Legislature(2015 - 2016)BELTZ 105 (TSBldg)

01/28/2016 01:30 PM LABOR & COMMERCE

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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ HB 155 FEES; WAIVERS; CREDITS; DEDUCTIONS;TAXES TELECONFERENCED
Heard & Held
+= HB 12 MORTGAGE LENDING AND LOAN ORIGINATORS TELECONFERENCED
Heard & Held
*+ SB 111 LIMIT FLAME RETARDANT ITEMS/FURNITURE TELECONFERENCED
Heard & Held
+ Bills Previously Heard/Scheduled: TELECONFERENCED
+= SB 121 SECURITY FREEZE ON MINOR'S CREDIT REPORT TELECONFERENCED
Moved SB 121 Out of Committee
-- Public Testimony --
          HB 12-MORTGAGE LENDING AND LOAN ORIGINATORS                                                                       
                                                                                                                                
1:39:50 PM                                                                                                                    
CHAIR  COSTELLO   reconvened  the   meeting  and   announced  the                                                               
consideration  of HB  12. [This  is  the first  hearing and  CSHB                                                               
12(L&C) is before the committee.]                                                                                               
                                                                                                                                
1:40:03 PM                                                                                                                    
REPRESENTATIVE SHELLEY HUGHES,  Alaska State Legislature, Juneau,                                                               
Alaska, sponsor of HB 12,  introduced the legislation speaking to                                                               
the following sponsor statement:                                                                                                
                                                                                                                                
     House Bill  12 improves  the mortgage  lending industry                                                                    
     by equalizing  the licensing requirements  for mortgage                                                                    
     loan  originators and  mortgage loan  brokers according                                                                    
     to the  kind of work  conducted rather than  a business                                                                    
     structure or anomaly in  current statute. Licensing the                                                                    
     level  of   professional  duties   and  the   level  of                                                                    
     liability in  the lending process  helps create  a more                                                                    
     equitable  and   friendly  statutory   environment  for                                                                    
     business in Alaska.                                                                                                        
                                                                                                                                
     The  bill  would  also exempt  Alaska  Housing  Finance                                                                    
     Corporation and any  government agency participating in                                                                    
     the  Federal   HUD  (Housing  and   Urban  Development)                                                                    
     program   from   the   State   mortgage   lender/broker                                                                    
     licensure  requirement. The  government agencies  would                                                                    
     be  responsible  to  ensure that  their  mortgage  loan                                                                    
     originators  meet standards  equivalent to  the federal                                                                    
     SAFE Act requirements.                                                                                                     
                                                                                                                                
     HB 12  helps create a  more level playing field  in the                                                                    
     mortgage  lending industry  by eliminating  unnecessary                                                                    
     layers  of  licensure  and reduces  the  administrative                                                                    
     burden and costs to these businesses.                                                                                      
                                                                                                                                
1:43:38 PM                                                                                                                    
SENATOR COSTELLO asked Ms. Blaisdell to walk through the                                                                        
sectional for the bill.                                                                                                         
                                                                                                                                
1:43:56 PM                                                                                                                    
GINGER BLAISDELL, Staff to Representative Shelley Hughes,                                                                       
sponsor of HB 12, provided the following sectional analysis for                                                                 
HB 12:                                                                                                                          
                                                                                                                                
     Section 1: Allows  for an individual to  be licensed as                                                                    
     a mortgage  loan originator if  he/she works  under "an                                                                    
     exclusive   contract   for  a   registered   depository                                                                    
     institution"   or  "be   sponsored   by  a   registered                                                                    
     depository institution  under AS  06.60.014." Sponsored                                                                    
     means to  conduct business under  the supervision  of a                                                                    
     mortgage licensee or registered depository.                                                                                
                                                                                                                                
     This section  creates a supervisor to  employee-type of                                                                    
     relationship with contractors.                                                                                             
                                                                                                                                
     Section  2:  Adds  a  new  section  that  outlines  the                                                                    
     requirements  for   a  depository  institution   to  be                                                                    
     eligible to sponsor a mortgage loan originator.                                                                            
                                                                                                                                
     Section 3:  Adds exemptions for  "a federal,  state, or                                                                    
     local  government  agency,  including  an  agency  that                                                                    
     arranges or provides financing  for mortgage loans." In                                                                    
     doing  this  the  state   of  Alaska  recognizes  these                                                                    
     agencies  under  the  final rulings  of  the  SAFE  Act                                                                    
     effective  8/30/2011. Agencies  that  will be  affected                                                                    
     are AHFC  that offers HUD  loans and the  Anchorage HUD                                                                    
     Program.                                                                                                                   
                                                                                                                                
MS. BLAISDELL stated that the  section exempting non-profits from                                                               
certain  licensing requirements,  but  that  section was  removed                                                               
because some non-profits are venturing  into a competitive market                                                               
place so oversight is warranted.                                                                                                
                                                                                                                                
1:46:46 PM                                                                                                                    
SENATOR COSTELLO pointed out that the fiscal note needed to be                                                                  
updated because it mentions an exemption for non-profits.                                                                       
                                                                                                                                
MS. BLAISDELL continued the sectional analysis.                                                                                 
                                                                                                                                
     Section  4 adds  registered depository  institutions to                                                                    
     the banks that must have a surety bond.                                                                                    
                                                                                                                                
     Section 5 adds  registered depository institutions that                                                                    
     cover more than  one location are not  required to file                                                                    
     more than one bond.                                                                                                        
                                                                                                                                
     Section  6 adds  registered depository  institutions to                                                                    
     the banks that must bond for three years.                                                                                  
                                                                                                                                
     Section  7 adds  registered depository  institutions to                                                                    
     the banks  for which the department  can determine that                                                                    
     the bond is unsatisfactory.                                                                                                
                                                                                                                                
     Section 8 requires  a registered depository institution                                                                    
     to  follow   the  same  reporting  requirements   as  a                                                                    
     mortgage licensee and be subject  to the same penalties                                                                    
     if the report is not filed as required.                                                                                    
                                                                                                                                
     Sections  9-13 add  registered depository  institutions                                                                    
     in the requirements for managing mortgage records.                                                                         
                                                                                                                                
     Section 14 references  the availability of out-of-state                                                                    
     records  for registered  depository institutions.  If a                                                                    
     bank  is  located  outside   Alaska,  the  Division  of                                                                    
     Banking and  Securities can go  to that other  state to                                                                    
     conduct an audit or review.                                                                                                
                                                                                                                                
     Section  15  allows  the department  investigation  and                                                                    
     examination   authority   for   registered   depository                                                                    
     institutions.                                                                                                              
                                                                                                                                
     Section  16  adds  a  new  subsection  that  defines  a                                                                    
     "person"  as  a  contractor  who  is  working  for  the                                                                    
     registered depository institution.                                                                                         
                                                                                                                                
     Section 17  allows the department the  authorization to                                                                    
     censure,  suspend or  bar a  depository institution  in                                                                    
     the same manner as a mortgage licensee.                                                                                    
                                                                                                                                
     Section  18 adds  the  applicability of  administrative                                                                    
     procedures  to hold  administrative hearings  and issue                                                                    
     disciplinary orders on RDIs for registered depository                                                                      
     institutions.                                                                                                              
                                                                                                                                
     Section  19  adds  a new  definition  of  a  registered                                                                    
     depository institution. That is  a bank located outside                                                                    
     the state  of Alaska  registering as the  supervisor of                                                                    
     these independent contractors.                                                                                             
                                                                                                                                
MS.  BLAISDELL  said the  effective  date  will be  corrected  to                                                               
reflect January 1, 2017.                                                                                                        
                                                                                                                                
1:50:29 PM                                                                                                                    
SENATOR  GIESSEL asked  if  the bill  would  affect any  business                                                               
other than State Farm Bank.                                                                                                     
                                                                                                                                
MS. BLAISDELL  replied State  Farm Bank  and its  contractors are                                                               
the primary businesses  that would be affected, but  there may be                                                               
others with a similar business model.                                                                                           
                                                                                                                                
SENATOR  GIESSEL asked  if conducting  fewer audits  will have  a                                                               
positive fiscal impact on the division.                                                                                         
                                                                                                                                
MS.  BLAISDELL  said the  fiscal  note  is  zero and  she  didn't                                                               
believe that  the Division of Banking  and Securities anticipated                                                               
additional  costs. The  state will  see efficiencies  if it  only                                                               
audits State  Farm Bank as opposed  to the 19 audits  it conducts                                                               
now.                                                                                                                            
                                                                                                                                
1:53:29 PM                                                                                                                    
KEVIN  ANSELM,  Director,  Division of  Banking  and  Securities,                                                               
Department  of  Commerce,   Community  and  Economic  Development                                                               
(DCCED), Anchorage, Alaska, introduced herself.                                                                                 
                                                                                                                                
CHAIR COSTELLO asked  if the administration has a  positon on the                                                               
bill.                                                                                                                           
                                                                                                                                
MS. ANSELM reported that the administration is neutral on HB 12.                                                                
                                                                                                                                
CHAIR COSTELLO  asked if she  wanted to comment on  the potential                                                               
efficiencies or any of Senator Giessel's questions.                                                                             
                                                                                                                                
MS. ANSELM offered that the bill  would have a zero fiscal impact                                                               
to the division because they  will conduct one larger examination                                                               
of the employing depository as opposed to individual agents.                                                                    
                                                                                                                                
CHAIR COSTELLO asked if there  are any consumer protection issues                                                               
related to the bill.                                                                                                            
                                                                                                                                
1:54:52 PM                                                                                                                    
TRACY RENO, Financial Institutions  Examiner, Division of Banking                                                               
and Securities,  Department of  Commerce, Community  and Economic                                                               
Development (DCCED),  Anchorage, Alaska,  said the  division will                                                               
be able to  discuss enforcement or supervisory  issues with State                                                               
Farm Bank  directly. The division  does not have access  to those                                                               
reports right now because they deal with the individual agents.                                                                 
                                                                                                                                
1:55:28 PM                                                                                                                    
CHAIR COSTELLO opened public testimony for HB 12.                                                                               
                                                                                                                                
1:55:44 PM                                                                                                                    
KRISTIE  BABCOCK, Independent  State Farm  Agent, Kenai,  Alaska,                                                               
stated that  she is an  independent contractor State  Farm agent.                                                               
She has been  an agent and small business owner  in Kenai for the                                                               
past 16 years and has  eight employees. She markets insurance and                                                               
bank products  to Alaskans  exclusively on  behalf of  State Farm                                                               
Insurance companies and State Farm Bank.                                                                                        
                                                                                                                                
She  stated   that  as  an  originator,   she  processes  initial                                                               
applications and  is required to  be licensed and follow  all the                                                               
regulations for  mortgage loan originators  (MLO). HB  12 doesn't                                                               
change  or  reduce  that  requirement, but  it  will  change  the                                                               
requirement for her to carry  a mortgage broker license and serve                                                               
as her own sponsor and  supervisor. Instead, State Farm Bank will                                                               
be able to step  in and register with the State  of Alaska as her                                                               
sponsor  and supervisor.  The bank  assumes all  the liabilities,                                                               
responsibilities and  oversight of a mortgage  broker. This makes                                                               
sense because  the bank is the  lender and she is  an originator.                                                               
It  also avoids  the circumstance  of sponsoring  and supervising                                                               
herself.                                                                                                                        
                                                                                                                                
MS.   BABCOCK  reported   that  26   other  states   have  passed                                                               
legislation  similar  to  HB  12 and  several  other  states  are                                                               
considering  it.  She closed  emphasizing  that  HB 12  does  not                                                               
result in any less regulation for MLOs.                                                                                         
                                                                                                                                
2:00:01 PM                                                                                                                    
SENATOR MEYER  commented that  is sounds  as though  other states                                                               
have  had this  problem and  passed similar  laws to  address the                                                               
problem.                                                                                                                        
                                                                                                                                
MS. BABCOCK agreed.                                                                                                             
                                                                                                                                
2:01:11 PM                                                                                                                    
ROGER  BAINBRIDGE,  In  House Counsel,  State  Farm  Bank  (FSB),                                                               
Bloomington, Illinois,  spoke in  support of HB  12. He  said Ms.                                                               
Babcock summarized the issues nicely  and anything he added would                                                               
be redundant.  Addressing the question of  whether this pertained                                                               
only to  State Farm  Bank, he clarified  that the  bill addresses                                                               
independent   contractors  who   work  exclusively   in  mortgage                                                               
origination on  behalf of  a federally  chartered bank.  Thus, it                                                               
would apply to anybody that has  the same business model as State                                                               
Farm Bank and meets the definitions  that have been added to this                                                               
legislation.                                                                                                                    
                                                                                                                                
2:02:20 PM                                                                                                                    
STEVE P. ASHMAN, Division Manager,  Public Health Initiatives and                                                               
Partnerships  (PHIP),  Health   and  Human  Services  Department,                                                               
Municipality of Anchorage, stated  that PHIP manages pass-through                                                               
programs from  the federal government  such as Housing  and Urban                                                               
Development  (HUD) and  falls under  both the  federal and  state                                                               
SAFE  acts. Due  to  2011  clarifications of  the  SAFE Act,  HUD                                                               
determined that state employees are  not required to obtain state                                                               
licenses  and  registration  for  any loan  origination  under  a                                                               
government housing  assistant program.  As currently  written, HB                                                               
12 will mirror  the federal law and the department  is in support                                                               
of the exemption for government agencies, he said.                                                                              
                                                                                                                                
2:05:18 PM                                                                                                                    
CHAIR  COSTELLO  closed  public  testimony  and  held  HB  12  in                                                               
committee  awaiting  updates to  the  fiscal  note and  effective                                                               
date.                                                                                                                           
                                                                                                                                

Document Name Date/Time Subjects
HB 12 - Sponsor Statement.pdf SL&C 1/28/2016 1:30:00 PM
HB 12
HB 12 - Sectional Analysis.pdf SL&C 1/28/2016 1:30:00 PM
HB 12
HB 12- Fiscal Note DCCED-DBS.pdf SL&C 1/28/2016 1:30:00 PM
HB 12
HB 12 - Supporting Documents-Flow Chart and Explanation.pdf SL&C 1/28/2016 1:30:00 PM
HB 12
HB 12 - Supporting Documents - SAFE Act.pdf SL&C 1/28/2016 1:30:00 PM
HB 12
HB 12 - Supporting Documents-Letter Allie Hewitt.pdf SL&C 1/28/2016 1:30:00 PM
HB 12
HB 12 - Supporting Documents-Letter Curtis Green.pdf SL&C 1/28/2016 1:30:00 PM
HB 12
HB 12 - Supporting Documents-Letter Doug McCann.pdf SL&C 1/28/2016 1:30:00 PM
HB 12
HB 12 - Supporting Documents-Letter Jim Kelly.pdf SL&C 1/28/2016 1:30:00 PM
HB 12
HB 12 - Supporting Documents-Letter Justin Goodman.pdf SL&C 1/28/2016 1:30:00 PM
HB 12
HB 12 - Supporting Documents-Letter Kris Yoder.pdf SL&C 1/28/2016 1:30:00 PM
HB 12
HB 12 - Supporting Documents-Letter Kristie Babcock.pdf SL&C 1/28/2016 1:30:00 PM
HB 12
HB 12 - Supporting Documents-Letter Nancy Field.pdf SL&C 1/28/2016 1:30:00 PM
HB 12
HB 12 - Supporting Documents-Letter Rueben Willis.pdf SL&C 1/28/2016 1:30:00 PM
HB 12
HB 12 - Supporting Documents-Letter Randy Rhodes.pdf SL&C 1/28/2016 1:30:00 PM
HB 12
HB 12 - Supporting Documents-Letter Shannon Fortune.pdf SL&C 1/28/2016 1:30:00 PM
HB 12
HB 12 - Supporting Documents-Letter State Farm Agents.pdf SL&C 1/28/2016 1:30:00 PM
HB 12
HB 12 - Supporting Documents-Letter State Farm Corporation.pdf SL&C 1/28/2016 1:30:00 PM
HB 12
HB 12 - Supporting Documents-Letter Todd Jackson.pdf SL&C 1/28/2016 1:30:00 PM
HB 12
HB 12 - Supporting Documents-Letter Troy Sayer.pdf SL&C 1/28/2016 1:30:00 PM
HB 12
HB 12 - Supporting Documents-Letter Tyler Randolph.pdf SL&C 1/28/2016 1:30:00 PM
HB 12
HB 155 - Sponsor Statement.pdf SL&C 1/28/2016 1:30:00 PM
HB 155
HB 155 - Version Changes H-N.pdf SL&C 1/28/2016 1:30:00 PM
HB 155
HB 155 - Fiscal Note DOR.pdf SL&C 1/28/2016 1:30:00 PM
HB 155
HB 155 - Support Document Indirect Expenditure Report - Cigarette Tax Stamp Discount.pdf SL&C 1/28/2016 1:30:00 PM
HB 155
HB 155 - Support Document Indirect Expenditure Report - Commercial Passenger Vessel Gambling Tax Deduction.pdf SL&C 1/28/2016 1:30:00 PM
HB 155
HB 155 - Support Document Indirect Expenditure Report - Exploration Incentive Credit.pdf SL&C 1/28/2016 1:30:00 PM
HB 155
HB 155 - Support Document Indirect Expenditure Report - Motor Fuel Tax Timely Filing Discount.pdf SL&C 1/28/2016 1:30:00 PM
HB 155
HB 155 - Support Document Indirect Expenditure Report - Small Loan Company Exemption.pdf SL&C 1/28/2016 1:30:00 PM
HB 155
HB 155 - Support Document Indirect Expenditure Report - Tobacco Product Tax Timely Filing Deduction.pdf SL&C 1/28/2016 1:30:00 PM
HB 155
SB 111 - Sponsor statement.pdf SL&C 1/28/2016 1:30:00 PM
SB 111
SB 111 - Fiscal Note DEC.pdf SL&C 1/28/2016 1:30:00 PM
SB 111
SB 111 - Fiscal Note DPS.pdf SL&C 1/28/2016 1:30:00 PM
SB 111
SB 111 - AFN Resolution.pdf SL&C 1/28/2016 1:30:00 PM
SB 111
SB 111 - AK Professional Fire Fighters Assoc.pdf SL&C 1/28/2016 1:30:00 PM
SB 111
SB 111 - Alaska Nurses Association Letter.pdf SL&C 1/28/2016 1:30:00 PM
SB 111
SB 111 - Arc of Anchorage Letter.pdf SL&C 1/28/2016 1:30:00 PM
SB 111
SB 111 - ASBC Letter.pdf SL&C 1/28/2016 1:30:00 PM
SB 111
SB 111 - Breast Cancer Fund Letter.pdf SL&C 1/28/2016 1:30:00 PM
SB 111
SB 111 -Tony Stefani and Firefighters Cancer Prevention Foundation 1-27-16.pdf SL&C 1/28/2016 1:30:00 PM
SB 111
SB 111 - American Chemistry Council Opposition Letter.pdf SL&C 1/28/2016 1:30:00 PM
SB 111
SB 111 - Motorcycle Industry Council Letter.pdf SL&C 1/28/2016 1:30:00 PM
SB 111
SB 111 - Federal Statutes Regulating Chemicals.pdf SL&C 1/28/2016 1:30:00 PM
SB 111
State Chamber SB111.pdf SL&C 1/28/2016 1:30:00 PM
SB 111
SB 111 - Journal Article - Prenatal exposure to polybrominated diphenyl ethers and child attention.pdf SL&C 1/28/2016 1:30:00 PM
SB 111
SB 111 - Journal Article - Flame Retardants in Furniture Foam Benefits and Risks.pdf SL&C 1/28/2016 1:30:00 PM
SB 111
SB 111 - San Francisco Chronicle - Chemical industry hoodwinked California Legislature.pdf SL&C 1/28/2016 1:30:00 PM
SB 111
SB 111 - European Food Safety Authority Brominated Flame Retardants.pdf SL&C 1/28/2016 1:30:00 PM
SB 111
SB 111 - Are PBDE's Making Bald Eagles Go Extinct.pdf SL&C 1/28/2016 1:30:00 PM
SB 111
SB 111 - Article - Flame Retardants Are They Extinguishing Brain Development.pdf SL&C 1/28/2016 1:30:00 PM
SB 111
SB 111 - CDC Statement on PBDEs.pdf SL&C 1/28/2016 1:30:00 PM
SB 111
SB 111 - Chicago Tribune - Fear fans flames for chemical makers.pdf SL&C 1/28/2016 1:30:00 PM
SB 111
SB 111 - Chicago Tribune Article - Distorting Science.pdf SL&C 1/28/2016 1:30:00 PM
SB 111
SB 111 - EndoWeb - Hypothyroidism Linked to Flame Retardants.pdf SL&C 1/28/2016 1:30:00 PM
SB 111
SB 111 - Misc. Support E-mails.pdf SL&C 1/28/2016 1:30:00 PM
SB 111