Legislature(2019 - 2020)BELTZ 105 (TSBldg)
05/10/2019 01:30 PM Senate LABOR & COMMERCE
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| Audio | Topic |
|---|---|
| Start | |
| SB106 | |
| HB104 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | SB 106 | TELECONFERENCED | |
| *+ | HB 104 | TELECONFERENCED | |
HB 104-MORTGAGE LOAN ORIGINATOR LICENSING
1:43:26 PM
CHAIR REINBOLD reconvened the meeting and announced that the
final order of business would be CS FOR HOUSE BILL NO. 104(L&C)
am, "An Act relating to exemptions from mortgage lender,
mortgage broker, and mortgage loan originator licensing
requirements; and providing for an effective date."
1:44:05 PM
REPRESENTATIVE TAMMIE WILSON, Alaska State Legislature, Juneau,
paraphrased from her sponsor statement on HB 104, which read as
follows:
The current Alaska SAFE Act allows a seller to finance
his or her residence. If a person had more than one
residence (a second home for example) they could sell
and finance it themselves without a license under AS
06.60.015(b)(3). If the second home had been rented it
would be considered an income property and the seller
would be required to have a mortgage loan originator
license in order to seller finance it.
CSHB104(L&C) would allow a person to seller-finance
up to 5 of their own properties which are secured by a
dwelling, whether they are an income property or not.
Interior and more rural community property owners have
parcels with trailers or cabins on them; some with
water and electric, some without. These types of
properties are historically difficult to finance
through the traditional mortgage process and many
times lenders require more money down, shorter loan
terms, higher interest rates, and in some cases, will
not finance them at all. Those wishing to take on the
responsibility of home ownership and establish roots
in the community may find, for many reasons, that they
do not qualify for a traditional mortgage. Seller
financing is another tool that can be utilized to make
it affordable for one to realize their dream of having
a place they can finally call their home. Seller
financing is a reasonable and practical option for
both sellers and buyers of these type properties.
CSHB 104 would give more opportunity for the dream of
home ownership to those who might not otherwise
realize it and would relieve the financial burden of
bona fide non-profit organizations assisting Alaskans
in making their dream come true.
1:46:09 PM
REPRESENTATIVE WILSON said that she discovered that many people
are doing seller financing with their income property believing
that it was legal in Alaska to do so. Unfortunately, one person
found out through the court system that it is not. She said that
she discovered it was an issue throughout Alaska. She remarked
that very few people believed it was not possible to seller
finance properties. For example, a person might rent a home for
five years and decide to purchase it but could not do so without
having a mortgage loan originator license. This bill would allow
people to self-finance their residential loan.
1:46:52 PM
SENATOR COSTELLO clarified that the bill before the committee
was the committee substitute (CS) for HB 104 (L&C) am, work
order LS0275/S.A. Chair Reinbold objected for discussion
purposes.
1:47:32 PM
CHAIR REINBOLD opened public testimony on HB 104.
1:47:51 PM
PATRICE WALSH, Director, Division of Banking and Securities,
Department of Commerce, Community and Economic Development
(DCCED), Anchorage, stated the division's support for the bill.
1:49:00 PM
NADINE WINTERS, Executive Director, Fairbanks Neighborhood
Housing Service (FNHS), Fairbanks, spoke in support of HB 104.
She stated that FNHS provides affordable rental housing and
provides second mortgage payment assistance for income-eligible
first-time home buyers. The FNHS specifically supports the non-
profit exemption provision. Although the organization only
provides mission-driven second mortgages under market rates, it
is regulated like a bank that does first mortgages at market
rate. As a small organization, it can be difficult to comply.
For example, last year the FNHS closed 13 loans at zero percent
through a federal funding source targeted specifically for
people who are at 80 percent of area-median income. She
characterized their organization as a mission-driven process
whose funders specifically direct what can and cannot be done.
She said that having another layer of regulation is onerous and
problematic for them. The federal Secure and Fair Enforcement
for Mortgage Licensing (SAFE) Act was amended in 2010 to allow
states to exempt nonprofits such as theirs. She reported that 22
states have an exemption and 24 states have conditions similar
to ones in HB 104.
MS. WINTERS reiterated support for the bill, stating that it
would be immensely helpful. She predicted it would impact four
or five other non-profits that do the same thing. The FNHS does
not compete with banks since it offers a totally separate
product. In fact, FNHS actually enhances what the banks do
because with the closing costs and down payment assistance, more
people can afford to buy homes.
SENATOR BIRCH echoed her sentiments. He remarked that allowing a
seller to finance his/her residence increases flexibility and
improve lives for many.
1:51:31 PM
STACY HARVILL, Associate Broker, Liaison, Legislative Committee,
Alaska Association of Realtors, Fairbanks, spoke in support of
HB 104.
1:52:10 PM
CHAIR REINBOLD after first determining no one wished to testify,
closed public testimony on HB 104.
1:52:20 PM
REPRESENTATIVE WILSON read a list of bona fide nonprofit
organizations that would be affected by the bill, including
Anchorage Habitat for Humanity, Mat-Su Habitat for Humanity,
Alaska Community Development Corporation, Fairbanks Neighborhood
Housing Services, Rural Alaska Community Action Program, and
Alaska EnTech Capital, LLC.
She explained that individuals found out that private mortgage
contracts were not legal. She said that some title companies
were not moving forward with processing and that individuals
were not able to move into their homes. She said she was
surprised when she discovered this but would like people to be
able to have their own homes in ways that they can afford.
CHAIR REINBOLD asked for further clarification that her comments
reflected changes between bill version U and Version S. She
referred to work order 31-LS0275\S, page 1, lines 13-14, which
read, ";or (5) a bona fide nonprofit organization.
REPRESENTATIVE WILSON agreed. She said that this issue was
brought to her attention by the Division of Banking and
Securities. The original bill did not contain the nonprofit
provision, which would allow nonprofits to assist more
individuals in obtaining financing for homes. In further
response to Chair Reinbold, she said that one additional change
was made on the House floor to ensure that that a grandfather
provision was added to ensure that anyone who was currently in a
mortgage contract would not lose their home since these
individuals purchased their homes in good faith.
[HB 104 was held in committee.]
1:54:58 PM
CHAIR REINBOLD reviewed upcoming committee announcements.
1:55:23 PM
SENATOR BIRCH remarked that the legislature is tight on time. He
offered his support to move the bill.
CHAIR REINBOLD expressed an interest in holding the bill over,
in part, to allow Senator Bishop to review the fiscal note at
the next hearing.
1:56:39 PM
SENATOR GRAY-JACKSON thanked the sponsor for bringing the bill
forward. She also appreciated that the stakeholders were
involved in the process.
[HB 104 was held in committee.]