03/23/2010 01:30 PM Senate FINANCE

SENATE BILL NO. 279                                                                                                           
                                                                                                                                
     "An Act relating to  regulation of residential mortgage                                                                    
     lending, including  the licensing of  mortgage lenders,                                                                    
     mortgage  brokers, and  mortgage loan  originators, and                                                                    
     compliance  with  certain   federal  laws  relating  to                                                                    
     residential  mortgage  lending;  and providing  for  an                                                                    
     effective date."                                                                                                           
                                                                                                                                
1:35:59 PM                                                                                                                    
                                                                                                                                
SENATOR JOE  PASKVAN stated that  SB 279 is an  act relating                                                                    
to the regulation of  residential mortgage lending including                                                                    
the  licensing of  mortgage lenders,  mortgage brokers,  and                                                                    
mortgage  loan   originators  in  compliance   with  certain                                                                    
federal laws  relating to residential mortgage  lending. The                                                                    
purpose  of the  legislation is  to bring  Alaska's mortgage                                                                    
lending regulation act into compliance  with federal law. He                                                                    
mentioned the SAFE act which  requires each state to license                                                                    
mortgage loan originators through  a nationwide database and                                                                    
to amend  its statutes to meet  minimum licensing standards.                                                                    
The  Division of  Banking and  Securities  will continue  to                                                                    
review   the  uniform   application  submitted,   and  state                                                                    
regulators  will  continue  to   issue  the  licenses.  This                                                                    
legislation  is  supported  by the  National  Conference  of                                                                    
State Legislators  and the National Conference  of Insurance                                                                    
Legislators.                                                                                                                    
                                                                                                                                
1:39:31 PM                                                                                                                    
                                                                                                                                
TYSON  FICK, LEGISLATIVE  LIAISON,  DEPARTMENT OF  COMMERCE,                                                                    
COMMUNITY, AND  ECONOMIC DEVELOPMENT (DCCED),  explained the                                                                    
legislation  further.  He pointed  out  that  abuses in  the                                                                    
industry led to  the current financial crisis  in the United                                                                    
States.  He explained  the licensing  regulation agency  and                                                                    
their  responsibilities. The  national licensing  system and                                                                    
registry    increases    consumer    protection,    enhances                                                                    
supervision,  and  streamlines  the  licensing  process  for                                                                    
licensees. He mentioned  the passage of HB  221 which joined                                                                    
Alaska  with the  national registry.  He noted  that SB  229                                                                    
will bring the  state into compliance with  the federal SAFE                                                                    
act  by   amending  our  statutes   to  reach   the  minimum                                                                    
standards. The  objectives of the amendments  are to provide                                                                    
increased   accountability,  education,   and  tracking   of                                                                    
mortgage  lending  professions,  reduce fraud,  and  provide                                                                    
consumers with free and accessible information.                                                                                 
                                                                                                                                
PATRICE WALSH, CHEIF EXAMINER,  DCCED, delivered a sectional                                                                    
analysis. She  explained that the  changes were  the minimum                                                                    
standards required  by the  federal government.  She pointed                                                                    
out  Page  5,  Section  7,  Line  9  and  the  reference  to                                                                    
"transfers  of  mortgage  loan  originators  license"  where                                                                    
"mortgage loan"  was added to "originator".  She pointed out                                                                    
Page 6,  Section 11, Line  14 referencing an  annual license                                                                    
where the state  requires renewal each year  on December 31.                                                                    
She  continued with  Section 11,  Line  24 regarding  permit                                                                    
regulation  to  set  application, examination,  and  license                                                                    
fees.  She  detailed  Page  6, Line  31,  Section  12  which                                                                    
requires 20 hours of pre  licensing education. She continued                                                                    
with Page  10, Section 18,  Line 22  which is a  new section                                                                    
allowing for a provisional  license while a background check                                                                    
is performed.                                                                                                                   
                                                                                                                                
1:45:58 PM                                                                                                                    
                                                                                                                                
Ms.  Walsh  continued with  Section  22,  Page 12,  Line  23                                                                    
referring  to paper  licenses. The  national registry  has a                                                                    
section  of consumer  access  where  a licensee's  licensing                                                                    
credentials can be accessed online.                                                                                             
                                                                                                                                
1:47:18 PM                                                                                                                    
                                                                                                                                
Co-Chair Stedman  asked if  licenses will  be posted  in the                                                                    
licensee's office  or would  the public  rely on  the online                                                                    
version.  Ms.   Walsh  explained  that  the   department  is                                                                    
striving  to eliminate  paper licenses.  She commented  that                                                                    
many businesses operate online.                                                                                                 
                                                                                                                                
Ms. Walsh continued with Page  14, Section 29, Line 10 which                                                                    
is  an   addition  permitting  a  branch   office  to  track                                                                    
activity. She  continued with Page  15, Section 35,  Line 26                                                                    
which modifies continuing  education requirements. Currently                                                                    
the law  offers 24 hours  of continuing education for  a two                                                                    
year time period. She pointed  out Page 41, Section 85, Line                                                                    
20 which includes the repealed sections.                                                                                        
                                                                                                                                
1:50:15 PM                                                                                                                    
                                                                                                                                
Co-Chair Stedman  asked about a potential  sales transaction                                                                    
with an  out of state  licensee. Ms. Walsh answered  that an                                                                    
out of state licensee must apply for a license in Alaska.                                                                       
                                                                                                                                
Co-Chair Stedman  asked if  a licensee  must be  licensed in                                                                    
Alaska  to solicit  mortgage business.  Ms. Walsh  concurred                                                                    
that  the  person  must  have an  Alaskan  license  to  sell                                                                    
Alaskan property.                                                                                                               
                                                                                                                                
Senator Huggins asked if the  bill allows a person to handle                                                                    
the  mortgage on  their neighbor's  house. Ms.  Walsh stated                                                                    
that a person must have a  license to sell a house that does                                                                    
not belong to them.                                                                                                             
                                                                                                                                
Senator  Thomas  noted  that  real  estate  agents  are  not                                                                    
considered mortgage loan originators. Ms. Walsh concurred.                                                                      
                                                                                                                                
Senator Olson asked about  the education requirements listed                                                                    
on Pages  6 and  15. He asked  about potential  changes. Ms.                                                                    
Walsh  responded  that   continuing  education  requirements                                                                    
already exist and she noted the changes.                                                                                        
                                                                                                                                
Senator  Olson asked  about classes.  Ms.  Walsh noted  that                                                                    
classes are  offered through  a national  mortgage licensing                                                                    
system. The classes are offered  in a classroom, a classroom                                                                    
equivalent, or an instructor led webinar.                                                                                       
                                                                                                                                
1:54:23 PM                                                                                                                    
                                                                                                                                
Senator  Olson asked  about  Page 14  and  the licensing  of                                                                    
branch  offices.  He  asked  how  the  Alaska  branch  might                                                                    
address issues from  the lower 48. Ms.  Walsh responded that                                                                    
the    branch    application   process    requires    branch                                                                    
identification although  licensing and  registration numbers                                                                    
are  not used.  A formal  process would  include a  separate                                                                    
registration to allow observation of the branch activity.                                                                       
                                                                                                                                
Senator Olson did not understand  how this would cut down on                                                                    
fraud.                                                                                                                          
                                                                                                                                
Co-Chair Stedman  asked about potential  reciprocity between                                                                    
the states. Ms.  Walsh noted that there  is not reciprocity,                                                                    
but  many companies  are licensed  in  multiple states.  Co-                                                                    
Chair Stedman asked  why no reciprocity exists  for the real                                                                    
estate industry.                                                                                                                
                                                                                                                                
Ms. Walsh  responded that the  state has  requirements about                                                                    
obtaining a license. She added  that the steps for obtaining                                                                    
a license may be similar throughout various states.                                                                             
                                                                                                                                
Co-Chair Stedman asked if the  steps in the statute refer to                                                                    
the examination.                                                                                                                
                                                                                                                                
1:57:36 PM                                                                                                                    
                                                                                                                                
Ms.  Walsh  responded  that  an  application  for  licensure                                                                    
requires financial statements  and fingerprints. Felonies or                                                                    
bankruptcies can lead to denial of license.                                                                                     
                                                                                                                                
Co-Chair  Stedman  asked if  a  person  licensed in  another                                                                    
state is required  to sit for an additional  exam in Alaska.                                                                    
Ms.  Walsh  noted  that  the  mortgage  loan  originator  is                                                                    
required  to take  two tests.  One test  is a  national test                                                                    
recognized in  every state. The second  component of testing                                                                    
is the Alaska state test.                                                                                                       
                                                                                                                                
Co-Chair  Stedman   asked  if  other  states   have  similar                                                                    
requirements. Ms. Walsh responded yes.                                                                                          
                                                                                                                                
Senator Paskvan stressed  that the intent of the  bill is to                                                                    
bring Alaska  into conformance with  the national  SAFE act.                                                                    
Alaska's laws  with respect to  real estate can  differ from                                                                    
other state's laws.                                                                                                             
                                                                                                                                
Co-Chair  Stedman mention  one fiscal  impact note  from the                                                                    
Department of  Commerce, Community and  Economic Development                                                                    
for $131 thousand.                                                                                                              
                                                                                                                                
SB  279  was  HEARD  and   HELD  in  Committee  for  further                                                                    
consideration.                                                                                                                  
                                                                                                                                
2:01:34 PM     AT EASE                                                                                                        
2:02:36 PM     RECONVENE