Legislature(2015 - 2016)BELTZ 105 (TSBldg)
01/28/2016 01:30 PM Senate LABOR & COMMERCE
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| Audio | Topic |
|---|---|
| Start | |
| SB121 | |
| HB12 | |
| HB155 | |
| SB111 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | HB 155 | TELECONFERENCED | |
| += | HB 12 | TELECONFERENCED | |
| *+ | SB 111 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| += | SB 121 | TELECONFERENCED | |
HB 12-MORTGAGE LENDING AND LOAN ORIGINATORS
1:39:50 PM
CHAIR COSTELLO reconvened the meeting and announced the
consideration of HB 12. [This is the first hearing and CSHB
12(L&C) is before the committee.]
1:40:03 PM
REPRESENTATIVE SHELLEY HUGHES, Alaska State Legislature, Juneau,
Alaska, sponsor of HB 12, introduced the legislation speaking to
the following sponsor statement:
House Bill 12 improves the mortgage lending industry
by equalizing the licensing requirements for mortgage
loan originators and mortgage loan brokers according
to the kind of work conducted rather than a business
structure or anomaly in current statute. Licensing the
level of professional duties and the level of
liability in the lending process helps create a more
equitable and friendly statutory environment for
business in Alaska.
The bill would also exempt Alaska Housing Finance
Corporation and any government agency participating in
the Federal HUD (Housing and Urban Development)
program from the State mortgage lender/broker
licensure requirement. The government agencies would
be responsible to ensure that their mortgage loan
originators meet standards equivalent to the federal
SAFE Act requirements.
HB 12 helps create a more level playing field in the
mortgage lending industry by eliminating unnecessary
layers of licensure and reduces the administrative
burden and costs to these businesses.
1:43:38 PM
SENATOR COSTELLO asked Ms. Blaisdell to walk through the
sectional for the bill.
1:43:56 PM
GINGER BLAISDELL, Staff to Representative Shelley Hughes,
sponsor of HB 12, provided the following sectional analysis for
HB 12:
Section 1: Allows for an individual to be licensed as
a mortgage loan originator if he/she works under "an
exclusive contract for a registered depository
institution" or "be sponsored by a registered
depository institution under AS 06.60.014." Sponsored
means to conduct business under the supervision of a
mortgage licensee or registered depository.
This section creates a supervisor to employee-type of
relationship with contractors.
Section 2: Adds a new section that outlines the
requirements for a depository institution to be
eligible to sponsor a mortgage loan originator.
Section 3: Adds exemptions for "a federal, state, or
local government agency, including an agency that
arranges or provides financing for mortgage loans." In
doing this the state of Alaska recognizes these
agencies under the final rulings of the SAFE Act
effective 8/30/2011. Agencies that will be affected
are AHFC that offers HUD loans and the Anchorage HUD
Program.
MS. BLAISDELL stated that the section exempting non-profits from
certain licensing requirements, but that section was removed
because some non-profits are venturing into a competitive market
place so oversight is warranted.
1:46:46 PM
SENATOR COSTELLO pointed out that the fiscal note needed to be
updated because it mentions an exemption for non-profits.
MS. BLAISDELL continued the sectional analysis.
Section 4 adds registered depository institutions to
the banks that must have a surety bond.
Section 5 adds registered depository institutions that
cover more than one location are not required to file
more than one bond.
Section 6 adds registered depository institutions to
the banks that must bond for three years.
Section 7 adds registered depository institutions to
the banks for which the department can determine that
the bond is unsatisfactory.
Section 8 requires a registered depository institution
to follow the same reporting requirements as a
mortgage licensee and be subject to the same penalties
if the report is not filed as required.
Sections 9-13 add registered depository institutions
in the requirements for managing mortgage records.
Section 14 references the availability of out-of-state
records for registered depository institutions. If a
bank is located outside Alaska, the Division of
Banking and Securities can go to that other state to
conduct an audit or review.
Section 15 allows the department investigation and
examination authority for registered depository
institutions.
Section 16 adds a new subsection that defines a
"person" as a contractor who is working for the
registered depository institution.
Section 17 allows the department the authorization to
censure, suspend or bar a depository institution in
the same manner as a mortgage licensee.
Section 18 adds the applicability of administrative
procedures to hold administrative hearings and issue
disciplinary orders on RDIs for registered depository
institutions.
Section 19 adds a new definition of a registered
depository institution. That is a bank located outside
the state of Alaska registering as the supervisor of
these independent contractors.
MS. BLAISDELL said the effective date will be corrected to
reflect January 1, 2017.
1:50:29 PM
SENATOR GIESSEL asked if the bill would affect any business
other than State Farm Bank.
MS. BLAISDELL replied State Farm Bank and its contractors are
the primary businesses that would be affected, but there may be
others with a similar business model.
SENATOR GIESSEL asked if conducting fewer audits will have a
positive fiscal impact on the division.
MS. BLAISDELL said the fiscal note is zero and she didn't
believe that the Division of Banking and Securities anticipated
additional costs. The state will see efficiencies if it only
audits State Farm Bank as opposed to the 19 audits it conducts
now.
1:53:29 PM
KEVIN ANSELM, Director, Division of Banking and Securities,
Department of Commerce, Community and Economic Development
(DCCED), Anchorage, Alaska, introduced herself.
CHAIR COSTELLO asked if the administration has a positon on the
bill.
MS. ANSELM reported that the administration is neutral on HB 12.
CHAIR COSTELLO asked if she wanted to comment on the potential
efficiencies or any of Senator Giessel's questions.
MS. ANSELM offered that the bill would have a zero fiscal impact
to the division because they will conduct one larger examination
of the employing depository as opposed to individual agents.
CHAIR COSTELLO asked if there are any consumer protection issues
related to the bill.
1:54:52 PM
TRACY RENO, Financial Institutions Examiner, Division of Banking
and Securities, Department of Commerce, Community and Economic
Development (DCCED), Anchorage, Alaska, said the division will
be able to discuss enforcement or supervisory issues with State
Farm Bank directly. The division does not have access to those
reports right now because they deal with the individual agents.
1:55:28 PM
CHAIR COSTELLO opened public testimony for HB 12.
1:55:44 PM
KRISTIE BABCOCK, Independent State Farm Agent, Kenai, Alaska,
stated that she is an independent contractor State Farm agent.
She has been an agent and small business owner in Kenai for the
past 16 years and has eight employees. She markets insurance and
bank products to Alaskans exclusively on behalf of State Farm
Insurance companies and State Farm Bank.
She stated that as an originator, she processes initial
applications and is required to be licensed and follow all the
regulations for mortgage loan originators (MLO). HB 12 doesn't
change or reduce that requirement, but it will change the
requirement for her to carry a mortgage broker license and serve
as her own sponsor and supervisor. Instead, State Farm Bank will
be able to step in and register with the State of Alaska as her
sponsor and supervisor. The bank assumes all the liabilities,
responsibilities and oversight of a mortgage broker. This makes
sense because the bank is the lender and she is an originator.
It also avoids the circumstance of sponsoring and supervising
herself.
MS. BABCOCK reported that 26 other states have passed
legislation similar to HB 12 and several other states are
considering it. She closed emphasizing that HB 12 does not
result in any less regulation for MLOs.
2:00:01 PM
SENATOR MEYER commented that is sounds as though other states
have had this problem and passed similar laws to address the
problem.
MS. BABCOCK agreed.
2:01:11 PM
ROGER BAINBRIDGE, In House Counsel, State Farm Bank (FSB),
Bloomington, Illinois, spoke in support of HB 12. He said Ms.
Babcock summarized the issues nicely and anything he added would
be redundant. Addressing the question of whether this pertained
only to State Farm Bank, he clarified that the bill addresses
independent contractors who work exclusively in mortgage
origination on behalf of a federally chartered bank. Thus, it
would apply to anybody that has the same business model as State
Farm Bank and meets the definitions that have been added to this
legislation.
2:02:20 PM
STEVE P. ASHMAN, Division Manager, Public Health Initiatives and
Partnerships (PHIP), Health and Human Services Department,
Municipality of Anchorage, stated that PHIP manages pass-through
programs from the federal government such as Housing and Urban
Development (HUD) and falls under both the federal and state
SAFE acts. Due to 2011 clarifications of the SAFE Act, HUD
determined that state employees are not required to obtain state
licenses and registration for any loan origination under a
government housing assistant program. As currently written, HB
12 will mirror the federal law and the department is in support
of the exemption for government agencies, he said.
2:05:18 PM
CHAIR COSTELLO closed public testimony and held HB 12 in
committee awaiting updates to the fiscal note and effective
date.