Legislature(2009 - 2010)BARNES 124
03/30/2009 03:15 PM House LABOR & COMMERCE
| Audio | Topic |
|---|---|
| Start | |
| HB175 | |
| HB145 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 175 | TELECONFERENCED | |
| *+ | HB 145 | TELECONFERENCED | |
| *+ | HB 177 | TELECONFERENCED | |
| + | TELECONFERENCED |
ALASKA STATE LEGISLATURE
HOUSE LABOR AND COMMERCE STANDING COMMITTEE
March 30, 2009
3:16 p.m.
MEMBERS PRESENT
Representative Kurt Olson, Chair
Representative Mark Neuman, Vice Chair
Representative Mike Chenault
Representative John Coghill
Representative Bob Lynn
Representative Robert L. "Bob" Buch
Representative Lindsey Holmes
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
HOUSE BILL NO. 175
"An Act relating to insurance, including treating as
confidential certain information submitted to the director of
insurance by the National Association of Insurance
Commissioners; clarifying conditions for the release of insurer
deposits; defining travel insurance that may be sold under a
travel insurance limited producer license; establishing criteria
for licensing of nonresident independent adjusters as resident
adjusters; exempting rewards under a wellness program from
treatment as insurance discrimination or rebating; making
certain insurance required of the Comprehensive Health Insurance
Association permissive rather than mandatory; providing for the
administration of loss reimbursement policies and payments to
guaranty associations during insolvency proceedings; making
certain provisions relating to statements on applications and
guaranteed renewability for individual health insurance
applicable to hospital and medical service corporations; making
public certain forms and related documents filed for approval by
a hospital or medical service corporation after the filing
becomes effective; relating to deposits of self-funded multiple
employer welfare arrangements; repealing reasons that the
director of insurance may use to deny or revoke a license; and
providing for an effective date."
- MOVED CSHB 175(L&C) OUT OF COMMITTEE
HOUSE BILL NO. 145
"An Act relating to the regulation of residential real property
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."
- HEARD AND HELD
HOUSE BILL NO. 177
"An Act relating to marine products and motorized recreational
products; and providing for an effective date."
- SCHEDULED BUT NOT HEARD
PREVIOUS COMMITTEE ACTION
BILL: HB 175
SHORT TITLE: INSURANCE
SPONSOR(s): LABOR & COMMERCE
03/09/09 (H) READ THE FIRST TIME - REFERRALS
03/09/09 (H) L&C, FIN
03/11/09 (H) L&C AT 3:15 PM BARNES 124
03/11/09 (H) Heard & Held
03/11/09 (H) MINUTE(L&C)
03/13/09 (H) L&C AT 3:15 PM BARNES 124
03/16/09 (H) L&C AT 3:15 PM BARNES 124
03/16/09 (H) Scheduled But Not Heard
03/20/09 (H) L&C AT 3:15 PM BARNES 124
03/20/09 (H) Heard & Held
03/20/09 (H) MINUTE(L&C)
03/30/09 (H) L&C AT 3:15 PM BARNES 124
BILL: HB 145
SHORT TITLE: MORTGAGE LENDING
SPONSOR(s): REPRESENTATIVE(s) LYNN
02/23/09 (H) READ THE FIRST TIME - REFERRALS
02/23/09 (H) L&C, FIN
03/30/09 (H) L&C AT 3:15 PM BARNES 124
WITNESS REGISTER
LINDA HALL, Director
Division of Insurance, Anchorage Office
Department of Community & Economic Development (DCCED)
Anchorage, Alaska
POSITION STATEMENT: Answered questions during the discussion of
HB 175.
TYSON FICK, Legislative Liaison
Office of the Commissioner
Department of Commerce, Community, & Economic Development
(DCCED)
Juneau, Alaska
POSITION STATEMENT: Testified during the discussion of HB 145.
LORIE HOVANEC, Director
Division of Banking and Securities (DBS)
Department of Commerce, Community, & Economic Development
(DCCED)
Juneau, Alaska
POSITION STATEMENT: Testified in support of HB 145 and
presented the committee substitute during the discussion of HB
145.
ACTION NARRATIVE
3:16:46 PM
CHAIR KURT OLSON called the House Labor and Commerce Standing
Committee meeting to order at 3:16 p.m. Representatives Holmes,
Lynn, Neuman, and Olson were present at the call to order.
Representatives Buch, Chenault, and Coghill arrived as the
meeting was in progress.
3:17:03 PM
CHAIR OLSON indicated the sponsor of HB 177 requested that the
bill be removed from today's calendar.
HB 175-INSURANCE
3:17:26 PM
CHAIR OLSON announced that the first order of business would be
HOUSE BILL NO. 175, "An Act relating to insurance, including
treating as confidential certain information submitted to the
director of insurance by the National Association of Insurance
Commissioners; clarifying conditions for the release of insurer
deposits; defining travel insurance that may be sold under a
travel insurance limited producer license; establishing criteria
for licensing of nonresident independent adjusters as resident
adjusters; exempting rewards under a wellness program from
treatment as insurance discrimination or rebating; making
certain insurance required of the Comprehensive Health Insurance
Association permissive rather than mandatory; providing for the
administration of loss reimbursement policies and payments to
guaranty associations during insolvency proceedings; making
certain provisions relating to statements on applications and
guaranteed renewability for individual health insurance
applicable to hospital and medical service corporations; making
public certain forms and related documents filed for approval by
a hospital or medical service corporation after the filing
becomes effective; relating to deposits of self-funded multiple
employer welfare arrangements; repealing reasons that the
director of insurance may use to deny or revoke a license; and
providing for an effective date." [Before the committee was the
Version S.]
3:18:16 PM
LINDA HALL, Director, Division of Insurance, Anchorage Office,
Department of Community & Economic Development (DCCED), stated
that the committee substitute Version S removes previous
Sections 25 and 26 relating to insolvencies. She pointed out
that Section 11 of the bill permits the Division of Insurance
director to order a summary suspension of a license if the
director finds that protection of the public requires emergency
action and incorporates the finding in an order. She indicated
that she asked for this authority in cases of extreme
emergencies. She stated that is the only provision which
represents a policy change.
3:19:47 PM
REPRESENTATIVE COGHILL indicated that he spent some time with
the director of the Division of Insurance and agrees that
additional statutory authority is needed. He stated that he
tried to imagine a different director and circumstances in which
someone might misuse this authority. He offered his belief that
enough safeguards are in the bill to prevent misuse of
authority.
3:20:57 PM
REPRESENTATIVE NEUMAN referred to the bill title and asked which
information is confidential information.
MS. HALL referred to Section 1 of Version S. She stated AS
21.06.060 lists records that must be kept confidential. She
indicated AS 21.06.060(f)(2) adds to the list proprietary
information or records established by a showing satisfactory to
the director. Thus, the new paragraph would allow
confidentiality for proprietary or trade secrets. Additionally,
a change was made to paragraph (4) that would remove the term
"financial" from the analysis rations and examinations. She
explained that the division receives analysis ratios and
examination synopses from the National Association Insurance
Commissioners, which is other states' information. She
mentioned the Division of Insurance has signed a confidentiality
statement that it will not release other states' information.
Thus, this change would allow the division to obtain market
conduct information.
REPRESENTATIVE NEUMAN asked what the insurance term is for a
record check examining home insurance claims.
3:23:34 PM
MS. HALL answered that Representative Neuman is referring to the
[Comprehensive Loss Underwriting Exchange] C.L.U.E. report. She
explained that would be considered personally identifiable
consumer information. She offered her belief the division would
not release to the public confidential consumer information that
was collected in the course of conducting business. She related
that those types of reports would generally be in the insurance
company records and not in the division's records.
3:24:07 PM
REPRESENTATIVE NEUMAN asked whether the consumer's identity is
protected.
MS. HALL answered that the division does not perform any
profiling. She explained that the division would perform some
rating underwriting through the use of credit scoring. However,
the division does not receive detailed consumer information,
which by statute is confidential. She related the division
reviews standards. She stated that the rating and underwriting
laws prohibit unfair discrimination.
3:25:07 PM
MS. HALL, in response to Representative Neuman, explained that
the Division of Insurance does not collect personal information
so it would not have the ability to disseminate it. She added
that under public records laws, the division does not have to
collect and create reports that it does not already collect.
She opined the division does not collect personal information.
CHAIR OLSON offered his belief that the problem was corrected
last year and pertained to a different department that had been
releasing confidential information.
3:26:16 PM
MS. HALL, in response to Representative Neuman, explained the
only opposition received on HB 175 related to provisions that
have been removed from the bill.
3:26:54 PM
REPRESENTATIVE BUCH commented that the committee held extensive
discussions on HB 175 a month ago and his concerns have been
addressed. He inquired as to whether any other issues have
arisen that would need to be addressed before next session.
MS. HALL related her understanding that only three weeks
remained of the legislative session. She answered she had no
additional matters with respect to HB 175.
3:28:14 PM
CHAIR OLSON, after first determining no one else wished to
testify, closed public testimony on HB 175.
REPRESENTATIVE NEUMAN moved to report the CS for HB 175, Version
26-LS0579\S, Bailey, 3/16/09, out of committee with individual
recommendations and the accompanying fiscal note. There being
no objection, the CSHB 175(L&C) was reported from the House
Labor and Commerce Standing Committee.
3:29:23 PM
The committee took an at-ease from 3:29 p.m. to 3:31 p.m.
HB 145-MORTGAGE LENDING
3:31:18 PM
CHAIR OLSON announced that the final order of business would be
HOUSE BILL NO. 145, "An Act relating to the regulation of
residential real property 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."
3:31:28 PM
REPRESENTATIVE NEUMAN made a motion to adopt the committee
substitute (CS) for HB 145, Version 26-LS0598\E, Bannister,
3/30/09, as the work draft.
CHAIR OLSON objected for the purposes of discussion. [Version E
was before the committee.]
3:32:09 PM
TYSON FICK, Legislative Liaison, Office of the Commissioner,
Department of Commerce, Community, & Economic Development
(DCCED), stated that HB 145 makes many changes to mortgage
lending statutes to bring the state into compliance with the
federal Secure and Fair Enforcement for Mortgage Licensing Act
of 2008, also referred to as the SAFE Mortgage Licensing Act of
2008 (SAFE Act). This bill resulted from efforts by the
sponsor, the Department of Law (DOL), the Division of Banking
and Securities, Department of Commerce, Community, & Economic
Development (DCCED), industry representatives, and the
legislative drafters.
3:33:11 PM
LORIE HOVANEC, Director, Division of Banking and Securities
(DBS), Department of Commerce, Community, & Economic Development
(DCCED), offered the division's support for the committee
substitute Version E. She explained that the committee
substitute will bring current mortgage lending statutes in
compliance with federal law. Congress passed a new law that
required the division to revise its current statute. In the
interim the DCCED added back into the bill what is necessary to
grant authority for policy changes and to incorporate as much of
the SAFE Act into law as possible. She highlighted the banking
industry was concerned that the division might make changes by
regulation instead of by statute. She offered the Division of
Banking and Securities' support for the committee substitute,
Version E.
3:35:15 PM
MS. HOVANEC emphasized the need for compliance with federal law
by July 30, 2009. She explained that the federal law consists
of two parts. First is to bring the statutes into compliance.
Second is to join the national mortgage licensing database
registry system, referred to as the National Mortgage Licensing
System (NMLS). She further explained that states can join the
NMLS prior to the effective date of their statute. She
indicated that the NMLS is activated by groups of states. She
noted that Alaska, along with six or seven other states will
join the NMLS licensing system on August 1, 2009. She offered
her belief if HB 145 does not pass that the division will need
some authorization to join the NMLS. Additionally, under the
federal statutes, the U.S. Department of Housing and Urban
Development (HUD) will regulate mortgage licensing. She opined
the DCCED does not wish to have that occur. She highlighted
that the state could apply for an extension, but the HUD
standards are not yet set up. She related her understanding
that no states have applied for an extension. She hoped that
the legislature could support HB 145. Further, two sections of
the bill do not refer to mandated changes. She referred members
to item 10 in members' packets, titled "Talking Points- Lorie
Hovanec, Director, Division of Banking and Securities." She
offered to discuss the talking points, but related her
preference to have committee members digest the bill and discuss
the points at a later date.
3:38:36 PM
CHAIR OLSON remarked that HB 145 has been expanded from 9 to 36
pages. He inquired as to whether she has prepared a sectional
analysis for the bill.
MS. HOVANEC related that she received a copy of Version E about
an hour ago so she has not had time to revise the sectional
analysis to correspond to the committee substitute. She offered
to provide a sectional analysis for the next meeting.
3:39:24 PM
REPRESENTATIVE HOLMES mentioned that she appreciates the
forthcoming details. She said she did not see a fiscal note,
but recalled reading the state would share implementation costs.
She inquired as to the financial implications for the state.
MS. HOVANEC answered that the initial cost would likely be
$50,000, the minimum fee to join based on the number of
licensees. She explained that the state is just now licensing
mortgage lender broker, and orginators. Thereafter, the
licensing system is industry supported. She mentioned some
initial training sessions may be necessary for staff to learn to
operate the system, but by the third year the fiscal note is a
zero fiscal note. She referred to a fiscal note from the DCCED,
Banking and Securities approved by Commissioner Notti on
3/11/09.
3:40:51 PM
REPRESENTATIVE NEUMAN referred to page 3, lines 18-21, which
read, "For the purpose of participating in the registry, the
department may waive or modify, in whole or in part, by
regulation or order, any or all of the requirements of this
chapter ... " He opined this appears to be a blanket waiver.
MS. HOVANEC related her understanding the purpose is in the
event of an unexpected change that the state can modify via
regulation. She highlighted that this specific waiver language
is derived from the model state language approved by HUD. She
offered to review the intent of the provision. In response to
Chair Olson, Ms. Hovanec agreed that this is the first time the
language has been proposed to the legislature.
3:42:27 PM
REPRESENTATIVE BUCH asked for the reason for the federal changes
incorporated in the SAFE Act.
MS. HOVANEC offered her belief that the federal law changed due
to the mortgage lending issues and problems precipitated some of
the financial crises. She expressed her understanding the
former director, Mark Davis, related that the draft legislation
included some items the federal government was considering such
as pre-licensing, educational requirements, and background
checks.
3:43:59 PM
REPRESENTATIVE BUCH offered his belief that this is a "work in
progress" and some provisions may need to be adjusted.
MS. HOVANEC recalled a Congressional report that indicated the
state and federal government will work together on credit
transactions. She highlighted that the division has attempted
to keep some of the statutory requirements for licensing in
regulation in anticipation of changes the division may need to
adapt to next few years.
3:45:12 PM
CHAIR OLSON inquired as to who developed the model legislation
and if it has been adopted by other states.
MS. HOVANEC answered yes, that as of a month ago, two other
states have enacted their legislation, using a substantial
portion of the model language. She explained that the model
language was developed by the entities tasked under the SAFE Act
with creating the NMLS registry. The Conference of State Bank
Supervisors (CSBS), and [the American Association of Residential
Mortgage Regulators] (AARMR) developed the system and to date
over 20 governmental agencies are using the NMLS system. She
offered to forward HB 145 to the CSBS for review.
3:47:03 PM
REPRESENTATIVE CHENAULT asked who is requesting HB 145. He
opined one reason that some lending institutions are in the
position they currently are in is the institutions moved
away from good business practices by loaning money to
people who were a credible risk. He further opined the
federal government told them to lend money to anyone that
wanted to buy a home. He expressed concern about the
source of the changes, particularly if the federal
government is the source of the bill. He said:
If it is the bankers whose job it is to turn a profit
for their stockholders and their shareholders, then I
feel a lot more comfort in that. But, I think the
biggest reason we're in the position we are in is that
we had the federal government determine what was best
for the citizens of the U.S. and now we find what they
promoted is definitely going to be with us for a long
period of time, Mr. Chairman.
3:48:24 PM
REPRESENTATIVE NEUMAN pointed out the House Resources Standing
Committee just passed three resolutions "that told the federal
government to stay out of our business." He asked if the
provisions requirements background checks and fingerprints, are
subject to privacy clauses.
MS. HOVANEC offered to report back to the committee on
confidentiality. She related that the provisions are similar to
current statute. She stated that under the current statutes,
fingerprint cards are submitted to the Department of Public
Safety. While she said she was not certain, she offered her
belief that the statutes contain provisions for some level of
confidentiality. She stressed that the whole purpose of the
NMLS and registry is to prevent someone who "may not be an
upstanding member of the industry" from transacting business in
one state from moving to another part of the country to start
another operation. She opined that running background checks
creates more transparency and better consumer protection.
3:50:48 PM
REPRESENTATIVE NEUMAN asked whether any "profiling" can happen
as a result of the bill.
MS. HOVANEC answered that the background information is
performed by the national licensing system, and is sent to the
state to examiners in the Division of Banking and Securities who
make the licensing determination. She mentioned that licensing
examiners may also run their own check of records. She
highlighted that the state licenses individuals.
3:51:58 PM
REPRESENTATIVE NEUMAN referred to page 5 and 6 of HB 145 which
relates to examination fees that may be assessed. He inquired
as to whether the fee has been determined.
MS. HOVANEC offered her belief that the division is not
anticipating changing educational testing fees at this time.
3:53:01 PM
MS. HOVANEC, in response to Representative Neuman, stated that
the state statute became effective on July 1, 2008. The SAFE
Act became effective on July 30, 2008. She related that the
DCCED has worked with the Department of Law since then to make
some of the changes that would be required under the SAFE Act.
3:54:18 PM
MS. HOVANEC, in response to Chair Olson, stated the reason the
longer bill was not previously submitted is due to the lag time
in obtaining approval for the provisions in Version E. She
said, "Believe me, it certainly was not my preference. I've put
in 70 hours just this past week and all weekend, so, my
apologies."
3:54:54 PM
CHAIR OLSON indicated the committee did not even have 24 hours
advance notice to review the committee substitute. He announced
that HB 145, Version E, would be held over for further
consideration.
3:55:22 PM
ADJOURNMENT
There being no further business before the committee, the House
Labor and Commerce Standing Committee meeting was adjourned at
3:55 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| 01 HB145 ver A.pdf |
HL&C 3/30/2009 3:15:00 PM |
HB 145 |
| 02 CSHB145 Sponsor Statement ver R.pdf |
HL&C 3/30/2009 3:15:00 PM |
HB 145 |
| 03 CS for HB145 ver R.pdf |
HL&C 3/30/2009 3:15:00 PM |
HB 145 |
| 04 HB145 SAFE Act Overview.pdf |
HL&C 3/30/2009 3:15:00 PM |
HB 145 |
| 06 HB145 SAFE Act--Frequently Asked Questions.pdf |
HL&C 3/30/2009 3:15:00 PM |
HB 145 |
| 08 HB145 Leg Legal Memo ver E.pdf |
HL&C 3/30/2009 3:15:00 PM |
HB 145 |
| 09 CS HB145 ver E.pdf |
HL&C 3/30/2009 3:15:00 PM |
HB 145 |
| 07 CSHB145 ver E - Presentation to L&C by Laurie Hovanec.pdf |
HL&C 3/30/2009 3:15:00 PM |
HB 145 |
| 05 HB145 SAFE Act side by side with Model Language.pdf |
HL&C 3/30/2009 3:15:00 PM |