Legislature(2007 - 2008)SENATE FINANCE 532
05/10/2007 01:30 PM Senate FINANCE
| Audio | Topic |
|---|---|
| Start | |
| HB162 | |
| SB104 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | SB 104 | TELECONFERENCED | |
| + | TELECONFERENCED |
CS FOR HOUSE BILL NO. 162(L&C)
"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; making
certain violations unfair trade practices; relating to
persons who are licensed under the Alaska Small Loans Act;
and providing for an effective date."
This was the first hearing for this bill in the Senate Finance
Committee.
AT EASE 1:52:18 PM / 1:54:11 PM
Senator Elton moved to adopt Finance committee substitute
Version 25-LS0070\N, Bannister, dated May 8, 2007, as the
working document.
There being no objection, the Version "N" committee substitute
was ADOPTED as the working document.
1:54:38 PM
REPRESENTATIVE BOB LYNN, the bill's sponsor and a licensed
Alaska real estate broker, contended that the largest real
estate loan typically committed to by an individual is the one
utilized to finance the purchase of their home. Nonetheless, few
people understand the "hidden mechanisms and inner workings" of
mortgage loans or keep abreast of "ever-changing" federal and
state mortgage laws. Not finding the right loan with the right
terms "could be a very expensive 30 year mistake."
Representative Lynn became aware of the intricacies of the
mortgage business when he became a licensed realtor. "The most
important thing I know about mortgages is what I don't know."
Representative Lynn recounted that when he made his first home
real estate sale, he purposely arranged for the home buyer to
meet with an experienced mortgage lender; one he believed to be
honest, knowledgeable about the law, and qualified to arrange
the proper loan and address any problem that arose.
Representative Lynn considered finding the right mortgage lender
to be as important as finding the perfect home for his client.
This is "exactly why" he sponsored this bill.
Representative Lynn noted that this bill is supported by the
Alaska Mortgage Bankers Association, the Alaska Mortgage Brokers
Association, the Alaska Independent Lenders Association,
realtors from across the State, and the Division of Banking &
Securities in the Department of Commerce, Community and Economic
Development.
Representative Lynn pointed out that Alaska is the only state
that does not regulate the mortgage loan industry. There are no
licensing or training requirements for people working in the
mortgage industry. This is nonsensical since the State has
licensing and training requirements for tattoo artists and
hairdressers. No background checks or periodic examinations by
the Division of Banking & Securities are conducted. This bill
would "fix that."
1:57:29 PM
Representative Lynn favored licensing any entity, large or
small, making a home loan in the State. The goal should be to
provide "a level playing field" in the mortgage lending
industry. This is contrary to the opinion of those wishing to
"exempt affiliates" and companies that operate via the internet
from outside Alaska.
Representative Lynn characterized state and federal loan
origination laws as complex and ever-changing. "One must be an
expert to speak with any kind of competence on the subject"
addressed in this legislation.
1:58:13 PM
Representative Lynn informed the Committee that Mark Davis with
the Department of Commerce, Community and Economic Development
and industry professionals were available to further address the
intricacies of the subject and the bill before the Committee.
1:58:35 PM
Representative Lynn deemed this a consumer protection bill of
"great importance". He asked the Committee to support the bill.
1:58:51 PM
MARK DAVIS, Director, Division of Banking & Securities,
Department of Commerce, Community and Economic Development
specified that this bill would require the licensing of mortgage
bankers, brokers, and originators. No such licensing
requirements currently exist in Alaska.
Mr. Davis noted that even though ten federal statutes are
applicable to this industry, the absent of a State licensing
requirement prevents the State from ensuring "that the mortgages
being done in this State were in compliance with those laws."
Mr. Davis explained that this bill would allow for State
examination and investigation of licensees and would prohibit
certain acts such as deceptive advertising. It would also
require licensees to comply with federal laws including the
Truth in Lending Act and the Real Estate Settlement Procedures
Act of 1974 (RESPA). In addition, the bill would allow
disciplinary action against any licensee conducting a mortgage
loan in violation of these laws.
Mr. Davis informed that the bill would provide a mechanism
through which the State could examine licensees to ensure they
followed the law and met educational requirements. Predatory
practices, specifically the practice referred to as "flipping",
would be prohibited. Flipping is a practice in which a property
is refinanced within a 12-month period. This practice is not in
the best interest of the borrower.
Mr. Davis contended that "the best deterrence was not the force
of the law", it was education. "If people are educated and
understand the laws then they are able to comply with them."
2:00:42 PM
To that point, Mr. Davis specified that the bill would mandate
continuing education to ensure that people in the mortgage
industry have "the minimum standard of education." This is a
requirement imposed on numerous professions.
Mr. Davis revealed that during recent Division-sponsored
investment and financial education seminars conducted in 13
communities throughout the State, numerous complaints about the
mortgage lending industry surfaced.
Mr. Davis opined that the incorporation of federal mortgage
laws" into this legislation avoided the creation of "a second
layer of regulation," as, in essence, the licensee would be
required "to follow the laws they should already be following."
The decision to incorporate federal mortgage laws was based on a
report compiled by the State of Maine. That report concluded
"that the best reform Maine could make for their mortgage
licensing would be to re-incorporate those federal mortgage laws
in the State law."
Mr. Davis stated that the deceptive advertising prohibitions
would ensure that accurate information on loan percentage rates
and the type of loan qualifying for a specified rate would be
provided.
2:02:17 PM
Mr. Davis recounted that legislation was adopted a few years
earlier that allowed the Division to license and regulate
deferred deposit lenders commonly referred to as payday lenders.
Since that time, ten lenders have left the profession: "some
voluntarily, some by order". However, "30 new companies have
entered the industry and rates have gone down."
Mr. Davis noted that the payday lender legislation also
contained restitution language. As a result, the Division has
been able to collect in excess of "$700,000 in restitution for
people who took out loans that were in violation of the
Statute." This bill contains "similar restitutions provision,"
which would allow the State to "make people whole who had been
harmed by predatory lending practices."
2:03:01 PM
Mr. Davis noted that the majority of the exemptions specified in
the bill follow federal law. State banks and other entities
currently subject to regulation would not be subject to this
bill.
Mr. Davis agreed with Representative Lynn's assessment that this
bill would create "a more level playing field." Lending
practices of banks operating in the State are subject to
Division supervision; however, there are mortgages being
processed "by other companies that may be affiliated with that
bank that are not being regulated."
Mr. Davis advised that the Division was in support of the bill,
"as important financial transactions should be licensed." The
education requirements and criminal background checks on
licensees are also important components.
Mr. Davis also specified that the Federal Bureau of
Investigations (FBI), which is currently conducting a mortgage
investigation in the State, has issued a favorable opinion on
the bill, as documented in a [unspecified] newspaper article.
Mr. Davis emphasized that the adoption of this bill would allow
the Division to respond to consumer complaints.
Mr. Davis concluded by stating that the bill's combination of
licensing and continuing education requirements would improve
mortgage lending industry operations in the State.
2:04:26 PM
Senator Dyson inquired to the cost and time required to obtain a
mortgage lender's license.
Mr. Davis estimated that the initial cost would be approximately
$1,000. This would include a $250 one-time licensing fee, a
biannual licensing fee of $500, and annual continuing education
costs of approximately $200. Many states allow the use of
internet training programs. There are also companies that would
contract with the State to provide training.
Mr. Davis advised that the bill would create a commission to
assist the Department in developing the training component. The
goal would be to keep costs to a minimum.
2:05:43 PM
Senator Dyson asked an estimate of the time that would be
required to complete the training requirements.
Mr. Davis expressed that a specific number of training hours
would be required. Internet training programs are favored
because a person could do them at their convenience. While this
would be subject to the "honor system", internet training is
currently permitted for other professions, including Alaska Bar
Association training.
2:06:25 PM
Senator Dyson cited the argument that the enactment of this bill
could limit competition. That would be detrimental to Alaska
consumers as they might not be able to access the best deal
available.
Mr. Davis disagreed. The Division receives calls each week from
mortgage loan entities inquiring to the State's mortgage lending
licensure requirements. There are two reactions to being told
there were none: some say okay with it while others say they'll
wait until some are established.
Mr. Davis reminded the Committee that more payday lenders are
operating in the State now than before the State began to
license and regulate that industry.
Mr. Davis also pointed out that there is no shortage of mortgage
lending companies in the State. Like the payday lending
legislation, this bill would also require internet mortgage
lenders to abide by Alaska law. Two internet payday lender
entities went out of business due to their inability to comply
with State law.
2:07:36 PM
Senator Thomas, describing this as a long and difficult bill to
read, asked whether interest-only loans were addressed in the
bill.
Mr. Davis clarified that the "bill does not prohibit any
particular type of lending", with the exception of flipping, as
addressed earlier in the discussion. The bill does however
require lenders to comply with federal law, refrain from
deceptive practices, and fully disclose loan terms.
Mr. Davis allowed that even thought certain types of loans are
riskier than others the bill would not curtail loan products.
Thus, experienced borrowers would continue to have a variety of
loan products to choose from.
Mr. Davis informed the Committee that while the Division
wholeheartedly supports the State enacting a predatory loan law
that law should not occur until after the State enacts
legislation requiring money transmitters and mortgages lenders
to be licensed.
Mr. Davis communicated that banning interest-only loans might
limit some people's ability to utilize a loan that might be
appropriate for them. Nonetheless, certain people should not
consider interest-only loans. "That's the reason RESPA and Truth
in Lending and other statutes require disclosure.
Mr. Davis advised that testimony before the House of
Representatives on this topic indicated "that there have been
repeated violations of RESPA at closings in Alaska and they
often pertain to lack of disclosure."
2:09:15 PM
Senator Thomas clarified his question. He was not implying that
interest-only loans should be banned, but rather that some type
of warning ought to be provided.
Mr. Davis expressed that the prohibition of deceptive
advertising would help address this concern. Some deceptive
advertising does not disclose the mechanics involved in
establishing the actual interest rates. Thus, one of the goals
of this legislation is to educate consumers about terminology
such as "a reset rate" that might be referenced in the terms of
a loan and how it might affect the loan they are agreeing to.
2:10:07 PM
Senator Elton asked for clarification about the $150 fee that
would be charged for a person to retake the competency test, as
specified in Section 1 Section 06.60.040. Competency testing.
(a), page 6 line 11 of Version "N". It is unclear whether there
would be a fee for the initial test.
Mr. Davis replied that in an effort to keep an individual's
costs to a minimal, the cost of taking the competency test the
first time would be covered in the fees collected to establish
the educational program. A fee would only be charged if the
person failed the first test and had to retake it.
Senator Elton suggested that the language be changed to clarify
no fee would be charged for the first test.
Mr. Davis agreed. Further discussion in this regard would occur.
Senator Huggins commended Mr. Davis on the effort the Division
exerted on the bill. Legislation considered the previous year on
this issue recommended exempting people who conducted six or
less loans annually from the licensing requirements. He asked
whether that recommendation was included in this legislation.
2:12:14 PM
Mr. Davis affirmed the bill contained a provision which allowed
for "a very small exemptions for mortgage lenders" who conducted
six or less loans a year. However, they would still be subject
to the enforcement provisions of the bill; they would be
"required to register," comply with "all the dictates of the
bill and be subject to examination upon a complaint."
2:12:39 PM
Senator Dyson understood that the majority of "bad loan"
problems could be attributable to an "organization that offers
many financial products and services" and hires "part time
employees to sell those services". This might include insurance,
real estate sales, and investment services.
2:13:33 PM
Mr. Davis affirmed that as being part of the problem. However,
the Division has received complaints about loans made through
larger entities including federal banks and large mortgage
companies.
2:13:59 PM
Senator Olson surmised that the process of licensing individuals
would be a "cumbersome" task. He questioned whether this impact
was adequately reflected in the fiscal notes accompanying the
bill.
Mr. Davis agreed the licensing task would be labor intensive.
Nonetheless, it would be appropriate action. He agreed with
Representative Lynn that buying a home is one of "the most
important financial commitments" a person could make. The person
offering a mortgage loan service should have "the type of
licensing required of an insurance agent, a securities agent, or
an investment advisor." Requiring loan originators to undergo
background checks and take education courses will help prevent
"a lot of the problems" that have been experienced.
Mr. Davis disclosed that four cases involving the mortgage loan
industry have been filed in United States Federal Court in
Anchorage in the last month. This "is indicative of the problem
we have in the State."
Senator Olson asked whether having the licensing requirements
proposed in this legislation in place would have prevented the
events depicted in the articles [copies on file] printed in the
Alaska Daily News newspaper on April 21 and May 3, 2007.
Mr. Davis hoped that would be the case. Individuals seeking to
acquire a license would undergo a background check which would
likely alert authorities about prior suspect activities. The
background check activity has been helpful in other professions,
such as security broker dealers.
2:16:07 PM
Senator Thomas asked whether the non-profit organization
exemptions referenced in paragraph (5) of Section 1, subsection
Sec. 06.60.015.Exemptions; requirements of registration., page 3
lines 9 through 12, referred to exemptions allowed under federal
law and well as non-profit housing authorities such as the
Alaska Housing Finance Corporation (AHFC) and the Tlingit Haida
Housing Authority.
2:16:44 PM
Mr. Davis affirmed that to be correct.
Senator Thomas acknowledged. He then asked whether individuals
who work for an exempted institution such as a bank licensed
under federal law would be exempt from the licensing
requirements of this bill.
2:17:15 PM
Mr. Davis clarified that those employees would not be required
to be licensed, however "they would be subject to general
supervision". For example, when conducting an examination of a
State bank, the Division would review the bank's loan portfolio
including its mortgage loan files, to ensure the bank was
compliant with federal law, the Truth in Advertising Act, and
RESPA regulations.
Mr. Davis noted that the rating given a bank by the Division is
based on its compliance record. That rating "has a profound
affect on the bank's ability to raise money." Banks have reason
to maintain a high rating.
Senator Thomas deduced therefore that a loan officer would be
responsible for individuals reporting to them.
Mr. Davis affirmed.
2:18:21 PM
SIMON KEYMER, American Financial Services Association (AFSA)
testified via teleconference from an offnet location. AFSA is a
financial trade association based in Washington DC. Its members
include mortgage lenders and other "financial services companies
who provide credit to consumers and small businesses."
Mr. Keymer communicated AFSA's "grave concern" about the bill,
as written. He encouraged the Committee to review the amendment
language recommendations [copy not on file] the Association had
provided which mirror language in the mortgage lending bill, SB
272 that passed the Senate the previous year. Else wise, the
recommendation would be to hold this bill in Committee until the
next Legislative session in order to allow time for its "complex
technical and legal issues" to be further scrutinized.
Mr. Keymer pointed out that holding the bill in Committee would
not be detrimental since the licensing provisions in the bill
would not be implemented until 2009.
Mr. Keymer communicated that AFSA believes the best approach
would be to license "large multi-state lenders", but provide a
licensing exemption to their employees. This would balance
consumer protection needs with a wide array of consumer credit
options. This bill, in its current form, could lead to a "flawed
law" that would require it to be re-addressed during the next
session.
Mr. Keymer highlighted some of the consumer protection language
proposed by AFSA: a company would be required to sign an
agreement with the Department of Commerce, Community and
Economic Development "stating that they would accept full
responsibility for ensuring that the employee acts in full
compliance with this chapter." The agreement might also require
a company to conduct employee background checks, provide
continuing education, and other items deemed important by the
Department.
2:20:34 PM
Mr. Keyner pointed out that the Department could retain their
"ability to examine the company to ensure compliance with the
Act". Other recommendations by AFSA include requiring a company
to secure a bond, at a level specified by the Department, to
address any cost the State or a person might experience as a
result of a violation of this chapter.
Mr. Keyner stated that, in its current form, the bill is
contrary to actions of other states. Fewer than ten states
require employees of large multi-State mortgage companies to
acquire individual licenses. Doing so significantly increases
the administrative burden on lenders and regulators; lenders
would be forced to pass costs on to consumers.
Mr. Keyner urged the Committee to recognize the differences
between small and large interstate and intrastate mortgage
lending companies. AFSA members are typically big companies that
are licensed in multiple states and have large numbers of
employees. They are concerned about their reputation and are
often affiliated with a company regulated by the Federal Reserve
Board. These are the reasons they conduct pre-employment
screening including background checks and provide education, and
compliance training.
Mr. Keyner urged the Committee to adopt the amendment language
proposed by ASFA.
2:22:56 PM
KEVIN BREELAND, President, Alaska Mortgage Bankers Association
and Partner and Mortgage Loan Originator, Residential Mortgage
Alaska, shared his extensive background in the mortgage loan
profession. Alaska is the only state that does not require
mortgage lender licensing for companies. 26 states require some
form of licensing for mortgage loan originators. All that is
currently required in Alaska is a business license.
Mr. Breeland stated that except for the non-licensed mortgage
loan originator, a typical real estate transaction involves
numerous licensed individuals including, for example, a licensed
real estate agent, a licensed home inspector, a licensed
engineer if such service is required, and a licensed real estate
appraiser. Any construction work required would be done by a
licensed and bonded contractor and any new construction must be
inspected by a licensed or certified inspector or a municipal or
borough inspector. The title work on the transaction is
performed by a licensed title company under the jurisdiction of
the insurance commission.
2:25:58 PM
Mr. Breeland thought that everyone in the industry, regardless
of their length of experience, should take competency tests. He
also contended that the 2009 effective date specified in the
bill would provide sufficient time for those in the industry to
comply with its regulations.
2:26:54 PM
Mr. Breeland characterized this as "an industry bill brought to
you by industry. It is a collaborated effort," eight years in
the making, involving the Alaska Mortgage Bankers Association
and the Alaska Mortgage Brokers Association. The bill has the
support of AARP, the Alaska Association of Realtors, the Alaska
Home Builders Association, the Alaska Land Title Association,
the Appraiser Institute, Alaska Chapter, the Anchorage Board of
Realtors, the Valley Board of Realtors, and the Anchorage
Homebuilders Association. He urged the Committee to support the
bill.
2:27:34 PM
PETER EASAW, Primerica Financial Services, reviewed his
background in the mortgage industry. This bill would be "a
disservice to" Primerica and its customers. Primerica offers
personalized "financial solutions" to its customers and believes
in educating its customers prior to selling or proposing a
product to them.
Mr. Easaw considered this legislation a duplication of the
efforts currently administered by Primerica. The company already
strives to educate its clients, provides continuing education to
its employees, and has a mission of doing "what's right".
Mr. Easaw strongly believed this bill would prevent people from
having the same opportunity he has had with his company. He
urged a no vote on the bill in its current form.
2:30:17 PM
Senator Dyson asked Mr. Easaw to discuss what he would change in
the bill.
Mr. Easaw supported licensing a company as opposed to each
individual working for it.
2:30:51 PM
JULIE GRANGER, Primerica Financial Services, introduced herself.
Co-Chair Stedman asked Ms. Granger to clarify her capacity with
Primerica.
Ms. Granger worked at Primerica's corporate head office in
Atlanta Georgia and was testifying today on behalf of the
company and its 150 Alaskan employees.
Co-Chair Stedman, observing that the public testimony ledger for
this bill included numerous Primerica employees, asked whether
the company closed its offices today in order to allow its
employees to testify on the bill.
Ms. Granger responded no. Primerica employees elected to testify
because they were "passionate about the service that we provide
to Alaska borrowers." They are concerned that their services
might be jeopardized by some of the requirements in the bill.
The hope is that a workable solution could be achieved; one that
would protect consumers and allow the Department to examine the
industry to ensure there were no problems with the company or
its services.
In response to a question from Co-Chair Stedman, Ms. Granger
affirmed the company sent her to testify on the bill and express
how important Alaska is to Primerica.
Co-Chair Stedman specified that his questions were intended to
assist him in understanding the nature of the testimony that
would be provided by other Primerica employees.
Ms. Granger expressed that the number of Primerica employees
willing to testify today should be viewed as an indication of
the importance of the bill and concern about its effects on
their livelihood.
2:32:51 PM
Senator Olson inquired to Primerica's position on the bill.
Ms. Granger expressed support for regulating the mortgage
industry in the State; however, the company did not favor the
bill as written. She was optimistic that a workable solution,
one that would protect consumers and allow for regulatory
oversight, was obtainable.
2:33:30 PM
Senator Olson concluded from the testimony that the changes made
in the Version "N" committee substitute did not address the
company's concern about the bill.
2:33:38 PM
Ms. Granger affirmed.
Co-Chair Stedman asked that the company provide his office a
list of concerns specific to Version "N".
Ms. Granger agreed.
2:34:05 PM
Senator Huggins deduced that the company had been actively
involved in legislation on this issue in other states.
Ms. Granger confirmed that to be the case. 26 states have
enacted legislation in this regard. While the recent trend has
been to require individual licensing, the majority of the 26
states that have enacted mortgage lending legislation have
recognized the company's "good compliance history" and the
uniqueness of its business model. They have allowed the company
to be licensed and accountable for its employees instead of
requiring employees to hold individual licenses.
Ms. Granger reiterated that the company's reputation and
financial success are affected by its agents' actions.
Senator Huggins asked the number of states that require
individual licensing.
Ms. Granger stated that fewer than ten states the company
operates in require individual licensing; several of those are
simply registrations wherein the company just provides a listing
of its employees. This listing is utilized by the state to track
where individuals are employed. While a multitude of approaches
have been taken, the majority of states have endeavored to reach
a reasonable solution.
Senator Huggins asked Ms. Granger to identify components of the
bill deemed particularly onerous.
2:35:47 PM
Ms. Granger responded that the company's business model requires
them to screen its agents. This would include background checks
and internal auditing. The company is also subject to federal
law since its loans involve federal lenders. Insurance products
sold by the company must also comply with insurance and security
regulations.
Ms. Granger declared that this legislation, in its current form,
would produce "another level of regulation that does not provide
any additional benefit to consumers".
Ms. Granger declared that Primerica "is stepping up" in support
of State licensing and regulations. The money raised from
licensing fees will support the State's mortgage regulation
efforts. The amendment Primerica supports is "fiscally neutral".
2:36:49 PM
Senator Thomas understood that Primerica, as the owner company,
supported having the company, rather than individuals, assume
the entirety of licensing responsibilities specified in this
bill. He noted that the only element missing from the mortgage
lending legislation considered the previous year was the
determination of who would be applying for the license.
Senator Thomas asked for further information about why Primerica
considered individual licensing requirements so burdensome;
specifically whether it was the cost associated with individual
licensing or whether the employment status of the individuals
working for it would change from being independent contract
agents to being employees.
2:37:37 PM
Ms. Granger responded that Primerica has successfully utilized
the independent contract agent business model for approximately
30 years. The company sees it as "a way to cut costs" and
thereby support its ability "to market to middle and lower
income consumers who have very low transaction amounts".
2:38:18 PM
Senator Elton appreciated Ms. Granger's testimony. Rather than
protecting consumers from companies such as Primerica which
might have "all the controls in place", the purpose of licensing
"is to protect the consumer from bad actors". Thus, his concern
is that implementing something that helps a company like
Primerica would "open the door for companies that might not have
the same kind of controls".
Ms. Granger stated that this concern had been raised during
deliberations on the bill in the House. There was concern that
the amendment proposed by Primerica was "not narrow enough" and
that other companies would not perform in the same manner as
Primerica.
Ms. Granger advised that the amendment has been narrowed in
scope in that it would now apply "to exclusive agents". The
company would be required to pay licensing fees and also hold an
insurance license. The amendment is now significantly different
than the one offered in the House.
2:40:09 PM
Ms. Granger emphasized that "the solution" being proposed has
worked in other states.
2:40:45 PM
Senator Elton asked that, after review, the Department provide
its recommendation on the amendment being offered by the
industry.
2:41:03 PM
In response to a question from Senator Olson, Co-Chair Stedman
clarified that the amendment being discussed "is not on the
table".
2:41:15 PM
LYNNEA OLSEN, Citigroup, informed the Committee that Citigroup
is the parent company to Primerica. She traveled here from
California to testify on behalf of Citigroup in opposition to
the bill in its current form. Citigroup strongly supports
regulation of the mortgage industry and has actively
participated in establishing "high thresholds" for the industry
in other states in its desire to uphold its reputation, enhance
its economic viability, and provide appropriate products to
consumers.
Ms. Olsen cited Citigroup's willingness to continue working with
the State to reach a solution that would benefit the Primerica
business model. This would include corporate rather than
individual licensure. She reminded the Committee that that
concept had been included in the mortgage lending legislation
considered the previous year.
Ms. Olsen stressed that corporate licensure would ensure
consumer protection. The company would commit to being
responsible for any violation of State Statute and would file a
surety bond with the State. In addition, the company would
pledge "to make any borrower whole" if they suffered an injury.
They would also pledge that the company and its agents would
comply with State law. The company was confident that its
business model, which includes such things as internal training
and auditing, would be able to uphold its commitments.
2:43:34 PM
Ms. Olsen also considered corporate licensure an appropriate
mechanism as it would allow the State to review the company's
operations through routine, spot, or periodic audits. She urged
that the bill be held in Committee in order for further
discussion to occur. Primerica has a good business model and it
would be disappointing were its Alaska operations and consumer
services limited.
Co-Chair Stedman, noting that a number of individuals working
with Primerica had signed up to testify, asked, in consideration
of time that those individuals limit their remarks to whether
they support or oppose the legislation. They should only expand
their remarks if they had something "new to add to the
discussion".
2:45:05 PM
JEFFREY SMITH, Primerica Financial Services testified via
teleconference from Mat-Su in opposition to the bill. It would
place a "huge financial burden on my small business". This in
turn would be detrimental to his clients.
2:45:29 PM
PHYLISS HOFFMAN, Primerica Financial Services, testified via
teleconference from Mat-Su in opposition to the bill. Primerica
agents are internally monitored, must meet internal continuing
education requirements, and must comply with regulations. "A
duplicate mortgage loan originator license makes absolutely no
sense." The services provided by Primerica agents to people in
this State are appreciated.
Co-Chair Stedman repeated his request that Primerica agents keep
their comments on point.
2:48:02 PM
FRED LAURION, Primerica Financial Services, testified via
teleconference from Anchorage and elaborated on the importance
the company places on educating the consumer. Anything that
might hamper the company's ability to operate in the State would
be detrimental to that effort. He opposed the bill, as written,
and urged the Committee to either amend or postpone action on
it.
2:49:37 PM
LAIRD JENKINS, Primerica Financial Services, testified via
teleconference from Anchorage in opposition to the bill, as
written.
2:49:53 PM
CARL MCINTYRE, Primerica Financial Services, testified via
teleconference from Anchorage. He opposed the bill as written.
2:50:12 PM
JOHN PEEK, Primerica Financial Services, testified via
teleconference from Anchorage and spoke in opposition to the
bill, as written. The company provides a great service to
residents of the State.
2:50:36 PM
MIKE CLAYBORN, Primerica Financial Services, testified via
teleconference from Anchorage. He opposed the bill as written.
JULIA COSTER, Assistant Attorney General, Commercial/Fair
Business Section, Civil Division (Anchorage), Department of Law
testified via teleconference from Anchorage and informed the
Committee she was available to answer questions.
2:51:00 PM
DUSTIN SHANNON, Primerica Financial Services, testified via
teleconference from Anchorage in opposition to the bill as
written. While receiving his economics degree at the University
of Alaska Anchorage, he became aware of the "unintended
consequences" that sometimes occur when the government attempts
to protect the consumer. He was opposed to the bill, as written.
Increasing overhead expenses on individuals might dissuade them
from participating in this business.
2:52:06 PM
JOHN MARTIN, Alaska Mortgage Solution, and Past President,
Alaska Mortgage Brokers Association, testified via
teleconference from Anchorage. Recent media attention on
mortgage loan fraud in the State has contributed to the effort
behind this bill. People in the mortgage loan industry
"recognize the need for change" and have assisted in the
development of "this industry bill". "This bill effectively
addresses our concerns;" particularly in respect to licensing
mortgage companies and, specifically, mortgage loan originators.
Mr. Martin clarified that the bill would not require people who
process or underwrite loans to be licensed.
Mr. Martin asserted that the bill has broad industry support.
Other professional organizations also recognize the importance
of this legislation and the protection it can afford to our
residents.
Mr. Martin declared that the bill is "revenue neutral".
Furthermore, this "straight forward" bill would "not place an
undue burden or cost on business."
Mr. Martin reiterated that the bill would license an industry
that is currently unregulated.
Mr. Martin stated that the licensing fee being proposed would
cost a large multi-state lender, for example, approximately $20
each month. Those entities would save money by not having to
conduct background checks or provide continuing education
programs to their associates, as that effort would be conducted
under State oversight. This savings could be beneficial to
consumers.
Mr. Martin also noted that this legislation would require each
mortgage loan originator to be "responsible for paying their
very own low fees" which would amount to less than one dollar
per day.
Mr. Martin considered the best features of the bill to be that
the State would conduct licensee background checks and establish
industry performance standards. He supported the bill in its
current form; it would protect the citizens of the State.
2:55:04 PM
ROGER PRINCE, Securities Examiner, Division of Banking,
Securities and Corporations, Department of Commerce, Community
and Economic Development testified via teleconference from
Anchorage and informed the Committee he was available to answer
questions.
2:55:28 PM
NICOLE STRELTSOVA, Primerica Financial Services, testified via
teleconference from Fairbanks in opposition to the bill.
2:56:00 PM
LAVADA CHRISTINASON, Primerica Financial Services, testified via
teleconference from Fairbanks and opposed the bill as written.
2:56:19 PM
ROSE BAADE, Primerica Financial Services, testified via
teleconference from Fairbanks and spoke in opposition to the
bill as written. She urged the Committee to either postpone
action on the bill or amend it.
2:56:33 PM
JENNIFER MACOMBER, Primerica Financial Services, testified via
teleconference from Fairbanks in opposition to the bill, as
written.
2:56:52 PM
RON HUNT, Primerica Financial Services testified via
teleconference from Fairbanks and voiced opposition to the bill
as written.
2:57:12 PM
DENNIS SHINN, Primerica Financial Services, testified via
teleconference from Fairbanks in opposition to the bill, as
written.
2:57:37 PM
CURTIS MACOMBER, Primerica Financial Services, testified via
teleconference from Fairbanks and opposed the bill, as written.
2:58:08 PM
DAVID MUELLER, Primerica Financial Services, testified via
teleconference from Fairbanks in opposition to the bill as
written.
2:58:22 PM
BETTY KETZLER Primerica Financial Services testified via
teleconference from Fairbanks in opposition to the bill.
2:58:39 PM
DOTHORTHY JONES, Primerica Financial Services, testified via
teleconference from Fairbanks and spoke in opposition to the
bill, as written.
2:59:08 PM
MAUREEN MISEWICZ, Primerica Financial Services, testified via
teleconference from Fairbanks and spoke in opposition to the
bill as written. The bill should be amended in consideration of
Primerica's business model.
2:59:33 PM
JONATHAN BOURNE, Primerica Financial Services, testified via
teleconference from Fairbanks and opposed the bill as written.
3:00:30 PM
Senator Olson asked Roger Prince whether the Division was in
support of the bill.
Mr. Prince deferred to Mr. Davis to speak on behalf of the
Department; however, Mr. Davis was no longer available.
Co-Chair Stedman ordered the bill HELD in Committee.
RECESS TO CALL OF THE CHAIR 3:01:30 PM / 6:23:56 PM
| Document Name | Date/Time | Subjects |
|---|