           
18       AS 06.60.500 - 06.60.760, including paying claims, holding hearings, and incurring                                
19       legal expenses and other expenses directly related to fund claims and the operations of                           
20       the fund or for any other public purpose. Nothing in AS 06.60.500 - 06.60.760 creates                             
21       a dedicated fund.                                                                                                 
22            Sec. 06.60.530. Fund report. Every six months the department shall make a                                  
23       written report on the activities of the fund, the balances in the fund, interest earned on                        
24       the fund, and interest returned to the fund.                                                                      
25            Sec. 06.60.540. Approval required. (a) The department must approve a fund                                  
26       expenditure that is used to prepare, print, manufacture, sponsor, produce, or otherwise                           
27       provide an item or a service to a member of the public, to a licensee, to a potential                             
28       licensee, or to another person.                                                                                   
29            (b)  In (a) of this section, "an item or a service" includes an information                                  
30       pamphlet, an examination preparation packet, an educational course, the certification                             
31       of a continuing education course, and an instructor for a continuing education course.                            
01            Sec. 06.60.550. Required fund fees. (a) A person who applies for or renews                                 
02       an originator license or who operates as an originator under AS 06.60.010(b)(2) shall                             
03       pay to the department, in addition to the fees required by AS 06.60.035, a fund fee not                           
04       to exceed $150.                                                                                                   
05            (b)  Every two years, if the department determines that the average balance in                               
06       the fund during the previous two years was less than $250,000 or more than $500,000,                              
07       the department shall, unless the department waives the adjustment, adjust the fund fee                            
08       so that the average balance of the fund during the next two years is anticipated to be an                         
09       amount that is not less than $250,000 or more than $500,000. In this subsection,                                  
10       "average balance" means the average balance in the fund after the department deducts                              
11       anticipated expenditures for claims against the fund and for hearing and legal expenses                           
12       directly related to fund operations and claims.                                                                   
13            (c)  At least once a month, the department shall pay the fees collected under                                
14       this section into the general fund. These payments shall be credited to the fund.                                 
15            (d)  Notwithstanding (a) of this section, an originator licensee who obtains an                              
16       initial originator license when the department has reduced the fund fee to nothing, or a                          
17       mortgage licensee who begins operating as an originator under AS 06.60.010(b)(2)                                  
18       when the department has reduced the fund fee to nothing, shall nonetheless pay a fund                             
19       fee of $150 to the department each of the first two years of the originator license or,                           
20       for a mortgage licensee, of operating as an originator.                                                           
21            Sec. 06.60.560. Claim for reimbursement. In addition to any other remedies                                 
22       available to the person, a person seeking reimbursement for a loss suffered in a                                  
23       mortgage loan transaction as a result of fraud, misrepresentation, deceit, or the                                 
24       conversion of trust funds by an originator licensee is eligible to be reimbursed under                            
25       AS 06.60.500 - 06.60.760 for the loss from money appropriated for that purpose.                                   
26            Sec. 06.60.570. Submission of fund claim. To seek reimbursement under                                      
27       AS 06.60.560, a person shall submit a fund claim to the department for the                                        
28       reimbursement on a form furnished by the department. The person must file the fund                                
29       claim within two years after the occurrence of the fraud, misrepresentation, deceit, or                           
30       conversion that is claimed as the basis for the reimbursement.                                                    
31            Sec. 06.60.580. Form and contents of fund claim. The form for a fund claim                                 
01       shall be executed under penalty of unsworn falsification and must include                                         
02                 (1)  the name and address of each originator licensee involved;                                         
03                 (2)  the amount of the alleged loss;                                                                    
04                 (3)  the date or period of time during which the alleged loss occurred;                                 
05                 (4)  the date when the alleged loss was discovered;                                                     
06                 (5)  the name and address of the claimant; and                                                          
07                 (6)  a general statement of the facts related to the fund claim.                                        
08            Sec. 06.60.590. Claim hearing. Except as otherwise provided by                                             
09       AS 06.60.610, a hearing on a fund claim shall be handled by the office of                                         
10       administrative hearings (AS 44.64.010).                                                                           
11            Sec. 06.60.600. Filing and distribution of claim. At least 20 days before a                                
12       hearing is held on the fund claim by the office of administrative hearings                                        
13       (AS 44.64.010), a person making a fund claim shall send a copy of the claim filed with                            
14       the department to                                                                                                 
15                 (1)  each originator licensee alleged to have committed the misconduct                                  
16       resulting in the alleged loss;                                                                                    
17                 (2)  the employer of the originator licensee alleged to have committed                                  
18       the conduct resulting in the alleged loss; and                                                                    
19                 (3)  any other parties involved in the mortgage loan transaction that is                                
20       the subject of the fund claim.                                                                                    
21            Sec. 06.60.610. Election to use small claims court. (a) Within seven days                                  
22       after receiving a copy of a fund claim under AS 06.60.600, each originator licensee                               
23       against whom the claim is made may elect to defend the fund claim as a small claims                               
24       action in district court under District Court Rules of Civil Procedure if the claim does                          
25       not exceed the small claims jurisdictional limit.                                                                 
26            (b)  An originator licensee who elects under (a) of this section to defend a fund                            
27       claim in district court under the small claims rules may not revoke the election without                          
28       the consent of the person who filed the fund claim.                                                               
29            (c)  On receipt of a valid written election under (a) of this section, the                                   
30       department shall dismiss the fund claim filed with the department and notify the                                  
31       person who filed the fund claim that the person who filed the fund claim must bring a                             
01       small claims action in the appropriate district court.                                                            
02            Sec. 06.60.620. Filing fee. (a) A person who files a fund claim under                                      
03       AS 06.60.570 shall pay the department a filing fee of $250 when the person files the                              
04       fund claim.                                                                                                       
05            (b)  The department shall refund the filing fee required by (a) of this section if                           
06       the                                                                                                               
07                 (1)  department makes an award to the claimant;                                                         
08                 (2)  fund claim is dismissed under AS 06.60.610; or                                                     
09                 (3)  fund claim is withdrawn by the claimant before the office of                                       
10       administrative hearings (AS 44.64.010) holds a hearing on the fund claim.                                         
11            Sec. 06.60.630. Department contracts. When the department receives a fund                                  
12       claim, the department may contract under AS 36.30 (State Procurement Code) with an                                
13       investigator, an accountant, an attorney, or another person necessary for the                                     
14       department to process the fund claim. A contract may cover more than one fund claim.                              
15            Sec. 06.60.640. Defense of claim. When the department receives a fund claim,                               
16       the department shall allow each originator licensee against whom the claim is made an                             
17       opportunity to file with the department, within seven days after receipt of notification                          
18       of the fund claim under AS 06.60.600, a written statement in opposition to the fund                               
19       claim and a request for a hearing.                                                                                
20            Sec. 06.60.650. Standards of proof. A person who submits a fund claim under                                
21       AS 06.60.570 bears the burden of establishing by a preponderance of the evidence that                             
22       the person who filed the fund claim suffered a loss in a mortgage loan transaction as a                           
23       result of fraud, misrepresentation, deceit, or the conversion of trust funds by an                                
24       originator licensee and the extent of those losses.                                                               
25            Sec. 06.60.660. Postponement. The department may postpone its                                              
26       consideration of a fund claim until after a hearing under AS 06.60.590 or until the                               
27       completion of a pending or contemplated court proceeding.                                                         
28            Sec. 06.60.670. Nonapplication. AS 06.60.630 - 06.60.660 do not apply to a                                 
29       fund claim that is dismissed under AS 06.60.610.                                                                  
30            Sec. 06.60.680. Findings and payment. (a) At the conclusion of the                                         
31       department's consideration of a claim made under AS 06.60.570, the department shall                               
01       issue a written report that provides the department's findings of fact and conclusions of                         
02       law.                                                                                                              
03            (b)  If the department determines that the claimant has suffered a loss in a                                 
04       mortgage loan transaction as a result of fraud, misrepresentation, deceit, or the                                 
05       conversion of trust funds by an originator licensee, the department may award the                                 
06       person who filed the fund claim reimbursement from money appropriated to the fund                                 
07       for the claimant's loss.                                                                                          
08            Sec. 06.60.690. Fund operations. The department may charge from money                                      
09       appropriated to the department for the purpose the hearing and legal expenses related                             
10       to fund and fund claim operations and fund claims. The department shall deposit into                              
11       the fund money that the department recovers for these expenses from the originator                                
12       licensee under AS 06.60.745. The department may not consider amounts paid from the                                
13       fund for hearing or legal expenses when determining the maximum reimbursement to                                  
14       be awarded under AS 06.60.710 or the maximum liability for fund claims under                                      
15       AS 06.60.710.                                                                                                     
16            Sec. 06.60.700. Payment of small claims judgment. (a) If a fund claim                                      
17       originally filed with the department is dismissed and heard as a small claims action                              
18       under AS 06.60.610 and the person who filed the fund claim is awarded money in the                                
19       small claims action against an originator licensee, the department may pay, subject to                            
20       AS 06.60.710 and 06.60.720, any outstanding portion of the small claims judgment                                  
21       from money appropriated to the department for the purpose.                                                        
22            (b)  Before making payment under (a) of this section, the person who received                                
23       the award shall file with the department a copy of the final judgment and an affidavit                            
24       stating that more than 30 days have elapsed since the judgment became final and that                              
25       the judgment has not yet been satisfied by the originator licensee against whom the                               
26       award was made.                                                                                                   
27            (c)  After the department pays a small claims judgment under this section, the                               
28       department is subrogated to the rights of the person to whom the money was awarded                                
29       under the judgment.                                                                                               
30            Sec. 06.60.710. Maximum liability. (a) Payment of a fund claim may not                                     
31       exceed $15,000 for each claimant, except that the payment may not exceed a total of                               
01       $15,000 for each mortgage loan transaction regardless of the number of persons                                    
02       injured or the number of pieces of residential property involved in the mortgage loan                             
03       transaction.                                                                                                      
04            (b)  The maximum liability for fund claims against one originator licensee may                               
05       not exceed $50,000.                                                                                               
06            (c)  If the $50,000 liability under (b) of this section is insufficient to pay in full                       
07       the valid fund claims of all persons who have filed fund claims against one originator                            
08       licensee, the $50,000 shall be distributed among the claimants in the ratio that their                            
09       individual fund claims bear to the aggregate of valid fund claims, or in another manner                           
10       that the department considers equitable. The department shall distribute the money                                
11       among the persons entitled to share in the recovery without regard to the order in                                
12       which their fund claims were filed.                                                                               
13            Sec. 06.60.720. Order of fund claim payment. If the money appropriated to                                  
14       the department for the purpose is insufficient at a given time to satisfy an award under                          
15       AS 06.60.680 for a fund claim, the department shall, when sufficient money has been                               
16       appropriated to the department for the purpose, satisfy unpaid fund claims in the order                           
17       that the fund claims were originally filed, plus accumulated interest at the rate allowed                         
18       under AS 45.45.010(a).                                                                                            
19            Sec. 06.60.730. False claims or documents. A person who files with the                                     
20       department a notice, statement, or other document required under AS 06.60.500 -                                   
21       06.60.760 that contains a wilful material misstatement of fact is guilty of a class A                             
22       misdemeanor.                                                                                                      
23            Sec. 06.60.740. Right to subrogation. When the department has paid to a                                    
24       claimant the sum awarded by the department, the department shall be subrogated to all                             
25       of the rights of the claimant to the amount paid, and the claimant shall assign all right,                        
26       title, and interest in that portion of the claim to the department. Money collected by the                        
27       department on the claim shall be deposited in the fund.                                                           
28            Sec. 06.60.745. Reimbursement for expenses. If the department pays all or a                                
29       portion of a fund claim against an originator licensee under AS 06.60.680 or                                      
30       06.60.700, the department may recover from the originator licensee, in addition to the                            
31       payment of the fund claim, the expenses incurred by the department to process and                                 
01       otherwise handle the fund claim.                                                                                  
02            Sec. 06.60.750. Disciplinary action against an originator licensee.                                        
03       Repayment in full of all obligations to the fund does not nullify or modify the effect of                         
04       disciplinary proceedings brought against an originator licensee under this chapter.                               
05            Sec. 06.60.760. Definition. In AS 06.60.500 - 06.60.760, "originator licensee"                             
06       includes a mortgage licensee who is operating as an originator under                                              
07       AS 06.60.010(b)(2).                                                                                               
08                    Article 8. Program Administration Fee.                                                             
09            Sec. 06.60.800. Authorization of program administration fee. (a) The                                       
10       department may collect a program administration fee of $10 for each mortgage loan                                 
11       transaction to reimburse the state for the cost of administering this chapter.                                    
12            (b)  The program administration fee shall be paid by the borrower who is                                     
13       providing real property as security for the mortgage loan, except that, if the regulations                        
14       of a federal or state loan program that insures the loan and that applies to the mortgage                         
15       loan transaction prohibits the borrower from paying the program administration fee,                               
16       another party to the mortgage loan transaction shall pay the program administration                               
17       fee.                                                                                                              
18            (c)  If there are multiple mortgage loan instruments recorded for a single                                   
19       mortgage loan transaction, the department shall collect only one program                                          
20       administration fee.                                                                                               
21            (d)  In this section, "mortgage loan instrument" means a deed of trust,                                      
22       mortgage, or another loan instrument recorded to encumber residential real property in                            
23       the state.                                                                                                        
24            Sec. 06.60.810. Payment and use of fees. (a) The department shall coordinate                               
25       with the Department of Natural Resources to collect the program authorization fee.                                
26            (b)  The program authorization fee shall be charged when payment is made to                                  
27       the Department of Natural Resources for recording a document under AS 44.37.025.                                  
28            (c)  The program authorization fees collected under (b) of this section shall be                             
29       separately accounted for and may be appropriated by the legislature to the department                             
30       for the operation of this chapter.                                                                                
31                 Article 9. Duties and Powers of the Department.                                                       
01            Sec. 06.60.850. Publication of disciplinary action. The department may                                     
02       release for publication in a newspaper of general circulation in the locale of a                                  
03       licensee's principal office notice of disciplinary action taken by the department against                         
04       the licensee.                                                                                                     
05            Sec. 06.60.860. Fingerprinting. The department may forward fingerprints                                    
06       provided under this chapter to the Department of Public Safety for submission to the                              
07       Federal Bureau of Investigation for a report by the Federal Bureau of Investigation.                              
08            Sec. 06.60.870. Authority of department. The department may make a ruling,                                 
09       demand, or finding that the department determines is necessary for the proper conduct                             
10       of a licensee's business regulated by this chapter or for the enforcement of this chapter.                        
11       The ruling, demand, or finding must be consistent with this chapter.                                              
12            Sec. 06.60.880. Peace officer powers. (a) A person employed by the                                       
13       department for the administration and enforcement of this chapter may, with the                                   
14       concurrence of the commissioner of public safety, exercise the powers of a peace                                  
15       officer when those powers are specifically granted to the person by the department.                               
16            (b)  A person may exercise a power granted by the department under (a) of this                               
17       section only when necessary for the enforcement of the criminally punishable                                      
18       provisions of this chapter, regulations adopted under this chapter, and other criminally                          
19       punishable laws and regulations, including the investigation of violations of laws                                
20       against theft under AS 11.46.100 - 11.46.150, fraud under AS 11.46.600,                                           
21       misapplication of property under AS 11.46.620, and deceptive business practices                                   
22       under AS 11.46.710.                                                                                               
23                     Article 10. Miscellaneous Provisions.                                                             
24            Sec. 06.60.890. Application to Internet activities. This chapter applies to a                              
25       person even if the person is engaging in the activities regulated by this chapter by                              
26       using an Internet website from within or outside the state.                                                     
27            Sec. 06.60.895. Effect of revocation, suspension, or surrender of license.                                 
28       The revocation, suspension, or surrender of a license does not impair or otherwise                                
29       affect the rights or obligations of a preexisting lawful contract between the licensee                            
30       and a borrower.                                                                                                   
31            Sec. 06.60.900. Applicability of administrative procedures. The provisions                                 
01       of AS 44.62 (Administrative Procedure Act) apply to an action of the department to                                
02       deny, revoke, or suspend a license under this chapter, to censure, suspend, or bar a                              
03       person under AS 06.60.410, to hold hearings, and to issue orders.                                                 
04            Sec. 06.60.905. Untrue, misleading, or false statements. A person may not,                                 
05       in a document filed with the department or in a proceeding under this chapter, make or                            
06       cause to be made, an untrue statement of a material fact, or omit to state a material fact                        
07       necessary in order to make the statement made, in the light of the circumstances under                            
08       which it is made, not misleading or false.                                                                      
09            Sec. 06.60.910. Regulations. The department may adopt regulations under                                    
10       AS 44.62 (Administrative Procedure Act) to implement this chapter.                                                
11            Sec. 06.60.920. Relationship to federal and other state law. (a) If a                                      
12       provision of this chapter is preempted by or conflicts with federal law in a particular                           
13       situation, the provision does not apply to the extent of the preemption or conflict.                              
14            (b)  If a provision of this chapter conflicts with another state law in a particular                         
15       situation, the provision in this chapter governs to the extent of the conflict.                                   
16                       Article 11. General Provisions.                                                                 
17            Sec. 06.60.990. Definitions. In this chapter, unless the context otherwise                                 
18       requires,                                                                                                         
19                 (1)  "agent" does not include a person who is a state employee when                                     
20       acting in the capacity of a state employee;                                                                       
21                 (2)  "borrower" means an individual who receives a mortgage loan;                                       
22                 (3)  "broker" means to operate as a mortgage broker;                                                    
23                 (4)  "department" means the Department of Commerce, Community,                                          
24       and Economic Development;                                                                                         
25                 (5)  "escrow account" means an account                                                                  
26                      (A)  to which a borrower makes payments for obligations                                            
27            related to the real property that is the subject of a mortgage loan of the                                   
28            borrower;                                                                                                    
29                      (B)  held by a person other than the borrower on a mortgage                                        
30            loan; and                                                                                                    
31                      (C)  from which the person holding the account disburses                                           
01            money to pay obligations related to the real property that is the subject of a                               
02            mortgage loan of the borrower.                                                                               
03                 (6)  "fund" means the originator surety fund established by                                             
04       AS 06.60.500;                                                                                                     
05                 (7)  "fund claim" means a claim authorized under AS 06.60.560;                                          
06                 (8)  "fund fee" means the fee that is required to be paid by                                            
07       AS 06.60.550;                                                                                                     
08                 (9)  "knowingly" has the meaning given in AS 11.81.900;                                                 
09                 (10)  "license" means a license issued under this chapter;                                              
10                 (11)  "licensee" means a person who holds a license issued under this                                   
11       chapter;                                                                                                          
12                 (12)  "mortgage broker" means a person who, for compensation or gain,                                   
13       or in the expectation of compensation or gain, directly or indirectly, by telephone, by                           
14       electronic means, by mail, through the Internet, or in person, arranges with a variety of                         
15       lending sources, who may be private lenders, institutional investors, or wholesale                                
16       lenders, to provide financing for mortgage loans;                                                                 
17                 (13)  "mortgage lender" means a person who consummates and funds a                                      
18       mortgage loan and who is named as the payee in the promissory note and as the                                     
19       beneficiary of the deed of trust; "mortgage lender" does not include a subsequent                                 
20       purchaser of a mortgage loan or an interest in a mortgage loan that is originated by a                            
21       licensee under this chapter;                                                                                      
22                 (14)  "mortgage lender license" means a license issued under this                                       
23       chapter to operate as a mortgage lender;                                                                          
24                 (15)  "mortgage lender licensee" means a person who holds a mortgage                                    
25       lender license;                                                                                                   
26                 (16)  "mortgage license" means a mortgage lender license or a                                           
27       mortgage broker license;                                                                                          
28                 (17)  "mortgage licensee" means a mortgage lender licensee or a                                         
29       mortgage broker licensee;                                                                                         
30                 (18)  "mortgage loan"                                                                                   
31                      (A)  means a loan made to an individual if the proceeds are to                                     
01            be used primarily for personal, family, or household purposes and if the loan is                             
02            secured by a mortgage or deed of trust on an interest in a residential owner-                                
03            occupied property for one to four family units located in the state and                                      
04            regardless of where the loan is made;                                                                        
05                      (B)  includes the renewal or refinancing of a loan;                                                
06                      (C)  does not include loans                                                                        
07                           (i)  or extensions of credit to buyers of real property for                                   
08                 a part of the purchase price of the property by persons selling the                                     
09                 property owned by them;                                                                                 
10                           (ii)  to persons related to the lender by blood or                                            
11                 marriage;                                                                                               
12                           (iii)  to persons who are employees of the lender; or                                         
13                           (iv)  made primarily for a business, commercial, or                                           
14                 agricultural purpose of the borrower or for construction of residential                                 
15                 property;                                                                                               
16                 (19)  "operate" means do business, offer to provide, or provide;                                        
17                 (20)  "originator" means a natural person who, for compensation or                                      
18       gain, or in the expectation of compensation or gain, directly or indirectly, by                                   
19       telephone, by electronic means, by mail, or in person                                                             
20                      (A)  accepts or offers to accept an application for a mortgage                                     
21            loan from a potential borrower;                                                                              
22                      (B)  solicits or offers to solicit a mortgage loan for a potential                                 
23            borrower;                                                                                                    
24                      (C)  negotiates the terms or conditions of a mortgage loan with                                    
25            or for a borrower or potential borrower; or                                                                  
26                      (D)  issues to borrowers, potential borrowers, or the                                              
27            representatives of borrowers or potential borrowers, mortgage loan                                           
28                           (i)  commitments;                                                                             
29                           (ii)  interest rate agreements;                                                               
30                           (iii)  interest rate guarantees;                                                              
31                           (iv)  prequalification letters; or                                                            
01                           (v)  commitment letters to finance up to 90 percent of                                        
02                 the value of real property;                                                                             
03                 (21)  "originator license" means a license issued to a person to operate                                
04       as an originator;                                                                                                 
05                 (22)  "originator licensee" means a person who holds an originator                                      
06       license;                                                                                                          
07                 (23)  "program administration fee" means the fee described under                                        
08       AS 06.60.800(a);                                                                                                  
09                 (24)  "records" includes books, accounts, papers, files, and other                                      
10       records;                                                                                                          
11                 (25)  "residential property" means improved real property used or                                       
12       occupied, or intended to be used or occupied, for residential purposes.                                           
13            Sec. 06.60.995. Short title. This chapter may be known as the Mortgage                                     
14       Lending Regulation Act.                                                                                           
15    * Sec. 3. AS 44.62.330(a) is amended by adding a new paragraph to read:                                            
16                 (47)  Department of Commerce, Community, and Economic                                                   
17       Development relating to mortgage lending under AS 06.60.                                                          
18    * Sec. 4. AS 44.64.030(a)(5) is amended to read:                                                                   
19                 (5)  AS 06 (banks, [AND] financial institutions, and fund claims),                          
20       except as provided otherwise by AS 06.60.590;                                                                 
21    * Sec. 5. AS 45.50.481 is amended by adding a new subsection to read:                                              
22            (c)  The exemption in (a)(1) of this section does not apply to an act or                                     
23       transaction regulated under AS 06.60.                                                                             
24    * Sec. 6. The uncodified law of the State of Alaska is amended by adding a new section to                          
25 read:                                                                                                                   
26       TRANSITION: LICENSING OF CURRENT MORTGAGE LENDERS AND                                                             
27 MORTGAGE BROKERS. Notwithstanding AS 06.60.010, enacted by sec. 2 of this Act, a                                        
28 person who is engaging in activities for which a license is required under AS 06.60, enacted                            
29 by sec. 2 of this Act, immediately before the effective date of AS 06.60 is not required to                             
30 comply with the licensing requirements of AS 06.60 until March 1, 2009. In this section,                                
31 "license" has the meaning given in AS 06.60.990, enacted by sec. 2 of this Act.                                         
01    * Sec. 7. The uncodified law of the State of Alaska is amended by adding a new section to                          
02 read:                                                                                                                   
03       TRANSITION: REGULATIONS. The Department of Commerce, Community, and                                               
04 Economic Development may proceed to adopt regulations necessary to implement the                                        
05 changes made by this Act. The regulations take effect under AS 44.62 (Administrative                                    
06 Procedure Act), but not before July 1, 2008.                                                                            
07    * Sec. 8. Section 7 of this Act takes effect immediately under AS 01.10.070(c).                                    
08    * Sec. 9. Except as provided in sec. 8 of this Act, this Act takes effect July 1, 2008.