00 SENATE BILL NO. 102 01 "An Act relating to mortgage lenders, mortgage brokers, mortgage originators, state 02 agents who collect program administration fees, and other persons who engage in 03 activities relating to mortgage lending; relating to mortgage loan activities; relating to 04 an originator fund; relating to fees for mortgage loan transactions; and providing for an 05 effective date." 06 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 07 * Section 1. AS 06.01.050(3) is amended to read: 08 (3) "financial institution" means an institution subject to the regulation 09 of the department under this title; in this paragraph, "institution" includes a 10 commercial bank, savings bank, credit union, premium finance company, small loan 11 company, bank holding company, financial holding company, trust company, savings 12 and loan association, [AND] deferred deposit advance licensee under AS 06.50, and 13 licensee under AS 06.60; in this paragraph, "licensee under AS 06.60" has the 01 meaning given to "licensee" in AS 06.60.990; 02 * Sec. 2. AS 06 is amended by adding a new chapter to read: 03 Chapter 60. Mortgage Lending Regulation Act. 04 Article 1. Licensing. 05 Sec. 06.60.010. License required. (a) Except as provided under AS 06.60.015, 06 a person, including a person doing business from outside this state, may not operate as 07 a mortgage lender or mortgage broker in this state unless the person is licensed under 08 this chapter. 09 (b) A person may not operate as an originator in this state unless the person is 10 (1) a natural person who 11 (A) is licensed as an originator under this chapter; and 12 (B) works under contract for, or as an employee of, a mortgage 13 licensee; or 14 (2) a mortgage licensee, if an employee of the mortgage lender is 15 (A) a principal owner or a manager of the mortgage lender; and 16 (B) is licensed as an originator under this chapter. 17 (c) A license may cover more than one location of the licensee. 18 (d) A person who operates as both a mortgage lender and a mortgage broker is 19 only required to obtain one mortgage license. 20 Sec. 06.60.015. Exemptions; requirements of registration. (a) Subject to (b) 21 of this section, this chapter does not apply to a person who operates as a mortgage 22 lender or mortgage broker if the person is 23 (1) an individual who grants a mortgage loan for residential property 24 owned by the individual; 25 (2) a person who is authorized to engage in business as a bank, savings 26 institution, or credit union under the laws of the United States, a state or territory of 27 the United States, or the District of Columbia, and whose mortgage loan activity is 28 subject to the general supervision, regulation, and examination of a regulatory body or 29 agency of the United States, a state or territory of the United States, or the District of 30 Columbia; 31 (3) a subsidiary of or an affiliate of a person who is covered by (2) of 01 this subsection and who is subject to the general supervision, regulation, and 02 examination of a regulatory body or agency of the United States, a state or territory of 03 the United States, or the District of Columbia; 04 (4) a nonprofit corporation that makes mortgage loans to promote 05 home ownership or home improvements; in this paragraph, "nonprofit corporation" 06 means a corporation that qualifies under 26 U.S.C. 501(c)(3) or (4) (Internal Revenue 07 Code) for an exemption from federal income taxation; 08 (5) an agency of the federal government, a state government, a 09 municipality, or a quasi-governmental agency making or brokering mortgage loans 10 under the specific authority of the laws of a state or the United States; 11 (6) a person who acts as a fiduciary for an employee pension benefit 12 plan qualified under 26 U.S.C. (Internal Revenue Code) and who makes mortgage 13 loans solely to participants of the plan from assets of the plan; 14 (7) a person who acts in a fiduciary capacity conferred by the authority 15 of a court; or 16 (8) a person who is licensed by the United States Small Business 17 Administration as a small business investment company under 15 U.S.C. 661 - 697g 18 (Small Business Investment Act of 1958). 19 (b) A person who is listed in (a)(2) - (8) of this section shall file a registration 20 form to obtain an exemption under (a) of this section. The department shall determine 21 the form and content of the registration form. 22 Sec. 06.60.020. Application for mortgage license. An application for a 23 mortgage license must 24 (1) be in writing; 25 (2) be signed by the applicant and notarized; 26 (3) be on the form prescribed by the department; 27 (4) contain the name of the applicant; 28 (5) if the applicant is a partnership or an association not covered by (6) 29 or (7) of this section, contain the name and both the residence and business addresses 30 of each member of the partnership or association; 31 (6) if the applicant is a corporation, contain the name and both the 01 residence and business addresses of each officer and director of the corporation and a 02 shareholder holding 10 percent or more of the total shares; 03 (7) if the applicant is a limited liability company, contain the name and 04 both the residence and business addresses of each member of the company and any 05 manager of the company; 06 (8) contain the mailing address of the applicant, the street address and 07 city, if any, for each business location that will be covered by the license, and an 08 identification of the applicant's principal office; 09 (9) provide the applicant's written consent to an investigation of the 10 applicant under AS 06.60.030; 11 (10) contain other information that the department may require 12 concerning the organization and operations of the applicant and the financial 13 responsibility, background, experience, and activities of the applicant and its directors, 14 officers, members, owners, and other principals. 15 Sec. 06.60.025. Application for originator license. An application for an 16 originator license must 17 (1) be in writing; 18 (2) be signed by the applicant and notarized; 19 (3) be on a form prescribed by the department; 20 (4) contain the name and residence address of the applicant; 21 (5) include a complete set of fingerprints of the applicant; and 22 (6) contain other information or supporting material that the 23 department may require concerning the applicant, including other forms of 24 identification of the applicant. 25 Sec. 06.60.030. Investigation. The department shall investigate an applicant 26 for a license to determine if the applicant satisfies the requirements of this chapter for 27 the license. 28 Sec. 06.60.035. Fees and expenses. (a) When an applicant submits an 29 application for a license under this chapter to the department, the applicant shall pay to 30 the department 31 (1) a nonrefundable application fee of $250 in partial payment of those 01 investigation expenses incurred by the department; and 02 (2) a biennial license fee of $500 for the period that terminates two 03 years after the date the license is issued; after this payment, the biennial license fee is 04 due every two years on the anniversary date of the original issuance of the license. 05 (b) An applicant shall pay all investigative fees incurred by the department 06 before the department issues a license. 07 Sec. 06.60.040. Competency testing. (a) A person who applies for an 08 originator license shall pass a competency test conducted and graded by the 09 department. In cooperation with the education committee established under 10 AS 06.60.160(b), the department shall establish the scope and content of the test by 11 regulation. 12 (b) An individual must score 75 or better to pass the competency test. 13 (c) If an individual fails the competency test, the individual may take the 14 competency test again. The department may charge an additional $150 fee for each 15 additional competency test that the department provides to the person. 16 Sec. 06.60.045. Bonding. (a) An applicant for a mortgage license shall file 17 with the application submitted to the department under AS 06.60.020 a bond with one 18 or more sureties in the amount of $25,000 under which the applicant is the obligor. 19 The bond must be satisfactory to the department. 20 (b) The bond required by (a) of this section shall be for the use of the 21 department, the Department of Law, or another person to recover for a claim for relief 22 against the obligor under this chapter. The bond must state that the obligor will 23 faithfully conform to and abide by the provisions of this chapter and all regulations 24 adopted under this chapter and will pay the department, the Department of Law, or 25 another person all money that may become due or owing to the department, the 26 Department of Law, or the other person from the obligor under this chapter. 27 (c) An applicant for a mortgage license that covers more than one location is 28 not required to file more than one bond. 29 (d) The bond required under (a) of this section may be continuous until the 30 department revokes or otherwise terminates the license. 31 (e) If the department determines at any time that the bond required under (a) 01 of this section is unsatisfactory for any reason, the department may require the 02 mortgage licensee to file with the department, within 10 days after the receipt of a 03 written demand from the department, an additional bond that complies with the 04 provisions of this section. 05 Sec. 06.60.050. Issuance of license. Except as otherwise provided in this 06 chapter, the department shall issue a license to an applicant if 07 (1) the application complies with the requirements of this chapter that 08 apply to the particular license; 09 (2) the applicant 10 (A) has not been convicted, including a conviction based on a 11 guilty plea or a plea of nolo contendere, of a felony or another crime involving 12 fraud, misrepresentation, or dishonesty within the previous seven years; 13 (B) has not had a license for engaging in an occupation 14 suspended or revoked by this state, another state, or the federal government, or 15 within the previous seven years; in this subparagraph, "license" means a 16 license issued under this chapter or a similar license issued by another state; 17 (C) has not made a false statement of material fact on the 18 application; 19 (D) has not violated a provision of this chapter, a regulation 20 adopted under this chapter, or an order of the department under this chapter; 21 and 22 (3) the applicant pays all fees required to be paid by an applicant for 23 the particular license. 24 Sec. 06.60.055. Decision on application. (a) Within 30 days after the date a 25 complete application, the required bond if the application is for a mortgage license, 26 and any required fees and investigative costs are received by the department, the 27 department shall either grant or deny the license. 28 (b) If the department denies the license, the department shall promptly notify 29 the applicant. The notification must indicate the reason for the denial and that the 30 applicant is entitled to a hearing on the denial. 31 Sec. 06.60.060. Determinations for mortgage licensing. Before granting a 01 mortgage license, the department shall determine that 02 (1) the applicant has complied with the requirements of this chapter for 03 obtaining the license; 04 (2) the financial responsibility, experience, character, and general 05 fitness of the applicant, and of the applicant's directors, officers, members, owners, 06 and other principals, and the organization and operation of the applicant indicate that 07 the business will be operated efficiently and fairly, in the public interest, and under the 08 law; and 09 (3) the department has not found grounds for denial of a license under 10 AS 06.60.065. 11 Sec. 06.60.065. Additional grounds for denial of license. In addition to any 12 other grounds identified in this chapter for denying a license, the department may deny 13 a mortgage license to an applicant if the applicant 14 (1) has liabilities that exceed the applicant's assets, cannot meet the 15 applicant's obligations as they mature, or is in a financial condition that indicates that 16 the applicant cannot continue in business and safely handle the mortgage loans of the 17 applicant's customers; 18 (2) is permanently or temporarily enjoined by a court of competent 19 jurisdiction from engaging in or continuing conduct or a practice involving an aspect 20 of the business of providing financial services to the public; 21 (3) has been prohibited by a federal or state regulatory agency from 22 engaging in, participating in, or controlling a finance-related activity that provides 23 financial services to the public; or 24 (4) has, within the previous seven years, 25 (A) been convicted, including a conviction based on a guilty 26 plea or a plea of nolo contendere, of a felony or another crime involving fraud, 27 misrepresentation, or dishonesty; 28 (B) committed an act, made an omission, or engaged in a 29 practice that constitutes a breach of a fiduciary duty; 30 (C) had the applicant's participation in the conduct of a 31 business limited by an administrative act of a federal or state agency, including 01 the suspension or revocation of a license for engaging in an occupation; or 02 (D) had a license for engaging in an occupation suspended or 03 revoked by this state, another state, or the federal government. 04 Sec. 06.60.070. Form and contents of license. A license must be in a form 05 established by the department and must state the full name of the licensee. A mortgage 06 license must state the address for each office of the business where the business of the 07 licensee is to be conducted. If a mortgage licensee conducts business on the Internet, 08 the mortgage license must also state the registered domain address through which the 09 mortgage licensee conducts the mortgage licensee's business and the physical location 10 of the mortgage licensee's main business office. 11 Sec. 06.60.075. License availability. A licensee shall provide a copy of the 12 license to a person who requests a copy. 13 Article 2. License Duration, Renewal, Inactivity, and Surrender. 14 Sec. 06.60.080. Duration and renewal of license. A license issued under this 15 chapter remains in effect for two years after the license is issued unless revoked, 16 suspended, surrendered, or made inactive under this chapter. 17 Sec. 06.60.085. Renewal of license. (a) Unless the department denies the 18 renewal under (b) of this section, a licensee may renew a license by submitting to the 19 department 20 (1) a renewal application in the form and manner established by the 21 department; 22 (2) the biennial license fee required by AS 06.60.105; 23 (3) if the renewal is for a mortgage license, a report identifying any 24 changes in the information provided under AS 06.60.020(4) - (8); 25 (4) if the renewal is for an originator license, certificates or other 26 documents that show that the continuing education requirements of AS 06.60.160 have 27 been satisfied; and 28 (5) if the renewal is for an originator license or for a mortgage licensee 29 who is operating as an originator under AS 06.60.010(b)(2), the fund fee required by 30 AS 06.60.550. 31 (b) A renewal under (a) of this section is considered granted unless, within 30 01 days after the department receives the renewal application, the department notifies the 02 licensee that the department has denied the renewal application because the licensee is 03 not complying with this chapter. 04 Sec. 06.60.090. Inactive license. (a) A license may be made inactive under this 05 section. 06 (b) To be eligible to have a mortgage license be made inactive, all mortgage 07 loans of a licensee must have been paid in full or sold. 08 (c) To make a license inactive, a licensee shall provide the department with a 09 written request that the license be made inactive and return the license certificate to 10 the department. The request must include the licensee's name, address, and other 11 information that the department requires that is necessary for the department to 12 process the request and a statement by the licensee that all mortgage loans of the 13 licensee have been paid in full or sold. 14 (d) The department shall issue an inactive license certificate to a person whose 15 license becomes inactive under this section. 16 (e) If a person holds a license that becomes inactive under this section, the 17 person may not operate as a mortgage lender, mortgage broker, or originator under the 18 license in this state until the license is reactivated. 19 (f) If a license is made inactive under this section, the license remains inactive 20 until the person who holds the inactive license provides the department with a written 21 request that the license be reactivated. The request must include the information that 22 the department requires is necessary to process the request. 23 (g) While a license is inactive, the person holding the inactive license shall 24 pay the biennial license fee as required by AS 06.60.105 and inform the department of 25 any change that occurs in the name and address of the person, the location of the 26 person's business, or in the business operations or control of the person, but the person 27 is not required to maintain the bond required by AS 06.60.045 or to file the annual 28 report required by AS 06.60.100. 29 (h) Notwithstanding AS 06.60.120, while a license is inactive under this 30 section, the person who holds the license may not transfer the license to another 31 person. 01 (i) While a license is inactive under this section, the person is not required to 02 surrender the license under AS 06.60.097(b) for not having engaged in mortgage loan 03 activity for 12 months. 04 (j) While a license is inactive under this section, the person holding the 05 inactive license shall continue to maintain records as required by AS 06.60.135 for the 06 business transactions of the person that occurred before the license became inactive. 07 (k) While a license is inactive under this section, the department may take 08 action against the license, the person holding the inactive license, or both for 09 noncompliance with this chapter before the license became inactive or for 10 noncompliance with this section while the license is inactive. 11 (l) A licensee whose license lapses under this chapter is not eligible for an 12 inactive license under this section unless the license is reactivated under 13 AS 06.60.095. 14 (m) A person holding a license that is inactive under this section may not 15 engage in activities for which the license is required, but may receive commissions or 16 other payments from a person who contracted with or employed the licensee for 17 services and the services were performed while the licensee was actively licensed. 18 (n) Except as otherwise provided in this section and by regulations adopted by 19 the department, the provisions of this chapter do not apply to a person holding an 20 inactive license under this section. 21 Sec. 06.60.095. Reactivation of inactive license. (a) Except as provided in (b) 22 and (c) of this section, a person who has an inactive license certificate under 23 AS 06.60.090 may reactivate the license by applying to the department for an active 24 license and paying the required fees. 25 (b) A person is eligible for reactivation of an inactive license if the person has 26 been in an inactive status for less than 24 months from the anniversary date of the 27 issuance of the initial inactive license. If the person has been in an inactive status for 28 24 months or longer, the person may obtain a license only by satisfying the 29 qualifications applicable to initial licensure. 30 (c) The department shall issue an active license that has been converted from 31 inactive status under this section for the remainder of the current 24-month period of 01 the inactive license. 02 Sec. 06.60.097. Surrender of license. (a) A licensee may surrender a license 03 issued to the licensee by delivering written notice to the department that the licensee 04 intends to surrender the license, except that a mortgage licensee may not surrender a 05 license until all loans of that mortgage licensee have either been paid in full or sold. 06 (b) A licensee shall surrender a license issued to the licensee if the licensee 07 has not engaged in mortgage loan activity for 12 consecutive months. 08 (c) Surrender of a license under this section does not affect the licensee's civil 09 or criminal liability for acts committed before surrender of the license. 10 Article 3. Licensee Obligations. 11 Sec. 06.60.100. Annual report. (a) On or before March 15, or on another date 12 established by the department by regulation, of each year a mortgage licensee shall file 13 a report with the department giving relevant information that the department requires 14 concerning the business and operations of each location in the state where business 15 was conducted by the mortgage licensee in the state during the preceding calendar 16 year. The mortgage licensee shall make the report under oath or on affirmation. The 17 report must be in the form established by the department. 18 (b) A mortgage licensee who fails to file a report as required by (a) of this 19 section is subject to a civil penalty of $25 for each day's failure to file the report. 20 Sec. 06.60.105. Biennial license fee. (a) A licensee shall pay the department a 21 biennial license fee of $500. 22 (b) After the payment of the initial biennial license fee under AS 06.60.035, a 23 licensee shall pay the biennial license fee every two years on or before the anniversary 24 date of the original issuance the license. 25 (c) A mortgage licensee who is licensed to act as both a mortgage broker and a 26 mortgage lender is not required to pay more than one biennial license fee. 27 (d) The license fee imposed by (a) of this section is in addition to the fee 28 imposed under AS 43.70 (Alaska Business License Act). 29 Sec. 06.60.110. Location of business. A mortgage licensee may not maintain 30 the mortgage licensee's principal place of business or a branch office within an office, 31 suite, room, or place of business in which any other business is solicited or engaged in, 01 or in association or conjunction with another business, unless the name, ownership, 02 and business purpose of the other business is disclosed in the mortgage licensee's 03 application for a mortgage license. 04 Sec. 06.60.115. Change of place of business. If a mortgage licensee wishes to 05 change the mortgage licensee's place of business to another location, the mortgage 06 licensee shall submit a written notice to the department at least 10 days before 07 relocating the business. If the mortgage licensee is otherwise in compliance with this 08 chapter, the department shall issue a new mortgage license to the mortgage licensee to 09 reflect the new location. 10 Sec. 06.60.120. Transfer of business. (a) Except as provided by (b) of this 11 section, a mortgage licensee may only transfer or assign the licensee's business if 12 (1) the transfer is made to another mortgage licensee with the same 13 type of mortgage license as the transferring or assigning mortgage licensee; and 14 (2) the mortgage licensee provides the department with written notice 15 at least 30 days before the effective date of the proposed transfer or assignment. 16 (b) A person who holds an originator license may not transfer or assign the 17 originator license. 18 Sec. 06.60.130. Change in business control or operations. (a) The prior 19 written approval of the department is required for the continued operation of a 20 mortgage licensee's business when a change in control of the mortgage licensee is 21 proposed. The department may require the information it considers necessary to 22 determine whether a new application is required. The mortgage licensee requesting 23 approval of the change in control shall pay all reasonable expenses incurred by the 24 department to investigate and approve or deny the change in control. 25 (b) If there is a significant change in the business operations of a mortgage 26 licensee not covered by AS 06.60.120, the mortgage licensee shall provide written 27 notice to the department at least 30 days before the effective date of the change in 28 business operations. 29 Sec. 06.60.135. Records of mortgage licensee. (a) The requirements of this 30 section apply to the business transactions of a mortgage licensee that occur entirely or 31 partially in this state. 01 (b) A mortgage licensee shall keep and use in the mortgage licensee's business 02 the accounting records that are in accord with sound and accepted accounting 03 practices. 04 (c) A mortgage licensee shall maintain a record, by electronic record or 05 photocopying, for the account of each borrower and for each loan made to the 06 borrower. This record must contain all documents, notes, electronic correspondence, 07 and forms that are produced or prepared for the mortgage loan by the mortgage 08 licensee, and the mortgage licensee shall retain each document, note, electronic 09 correspondence, and form for 25 months. 10 (d) A mortgage licensee shall retain for at least three years after final payment 11 is made on a mortgage loan, or three years after a mortgage loan is sold, whichever 12 occurs first, the original contract for the mortgage licensee's compensation, copies of 13 the note, settlement statement, and truth-in-lending disclosure, an account of fees 14 received in connection with the loan, and other papers or records relating to the loan 15 that may be required by department order or regulation. 16 (e) If a mortgage licensee conducts business as a mortgage loan servicing 17 agent for mortgage loans that the mortgage licensee owns, or as an agent for other 18 mortgage lenders or investors, the mortgage licensee shall, in addition to complying 19 with (b) and (c) of this section, maintain a record for each mortgage loan. The record 20 for each mortgage loan must include, either in electronic or printed format, as well as 21 other papers required by department order or regulation, the amount of the mortgage 22 loan, the total amount of interest and finance charges on the mortgage loan, the 23 interest rate on the mortgage loan, the amount of each payment to be made on the 24 mortgage loan, a description of the collateral taken for the mortgage loan, a history of 25 all payments received by the mortgage licensee on the mortgage loan, a detailed 26 history of the amount of each payment that is applied to the reduction of the mortgage 27 loan principal, the interest that accrues on the mortgage loan, and any other fees and 28 charges that are related to the mortgage loan. The mortgage licensee shall retain the 29 record required by this subsection for three years after the loan is sold to another 30 mortgage loan servicing agent or after the mortgage loan is satisfied, whichever occurs 31 first. 01 (f) In this section, "mortgage loan servicing agent" means a person who acts 02 on behalf of the owner of a mortgage loan to collect payments on the mortgage loan 03 and enforce the terms of the mortgage loan. 04 Sec. 06.60.140. Availability of out-of-state records. A mortgage licensee 05 who operates an office or other place of business outside this state that is licensed 06 under this chapter shall, at the request of the department, 07 (1) make the records of the office or place of business available to the 08 department at a location within this state; or 09 (2) reimburse the department its reasonable costs, as provided in 10 AS 06.60.250(c), that are incurred by the department during an investigation or 11 examination conducted at the office or place of business. 12 Sec. 06.60.145. Disqualified persons. (a) A disqualified person may not be an 13 officer, a director, a partner, a member, a sole proprietor, a trustee, an employee of a 14 mortgage licensee, or in another position with similar responsibilities. In this 15 subsection, "employee" means an individual who negotiates an agreement with a 16 member of the public for the mortgage licensee or who has access to, or responsibility 17 for, escrow accounts or escrow money held by the mortgage licensee. 18 (b) A mortgage licensee may not permit a disqualified person to obtain an 19 ownership interest of 10 percent or more in the mortgage licensee's business without 20 the prior written approval of the department. 21 (c) Before a person may obtain an ownership interest of 10 percent or more in 22 the business of a mortgage licensee, the person shall authorize the department to 23 access the person's criminal history information in any state to determine whether the 24 person is a disqualified person. 25 (d) In this section, 26 (1) "disqualified person" means a person who 27 (A) has been convicted, including conviction by a guilty plea or 28 a plea of nolo contendere, of an offense that is a felony within the previous 29 seven years; 30 (B) has been held liable within the previous seven years for an 31 action that involves dishonesty or fraud by a final judgment in a civil action or 01 by an administrative judgment by a public agency; or 02 (C) had a license for engaging in an occupation revoked or 03 terminated for cause by an agency of this state, another state, or the federal 04 government within the previous seven years; 05 (2) "offense" means a criminal offense that involves deception, fraud, 06 misrepresentation, or violation of the public trust. 07 Sec. 06.60.150. Posting of license. A mortgage licensee shall conspicuously 08 post the mortgage license in each place of business of the mortgage licensee. 09 Sec. 06.60.155. Restriction on originator licensee work. An originator 10 licensee may only work as an originator licensee under contract for, or as an employee 11 of, one mortgage licensee. 12 Sec. 06.60.160. Continuing education requirements. (a) An originator 13 licensee shall complete and submit to the department evidence of at least 24 hours of 14 continuing education for each biennial license period. The originator licensee or 15 mortgage licensee shall submit the evidence when the originator licensee or mortgage 16 licensee submits a license renewal application. The 24 hours of continuing education 17 must be in a training program approved by the education committee established under 18 (b) of this section. 19 (b) The department shall establish an education committee consisting of seven 20 members. The commissioner of commerce, community, and economic development 21 shall appoint two persons employed by the department and five licensees to serve on 22 the committee. A licensee may apply to the department to serve on the education 23 committee established under this subsection by submitting an application in the form 24 and with the content established by the department. 25 (c) The education committee established under (b) of this section shall publish 26 on a regular basis a listing of classes, seminars, or other training programs that may be 27 used to satisfy the continuing education requirements of this section. 28 Article 4. Discipline and Investigation. 29 Sec. 06.60.200. Revocation and suspension of a license. (a) The department 30 may suspend or revoke a license if the department finds that 31 (1) the licensee has failed to 01 (A) make a payment required by this chapter; 02 (B) maintain a bond required under AS 06.60.045, if the 03 licensee is a mortgage licensee; 04 (C) satisfy the continuing education requirements, if the 05 licensee is an originator licensee; 06 (D) comply with an applicable provision of this title, with an 07 applicable regulation adopted under this title, with a lawful demand, ruling, 08 order, or requirement of the department, or with another statute or regulation 09 applicable to the conduct of the licensee's business; 10 (2) the licensee has, with respect to a mortgage loan transaction, 11 (A) made a substantial misrepresentation; 12 (B) made a false promise likely to influence, persuade, or 13 induce another person to take action; 14 (C) engaged in a serious course of misrepresentation or made a 15 false promise through another licensee; 16 (D) engaged in conduct that is fraudulent or dishonest; 17 (E) procured, or helped another person to procure, a license by 18 deceiving the department; 19 (F) engaged in conduct of which the department did not have 20 knowledge when the department issued the license, if the conduct demonstrates 21 that the licensee is not fit to engage in the activities for which the licensee was 22 licensed; 23 (G) knowingly authorized, directed, planned, or aided in the 24 publishing, distribution, or circulation of a materially false statement or a 25 material misrepresentation concerning the licensee's business or concerning 26 mortgage loans originated in the course of the licensee's business in this or 27 another state; or 28 (3) a fact or condition exists that would have constituted grounds for 29 denial of the initial issuance or the renewal of the license. 30 (b) In addition to the bases for revocation under (a) of this section, the 31 department may revoke the license of a licensee who is convicted, including 01 conviction by a plea of not guilty or a plea of nolo contendere, of a felony or another 02 crime involving fraud, misrepresentation, or dishonesty committed while licensed 03 under this chapter. A person whose license is revoked under this subsection is not 04 qualified to be issued another license until seven years have elapsed since the person 05 completed the sentence imposed for the conviction, or, if a sentence was not imposed 06 or was suspended, until seven years have elapsed from the conviction. 07 Sec. 06.60.210. Suspension related to fund. (a) When an award is made from 08 the fund, the department may suspend the license of the originator licensee whose 09 actions formed the basis of the award. 10 (b) The department shall lift a suspension made under (a) of this section if the 11 originator licensee reaches an agreement with the department on terms and conditions 12 for the repayment to the fund of the money awarded to the claimant and the costs of 13 hearing the fund claim. The department shall reimpose the suspension if the originator 14 licensee violates the terms of a repayment agreement entered into under this 15 subsection. 16 Sec. 06.60.230. Divestment. If the department has revoked a mortgage license, 17 the mortgage licensee shall divest itself of all outstanding loans that were issued under 18 this chapter by selling or assigning them to another mortgage licensee, except that the 19 divestment must be approved by the department. 20 Sec. 06.60.240. Reinstatement of revoked license. The department may 21 reinstate a revoked license if the licensee complies with this chapter or with a demand, 22 ruling, or requirement made by the department under this chapter. Before 23 reinstatement of a license, the licensee shall pay the biennial license fee required under 24 AS 06.60.105. 25 Sec. 06.60.250. Investigation and examination. (a) The department may 26 investigate and examine the affairs, business premises, and records of a person 27 required to be licensed under this chapter to determine compliance with this chapter, 28 regulations adopted under this chapter, AS 06.01, and applicable regulations adopted 29 under AS 06.01. Notwithstanding AS 06.01.015, the department may conduct an 30 examination at least once every 36 months, or sooner, if the examination is part of the 31 review of a complaint against the licensee. 01 (b) For the purposes of conducting an examination under this section, the 02 department 03 (1) shall have free access to the place of business, books, accounts, 04 safes, and vaults of the licensee; 05 (2) may conduct the examination without prior notice to the licensee; 06 and 07 (3) may examine, under oath or affirmation, all persons whose 08 testimony the department may require to conduct the examination. 09 (c) A person shall reimburse the department reasonable costs incurred by the 10 department to conduct an examination under this section. The reimbursement under 11 this subsection may not exceed the rate of $75 an hour for the examination, plus travel 12 costs, including a per diem allowance that does not exceed the per diem allowance for 13 employees of the state under AS 39.20.110. 14 Sec. 06.60.260. Removal or suspension of originator licensee. If the 15 department finds that an originator licensee is dishonest, reckless, or incompetent 16 when operating as an originator, or refuses to comply with the law, rules of the 17 department, or written requirements or instructions of the department relating to the 18 originator license, the department may remove or suspend the originator licensee from 19 operating as an originator in the state or order a person licensed under this title to 20 remove the originator licensee from operating as an originator for the person. 21 Sec. 06.60.270. Removal by entity. A person licensed under this title shall 22 remove an originator licensee from operating as an originator for the person if the 23 department directs the person to remove the originator licensee under AS 06.60.260. 24 Sec. 06.60.280. Department list. The department shall make available to the 25 public a list of all licensees who have been prosecuted, barred, or had their licenses 26 suspended or revoked under this chapter. The department shall publish the list on a 27 monthly basis. 28 Sec. 06.60.300. Definition. In AS 06.60.200 - 06.60.300, "originator licensee" 29 includes a mortgage licensee who is operating as an originator under 30 AS 06.60.010(b)(2). 31 Article 5. Business Duties and Restrictions. 01 Sec. 06.60.320. False, misleading, or deceptive advertising prohibited. A 02 person may not advertise, print, display, publish, distribute, broadcast, or cause or 03 permit to be advertised, printed, displayed, published, distributed, or broadcast, in any 04 manner a statement or representation with regard to the rates, terms, or conditions for 05 a mortgage loan that is false, misleading, or deceptive. 06 Sec. 06.60.330. Compliance with federal requirements. If the regulations 07 apply to the person under federal law, a person shall conduct the person's mortgage 08 loan activities under 12 CFR Part 226 and other regulations adopted by the federal 09 government under 10 (1) 12 U.S.C. 2601 - 2617 (Real Estate Settlement Procedures Act of 11 1974); 12 (2) 12 U.S.C. 2801 - 2810 (Home Mortgage Disclosure Act of 1975); 13 (3) 12 U.S.C. 2901 - 2908 (Community Reinvestment Act of 1977); 14 (4) 15 U.S.C. 1601 - 1666j and 1671 - 1693r (Consumer Credit 15 Protection Act); 16 (5) 42 U.S.C. 3601 - 3631 (Fair Housing Act of 1968); and 17 (6) any other federal law or regulation. 18 Sec. 06.60.340. Prohibited activities. (a) In addition to activities prohibited 19 elsewhere in this chapter or by another law, a person who is a licensee and a person 20 who is required to be licensed under this chapter may not, in the course of a mortgage 21 loan transaction, 22 (1) misrepresent or conceal material facts or make false promises 23 likely to influence, persuade, or induce an applicant for a mortgage loan or a borrower 24 to enter into a mortgage loan transaction; 25 (2) pursue a course of misrepresentation through an agent; 26 (3) improperly refuse to issue a satisfaction of a mortgage loan; 27 (4) fail to account for or deliver to a person money, a document, or 28 another thing of value obtained in connection with a mortgage loan, including money 29 provided for a real estate appraisal or a credit report if the person is not entitled to 30 retain the money under the circumstances; 31 (5) pay, receive, or collect, in whole or in part, a commission, fee, or 01 other compensation for brokering a mortgage loan in violation of this chapter, 02 including a mortgage loan brokered by an unlicensed person other than an exempt 03 person; 04 (6) fail to disburse money in accordance with a written commitment or 05 agreement to make a mortgage loan; 06 (7) engage in a transaction, practice, or course of business that is not 07 engaged in by the person in good faith or fair dealing or that constitutes a fraud on a 08 person in connection with the brokering, making, purchase, or sale of a mortgage loan; 09 (8) influence or attempt to influence through coercion, extortion, or 10 bribery the development, reporting, result, or review of a real estate appraisal sought 11 in connection with a mortgage loan; this paragraph does not prohibit a person from 12 asking an appraiser to 13 (A) consider additional appropriate property information; 14 (B) provide further detail, substantiation, or explanation for the 15 appraiser's value determination; or 16 (C) correct errors in the appraisal report; 17 (9) in a loan commitment or prequalification letter, make a false or 18 misleading statement, or omit relevant information or conditions that the person knew 19 or reasonably should have known from a preliminary examination of the borrower's 20 loan application, credit report, assets, and income, except that this paragraph does not 21 apply if 22 (A) the borrower made a false or misleading statement or 23 omitted relevant information in the loan application that the person relied on 24 when issuing the loan commitment or prequalification letter; or 25 (B) the person funds the loan at the rate, terms, and costs stated 26 in the good faith estimate provided to the borrower at the time the 27 prequalification letter was issued or the loan commitment was made; 28 (10) engage in a practice or course of business in which the ultimate 29 rates, terms, or costs of mortgage loans are materially worse for the borrowers than 30 they are represented to be in the first good faith estimates the person provides to the 31 borrowers; this paragraph does not apply if 01 (A) the person's generally published or advertised rates, terms, 02 or costs, if any, change for a borrower's loan program; or 03 (B) new or changed information from the borrower makes it 04 necessary to change the loan program offered to the borrower. 05 (b) A licensee may not represent to the public that the licensee holds a title or 06 certification if the representation violates 15 U.S.C. 1125. 07 Sec. 06.60.350. Certain refinancing prohibited. (a) A mortgage licensee may 08 not refinance a mortgage loan within 12 months after the date the mortgage loan is 09 closed, unless the refinancing is beneficial to the borrower. 10 (b) The factors to be considered when determining if refinancing is beneficial 11 to the borrower under (a) of this section may include 12 (1) the borrower's new monthly payment is lower than the total of all 13 monthly obligations being refinanced, after taking into account the costs and fees of 14 the refinancing; 15 (2) the amortization period of the new mortgage loan is different from 16 the amortization period of the mortgage loan being refinanced; 17 (3) the borrower receives cash in excess of the costs and fees of the 18 refinancing; 19 (4) the rate of interest of the borrower's promissory note is reduced; 20 (5) the mortgage loan changes from an adjustable rate loan to a fixed 21 rate loan after taking into account costs and fees; 22 (6) the refinancing is necessary to respond to a bona fide personal need 23 or an order of a court of competent jurisdiction; 24 (7) the original term of the mortgage loan being refinanced is two 25 years or less; and 26 (8) the refinancing is being made to prevent a foreclosure on an 27 existing mortgage loan. 28 Sec. 06.60.360. Escrow accounts. (a) A mortgage licensee and a borrower 29 may agree that the mortgage licensee will keep in an escrow account all money that 30 the borrower is required to pay to defray future taxes or insurance premiums or for 31 other lawful purposes. The escrow account must be segregated from the other accounts 01 of the mortgage licensee. The mortgage licensee may not commingle the borrower's 02 money with the general funds of the mortgage licensee. 03 (b) A mortgage licensee may not require a borrower to pay money into escrow 04 to defray future taxes, to defray insurance premiums, or for another purpose, in 05 connection with a subordinate mortgage loan, unless an escrow account for that 06 purpose is not being maintained for the mortgage loan that is superior to the 07 subordinate mortgage loan. 08 (c) If the billing address of a mortgage licensee who is holding money in 09 escrow for insurance premiums changes, the mortgage licensee shall notify the insurer 10 in writing about the changed billing address within 30 days after the change, or 60 11 days before the renewal date of the insurance policy, whichever is later. 12 (d) Except as provided by (e) of this section, a mortgage licensee who accepts 13 money belonging to a borrower in connection with a mortgage loan shall deposit all of 14 the money into an escrow account maintained by the mortgage licensee in a bank or 15 another recognized depository institution. The mortgage licensee may not commingle 16 the borrower's money with the general funds of the mortgage licensee. The mortgage 17 licensee shall maintain all money deposited in the escrow account by the borrower 18 until the money is paid to the intended third party. In this subsection, "recognized 19 depository institution" means a person who is organized as a financial institution under 20 the laws of a state or the federal government. 21 (e) A mortgage licensee is not required to deposit and maintain a borrower's 22 money in an escrow account under (d) of this section if the mortgage licensee obtains 23 a bond or letter of credit payable to the state that covers the anticipated average 24 amount that would otherwise be held in an escrow account at any one time under (d) 25 of this section. 26 Article 6. Enforcement. 27 Sec. 06.60.400. Cease and desist orders. The department may issue, under 28 AS 06.01.030, an order directing a person to cease and desist from engaging in an 29 unsafe or unsound practice. The department shall determine the form and content of 30 the order. 31 Sec. 06.60.410. Censure, suspension, or bar. (a) In addition to any other 01 remedy provided under this chapter, the department may, by order after appropriate 02 notice and opportunity for a hearing, censure a person, suspend the license of a person 03 for a period not to exceed 12 months, or bar a person from a position of employment, 04 management, or control of a licensee, if the department finds that 05 (1) the censure, suspension, or bar is in the public interest; 06 (2) the person has knowingly committed or caused a violation of this 07 chapter or a regulation adopted under this chapter; and 08 (3) the violation has caused material damage to the licensee or to the 09 public. 10 (b) When the person who is the subject of a proposed order under this section 11 receives a notice of the department's intention to issue an order under this section, the 12 person is immediately prohibited from engaging in any activities for which a license is 13 required under this chapter. 14 (c) A person who is suspended or barred under this section is prohibited from 15 participating in a business activity of a licensee and from engaging in a business 16 activity on the premises where a licensee is conducting the licensee's business. This 17 subsection may not be construed to prohibit a suspended or barred person from having 18 the person's personal transactions processed by a licensee. 19 Sec. 06.60.420. Civil penalty for violations. (a) A person who knowingly 20 violates a provision of this chapter or a regulation adopted under this chapter is liable 21 for a civil penalty not to exceed $10,000 for each violation. 22 (b) The remedies provided by this section and by other sections of this chapter 23 are not exclusive and may be used in combination with other remedies allowed under 24 law to enforce the provisions of this chapter. 25 Sec. 06.60.430. Additional enforcement provisions, actions, and rights. (a) 26 The department may treat a licensee as a financial institution under AS 06.01 when 27 applying the enforcement provisions of AS 06.01. 28 (b) This chapter may not be interpreted to prevent the attorney general or any 29 other person from exercising the rights provided under AS 45.50.471 - 45.50.561. 30 (c) If the department determines that a licensee or a person acting on the 31 behalf of the licensee is in violation of, or has violated, a provision of this chapter, the 01 department may refer the information to the attorney general and request that the 02 attorney general investigate the violation under AS 45.50.495. The attorney general 03 may enjoin a violation of this chapter and may seek restitution, rescission, and other 04 relief as allowed by law. 05 (d) In addition to another investigation allowed under this chapter, the 06 department may conduct other examinations, periodic audits, special audits, 07 investigations, and hearings as may be necessary and proper for the efficient 08 administration of this chapter. 09 Article 7. Originator Surety Fund. 10 Sec. 06.60.500. Originator surety fund. The originator surety fund is 11 established as a separate account in the general fund. 12 Sec. 06.60.510. Composition of fund. The fund consists of payments made by 13 originator licensees under AS 06.60.550, filing fees retained under AS 06.60.620, 14 income earned on the investment of the money in the fund, and money deposited in 15 the fund by the department under AS 06.60.740. 16 Sec. 06.60.520. Use of fund. The legislature may appropriate the money 17 collected in the fund under AS 06.60.510 to the department to implement 18 AS 06.60.500 - 06.60.760, including paying claims, holding hearings, and incurring 19 legal expenses and other expenses directly related to fund claims and the operations of 20 the fund or for any other public purpose. Nothing in AS 06.60.500 - 06.60.760 creates 21 a dedicated fund. 22 Sec. 06.60.530. Fund report. Every six months the department shall make a 23 written report on the activities of the fund, the balances in the fund, interest earned on 24 the fund, and interest returned to the fund. 25 Sec. 06.60.540. Approval required. (a) The department must approve a fund 26 expenditure that is used to prepare, print, manufacture, sponsor, produce, or otherwise 27 provide an item or a service to a member of the public, to a licensee, to a potential 28 licensee, or to another person. 29 (b) In (a) of this section, "an item or a service" includes an information 30 pamphlet, an examination preparation packet, an educational course, the certification 31 of a continuing education course, and an instructor for a continuing education course. 01 Sec. 06.60.550. Required fund fees. (a) A person who applies for or renews 02 an originator license or who operates as an originator under AS 06.60.010(b)(2) shall 03 pay to the department, in addition to the fees required by AS 06.60.035, a fund fee not 04 to exceed $150. 05 (b) Every two years, if the department determines that the average balance in 06 the fund during the previous two years was less than $250,000 or more than $500,000, 07 the department shall, unless the department waives the adjustment, adjust the fund fee 08 so that the average balance of the fund during the next two years is anticipated to be an 09 amount that is not less than $250,000 or more than $500,000. In this subsection, 10 "average balance" means the average balance in the fund after the department deducts 11 anticipated expenditures for claims against the fund and for hearing and legal expenses 12 directly related to fund operations and claims. 13 (c) At least once a month, the department shall pay the fees collected under 14 this section into the general fund. These payments shall be credited to the fund. 15 (d) Notwithstanding (a) of this section, an originator licensee who obtains an 16 initial originator license when the department has reduced the fund fee to nothing, or a 17 mortgage licensee who begins operating as an originator under AS 06.60.010(b)(2) 18 when the department has reduced the fund fee to nothing, shall nonetheless pay a fund 19 fee of $150 to the department each of the first two years of the originator license or, 20 for a mortgage licensee, of operating as an originator. 21 Sec. 06.60.560. Claim for reimbursement. In addition to any other remedies 22 available to the person, a person seeking reimbursement for a loss suffered in a 23 mortgage loan transaction as a result of fraud, misrepresentation, deceit, or the 24 conversion of trust funds by an originator licensee is eligible to be reimbursed under 25 AS 06.60.500 - 06.60.760 for the loss from money appropriated for that purpose. 26 Sec. 06.60.570. Submission of fund claim. To seek reimbursement under 27 AS 06.60.560, a person shall submit a fund claim to the department for the 28 reimbursement on a form furnished by the department. The person must file the fund 29 claim within two years after the occurrence of the fraud, misrepresentation, deceit, or 30 conversion that is claimed as the basis for the reimbursement. 31 Sec. 06.60.580. Form and contents of fund claim. The form for a fund claim 01 shall be executed under penalty of unsworn falsification and must include 02 (1) the name and address of each originator licensee involved; 03 (2) the amount of the alleged loss; 04 (3) the date or period of time during which the alleged loss occurred; 05 (4) the date when the alleged loss was discovered; 06 (5) the name and address of the claimant; and 07 (6) a general statement of the facts related to the fund claim. 08 Sec. 06.60.590. Claim hearing. Except as otherwise provided by 09 AS 06.60.610, a hearing on a fund claim shall be handled by the office of 10 administrative hearings (AS 44.64.010). 11 Sec. 06.60.600. Filing and distribution of claim. At least 20 days before a 12 hearing is held on the fund claim by the office of administrative hearings 13 (AS 44.64.010), a person making a fund claim shall send a copy of the claim filed with 14 the department to 15 (1) each originator licensee alleged to have committed the misconduct 16 resulting in the alleged loss; 17 (2) the employer of the originator licensee alleged to have committed 18 the conduct resulting in the alleged loss; and 19 (3) any other parties involved in the mortgage loan transaction that is 20 the subject of the fund claim. 21 Sec. 06.60.610. Election to use small claims court. (a) Within seven days 22 after receiving a copy of a fund claim under AS 06.60.600, each originator licensee 23 against whom the claim is made may elect to defend the fund claim as a small claims 24 action in district court under District Court Rules of Civil Procedure if the claim does 25 not exceed the small claims jurisdictional limit. 26 (b) An originator licensee who elects under (a) of this section to defend a fund 27 claim in district court under the small claims rules may not revoke the election without 28 the consent of the person who filed the fund claim. 29 (c) On receipt of a valid written election under (a) of this section, the 30 department shall dismiss the fund claim filed with the department and notify the 31 person who filed the fund claim that the person who filed the fund claim must bring a 01 small claims action in the appropriate district court. 02 Sec. 06.60.620. Filing fee. (a) A person who files a fund claim under 03 AS 06.60.570 shall pay the department a filing fee of $250 when the person files the 04 fund claim. 05 (b) The department shall refund the filing fee required by (a) of this section if 06 the 07 (1) department makes an award to the claimant; 08 (2) fund claim is dismissed under AS 06.60.610; or 09 (3) fund claim is withdrawn by the claimant before the office of 10 administrative hearings (AS 44.64.010) holds a hearing on the fund claim. 11 Sec. 06.60.630. Department contracts. When the department receives a fund 12 claim, the department may contract under AS 36.30 (State Procurement Code) with an 13 investigator, an accountant, an attorney, or another person necessary for the 14 department to process the fund claim. A contract may cover more than one fund claim. 15 Sec. 06.60.640. Defense of claim. When the department receives a fund claim, 16 the department shall allow each originator licensee against whom the claim is made an 17 opportunity to file with the department, within seven days after receipt of notification 18 of the fund claim under AS 06.60.600, a written statement in opposition to the fund 19 claim and a request for a hearing. 20 Sec. 06.60.650. Standards of proof. A person who submits a fund claim under 21 AS 06.60.570 bears the burden of establishing by a preponderance of the evidence that 22 the person who filed the fund claim suffered a loss in a mortgage loan transaction as a 23 result of fraud, misrepresentation, deceit, or the conversion of trust funds by an 24 originator licensee and the extent of those losses. 25 Sec. 06.60.660. Postponement. The department may postpone its 26 consideration of a fund claim until after a hearing under AS 06.60.590 or until the 27 completion of a pending or contemplated court proceeding. 28 Sec. 06.60.670. Nonapplication. AS 06.60.630 - 06.60.660 do not apply to a 29 fund claim that is dismissed under AS 06.60.610. 30 Sec. 06.60.680. Findings and payment. (a) At the conclusion of the 31 department's consideration of a claim made under AS 06.60.570, the department shall 01 issue a written report that provides the department's findings of fact and conclusions of 02 law. 03 (b) If the department determines that the claimant has suffered a loss in a 04 mortgage loan transaction as a result of fraud, misrepresentation, deceit, or the 05 conversion of trust funds by an originator licensee, the department may award the 06 person who filed the fund claim reimbursement from money appropriated to the fund 07 for the claimant's loss. 08 Sec. 06.60.690. Fund operations. The department may charge from money 09 appropriated to the department for the purpose the hearing and legal expenses related 10 to fund and fund claim operations and fund claims. The department shall deposit into 11 the fund money that the department recovers for these expenses from the originator 12 licensee under AS 06.60.745. The department may not consider amounts paid from the 13 fund for hearing or legal expenses when determining the maximum reimbursement to 14 be awarded under AS 06.60.710 or the maximum liability for fund claims under 15 AS 06.60.710. 16 Sec. 06.60.700. Payment of small claims judgment. (a) If a fund claim 17 originally filed with the department is dismissed and heard as a small claims action 18 under AS 06.60.610 and the person who filed the fund claim is awarded money in the 19 small claims action against an originator licensee, the department may pay, subject to 20 AS 06.60.710 and 06.60.720, any outstanding portion of the small claims judgment 21 from money appropriated to the department for the purpose. 22 (b) Before making payment under (a) of this section, the person who received 23 the award shall file with the department a copy of the final judgment and an affidavit 24 stating that more than 30 days have elapsed since the judgment became final and that 25 the judgment has not yet been satisfied by the originator licensee against whom the 26 award was made. 27 (c) After the department pays a small claims judgment under this section, the 28 department is subrogated to the rights of the person to whom the money was awarded 29 under the judgment. 30 Sec. 06.60.710. Maximum liability. (a) Payment of a fund claim may not 31 exceed $15,000 for each claimant, except that the payment may not exceed a total of 01 $15,000 for each mortgage loan transaction regardless of the number of persons 02 injured or the number of pieces of residential property involved in the mortgage loan 03 transaction. 04 (b) The maximum liability for fund claims against one originator licensee may 05 not exceed $50,000. 06 (c) If the $50,000 liability under (b) of this section is insufficient to pay in full 07 the valid fund claims of all persons who have filed fund claims against one originator 08 licensee, the $50,000 shall be distributed among the claimants in the ratio that their 09 individual fund claims bear to the aggregate of valid fund claims, or in another manner 10 that the department considers equitable. The department shall distribute the money 11 among the persons entitled to share in the recovery without regard to the order in 12 which their fund claims were filed. 13 Sec. 06.60.720. Order of fund claim payment. If the money appropriated to 14 the department for the purpose is insufficient at a given time to satisfy an award under 15 AS 06.60.680 for a fund claim, the department shall, when sufficient money has been 16 appropriated to the department for the purpose, satisfy unpaid fund claims in the order 17 that the fund claims were originally filed, plus accumulated interest at the rate allowed 18 under AS 45.45.010(a). 19 Sec. 06.60.730. False claims or documents. A person who files with the 20 department a notice, statement, or other document required under AS 06.60.500 - 21 06.60.760 that contains a wilful material misstatement of fact is guilty of a class A 22 misdemeanor. 23 Sec. 06.60.740. Right to subrogation. When the department has paid to a 24 claimant the sum awarded by the department, the department shall be subrogated to all 25 of the rights of the claimant to the amount paid, and the claimant shall assign all right, 26 title, and interest in that portion of the claim to the department. Money collected by the 27 department on the claim shall be deposited in the fund. 28 Sec. 06.60.745. Reimbursement for expenses. If the department pays all or a 29 portion of a fund claim against an originator licensee under AS 06.60.680 or 30 06.60.700, the department may recover from the originator licensee, in addition to the 31 payment of the fund claim, the expenses incurred by the department to process and 01 otherwise handle the fund claim. 02 Sec. 06.60.750. Disciplinary action against an originator licensee. 03 Repayment in full of all obligations to the fund does not nullify or modify the effect of 04 disciplinary proceedings brought against an originator licensee under this chapter. 05 Sec. 06.60.760. Definition. In AS 06.60.500 - 06.60.760, "originator licensee" 06 includes a mortgage licensee who is operating as an originator under 07 AS 06.60.010(b)(2). 08 Article 8. Program Administration Fee. 09 Sec. 06.60.800. Authorization of program administration fee. (a) The 10 department may collect a program administration fee of $10 for each mortgage loan 11 transaction to reimburse the state for the cost of administering this chapter. 12 (b) The program administration fee shall be paid by the borrower who is 13 providing real property as security for the mortgage loan, except that, if the regulations 14 of a federal or state loan program that insures the loan and that applies to the mortgage 15 loan transaction prohibits the borrower from paying the program administration fee, 16 another party to the mortgage loan transaction shall pay the program administration 17 fee. 18 (c) If there are multiple mortgage loan instruments recorded for a single 19 mortgage loan transaction, the department shall collect only one program 20 administration fee. 21 (d) In this section, "mortgage loan instrument" means a deed of trust, 22 mortgage, or another loan instrument recorded to encumber residential real property in 23 the state. 24 Sec. 06.60.810. Payment and use of fees. (a) The department shall coordinate 25 with the Department of Natural Resources to collect the program authorization fee. 26 (b) The program authorization fee shall be charged when payment is made to 27 the Department of Natural Resources for recording a document under AS 44.37.025. 28 (c) The program authorization fees collected under (b) of this section shall be 29 separately accounted for and may be appropriated by the legislature to the department 30 for the operation of this chapter. 31 Article 9. Duties and Powers of the Department. 01 Sec. 06.60.850. Publication of disciplinary action. The department may 02 release for publication in a newspaper of general circulation in the locale of a 03 licensee's principal office notice of disciplinary action taken by the department against 04 the licensee. 05 Sec. 06.60.860. Fingerprinting. The department may forward fingerprints 06 provided under this chapter to the Department of Public Safety for submission to the 07 Federal Bureau of Investigation for a report by the Federal Bureau of Investigation. 08 Sec. 06.60.870. Authority of department. The department may make a ruling, 09 demand, or finding that the department determines is necessary for the proper conduct 10 of a licensee's business regulated by this chapter or for the enforcement of this chapter. 11 The ruling, demand, or finding must be consistent with this chapter. 12 Sec. 06.60.880. Peace officer powers. (a) A person employed by the 13 department for the administration and enforcement of this chapter may, with the 14 concurrence of the commissioner of public safety, exercise the powers of a peace 15 officer when those powers are specifically granted to the person by the department. 16 (b) A person may exercise a power granted by the department under (a) of this 17 section only when necessary for the enforcement of the criminally punishable 18 provisions of this chapter, regulations adopted under this chapter, and other criminally 19 punishable laws and regulations, including the investigation of violations of laws 20 against theft under AS 11.46.100 - 11.46.150, fraud under AS 11.46.600, 21 misapplication of property under AS 11.46.620, and deceptive business practices 22 under AS 11.46.710. 23 Article 10. Miscellaneous Provisions. 24 Sec. 06.60.890. Application to Internet activities. This chapter applies to a 25 person even if the person is engaging in the activities regulated by this chapter by 26 using an Internet website from within or outside the state. 27 Sec. 06.60.895. Effect of revocation, suspension, or surrender of license. 28 The revocation, suspension, or surrender of a license does not impair or otherwise 29 affect the rights or obligations of a preexisting lawful contract between the licensee 30 and a borrower. 31 Sec. 06.60.900. Applicability of administrative procedures. The provisions 01 of AS 44.62 (Administrative Procedure Act) apply to an action of the department to 02 deny, revoke, or suspend a license under this chapter, to censure, suspend, or bar a 03 person under AS 06.60.410, to hold hearings, and to issue orders. 04 Sec. 06.60.905. Untrue, misleading, or false statements. A person may not, 05 in a document filed with the department or in a proceeding under this chapter, make or 06 cause to be made, an untrue statement of a material fact, or omit to state a material fact 07 necessary in order to make the statement made, in the light of the circumstances under 08 which it is made, not misleading or false. 09 Sec. 06.60.910. Regulations. The department may adopt regulations under 10 AS 44.62 (Administrative Procedure Act) to implement this chapter. 11 Sec. 06.60.920. Relationship to federal and other state law. (a) If a 12 provision of this chapter is preempted by or conflicts with federal law in a particular 13 situation, the provision does not apply to the extent of the preemption or conflict. 14 (b) If a provision of this chapter conflicts with another state law in a particular 15 situation, the provision in this chapter governs to the extent of the conflict. 16 Article 11. General Provisions. 17 Sec. 06.60.990. Definitions. In this chapter, unless the context otherwise 18 requires, 19 (1) "agent" does not include a person who is a state employee when 20 acting in the capacity of a state employee; 21 (2) "borrower" means an individual who receives a mortgage loan; 22 (3) "broker" means to operate as a mortgage broker; 23 (4) "department" means the Department of Commerce, Community, 24 and Economic Development; 25 (5) "escrow account" means an account 26 (A) to which a borrower makes payments for obligations 27 related to the real property that is the subject of a mortgage loan of the 28 borrower; 29 (B) held by a person other than the borrower on a mortgage 30 loan; and 31 (C) from which the person holding the account disburses 01 money to pay obligations related to the real property that is the subject of a 02 mortgage loan of the borrower. 03 (6) "fund" means the originator surety fund established by 04 AS 06.60.500; 05 (7) "fund claim" means a claim authorized under AS 06.60.560; 06 (8) "fund fee" means the fee that is required to be paid by 07 AS 06.60.550; 08 (9) "knowingly" has the meaning given in AS 11.81.900; 09 (10) "license" means a license issued under this chapter; 10 (11) "licensee" means a person who holds a license issued under this 11 chapter; 12 (12) "mortgage broker" means a person who, for compensation or gain, 13 or in the expectation of compensation or gain, directly or indirectly, by telephone, by 14 electronic means, by mail, through the Internet, or in person, arranges with a variety of 15 lending sources, who may be private lenders, institutional investors, or wholesale 16 lenders, to provide financing for mortgage loans; 17 (13) "mortgage lender" means a person who consummates and funds a 18 mortgage loan and who is named as the payee in the promissory note and as the 19 beneficiary of the deed of trust; "mortgage lender" does not include a subsequent 20 purchaser of a mortgage loan or an interest in a mortgage loan that is originated by a 21 licensee under this chapter; 22 (14) "mortgage lender license" means a license issued under this 23 chapter to operate as a mortgage lender; 24 (15) "mortgage lender licensee" means a person who holds a mortgage 25 lender license; 26 (16) "mortgage license" means a mortgage lender license or a 27 mortgage broker license; 28 (17) "mortgage licensee" means a mortgage lender licensee or a 29 mortgage broker licensee; 30 (18) "mortgage loan" 31 (A) means a loan made to an individual if the proceeds are to 01 be used primarily for personal, family, or household purposes and if the loan is 02 secured by a mortgage or deed of trust on an interest in a residential owner- 03 occupied property for one to four family units located in the state and 04 regardless of where the loan is made; 05 (B) includes the renewal or refinancing of a loan; 06 (C) does not include loans 07 (i) or extensions of credit to buyers of real property for 08 a part of the purchase price of the property by persons selling the 09 property owned by them; 10 (ii) to persons related to the lender by blood or 11 marriage; 12 (iii) to persons who are employees of the lender; or 13 (iv) made primarily for a business, commercial, or 14 agricultural purpose of the borrower or for construction of residential 15 property; 16 (19) "operate" means do business, offer to provide, or provide; 17 (20) "originator" means a natural person who, for compensation or 18 gain, or in the expectation of compensation or gain, directly or indirectly, by 19 telephone, by electronic means, by mail, or in person 20 (A) accepts or offers to accept an application for a mortgage 21 loan from a potential borrower; 22 (B) solicits or offers to solicit a mortgage loan for a potential 23 borrower; 24 (C) negotiates the terms or conditions of a mortgage loan with 25 or for a borrower or potential borrower; or 26 (D) issues to borrowers, potential borrowers, or the 27 representatives of borrowers or potential borrowers, mortgage loan 28 (i) commitments; 29 (ii) interest rate agreements; 30 (iii) interest rate guarantees; 31 (iv) prequalification letters; or 01 (v) commitment letters to finance up to 90 percent of 02 the value of real property; 03 (21) "originator license" means a license issued to a person to operate 04 as an originator; 05 (22) "originator licensee" means a person who holds an originator 06 license; 07 (23) "program administration fee" means the fee described under 08 AS 06.60.800(a); 09 (24) "records" includes books, accounts, papers, files, and other 10 records; 11 (25) "residential property" means improved real property used or 12 occupied, or intended to be used or occupied, for residential purposes. 13 Sec. 06.60.995. Short title. This chapter may be known as the Mortgage 14 Lending Regulation Act. 15 * Sec. 3. AS 44.62.330(a) is amended by adding a new paragraph to read: 16 (47) Department of Commerce, Community, and Economic 17 Development relating to mortgage lending under AS 06.60. 18 * Sec. 4. AS 44.64.030(a)(5) is amended to read: 19 (5) AS 06 (banks, [AND] financial institutions, and fund claims), 20 except as provided otherwise by AS 06.60.590; 21 * Sec. 5. AS 45.50.481 is amended by adding a new subsection to read: 22 (c) The exemption in (a)(1) of this section does not apply to an act or 23 transaction regulated under AS 06.60. 24 * Sec. 6. The uncodified law of the State of Alaska is amended by adding a new section to 25 read: 26 TRANSITION: LICENSING OF CURRENT MORTGAGE LENDERS AND 27 MORTGAGE BROKERS. Notwithstanding AS 06.60.010, enacted by sec. 2 of this Act, a 28 person who is engaging in activities for which a license is required under AS 06.60, enacted 29 by sec. 2 of this Act, immediately before the effective date of AS 06.60 is not required to 30 comply with the licensing requirements of AS 06.60 until March 1, 2009. In this section, 31 "license" has the meaning given in AS 06.60.990, enacted by sec. 2 of this Act. 01 * Sec. 7. The uncodified law of the State of Alaska is amended by adding a new section to 02 read: 03 TRANSITION: REGULATIONS. The Department of Commerce, Community, and 04 Economic Development may proceed to adopt regulations necessary to implement the 05 changes made by this Act. The regulations take effect under AS 44.62 (Administrative 06 Procedure Act), but not before July 1, 2008. 07 * Sec. 8. Section 7 of this Act takes effect immediately under AS 01.10.070(c). 08 * Sec. 9. Except as provided in sec. 8 of this Act, this Act takes effect July 1, 2008.