04/15/2010 08:30 AM House FINANCE

CS FOR SENATE BILL NO. 279(FIN)                                                                                               
                                                                                                                                
     "An Act relating to  regulation of residential mortgage                                                                    
     lending, including  the licensing of  mortgage lenders,                                                                    
     mortgage  brokers, and  mortgage loan  originators, and                                                                    
     compliance  with  certain   federal  laws  relating  to                                                                    
     residential  mortgage  lending;  and providing  for  an                                                                    
     effective date."                                                                                                           
                                                                                                                                
7:37:28 PM                                                                                                                    
                                                                                                                                
SENATOR JOE  PASKVAN explained that  SB 279  brings Alaska's                                                                    
mortgage  lending regulation  act into  compliance with  the                                                                    
federal public  law called the  Secure and  Fair Enforcement                                                                    
for  Mortgage Licensing  Act otherwise  referred  to as  the                                                                    
SAFE  act.  Each state  much  issue  the license  through  a                                                                    
national  process. He  noted that  the  Alaska licensing  is                                                                    
performed through  the nationwide mortgage  licensing system                                                                    
and registry beginning August 1,  2009. The second component                                                                    
of the safe  act mandates that the  United States Department                                                                    
of  Housing  and  Urban  Development  begins  enforcing  the                                                                    
licensing aspect  in addition to the  registry components if                                                                    
the  state  does  not  align   with  federal  standards.  He                                                                    
mentioned  Page 5,  Line 22,  and Section  8, which  changes                                                                    
that  the  reference  to   "originator"  to  "mortgage  loan                                                                    
originator." He noted Page 6  exhibits renewals changed from                                                                    
biannual to  annual. He noted  that Page 7, Line  5, Section                                                                    
12  established  that  the  permit   fees  will  be  set  in                                                                    
regulation.  He  added that  Page  7,  Line 10,  Section  13                                                                    
required 20 hours of pre-licensing  education. Page 11, Line                                                                    
1,   Section  19   authorized  the   division  to   issue  a                                                                    
provisional  license. Page  13, Line  2, Section  23 omitted                                                                    
references to  paper licenses.  He noted  Page 14,  Line 21,                                                                    
Section  30 permits  branch  office  registration. Page  16,                                                                    
Line  7, Section  36 modified  the educational  requirements                                                                    
from 24 hours every two years  to 8 hours annually. Page 41,                                                                    
Line 28, Section  85 allowed that finger print  cards of the                                                                    
mortgage  loan  originator would  be  sent  to the  registry                                                                    
rather than  to the  Department of  Public Safety  (DPS). He                                                                    
finished with Page  42, Line 2, Section  86 eliminated small                                                                    
mortgage lender or originator exemption.                                                                                        
                                                                                                                                
7:41:56 PM                                                                                                                    
                                                                                                                                
Senator Paskvan  addressed the  fiscal note,  which includes                                                                    
funding for  one additional occupational  licensing position                                                                    
at $65 thousand  per year. An additional $3000  for cost and                                                                    
supplies  is  associated   with  the  contractual  position.                                                                    
Increased travel costs are anticipated  due to the increased                                                                    
use  of  the internet.  An  annual  membership fee  for  the                                                                    
American Association of  residential mortgage regulators for                                                                    
$750 is  due annually. Lastly  a state background  check fee                                                                    
for  the sum  of  $5,250, which  the  division must  advance                                                                    
until the  fee is  collected from  the licensee.  Revenue is                                                                    
expected to  increase due to  the expansion of  the licensee                                                                    
definition  to  include   loan  modification  and  servicing                                                                    
companies. An increase in revenues  is anticipated with this                                                                    
system.                                                                                                                         
                                                                                                                                
Co-Chair  Hawker asked  if national  prototype language  was                                                                    
followed in  the bill. He  noted that the Department  of Law                                                                    
has been in contact through the process.                                                                                        
                                                                                                                                
7:43:49 PM                                                                                                                    
                                                                                                                                
Representative   Fairclough   stated   that   the   realtors                                                                    
requested  assistance  of   the  legislature  in  regulating                                                                    
mortgage  licensing. She  commended Senator  Paskvan on  the                                                                    
legislation.  She requested  more information  regarding the                                                                    
exemptions.  She  asked  about  Page  4,  Section  06.60.015                                                                    
exemptions.                                                                                                                     
                                                                                                                                
7:45:02 PM                                                                                                                    
                                                                                                                                
PATRICE  WALSH,  CHIEF  EXAMINER,  DEPARTMENT  OF  COMMERCE,                                                                    
COMMUNITY    AND   ECONOMIC    DEVELOPMENT   responded    to                                                                    
Representative Fairclough's queries.  She commented that the                                                                    
amendments and  exemptions have changed due  to the mandates                                                                    
in  the SAFE  ACT. Many  exemptions in  the current  law are                                                                    
thus eliminated.  She noted  that the  banks and  the credit                                                                    
unions do not pertain as they are already regulated.                                                                            
                                                                                                                                
Co-Chair Hawker asked the professional  opinion on the bill.                                                                    
Ms.   Walsh   stated   that  the   division   supports   the                                                                    
legislation. She stated  that Alaska will be  the only state                                                                    
that does not  meet the SAFE requirements, if  the bill does                                                                    
not pass.  The bill places  all loan originators on  a level                                                                    
playing ground.                                                                                                                 
                                                                                                                                
7:47:37 PM                                                                                                                    
                                                                                                                                
LORI   HOVANEC,  DIVISION   BANKING   AND  SECURITIES   (via                                                                    
teleconference), appreciated the  legislature's efforts. She                                                                    
stated that the  administration is in favor of  the bill and                                                                    
the amendment.                                                                                                                  
                                                                                                                                
JOHN   CARMAN,   PRESIDENT,   HOME  STATE   MORTGAGES   (via                                                                    
teleconference),  testified in  support of  the legislation.                                                                    
He expressed appreciation for the division of banking.                                                                          
                                                                                                                                
Co-Chair Hawker  asked if the  support is contingent  on the                                                                    
amendment. Mr.  Carman stated that  his personal  support is                                                                    
contingent on the amendment.                                                                                                    
                                                                                                                                
7:50:33 PM                                                                                                                    
                                                                                                                                
Co-Chair Hawker  asked if there  was opposition to  the bill                                                                    
from the  mortgage industry. Mr. Carman  replied that others                                                                    
who  do not  typically originate  loans are  concerned about                                                                    
the licensing requirement.                                                                                                      
                                                                                                                                
Co-Chair  Hawker  asked  about  the  real  estate  brokerage                                                                    
industry.  Mr.  Carman  stated  that  the  industry  was  in                                                                    
support of the bill and the amendment.                                                                                          
                                                                                                                                
7:51:57 PM                                                                                                                    
                                                                                                                                
Co-Chair  Hawker  asked Ms.  Walsh  if  she knew  about  any                                                                    
objection from any other industry. Ms. Walsh answered no.                                                                       
                                                                                                                                
7:52:43 PM                                                                                                                    
                                                                                                                                
Co-Chair Hawker Moved Amendment 1.                                                                                              
                                                                                                                                
Vice-Chair Thomas Objected.                                                                                                     
                                                                                                                                
Senator  Paskvan  described  the  amendment.  He  noted  the                                                                    
concern  that  a licensing  issue  might  trigger an  unfair                                                                    
trade  practices act,  which could  include treble  damages.                                                                    
The  exclusion  of  those regulatory  licensing  issues  was                                                                    
requested.  The  amendment  maintains  the  Alaska  consumer                                                                    
protection scheme.  He supports the amendment  and felt that                                                                    
the industry's request was appropriate and reasonable.                                                                          
                                                                                                                                
Ms.  Walsh stated  that  the  division is  in  favor of  the                                                                    
amendment.                                                                                                                      
                                                                                                                                
7:55:31 PM                                                                                                                    
                                                                                                                                
Vice-Chair Thomas withdrew the objection.                                                                                       
                                                                                                                                
Co-Chair Hawker pointed  out that the fiscal  note is funded                                                                    
by  receipt services.  Ms. Walsh  added that  the $5000  fee                                                                    
allows for  the background check  prior to licensing  of the                                                                    
mortgage brokers. She noted that application of licensure.                                                                      
                                                                                                                                
Co-Chair  Hawker asked  how the  information relates  to the                                                                    
fiscal note. Ms.  Walsh responded that the  division must up                                                                    
front  the cost  to the  DPS. Co-Chair  Hawker asked  if the                                                                    
item is included  in the change of revenues  line. Ms. Walsh                                                                    
stated that the item was found in other receipts.                                                                               
                                                                                                                                
Co-Chair  Hawker  asked  what  drives  the  additional  $500                                                                    
thousand  in state  revenues. Ms.  Walsh responded  that the                                                                    
division is  anticipating additional licensees with  the new                                                                    
bill.                                                                                                                           
                                                                                                                                
Ms.  Hovanec  explained that  the  $60  thousand in  funding                                                                    
source  for   other  receipt  services  indicate   that  the                                                                    
expenditures will be covered by  other the receipt services.                                                                    
She noted  that the move  from a  biannual to an  annual fee                                                                    
increases  revenue.  The  addition  of  licensing  for  loan                                                                    
modification and  servicing companies as well  as additional                                                                    
internet business required increases.                                                                                           
                                                                                                                                
Co-Chair  Hawker understood  that enough  revenues exist  to                                                                    
meet  the increased  cost shown  as other  receipt services.                                                                    
Greater  revenues are  anticipated  shown in  the change  of                                                                    
revenues line.                                                                                                                  
                                                                                                                                
LUANNE  WEYRAUCH,  DIVISION  OF BANKING  SECURITIES,  stated                                                                    
that the Department of Law supports the legislation.                                                                            
                                                                                                                                
Vice-Chair Thomas MOVED  to report HCS CSSB  279(FIN) out of                                                                    
Committee   with   individual    recommendations   and   the                                                                    
accompanying fiscal  note. There being NO  OBJECTION, it was                                                                    
so ordered.                                                                                                                     
                                                                                                                                
HCS CSSB 279(FIN)  was REPORTED out of Committee  with a "do                                                                    
pass" recommendation and  with attached previously published                                                                    
fiscal note: FN1 (CED).