Legislature(2007 - 2008)BELTZ 211
04/26/2007 01:30 PM Senate LABOR & COMMERCE
Audio | Topic |
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Start | |
SB140 | |
SB102 | |
SB28 | |
SB118 | |
HB121 | |
Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
*+ | SB 118 | TELECONFERENCED | |
+ | HB 121 | TELECONFERENCED | |
+ | TELECONFERENCED | ||
+= | SB 140 | TELECONFERENCED | |
+= | SB 102 | TELECONFERENCED | |
+= | SB 28 | TELECONFERENCED | |
SB 102-MORTGAGE LENDING 1:38:50 PM CHAIR ELLIS announced SB 102 to be up for consideration. The committee was working from version C committee substitute. LYNEA OLSON, Vice President, CitiGroup, opposed SB 102 saying while CitiGroup supported regulation of the mortgage industry, corporate state licensure, and granting the department regulatory and enforcement powers over them, they oppose the current version of SB 102because it would require them to license employees and exclusive agents of large national lenders. She said a majority of states have implemented a more reasonable licensing scheme where they allow an exemption for large national lenders including CitiGroup. MS. OLSON said that corporate licensure would protect consumers and that CitiGroup would agree with the department to post a surety bond so an injured borrower could be made whole. She said the corporate licensure would make sure that its employees and exclusive agents are in compliance with Alaska law. 1:40:51 PM SENATOR STEVENS joined the committee. MS. OLSON also explained that CitiGroup has internal training procedures, supervision, audits, and surveillance and compliance procedures in place. CHAIR ELLIS said he appreciated her testimony, but the issue is a balancing act between access to credit for Alaskan consumers and the consumer protection and responsibility of the various players in that market. He said that Senator Huggins, the sponsor, is willing to continue discussing the bill. SYMON KEYMER, State Government Affairs, American Financial Services Association (AFSA), said AFSA is a national trade association based in Washington D.C. and its members are financial services companies that provide credit for consumers and small businesses including many mortgage lenders. He said that AFSA still opposes the current bill. He said AFSA had submitted amendment language in the past and worked with the Division of Banking and Securities, but had not come to an agreement. He asked that the bill be held over to give them more time to address the legal and technical issues that must be addressed for effective regulation of the industry. If passed as it stands, SB 102, version C, will fly in the face of practices in over 40 other states. It will significantly increase the burden on Alaska's lenders, regulators and consumers and add costs to lenders that they will pass on to borrowers. It could also have a negative effect on compliance activities for regulators. MR. KEYMER said the belief that reciprocal regulation with other states will do away with duplicative, onerous and expensive employee licensing is not a realistic option and he didn't know of any state that currently provides for originator licensing reciprocity. He said that regulators in other states have been willing to adopt exemptions for employees and exclusive agents of well-capitalized and highly regulated entities like AFSA members to conserve state resources. Regulators have realized that placing financial and supervisory responsibility squarely on corporate entities who have the financial stability, internal training programs, corporate supervision and the accountability of AFSA member companies allows them to devote more resources to greater oversight and accountability for those industry players who do not. 1:46:01 PM MR. KEYMER said it is also difficult to pass regulations because each industry player is different. He explained: State and federal lenders and independent mortgage brokers are regulated differently because they operate differently. Large mortgage lenders differ significantly from independent mortgage brokers. They typically operate as license entities in multiple states and have a large number of employees who interact with customers from many states on a daily basis. They are well-capitalized, carry huge reputation risks associated with employee misconduct and may be affiliated with an entity regulated by the Federal Reserve Board. Effective mortgage loan originator licensing must recognize these differences between large mortgage lenders and independent mortgage brokers and must recognize the difference between inter-state companies and large multi-state companies. Duplicative or overlapping licensing of large multi-state entities and individuals should be avoided. As far as enforcement is concerned, nothing in the AFSA amendment would limit the supervisory and important powers of the department. As employees and exclusive agents of a licensed company, these individuals would only be subject to provisions of the acts applicable to their license. In addition to this, the bill grants broad authority to both the department and the attorney general to enforce the provisions of the act against any person as well as any licensee. This broad authority would allow the department to enforce these provisions of the act against AFSA member companies and their employees and exclusive agents. There are other protections in the AFSA amendment. The amendment would require as part of the license that the company sign a binding written agreement with the department stating that they accept full responsibility for insuring that the employee acts in full compliance with this chapter. This agreement could include requirements such as employee background checks, continuing education, and other items deemed necessary by the department. The department would also have the ability to examine the company to insure compliance with the act and the department would have legal authority to review any loan made by a licensed company. The details of these requirements would be worked out in regulation. The amendment also requires the company to maintain a bond in an amount required by the department to benefit the state or any person who suffers loss by the violation of this chapter. The licensed company would also have to make a one-time filing with the department for an exemption from licensure for its employees or exclusive agents. 1:48:32 PM In conclusion, we note that the Senate passed a bill, SB 272, last year that AFSA and its members were entirely comfortable with. This year we had enthusiastically agreed to corporate licensure and in good faith believed that we had agreed with the department to a concept whereby lenders themselves would be regulated, but the employees and exclusive agents of large multi-state mortgage lenders would not be licensed individually. This has now proved not to be the case. Nevertheless, we believe that such a concept is the best way to balance consumer protection with wide access to credit for the people of Alaska. 1:49:05 PM CHAIR ELLIS thanked Mr. Keymer for his testimony. He noted that the committee has relied on Mark Davis, the director of the Division of Banking and Securities for his expertise and interpretation of the state interest in this legislation. He said that he feels caught short on the technical issues, but for this bill to pass this year with its considerable consumer protections, it needs to move on its way. The sponsor has said he will continue the conversation at the finance level and another bill is in motion in the other body. 1:50:05 PM SENATOR STEVENS moved to pass CSSB 102(L&C) from committee with individual recommendations and attached fiscal note. There were no objections and it was so ordered.
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