CSSB 272(FIN): "An Act relating to mortgage lenders, mortgage brokers, state agents who collect program administration fees, and other persons who engage in activities relating to mortgage lending; relating to mortgage loan activities; relating to fees for recorded mortgage loan instruments; and providing for an effective date."

00 CS FOR SENATE BILL NO. 272(FIN) 01 "An Act relating to mortgage lenders, mortgage brokers, state agents who collect 02 program administration fees, and other persons who engage in activities relating to 03 mortgage lending; relating to mortgage loan activities; relating to fees for recorded 04 mortgage loan instruments; and providing for an effective date." 05 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 06 * Section 1. AS 06.01.050(3) is amended to read: 07 (3) "financial institution" means an institution subject to the regulation 08 of the department under this title; in this paragraph, "institution" includes a 09 commercial bank, savings bank, credit union, premium finance company, small loan 10 company, bank holding company, financial holding company, trust company, savings 11 and loan association, [AND] deferred deposit advance licensee under AS 06.50, 12 mortgage lender under AS 06.60, and mortgage broker under AS 06.60; 13 * Sec. 2. AS 06 is amended by adding a new chapter to read: 14 Chapter 60. Mortgage Lending.

01 Article 1. Licensing. 02 Sec. 06.60.010. License required. (a) Except as provided under AS 06.60.020, 03 a person, including a person doing business from outside this state, may not solicit or 04 engage in business, or offer to provide services, as a mortgage lender in this state 05 unless the person is licensed under this chapter. 06 (b) Except as provided under AS 06.60.020, a person, including a person 07 doing business from outside this state, may not solicit or engage in business as a 08 mortgage broker, or offer to provide services, in this state unless the person is licensed 09 under this chapter. 10 (c) The department may issue a dual license under this chapter that allows a 11 person to engage in business, or offer to provide services, as a mortgage lender and a 12 mortgage broker. 13 (d) A license may cover more than one location of the licensee. 14 Sec. 06.60.020. Exemptions. This chapter does not apply to 15 (1) a person who makes six or fewer mortgage loans within a period of 16 12 consecutive months; 17 (2) a person who is authorized to engage in business as a bank, savings 18 institution, or credit union under the laws of the United States, a state or territory of 19 the United States, or the District of Columbia, and whose mortgage loan activity is 20 subject to the general supervision, regulation, and examination of a regulatory body or 21 agency of the United States, a state or territory of the United States, or the District of 22 Columbia; 23 (3) a subsidiary of or an affiliate of a person who is covered by (2) of 24 this section and who is subject to the general supervision, regulation, and examination 25 of a regulatory body or agency of the United States, a state or territory of the United 26 States, or the District of Columbia; 27 (4) a nonprofit corporation that makes mortgage loans to promote 28 home ownership or home improvements; in this paragraph, "nonprofit corporation" 29 means a corporation that qualifies under 26 U.S.C. 501(c)(3) or (4) (Internal Revenue 30 Code) for an exemption from federal income taxation; 31 (5) an agency of the federal government, a state government, a

01 municipality, or a quasi-governmental agency making or brokering mortgage loans 02 under the specific authority of the laws of a state or the United States; 03 (6) a person who acts as a fiduciary for an employee pension benefit 04 plan qualified under 26 U.S.C. (Internal Revenue Code) and who makes mortgage 05 loans solely to participants of the plan from assets of the plan; 06 (7) a person who is licensed in this state as an attorney, real estate 07 broker, or real estate agent when rendering services as an attorney, real estate broker, 08 or real estate agent, but who is not actively and principally engaged in negotiating, 09 placing, or finding mortgage loans; however, a real estate broker or real estate agent 10 who receives a fee, commission, rebate, or other payment for directly or indirectly 11 negotiating, placing, or finding a mortgage loan for another person is not covered by 12 this paragraph; 13 (8) a person who acts in a fiduciary capacity conferred by the authority 14 of a court; and 15 (9) a person who is licensed by the United States Small Business 16 Administration as a small business investment company under 15 U.S.C. 661 - 696 17 (Small Business Investment Act of 1958). 18 Sec. 06.60.025. Employees and independent contractors. (a) An employee 19 of a licensee is not required to obtain a separate license under this chapter. 20 (b) An independent contractor of a licensee who provides services related to 21 mortgage loans to a licensee is not required to obtain a license under this chapter if 22 (1) the independent contractor and licensee execute a written contract 23 under which 24 (A) the licensee accepts responsibility for ensuring that the 25 independent contractor complies with the requirements of this chapter; and 26 (B) the independent contractor agrees to operate in compliance 27 with this chapter; and 28 (2) the department provides advance written approval of the agreement 29 between the independent contractor and the licensee. 30 Sec. 06.60.030. Application for license. An application for a license must 31 (1) be in writing;

01 (2) be made under oath or affirmation; 02 (3) be in the form prescribed by the department; 03 (4) contain the name and both the residence and business addresses of 04 the applicant as follows: 05 (A) if the applicant is a partnership or an association not 06 covered by (B) or (C) of this paragraph, the name and both the residence and 07 business addresses of each member of the partnership or association; 08 (B) if the applicant is a corporation, the name and both the 09 residence and business addresses of each officer and director of the corporation 10 and any shareholder holding 10 percent or more of the total shares; 11 (C) if the applicant is a limited liability company, the name and 12 both the residence and business addresses of each member of the company and 13 any manager of the company; 14 (5) contain the mailing address of the applicant, and the street address 15 and city, if any, for each business location that will be licensed; and 16 (6) contain other information as the department may require 17 concerning the organization and operations of the applicant and the financial 18 responsibility, background, experience, and activities of the applicant and its 19 members, officers, directors, owners, and other principals. 20 Sec. 06.60.040. Investigation. The department shall investigate an applicant 21 for a license to determine if the applicant satisfies the requirements of this chapter for 22 the license. An applicant for a license shall pay the investigation expenses incurred by 23 the department. When the applicant submits the application to the department, the 24 applicant shall pay to the department a nonrefundable application fee of $500 in partial 25 payment of the investigation expenses incurred by the department. An applicant for a 26 dual license is not required to pay more than one application fee. 27 Sec. 06.60.050. Initial annual fee. (a) An applicant for a license shall pay the 28 annual license fee required by AS 06.60.210 to the department when the applicant 29 submits an application under AS 06.60.030. The initial annual license fee covers the 30 year that follows the date of the issuance of the license. 31 (b) An applicant for a dual license is not required to pay more than one initial

01 annual license fee. 02 Sec. 06.60.060. Bonding. (a) An applicant shall file with the application 03 submitted to the department under AS 06.60.030 a bond with one or more sureties in 04 the amount of $25,000 in which the applicant is the obligor. The bond must be 05 satisfactory to the department. 06 (b) The bond required by (a) of this section shall be for the use of the 07 department, the Department of Law, or a person for a cause of action against the 08 obligor under this chapter. The bond must state that the obligor will faithfully conform 09 to and abide by the provisions of this chapter and all regulations adopted under this 10 chapter and will pay the department, the Department of Law, or a person all money 11 that may become due or owing to the department, the Department of Law, or the 12 person from the obligor under this chapter. 13 (c) An applicant for a license that covers more than one location is not 14 required to file more than one bond. 15 (d) The bond required under (a) of this section may be continuous until the 16 department revokes or otherwise terminates the license. 17 (e) If the department determines at any time that the bond required under (a) 18 of this section is unsatisfactory for any reason, the department may require the 19 licensee to file with the department, within 10 days after the receipt of a written 20 demand from the department, an additional bond that complies with the provisions of 21 this section. 22 Sec. 06.60.070. Issuance of license. (a) Within 30 days after the date a 23 complete application, the required bond, and any required fees and investigative costs 24 are received by the department, the department shall either grant or deny the license. 25 (b) If the department denies the license, the department shall promptly notify 26 the applicant. The notification must indicate the reason for the denial and provide the 27 applicant with an opportunity for a hearing on the department's denial. 28 Sec. 06.60.080. Determinations for licensing. Before granting a license, the 29 department shall determine that 30 (1) the applicant has complied with the requirements of this chapter for 31 obtaining a license, including having paid all required fees and investigative costs;

01 (2) the financial responsibility, experience, character, and general 02 fitness of the applicant, and of the applicant's members and officers or other 03 principals, and the organization and operation of the applicant indicate that the 04 business will be operated efficiently and fairly, in the public interest, and under the 05 law; and 06 (3) the department has not found grounds for denial of a license under 07 AS 06.60.090. 08 Sec. 06.60.090. Additional grounds for denial of license. The grounds for 09 denial of a license include a finding by the department that a person named in the 10 application 11 (1) has liabilities that exceed the person's assets, cannot meet the 12 person's obligations as they mature, or is in a financial condition that indicates that the 13 person cannot continue in business and safely handle the mortgage loans of the 14 person's customers; 15 (2) is permanently or temporarily enjoined by a court of competent 16 jurisdiction from engaging in or continuing conduct or a practice involving an aspect 17 of the business of providing financial services to the public; 18 (3) has been prohibited by a federal or state regulatory agency from 19 engaging, participating, or controlling a finance-related activity that provides financial 20 services to the public; or 21 (4) has, within the previous seven years, 22 (A) been convicted, including a conviction based on a guilty 23 plea or plea of nolo contendere, of a crime, including fraud or another crime 24 involving personal dishonesty; 25 (B) committed an act, made an omission, or engaged in a 26 practice that constitutes a breach of a fiduciary duty; 27 (C) had the person's participation in the conduct of a business 28 limited by an administrative act of a federal or state agency, including the 29 suspension of a license for engaging in an occupation; or 30 (D) had a license for engaging in an occupation revoked or 31 terminated for cause by a federal or state agency.

01 Sec. 06.60.100. Form and contents of license. A license must be in a form 02 established by the department, state the address for each office of the business where 03 the business of the licensee is to be conducted, and contain the full name of the 04 licensee. If a licensee conducts business on the Internet, the license must also state the 05 registered domain address or addresses through which the licensee conducts the 06 licensee's business and the physical location of the main business office. 07 Sec. 06.60.110. Duration and renewal of license. (a) A license issued under 08 this chapter remains in effect for one year after the license is issued unless revoked or 09 suspended under AS 06.60.300 or surrendered under AS 06.60.310. 10 (b) Unless the department denies the renewal under (c) of this section, a 11 licensee may renew a license by submitting to the department 12 (1) a renewal application in the form and manner established by the 13 department; 14 (2) the annual license fee required by AS 06.60.210; and 15 (3) a report identifying any changes in the information provided under 16 AS 06.60.030(4). 17 (c) A renewal under (b) of this section is considered granted unless, within 30 18 days after the department receives the renewal application, the department notifies the 19 licensee that the department has denied the renewal application because the licensee is 20 not complying with this chapter. 21 Sec. 06.60.120. Inactive license. (a) A license may be made inactive under this 22 section. 23 (b) To be eligible to have a license be made inactive, all mortgage loans of the 24 licensee must have been paid in full or sold. 25 (c) To make a license inactive, a licensee shall provide the department with a 26 written request that the license be made inactive. The request must include the 27 licensee's name, address, and other information that the department requires that is 28 necessary for the department to process the request and a statement by the licensee 29 that all mortgage loans of the licensee have been paid in full or sold. 30 (d) If a person holds a license that is inactive, the person may not solicit or 31 engage in business, or offer to provide services, as a mortgage lender in this state until

01 the license is reactivated. 02 (e) If a license is made inactive under this section, the license remains inactive 03 until the person who holds the inactive license provides the department with a written 04 request that the license be reactivated. The request must include the information that 05 the department requires is necessary to process the request. 06 (f) While a license is inactive, the person holding the inactive license shall pay 07 the annual license fee as required by AS 06.60.210 and inform the department of any 08 change that occurs in the name and address of the person, the location of the person's 09 business, or in the business operations or control of the person, but the person is not 10 required to maintain the bond required by AS 06.60.060, and the person is not required 11 to file the annual report required by AS 06.60.200. 12 (g) Notwithstanding AS 06.60.130, while a license is inactive under this 13 section, the person who holds the license may not transfer the license to another 14 person. 15 (h) While a license is inactive under this section, the person is not required to 16 surrender the license under AS 06.60.310(b) for not having engaged in mortgage loan 17 activity for 12 months. 18 (i) While a license is inactive under this section, the person holding the 19 inactive license shall continue to maintain records as required by AS 06.60.250 for the 20 business transactions of the person that occurred before the license became inactive. 21 (j) While a license is inactive under this section, the department may take 22 action against the license, the person holding the inactive license, or both under 23 AS 06.60.300 - 06.60.360 and 06.60.500 - 06.60.540 for noncompliance with this 24 chapter before the license became inactive or for noncompliance with this section 25 while the license is inactive. 26 (k) Except as otherwise provided in this section and by regulations adopted by 27 the department, the provisions of this chapter do not apply to a person holding an 28 inactive license under this section. 29 Sec. 06.60.130. Transfer of license. A licensee may not transfer or assign the 30 licensee's business unless 31 (1) the transfer is to another licensee with the same type of license as

01 the transferring or assigning licensee; and 02 (2) the licensee provides the department with written notice at least 30 03 days before the effective date of the proposed transfer or assignment. 04 Article 2. Licensee Obligations. 05 Sec. 06.60.200. Annual report. (a) On or before March 15, or on another date 06 established by the department by regulation, of each year a licensee shall file a report 07 with the department giving relevant information that the department requires 08 concerning the business and operations of each location in the state where business 09 was conducted by the licensee in the state during the preceding calendar year. The 10 licensee shall make the report under oath or on affirmation. The report must be in the 11 form established by the department. 12 (b) A licensee who fails to file a report as required by (a) of this section is 13 subject to a civil penalty of $25 for each day's failure to file the report. 14 Sec. 06.60.210. Annual license fee. (a) A licensee shall pay the department an 15 annual license fee of $250. 16 (b) After the payment of the initial annual license fee under AS 06.60.050, a 17 licensee shall pay the annual license fee on or before the date of each annual 18 anniversary of the date the license was first issued. A dual license holder is not 19 required to pay more than one annual license fee. 20 (c) The license fee imposed by (a) of this section is in addition to the fee 21 imposed under AS 43.70 (Alaska Business License Act). 22 Sec. 06.60.220. Location of business of making loans. A licensee may not 23 maintain the licensee's principal place of business or a branch office within an office, 24 suite, room, or place of business in which any other business is solicited or engaged in, 25 or in association or conjunction with another business, unless the name, ownership, 26 and business purpose of the other business is disclosed in the licensee's application for 27 a license. 28 Sec. 06.60.230. Change of place of business. If a licensee wishes to change 29 the licensee's place of business to another location, the licensee shall submit a written 30 notice to the department at least 10 days before relocating the business. If the licensee 31 is otherwise in compliance with this chapter, the department shall issue a new license

01 to the licensee to reflect the new location. 02 Sec. 06.60.240. Change in business operations or control of licensee. (a) If 03 there is a significant change in the business operations of the licensee, the licensee 04 shall provide written notice to the department at least 30 days before the effective date 05 of the change in operations. 06 (b) The prior written approval of the department is required for the continued 07 operation of a licensee's business when a change in control of the licensee is proposed. 08 The department may require the information it considers necessary to determine 09 whether a new application is required. The licensee requesting approval of the change 10 in control shall pay all reasonable expenses incurred by the department to investigate 11 and approve or deny the change in control. 12 Sec. 06.60.250. Records of licensee. (a) The requirements of this section apply 13 to the business transactions of a licensee that occur entirely or partially in this state. 14 (b) A licensee shall keep and use in the licensee's business the accounting 15 records that are in accord with sound and accepted accounting practices. 16 (c) A mortgage lender or mortgage broker required to be licensed under this 17 chapter shall maintain a record, by electronic record or photocopying, for the account 18 of each borrower and for each loan made to the borrower. This record must contain all 19 documents, notes, electronic correspondence, and forms that are produced or prepared 20 for the mortgage loan by the licensee, and the licensee shall retain each document, 21 note, electronic correspondence, and form for three years. 22 (d) A mortgage lender required to be licensed under this chapter shall retain 23 for at least three years after final payment is made on a mortgage loan, or three years 24 after a mortgage loan is sold, whichever occurs first, copies of the note, settlement 25 statement, truth-in-lending disclosure, and other papers or records relating to the loan 26 that may be required by department order or regulation. 27 (e) A mortgage broker required to be licensed under this chapter shall retain 28 for at least three years after a mortgage loan is made the original contract for the 29 mortgage broker's compensation, a copy of the settlement statement, an account of 30 fees received in connection with the loan, and other papers or records that may be 31 required by department order or regulation.

01 (f) If a licensee conducts business as a mortgage loan servicing agent for loans 02 that the licensee owns, or as an agent for other mortgage lenders or investors, the 03 licensee shall in addition to complying with (b) and (c) of this section, maintain a 04 record for each mortgage loan. The record for each mortgage loan must include, either 05 in electronic or printed format, as well as other papers required by department order or 06 regulation, the amount of the mortgage loan, the total amount of interest and finance 07 charges on the mortgage loan, the interest rate on the mortgage loan, the amount of 08 each payment to be made on the mortgage loan, a description of the collateral taken 09 for the mortgage loan, a history of all payments received by the licensee on the 10 mortgage loan, a detailed history of the amount of each payment that is applied to the 11 reduction of the mortgage loan principal, the interest that accrues on the mortgage 12 loan, and any other fees and charges that are related to the mortgage loan. The licensee 13 shall retain the record required by this subsection for three years after the loan is sold 14 to another mortgage loan servicing agent or after the mortgage loan is satisfied, 15 whichever occurs first. 16 Sec. 06.60.260. Availability of out-of-state records. A licensee who operates 17 an office or other place of business outside this state that is licensed under this chapter 18 shall, at the request of the department, 19 (1) make the records of the office or place of business available to the 20 department at a location within this state; or 21 (2) reimburse the department reasonable costs, as provided in 22 AS 06.60.340(d), that are incurred by the department during an investigation or 23 examination conducted at the office or place of business. 24 Sec. 06.60.270. Disqualified persons. (a) A disqualified person may not be an 25 officer, a director, a partner, a member, a sole proprietor, a trustee, an independent 26 contractor under AS 06.60.025(b), an employee of a licensee, or in another position 27 with similar responsibilities. In this subsection, "employee" means an individual who 28 negotiates an agreement with a member of the public for the licensee or who has 29 access to, or responsibility for, escrow accounts or escrow money held by the licensee. 30 (b) A licensee may not permit a disqualified person to obtain a controlling 31 ownership interest of 10 percent or more in the licensee's business without the prior

01 written approval of the department. 02 (c) Before a person may obtain a controlling ownership interest of 10 percent 03 or more in the business of a licensee, the person shall authorize the department to 04 access the person's criminal history information in any state to determine whether the 05 person is a disqualified person. 06 (d) In this section, 07 (1) "disqualified person" means a person who 08 (A) is convicted of an offense that is a felony within the 09 previous seven years; 10 (B) is held liable within the previous seven years for an action 11 that involves dishonesty or fraud by a final judgment in a civil action or by an 12 administrative judgment by a public agency; or 13 (C) had a professional license revoked or terminated for cause 14 by a state agency or federal agency within the previous seven years; 15 (2) "offense" means a criminal offense that involves deception, fraud, 16 misrepresentation, or violation of the public trust. 17 Sec. 06.60.280. Posting of license. A licensee shall conspicuously post the 18 license in each place of business of the licensee. 19 Article 3. Discipline of Licensee. 20 Sec. 06.60.300. Revocation and suspension of a license. The department, 21 after appropriate notice and opportunity for a hearing under AS 44.62 (Administrative 22 Procedure Act), may suspend or revoke the license of a licensee if the department 23 finds that 24 (1) the licensee has failed to 25 (A) pay any required fee or costs; 26 (B) maintain in effect a bond required under AS 06.60.060; or 27 (C) comply with any applicable provision of this title, with any 28 applicable regulations adopted under this title, with a lawful demand, ruling, 29 order, or requirement of the department, or with any other statute or regulation 30 applicable to the conduct of the licensee's business; or 31 (2) a fact or condition exists that would have constituted grounds for

01 denial of the issuance of the license. 02 Sec. 06.60.310. 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 licensee may not surrender a license until 05 all loans of that 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 Sec. 06.60.320. Effect of revocation, suspension, or surrender of license. 11 The revocation, suspension, or surrender of a license does not impair or otherwise 12 affect the rights or obligations of a preexisting lawful contract between the licensee 13 and a borrower. If the department has revoked a license, the licensee shall divest itself 14 of all outstanding loans that were issued under this chapter by selling or assigning 15 them to another licensee, except that the divestment must be approved by the 16 department. 17 Sec. 06.60.330. Reinstatement of revoked license. The department may 18 reinstate a revoked license if the licensee complies with this chapter or with a demand, 19 ruling, or requirement made by the department under this chapter. Before 20 reinstatement of a license, the licensee shall pay the annual license fee required under 21 AS 06.60.210. 22 Sec. 06.60.340. Investigation and examination. (a) The department may 23 investigate and examine the affairs, business, premises, and records of a mortgage 24 lender or mortgage broker required to be licensed under this chapter to determine 25 compliance with this chapter and regulations adopted under this chapter and AS 06.01. 26 Notwithstanding AS 06.01.015, the department shall conduct an examination at least 27 once every 36 months, or sooner if the examination is part of review of a complaint 28 against the licensee. 29 (b) The department shall conduct other examinations, periodic audits, special 30 audits, investigations, and hearings as may be necessary and proper for the efficient 31 administration of this chapter.

01 (c) 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 (d) A licensee shall reimburse the department reasonable costs incurred by the 10 department to conduct the examination. The reimbursement under this subsection may 11 not exceed the rate of $75 an hour for the examination, plus travel, housing, and per 12 diem that does not exceed the per diem allowance for employees of the state under 13 AS 39.20.110. 14 Sec. 06.60.350. Untrue, misleading, or false statements. A person may not, 15 in a document filed with the department or in a proceeding under this chapter, make or 16 cause to be made, an untrue statement of a material fact, or omit to state a material fact 17 necessary in order to make the statement made, in the light of the circumstances under 18 which it is made, not misleading or false. 19 Sec. 06.60.360. Authority of department. The department may make a ruling, 20 demand, or finding that the department determines is necessary for the proper conduct 21 of the licensee's business regulated by this chapter and the enforcement of this chapter. 22 The ruling, demand, or finding must be consistent with this chapter. 23 Article 4. Business Duties and Restrictions. 24 Sec. 06.60.400. False, misleading, or deceptive advertising prohibited. A 25 person may not advertise, print, display, publish, distribute, broadcast, or cause or 26 permit to be advertised, printed, displayed, published, distributed, or broadcast, in any 27 manner a statement or representation with regard to the rates, terms, or conditions for 28 a mortgage loan that is false, misleading, or deceptive. 29 Sec. 06.60.410. Compliance with federal requirements. If the regulations 30 apply to the person under federal law, a person shall conduct the person's mortgage 31 loan activities under 12 CFR Part 226 and other regulations adopted by the federal

01 government under 02 (1) 12 U.S.C. 2601 - 2617 (Real Estate Settlement Procedures Act of 03 1974); 04 (2) 12 U.S.C. 2801 - 2810 (Home Mortgage Disclosure Act of 1975); 05 (3) 12 U.S.C. 2901 - 2908 (Community Reinvestment Act of 1977); 06 (4) 15 U.S.C. 1601 - 1666j and 1671 - 1693r (Consumer Credit 07 Protection Act); 08 (5) 42 U.S.C. 3601 - 3631 (Fair Housing Act of 1968); and 09 (6) any other federal law or regulation. 10 Sec. 06.60.420. Prohibited activities. In addition to activities prohibited 11 elsewhere in this chapter or by another law, a person who is a licensee, a person who 12 is required to be licensed under this chapter, and an employee and an independent 13 contractor to whom AS 06.60.025 applies may not, in the course of a mortgage loan 14 transaction, 15 (1) misrepresent or conceal material facts or make false promises 16 likely to influence, persuade, or induce an applicant for a mortgage loan or a borrower 17 to enter into a mortgage loan transaction; 18 (2) pursue a course of misrepresentation through an agent; 19 (3) improperly refuse to issue a satisfaction of a mortgage loan; 20 (4) fail to account for or deliver to a person money, a document, or 21 another thing of value obtained in connection with a mortgage loan, including money 22 provided for a real estate appraisal or a credit report if the person is not entitled to 23 retain the money under the circumstances; 24 (5) pay, receive, or collect, in whole or in part, a commission, fee, or 25 other compensation for brokering a mortgage loan in violation of this chapter, 26 including a mortgage loan brokered by any unlicensed person other than an exempt 27 person; 28 (6) fail to disburse money in accordance with a written commitment or 29 agreement to make a mortgage loan; 30 (7) engage in a transaction, practice, or course of business that is not 31 engaged in by the person in good faith or fair dealing or that constitutes a fraud on a

01 person in connection with the brokering, making, purchase, or sale of a mortgage loan; 02 (8) influence or attempt to influence through coercion, extortion, or 03 bribery the development, reporting, result, or review of a real estate appraisal sought 04 in connection with a mortgage loan; this paragraph does not prohibit a person from 05 asking an appraiser to 06 (A) consider additional appropriate property information; 07 (B) provide further detail, substantiation, or explanation for the 08 appraiser's value conclusion; or 09 (C) correct errors in the appraisal report; 10 (9) in a loan commitment or prequalification letter, make a false or 11 misleading statement, or omit relevant information or conditions that the person knew 12 or reasonably should have known from a preliminary examination of the borrower's 13 loan application, credit report, assets, and income, except that this paragraph does not 14 apply if 15 (A) the borrower made a false or misleading statement or 16 omitted relevant information in the loan application that the person relied on 17 when issuing the loan commitment or prequalification letter; or 18 (B) the person funds the loan at the rate, terms, and costs stated 19 in the good faith estimate provided to the borrower at the time of the 20 prequalification letter or loan commitment; 21 (10) engage in a practice or course of business in which the ultimate 22 rates, terms, or costs of mortgage loans are materially worse for the borrowers than 23 they are represented to be in the first good faith estimates the person provides to the 24 borrowers; this paragraph does not apply if 25 (A) the person's generally published or advertised rates, terms, 26 or costs, if any, change for a borrower's loan program; or 27 (B) new or changed information from the borrower makes it 28 necessary to change the loan program offered to the borrower. 29 Sec. 06.60.430. Certain refinancing prohibited. (a) A mortgage lender or a 30 mortgage broker may not refinance a mortgage loan within 12 months after the date 31 the mortgage loan is originated by the lender or broker, unless the refinancing is in the

01 borrower's interest. 02 (b) The factors to be considered when determining if refinancing is in the 03 borrower's interest may include whether 04 (1) the borrower's new monthly payment is lower than the total of all 05 monthly obligations being refinanced, after taking into account the costs and fees of 06 the refinancing; 07 (2) the amortization period of the new mortgage loan is different from 08 the amortization period of the mortgage loan being refinanced; 09 (3) the borrower receives cash in excess of the costs and fees of the 10 refinancing; 11 (4) the rate of interest of the borrower's promissory note is reduced; 12 (5) the mortgage loan changes from an adjustable rate loan to a fixed 13 rate loan after taking into account costs and fees; 14 (6) the refinancing is necessary to respond to a bona fide personal need 15 or an order of a court of competent jurisdiction; 16 (7) the original term of the mortgage loan being refinanced is two 17 years or less; and 18 (8) the refinancing is being made to prevent a foreclosure on an 19 existing mortgage loan. 20 (c) In this section, "mortgage loan" has the meaning given in 15 U.S.C. 21 1602(aa). 22 Sec. 06.60.440. Escrow and trust accounts. (a) A mortgage lender and a 23 borrower may agree that the mortgage lender will keep in an escrow account all 24 money that the borrower is required to pay to defray future taxes or insurance 25 premiums or for other lawful purposes. The escrow account must be a trust account or 26 another account that is segregated from the other accounts of the mortgage lender. The 27 mortgage lender may not commingle the borrower's money with the general funds of 28 the mortgage lender. 29 (b) A mortgage lender may not require a borrower to pay money into escrow 30 to defray future taxes, to defray insurance premiums, or for another purpose, in 31 connection with a subordinate mortgage loan, unless an escrow account for that

01 purpose is not being maintained for the mortgage loan that is superior to the 02 subordinate mortgage loan. 03 (c) A mortgage lender who is holding money in escrow for insurance 04 premiums shall notify the insurer in writing within 30 days after the billing address of 05 the mortgage lender changes, or 60 days before the renewal date of the insurance 06 policy, whichever is later. 07 (d) A mortgage broker who accepts money belonging to a borrower in 08 connection with a mortgage loan shall deposit all of the money into a trust account 09 maintained by the mortgage broker in a bank or another recognized depository 10 institution in this state. The mortgage broker may not commingle the borrower's 11 money with the general funds of the mortgage broker. The mortgage broker shall 12 maintain all money deposited by the mortgage broker in the trust account until the 13 money is disbursed by the mortgage broker in accordance with instructions from the 14 borrower. 15 Article 5. Enforcement. 16 Sec. 06.60.500. Cease and desist orders. The department may issue, under 17 AS 06.01.030, an order directing a person to cease and desist from engaging in an 18 unsafe or unsound practice. 19 Sec. 06.60.510. Censure, suspension, or bar. (a) In addition to any other 20 remedy provided under this chapter, the department may, by order after appropriate 21 notice and opportunity for a hearing, censure a person or suspend for a period not to 22 exceed 12 months or bar a person from a position of employment, management, or 23 control of a licensee if the department finds that 24 (1) the censure, suspension, or bar is in the public interest; 25 (2) the person has knowingly committed or caused a violation of this 26 chapter or a regulation adopted under this chapter; and 27 (3) the violation has caused material damage to the licensee or to the 28 public. 29 (b) When the person who is the subject of a proposed order under this section 30 receives a notice of the department's intention to issue an order under this section, the 31 person is immediately prohibited from engaging in any activities for which a license is

01 required under this chapter. 02 (c) A person who is suspended or barred under this section is prohibited from 03 participating in a business activity of a licensee and from engaging in a business 04 activity on the premises where a licensee is conducting the licensee's business. This 05 subsection may not be construed to prohibit a suspended or barred person from having 06 the person's personal transactions processed by a licensee. 07 Sec. 06.60.520 Responsibility of licensee for violations. A licensee who acts 08 as a mortgage lender or mortgage broker is vicariously liable under AS 06.60.300 and 09 06.60.530 for a violation of a provision of this chapter or of a lawful demand, ruling, 10 or requirement of the department made under and within the authority of this chapter, 11 committed by a person while in the course of the person's employment or agency for 12 the licensee. 13 Sec. 06.60.530. Civil penalty for violations. (a) A person who knowingly 14 violates a provision of this chapter or a regulation adopted under this chapter is liable 15 for a civil penalty not to exceed $10,000 for each violation. 16 (b) The remedies provided by this section and by other sections of this chapter 17 are not exclusive and may be used in any combination with other remedies allowed 18 under law to enforce the provisions of this chapter. 19 Sec. 06.60.540. Additional enforcement provisions, actions, and rights. (a) 20 The department may treat a licensee as a financial institution under AS 06.01 when 21 applying the enforcement provisions of AS 06.01. 22 (b) This chapter may not be interpreted to prevent the attorney general or any 23 other person from exercising the rights provided under AS 45.50.471 - 45.50.561. 24 (c) If the department determines that a licensee or a person acting on the 25 behalf of the licensee is in violation of, or has violated, a provision of this chapter, the 26 department may refer the information to the attorney general and request that the 27 attorney general investigate the violation under AS 45.50.495. The attorney general 28 may enjoin a violation of this chapter and may seek restitution, rescission, and other 29 relief as allowed by law. 30 Article 6. Collection of Program Administration Fee. 31 Sec. 06.60.600. Authorization of program administration fee. (a) The

01 department may collect a program administration fee of $10 for each mortgage loan 02 instrument to reimburse the state for the cost of administering this chapter. 03 (b) The fee shall be paid by the borrower who is providing real property as 04 security for the mortgage loan, except that, if the regulations of a federal or state loan 05 program that insures the loan and that applies to the mortgage loan transaction 06 prohibits the borrower from paying this fee, another party to the mortgage loan 07 transaction shall pay the fee. 08 (c) If there are multiple mortgage loan instruments recorded for a single 09 mortgage loan transaction, only one fee under (a) of this section shall be due. 10 (d) In this section, "mortgage loan instrument" means a deed of trust, 11 mortgage, or another loan instrument recorded to encumber residential real property in 12 the state. 13 Sec. 06.60.610. Appointment of agents. (a) The department may contract with 14 a licensee or another person to act as an agent to collect the program administration 15 fee. 16 (b) The department is not liable for an agent's defalcation or failure to account 17 for the program administration fees collected by the agent, but the department may 18 require the agent to obtain a bond in an adequate sum conditioned on the agent's 19 faithfully accounting for all money collected under this section. 20 Sec. 06.60.620. Retention and reporting of fees. (a) An agent may retain 25 21 percent of the program administration fees collected by the agent. 22 (b) An agent shall transmit to the department for deposit in the general fund 23 the program administration fees collected by the agent under this section, except the 24 amount authorized to be retained under (a) of this section, and report to the department 25 the number of mortgage loan documents recorded by the agent under AS 40.17. 26 (c) An agent shall remit the program administration fees and report required 27 under (b) of this section to the department by January 15 for the preceding calendar 28 year. 29 (d) The department may assess against an agent who does not comply with (c) 30 of this section a civil penalty of one and one-half percent of the amount of the program 31 administration fees that the agent is required to transmit to the department. The

01 department may assess the penalty for each entire month and each partial month that 02 the proceeds are delinquent. 03 Article 7. Miscellaneous Provisions. 04 Sec. 06.60.700. Application to Internet activities. This chapter applies to a 05 person even if the person is engaging in the activities regulated by this chapter by 06 using an Internet website from within or outside the state. 07 Sec. 06.60.705. Applicability of administrative procedures. The provisions 08 of AS 44.62 (Administrative Procedure Act) apply to an action of the department to 09 deny, revoke, or suspend a license under this chapter and to hearings and orders of the 10 department. 11 Sec. 06.60.710. Regulations. The department may adopt regulations under 12 AS 44.62 (Administrative Procedure Act) to implement this chapter. 13 Sec. 06.60.720. Relationship to federal and other state law. (a) If a 14 provision of this chapter is preempted by or conflicts with federal law in a particular 15 situation, the provision does not apply to the extent of the preemption or conflict. 16 (b) If a provision of this chapter conflicts with another state law in a particular 17 situation, the provision in this chapter governs to the extent of the conflict. 18 Article 8. General Provisions. 19 Sec. 06.60.990. Definitions. In this chapter, unless the context otherwise 20 requires, 21 (1) "agent" does not include a person who is a state employee when 22 acting in the capacity of a state employee; 23 (2) "borrower" means an individual who receives a mortgage loan; 24 (3) "broker" means to engage in the activity of a mortgage broker; 25 (4) "department" means the Department of Commerce, Community, 26 and Economic Development; 27 (5) "dual license" means a license issued under AS 06.60.010(c); 28 (6) "knowingly" has the meaning given in AS 11.81.900; 29 (7) "license" means a license issued under this chapter; 30 (8) "licensee" means a person who holds a license issued under this 31 chapter;

01 (9) "mortgage broker" means a person who, for compensation or gain, 02 or in the expectation of compensation or gain, directly or indirectly, by telephone, by 03 electronic means, by mail, or in person with the borrower or potential borrower, 04 (A) accepts or offers to accept an application for a mortgage 05 loan; 06 (B) solicits or offers to solicit a mortgage loan; 07 (C) negotiates the terms or conditions of a mortgage loan; or 08 (D) issues mortgage loan commitments or interest rate 09 guarantee agreements to borrowers; 10 (10) "mortgage lender" means a person who consummates and funds a 11 mortgage loan and who is named as the payee in the promissory note and as the 12 beneficiary of the deed of trust; "mortgage lender" does not include a subsequent 13 purchaser of a mortgage loan or an interest in a mortgage loan that is originated by a 14 licensee under this chapter; 15 (11) "mortgage loan" 16 (A) means a loan made to an individual if the proceeds are to 17 be used primarily for personal, family, or household purposes and if the loan is 18 secured by a mortgage or deed of trust on an interest in a residential owner- 19 occupied property for one to four families located in the state and regardless of 20 where the loan is made; 21 (B) includes the renewal or refinancing of a loan; 22 (C) does not include loans 23 (i) or extensions of credit to buyers of real property for 24 a part of the purchase price of the property by persons selling the 25 property owned by them; 26 (ii) to persons related to the lender by blood or 27 marriage; 28 (iii) to persons who are employees of the lender; or 29 (iv) made primarily for a business, commercial, or 30 agricultural purpose or for construction of residential property; 31 (12) "mortgage loan servicing agent" means a person who acts on

01 behalf of a mortgage lender to collect payments on a mortgage loan and enforce the 02 terms of a mortgage loan; 03 (13) "program administration fee" means the fee described under 04 AS 06.60.600(a); 05 (14) "records" includes books, accounts, papers, files, and other 06 records; 07 (15) "residential property" means improved real property used or 08 occupied, or intended to be used or occupied, for residential purposes. 09 Sec. 06.60.995. Short title. This chapter may be known as the Mortgage 10 Lending Act of 2006. 11 * Sec. 3. AS 44.62.330(a) is amended by adding a new paragraph to read: 12 (46) Department of Commerce, Community, and Economic 13 Development relating to mortgage lending under AS 06.60. 14 * Sec. 4. AS 45.50.481 is amended by adding a new subsection to read: 15 (c) The exemption in (a)(1) of this section does not apply to an act or 16 transaction regulated under AS 06.60. 17 * Sec. 5. The uncodified law of the State of Alaska is amended by adding a new section to 18 read: 19 TRANSITION: LICENSING OF CURRENT MORTGAGE LENDERS AND 20 MORTGAGE BROKERS. Notwithstanding AS 06.60.010, enacted by sec. 2 of this Act, a 21 person who is engaging in activities for which a license is required under AS 06.60, enacted 22 by sec. 2 of this Act, immediately before the effective date of AS 06.60 is not required to 23 comply with the licensing requirements of AS 06.60 until March 1, 2008. In this section, 24 "license," "mortgage broker," and "mortgage lender" have the meanings given in 25 AS 06.60.990, enacted by sec. 2 of this Act. 26 * Sec. 6. The uncodified law of the State of Alaska is amended by adding a new section to 27 read: 28 TRANSITION: REGULATIONS. The Department of Commerce, Community, and 29 Economic Development may proceed to adopt regulations necessary to implement the 30 changes made by this Act. The regulations take effect under AS 44.62 (Administrative 31 Procedure Act), but not before the effective date of the respective statutory change.

01 * Sec. 7. Section 6 of this Act takes effect immediately under AS 01.10.070(c). 02 * Sec. 8. Except as provided in sec. 7 of this Act, this Act takes effect July 1, 2007.