04/13/2009 08:30 AM House FINANCE

HOUSE BILL NO. 221                                                                                                            
                                                                                                                                
     "An  Act relating  to the state's  participation  in the                                                                   
     federal   Nationwide  Mortgage   Licensing  System   and                                                                   
     Registry,  and   to  mortgage  lending   regulation  and                                                                   
     licensing; and providing for an effective date."                                                                           
                                                                                                                                
CONRAD JACKSON,  STAFF, REPRESENTATIVE  KURT OLSON,  SPONSOR,                                                                   
introduced HB 221.  He reported  that the bill is a quick fix                                                                   
at the request  of the Department of Commerce,  Community and                                                                   
Economic Development  so that  Alaska can participate  in the                                                                   
National Mortgage Licensing System (NMLS).                                                                                      
                                                                                                                                
8:42:49 AM                                                                                                                    
                                                                                                                                
TYSON  FICK,  LEGISLATIVE LIAISON,  DEPARTMENT  OF  COMMERCE,                                                                   
COMMUNITY  AND  ECONOMIC DEVELOPMENT,  related  that  shortly                                                                   
after the  state passed its  own mortgage licensing  law, the                                                                   
federal  government  passed  their  own  version  called  the                                                                   
Secure  and Fair  Enforcement  of Mortgage  Licensing Act  of                                                                   
2008 (SAFE).   This  Act sets  a floor  level for  compliance                                                                   
made  up  of  database,  registry,  and  national  background                                                                   
check, as well  as statutory changes.  He explained  that the                                                                   
time sensitive  piece of  the bill  is joining the  database.                                                                   
He  drew  attention  to  the fiscal  note  for  $98,000  from                                                                   
receipt  supported services  to  pay for  a $50,000  one-time                                                                   
fee,  $20,000   to  update  the  computer  system,   and  the                                                                   
remainder for travel for training.                                                                                              
                                                                                                                                
8:44:08 AM                                                                                                                    
                                                                                                                                
Representative   Austerman   noticed   that  the   bill   was                                                                   
introduced on April 8.  He wondered  when the federal act was                                                                   
passed.  Mr. Fick thought it was  last July.  He related that                                                                   
HB 221  is part  of a  larger bill  and deals  only with  the                                                                   
time-sensitive piece.                                                                                                           
                                                                                                                                
Representative  Austerman requested  the bill  number of  the                                                                   
larger bill.  Mr. Fick said it was HB 145 and SB 149.                                                                           
                                                                                                                                
8:45:23 AM                                                                                                                    
                                                                                                                                
Representative  Fairclough asked how  much research  had been                                                                   
done  regarding  the  exchange  of  information  when  Alaska                                                                   
provides information to a national database.                                                                                    
                                                                                                                                
LORIE HOVANEC,  DIRECTOR, DIVISIONS OF BANKING  & SECURITIES,                                                                   
DEPARTMENT  OF COMMERCE, COMMUNITY  AND ECONOMIC  DEVELOPMENT                                                                   
testifying  via teleconference,  requested  clarification  of                                                                   
the question.                                                                                                                   
                                                                                                                                
Representative  Fairclough restated the  question to  ask how                                                                   
data is shared with the rest of  the nation.  She was looking                                                                   
for "strings attached".                                                                                                         
                                                                                                                                
Ms. Hovanek explained  the purpose of the national  data base                                                                   
is  to share  information  about mortgage  professionals  and                                                                   
companies  nationally, provide  transparency, and  streamline                                                                   
the licensing process.                                                                                                          
                                                                                                                                
Representative Fairclough  asked if the information  would be                                                                   
shared  with  other  national  organizations.    Ms.  Hovanek                                                                   
assured that it was a closed, secure system.                                                                                    
                                                                                                                                
8:47:42 AM                                                                                                                    
                                                                                                                                
Co-Chair Stoltze asked if there  were any questions of policy                                                                   
concern.                                                                                                                        
                                                                                                                                
Representative Fairclough pointed  out a letter of good faith                                                                   
from the Alaska  Association of Mortgage Brokers  which noted                                                                   
that  HUD has  the authority  to  grant an  extension to  the                                                                   
states.  She wondered where the bill was held up.                                                                               
                                                                                                                                
Representative Olson  related that HB 145, a  thirty-six page                                                                   
bill,  was in  Labor  and Commerce.   It  was  felt that  the                                                                   
smaller bill  would have  an easier  time moving through  the                                                                   
system  and would  show a good  faith effort  to the  federal                                                                   
government.                                                                                                                     
                                                                                                                                
Representative  Fairclough wondered if  there was a  back out                                                                   
clause.  Mr. Fick did not know.                                                                                                 
                                                                                                                                
8:50:29 AM                                                                                                                    
                                                                                                                                
Ms. Hovanec  stated that there  is no choice whether  to join                                                                   
or not.  Alaska  is scheduled to join the  national licensing                                                                   
system  on August  1,  which is  very close  to  the July  30                                                                   
deadline.                                                                                                                       
                                                                                                                                
Representative   Fairclough   voiced   concerns   about   the                                                                   
consequences  of  not  thoroughly  understanding  the  issues                                                                   
related to mortgage  lending.  Ms. Hovanec opined  that it is                                                                   
a  great system.    The intent  is  to handle  all  licensing                                                                   
through  the national  data  base, but  the  state can  still                                                                   
issue the license.  The mortgage  companies and professionals                                                                   
will submit  their license information and  their fingerprint                                                                   
cards  to  the  national  database.   The  FBI  will  do  the                                                                   
background check, and then the  information is passed back to                                                                   
the  state.   Current state  statutes apply  until the  state                                                                   
comes into  compliance with  the SAFE Act.   It is  a federal                                                                   
requirement   that   the   applicant   submit   the   license                                                                   
information to the national database.                                                                                           
                                                                                                                                
8:53:11 AM                                                                                                                    
                                                                                                                                
Representative  Kelly asked  what happens  if the state  does                                                                   
not join.  Ms.  Hovanec explained that if the  state does not                                                                   
join,  the US  Department of  Housing  and Urban  Development                                                                   
(HUD) will  set up its own  requirements, which would  not be                                                                   
good for the industry.                                                                                                          
                                                                                                                                
8:53:57 AM                                                                                                                    
                                                                                                                                
Representative Austerman  spoke of the issue  of dealing with                                                                   
rogue companies.   He wondered what options the  state has to                                                                   
turn a company down.                                                                                                            
                                                                                                                                
8:54:29 AM                                                                                                                    
                                                                                                                                
PATRICE WALSH, CONSUMER FINANCE  CHIEF, DIVISION OF BANKING &                                                                   
SECURITIES,  DEPARTMENT OF COMMERCE,  COMMUNITY AND  ECONOMIC                                                                   
DEVELOPMENT, testified via teleconference,  and explained the                                                                   
way suitability  for licensing  is determined.   She  related                                                                   
that the  same criteria  found in  current mortgage  statutes                                                                   
would be used to screen applicants.   If an applicant has had                                                                   
a  banking-related  felony  the   license  is  denied.    The                                                                   
national database will provide  information about problems an                                                                   
applicant may have had in another state.                                                                                        
                                                                                                                                
Representative  Fairclough  noted that  Representative  Olson                                                                   
agrees with the bill.                                                                                                           
                                                                                                                                
8:56:24 AM                                                                                                                    
                                                                                                                                
Representative Fairclough MOVED  to report CSHB 221 (L&C) out                                                                   
of  Committee   with  individual   recommendations   and  the                                                                   
accompanying fiscal note.                                                                                                       
                                                                                                                                
Representative  Austerman  OBJECTED  to  comment.   He  spoke                                                                   
against the idea of "nationalization one step at a time".                                                                       
                                                                                                                                
Representative Austerman WITHDREW his objection.                                                                                
                                                                                                                                
There being NO OBJECTION, it was so ordered.                                                                                    
                                                                                                                                
CSHB  221  (L&C)  was REPORTED  out  of  Committee  with  "no                                                                   
recommendation" and with fiscal  note #1 by the Department of                                                                   
Commerce, Community and Economic Development.                                                                                   
                                                                                                                                
AT-EASE:       8:57:53 AM                                                                                                     
                                                                                                                                
RECONVENED:    8:59:27 AM