04/29/2019 03:15 PM House LABOR & COMMERCE

           HB 104-MORTGAGE LOAN ORIGINATOR LICENSING                                                                        
                                                                                                                                
3:56:41 PM                                                                                                                    
                                                                                                                                
CO-CHAIR LEDOUX announced  that the next order  of business would                                                               
be  CS  FOR  HOUSE  BILL   NO.  104(L&C),  "An  Act  relating  to                                                               
exemptions from  mortgage lender,  mortgage broker,  and mortgage                                                               
loan  originator licensing  requirements;  and  providing for  an                                                               
effective date."                                                                                                                
                                                                                                                                
3:57:20 PM                                                                                                                    
                                                                                                                                
CO-CHAIR LEDOUX opened public testimony.                                                                                        
                                                                                                                                
3:57:34 PM                                                                                                                    
                                                                                                                                
STACY HARVILL,  Realtor, Madden Real  Estate, stated  her support                                                               
for HB 104.   She offered her belief that  HB 104 provides strong                                                               
consumer protection  and provides  options for people  buying and                                                               
selling in  the state of Alaska.   She said that  there are often                                                               
properties that  do not  fit the  traditional financing  mold and                                                               
buyers that do  not fit the traditional financing  standard.  She                                                               
opined  that  the  solution  is  owner  financing;  however,  the                                                               
current law  has made it that  a private individual cannot  do so                                                               
unless the  dwelling serves as  the individual's residence.   She                                                               
shared her  belief that  HB 104 will  help to  adequately address                                                               
owner financing and make it  easier for individuals to sell their                                                               
properties in many circumstances.                                                                                               
                                                                                                                                
CO-CHAIR WOOL  asked if  Ms. Harvill was  aware that  the current                                                               
version  of   the  bill  allows   for  nonprofits,  as   well  as                                                               
individuals, to sell properties.                                                                                                
                                                                                                                                
MS. HARVILL disclosed that she  participated in drafting the bill                                                               
and acknowledged  that nonprofits  were not  originally included.                                                               
Nonetheless, she  said that it  makes sense to  include nonprofit                                                               
organizations and expressed support for that addition.                                                                          
                                                                                                                                
CO-CHAIR WOOL asked if Ms.  Harvill would feel differently if the                                                               
nonprofits were large national groups  rather than small "mom and                                                               
pop" organizations.                                                                                                             
                                                                                                                                
MS. HARVILL  said, "possibly  but not  necessarily."   She stated                                                               
that all  the nonprofit organizations that  were mentioned during                                                               
the previous bill hearing for HB 104 made sense to her.                                                                         
                                                                                                                                
4:01:06 PM                                                                                                                    
                                                                                                                                
NADINE  WINTERS,   Executive  Director,   Fairbanks  Neighborhood                                                               
Housing Services, expressed  her support for HB  104, adding that                                                               
the  nonprofit exemption  would specifically  apply to  Fairbanks                                                               
Neighborhood  Housing  Services  (FNHS).   She  said  they  offer                                                               
products that are not available  by traditional lenders and would                                                               
be exempt by  federal law.  She opined that  this bill would help                                                               
FNHS  fulfill  their mission  to  help  low- and  moderate-income                                                               
first-time home buyers get into homes.                                                                                          
                                                                                                                                
4:03:52 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE HANNAN  asked what kind for  employee screening is                                                               
done   to  stop   the  abuse   of   loan  applicants'   financial                                                               
information.                                                                                                                    
                                                                                                                                
MS.  WINTERS replied  that  they  have confidentiality  policies,                                                               
mortgage  underwriting  policies and  procedures,  as  well as  a                                                               
litany of assurances required by their funding sources.                                                                         
                                                                                                                                
REPRESENTATIVE  HANNAN   asked  if   that  includes   a  criminal                                                               
background check.                                                                                                               
                                                                                                                                
MS. WINTERS answered yes.                                                                                                       
                                                                                                                                
4:05:34 PM                                                                                                                    
                                                                                                                                
CO-CHAIR WOOL asked  if Ms. Winters, a  licensed loan originator,                                                               
handles all loans in her office.                                                                                                
                                                                                                                                
MS. WINTERS  confirmed that.  She  added that she does  the terms                                                               
with  the  assistance   from  a  loan  processor   who  does  the                                                               
voluminous paperwork requirements.                                                                                              
                                                                                                                                
CO-CHAIR WOOL considered  whether a nonprofit group  would be, by                                                               
definition, a  commercial lender if  they were to offer  the same                                                               
kind  of loan  as  a bank.    He  asked if  that  would make  the                                                               
nonprofit ineligible for the exemption.                                                                                         
                                                                                                                                
MS.  WINTERS  acknowledged  that  would meet  the  definition  of                                                               
"commercial" and the exemption would not apply to them.                                                                         
                                                                                                                                
CO-CHAIR  WOOL  sought clarification  on  the  zero percent  loan                                                               
program offered by  FNHS.  He speculated that  their down payment                                                               
helps people get bank loans to buy a house.                                                                                     
                                                                                                                                
MS. WINTERS said,  "Exactly," and added that  all her nonprofit's                                                               
programs  are for  first-time home  buyers.   She clarified  that                                                               
every second  mortgage that FNHS does  is tied to a  first lender                                                               
whose  client wouldn't  have been  able  to get  into their  home                                                               
without the program assistance offered by the nonprofit.                                                                        
                                                                                                                                
4:10:46 PM                                                                                                                    
                                                                                                                                
CO-CHAIR WOOL suggested a scenario  in which someone wants to get                                                               
a second  mortgage on a house  they own.   He asked if he  or she                                                               
would be  required to come up  with the down payment  if they are                                                               
already paying for the loan on their house.                                                                                     
                                                                                                                                
MS.  WINTERS said  if  that individual  already  has an  existing                                                               
mortgage  then  FNHS   would  not  be  assisting   them,  as  the                                                               
organization helps  first-time home buyers.   She reiterated that                                                               
someone  looking for  a second  mortgage  on top  of an  original                                                               
mortgage would  not be a client  that they serve.   She continued                                                               
by saying that FNHS helps people  with closing costs and the down                                                               
payment.                                                                                                                        
                                                                                                                                
CO-CHAIR  WOOL offered  his understanding  that  FNHS is  helping                                                               
people out with fees rather than originating their mortgage.                                                                    
                                                                                                                                
MS.  WINTERS  acknowledged that  they  are  augmenting a  certain                                                               
population of homebuyers in the community rather than competing.                                                                
                                                                                                                                
4:12:49 PM                                                                                                                    
                                                                                                                                
PATRICK  ANDERSON CEO,  Rural  Alaska  Community Action  Program,                                                               
informed  the  committee  that   Rural  Alaska  Community  Action                                                               
Program (RurAL  CAP) is  a nonprofit  agency operating  in Alaska                                                               
and  a licensed  mortgage loan  originator as  required by  state                                                               
law.   He expressed full  support for HB  104 as it  would exempt                                                               
nonprofit  organizations like  RurAL CAP  from the  requirements.                                                               
He  explained that  RurAL CAP  closes second  mortgages for  low-                                                               
income  home  buyers  that  are serviced  and  funded  by  Alaska                                                               
Housing  Finance Corporation,  noting that  in the  past 7  years                                                               
they have closed only 36 such  loans while expending in excess of                                                               
$20,000 in fees to maintain compliance with regulations.                                                                        
                                                                                                                                
CO-CHAIR WOOL  questioned whether  RurAL CAP uses  a bank  to buy                                                               
properties.                                                                                                                     
                                                                                                                                
MR. ANDERSON said that they buy it themselves.                                                                                  
                                                                                                                                
4:19:34 PM                                                                                                                    
                                                                                                                                
CO-CHAIR WOOL  said the committee  has heard from  nonprofits who                                                               
say they don't compete with  banks and offer different loans than                                                               
banks do.   He asked for the Division of  Banking and Securities'                                                               
response to that.                                                                                                               
                                                                                                                                
PATRICE  WALSH, Director,  Division  of  Banking and  Securities,                                                               
Department  of   Commerce,  Community  &   Economic  Development,                                                               
replied  that she  views these  nonprofits  as public  assistance                                                               
because  they  are  offering  services  to  a  group  that  isn't                                                               
serviced  by the  state or  federally licensed  loan originators.                                                               
She  noted  that   the  federal  law  already   allows  for  this                                                               
exemption, which other states have  adopted, leaving Alaska as an                                                               
outlier that has yet to convert to keep up with federal law.                                                                    
                                                                                                                                
4:21:50 PM                                                                                                                    
                                                                                                                                
CO-CHAIR WOOL asked  if the number of loans would  increase if HB
 were to pass.                                                                                                               
                                                                                                                                
MS. WALSH  offered her belief  that there wouldn't be  more loans                                                               
because the nonprofits get their  money through grants, which are                                                               
limited.  She  added that she has never seen  the volume increase                                                               
for the few licensees that they have.                                                                                           
                                                                                                                                
4:24:18 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE HANNAN questioned whether  Ms. Walsh believes that                                                               
allowing the nonprofit origination  of residential mortgage loans                                                               
would open a risk to consumers in Alaska.                                                                                       
                                                                                                                                
MS. WALSH answered  no, because nonprofits must  qualify for this                                                               
exemption  and   in  that  qualification  process   there  is  an                                                               
extensive  review  of  each organization  that  must  be  renewed                                                               
annually.                                                                                                                       
                                                                                                                                
4:26:41 PM                                                                                                                    
                                                                                                                                
CO-CHAIR LEDOUX closed public testimony.                                                                                        
                                                                                                                                
4:26:56 PM                                                                                                                    
                                                                                                                                
The committee took a brief at-ease.                                                                                             
                                                                                                                                
4:27:53 PM                                                                                                                    
                                                                                                                                
CO-CHAIR WOOL said he wasn't  present for the introduction of the                                                               
CS  at the  previous bill  hearing.   He further  noted that  the                                                               
nonprofits seem to  have a limited scope of  a limited clientele.                                                               
He  added that  it  would  have been  helpful  to  hear from  the                                                               
banking industry during testimony.                                                                                              
                                                                                                                                
4:28:24 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  WOOL moved  to report  CSHB  104, Version  31-LS0275\S,                                                               
Bannister,   4/10/109,   out   of   committee   with   individual                                                               
recommendations  and  the  accompanying fiscal  notes.    Without                                                               
objection,  CSHB 104(L&C)  was  moved from  the  House Labor  and                                                               
Commerce Standing Committee.