Legislature(2009 - 2010)CAPITOL 106
04/09/2010 03:15 PM House LABOR & COMMERCE
| Audio | Topic |
|---|---|
| Start | |
| SB159 | |
| HCR21 | |
| SB279 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | SB 159 | TELECONFERENCED | |
| += | HCR 21 | TELECONFERENCED | |
| + | SB 279 | TELECONFERENCED | |
SB 279-MORTGAGE LENDING
3:48:47 PM
CHAIR OLSON announced that the final order of business would be
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." [Before the committee was CSSB 279(FIN).]
3:48:54 PM
SENATOR JOE PASKVAN, Alaska State Legislature, as prime sponsor
of the bill, paraphrased from his sponsor statement, which read
[original punctuation provided]:
Senate Bill 279, along with regulations promulgated
when the bill becomes law, will bring Alaska's
mortgage lending law into compliance with the new
federal law and national licensing system.
Alaska's current mortgage lending law, the Alaska
Mortgage Lending Regulation Act ("AMLRA"), became
effective July 1, 2008. The law requires that mortgage
lenders, brokers, and originators apply for and obtain
a mortgage license in order to do business in Alaska.
The purpose of this law is to protect consumers and
hinder predatory lending and fraudulent behavior.
On July 30, 2008, a new federal law called the Secure
and Fair Enforcement for Mortgage Licensing Act of
2008 (the SAFE Act) became effective. The SAFE Act
requires that all states (1) implement mortgage laws
which conform to its requirements by July 30, 2009,
and (2) join and use a national database called the
National Mortgage Licensing System and Registry
(Registry) to license mortgage loan originators.
States may implement more comprehensive mortgage
lending laws than are provided under the federal SAFE
Act, which provides minimum standards and
requirements.
Alaska was able to join and begin licensing through
the Registry on August 1, 2009, as the result of the
passage of HB 221 last legislative session, which
authorized participation in the Registry, enabling the
state to comply with that part of the SAFE Act.
Under the SAFE Act, a state which is unable to meet
the July 30, 2009 compliance deadline and whose
legislature meets annually, may apply for a one·year
extension to the U.S. Department of Housing and Urban
Development (HUD), the federal agency tasked with
compliance oversight. Alaska requested an extension on
August 25, 2009.
If a state does not comply with the federal law by the
deadline, then HUD is required under the SAFE Act to
license loan originators in the state. While a state
may maintain authority under its existing law, the
authority will be subordinate to HUD. This structure
would increase the regulatory burden and cost on the
industry. HUD is not required to coordinate with the
states.
A few examples of revisions and requirements under the
SAFE Act include (a) changing our current license
renewal from a biennial to an annual renewal and (b)
requiring 20 hours of pre-licensing education.
For consumers and state regulators, one of the primary
advantages to joining the Registry is the sharing of
information about mortgage lenders and loan
originators among states, as well as the ability to
conduct joint exams with other states for out-of-state
mortgage lenders doing business in Alaska, including
those which operate via the Internet. The Registry
also increases and centralizes information available
to state regulators, the industry and consumer about
the mortgage lending companies and professionals. The
use of a national licensing database is also
beneficial to the mortgage lending industry, making it
easier to track mortgage loan originators and creating
a uniform, electronic application process for
licensing.
3:52:45 PM
SENATOR PASKVAN briefly outlined the changes that were made to
the original bill contained in the CSSB 279(FIN) currently
before the committee. On page 6, lines 8-18, the license fees
were changed from biennial fees to annual license fees, and on
page 6, lines 23-27, the permit fees are designated to be set by
regulation. On page 6, lines 28-31, and page 7, lines 1-19, the
bill sets out the requirement for 20 hours of pre-licensing
education. On page 10, lines 18-31, and page 11, line 1, the
bill provides the division with the authority to issue a
provisional license if the fingerprinting card is delayed due to
any agency backlog.
SENATOR PASKVAN referred to page 12, line 20-27, to changes made
to omit the reference to paper in the event that in the future
the on-line registry data is adopted. On page 14, lines 8-14,
would establish regulations and application for a mortgage
licensee to register with his/her branch office. On page 15,
lines 24-31 through page 17, line 2, the bill modifies the
continuing education requirements from 24 hours every two years
to 8 hours annually. On page 41, lines 14-18, this provision
would allow fingerprint cards to be sent to the branch registry
instead of submittal to the Department of Public Safety for
submittal to the FBI for background checks. On page 42, lines
19-21, the bill would eliminate the small mortgage lender
originator exemption as well as repeal other statutes in AS
06.60.
SENATOR PASKVAN referred to the fiscal note. One additional
occupational licensing position would be added at a cost of
$65,000, with an additional $3,000 for costs associated with
this position. He related that some increased travel will be
necessary since out of state exams are required to license out
of state mortgage lending companies. The annual membership fee
for the American Association of Residential Mortgage Regulators
(AAMR) is $750 annually. The state background check fee of
$5,000 must be paid up-front and subsequent licensee
reimbursement will be made. It is anticipated that the revenue
will increase by including the loan modification servicing
provisions and the change from biennial to annual licensing fees
for licensees.
3:54:18 PM
CHAIR OLSON reported that this bill came to the committee last
year and the committee passed out the time sensitive portion
last session.
3:55:49 PM
REPRESENTATIVE T. WILSON asked whether the additional staff
person would be paid from revenues generated by the program.
SENATOR PASKVAN explained that the revenue is anticipated to
increase substantially. He suggested the department could more
fully answer the question.
3:56:21 PM
REPRESENTATIVE CHENAULT made a motion to adopt Amendment 1,
labeled 26-LS1295\P.1, Bannister, 4/9/10, which read as follows:
Page 1, following line 5:
Insert a new bill section to read:
"* Section 1. The uncodified law of the State of
Alaska is amended by adding a new section to read:
LEGISLATIVE INTENT FOR REPEAL OF
AS 45.50.471(b)(52). With regard to the repeal of
AS 45.50.471(b)(52) by sec. 86 of this Act, it is the
intent of the legislature that
(1) the repeal is to prevent liability
under AS 45.50.471 - 45.50.561 for conduct that
violates AS 06.60, as amended by this Act, but that
does not affect borrowers or potential borrowers;
(2) a person, including existing licensees
under sec. 87 of this Act, who is required to be
licensed under AS 06.60, as amended by this Act, and
who engages in conduct prohibited by AS 45.50.471 -
45.50.561 remain subject to the provisions of
AS 45.50.471 - 45.50.561, including the provisions for
private and class actions under AS 45.50.531; and
(3) the repeal not limit or prevent an
action by the attorney general, or by another person
or class of persons, based on AS 45.50.471."
Page 1, line 6:
Delete "Section 1"
Insert "Sec. 2"
Renumber the following bill sections accordingly.
Page 41, lines 20 - 21:
Delete "and 06.60.870"
Insert "06.60.870; and AS 45.50.471(b)(52)"
Page 42, line 2:
Delete "sec. 8"
Insert "sec. 9"
Page 42, line 11:
Delete "sec. 88"
Insert "sec. 89"
Page 42, line 12:
Delete "sec. 88"
Insert "sec. 89"
Page 42, line 13:
Delete "sec. 9"
Insert "sec. 10"
Page 42, line 14:
Delete "sec. 9"
Insert "sec. 10"
Page 42, line 15:
Delete "sec. 9"
Insert "sec. 10"
Page 42, line 16:
Delete "sec. 14"
Insert "sec. 15"
Page 42, line 17:
Delete "sec. 14"
Insert "sec. 15"
Page 42, line 19:
Delete "sec. 58"
Insert "sec. 59"
Page 42, line 20:
Delete "sec. 58"
Insert "sec. 59"
Page 42, line 22:
Delete "sec. 59"
Insert "sec. 60"
Page 42, line 23:
Delete "sec. 59"
Insert "sec. 60"
Page 43, line 2:
Delete "sec. 88"
Insert "sec. 89"
Page 43, line 3:
Delete "sec. 89"
Insert "sec. 90"
3:56:36 PM
CHAIR OLSON objected for the purpose of discussion.
SENATOR PASKVAN explained that a question arose as to whether a
person could be subject to treble damages and potential
liability from a technical violation such as a licensing matter.
Amendment 1 would eliminate the licensee from being subject to
AS 45.50.471(b)(2). The purpose of the intent language is to
ensure that that the licensees understood they would still
subject to other provisions in AS 45.50.471 - 45.50.561,
including the provisions for private and class actions under AS
45.50.531. He characterized Amendment 1 as a reasonable
compromise between industry and the administration.
3:58:47 PM
CHAIR OLSON removed his objection. There being no further
objection, Amendment 1 was adopted.
REPRESENTATIVE BUCH asked to hear testimony from the department
about the bill and on Amendment 1.
4:00:01 PM
LORI HOVANEC, Director, Division of Banking and Securities,
Department of Commerce, Community, & Economic Development
(DCCED), stated that the division does not have any objection to
Amendment 1.
4:00:43 PM
CYNTHIA DRINKWATER, Assistant Attorney General, Commercial/Fair
Business Section, Department of Law (DOL), stated that she did
not have any comments on the bill but asked to speak about
Amendment 1. One effect of Amendment 1 might be to create some
ambiguity regarding the applicability of the Consumer Protection
Act to violations of the Mortgage Lending Act. The legislative
intent language states the private right of action remains and
that the attorney general's authority remains. However, the
concern is that the statute on its face will show the provision
of the Consumer Protection Act under AS 45.54.471 (b) (52) was
repealed. Thus, it could be reasonable to assume that the
legislature intended to restrict the options for consumers,
which is the opposite of the intent expressed today. This is
less of an issue for the enforcement by the Attorney General's
office since other provisions of AS 06.60 and in the Consumer
Protection Act that make it clear the Attorney General does have
consumer protection jurisdiction. Still, the legislative intent
behind the repeal may not be apparent and there well could be
confusion about consumer remedies under the act and in
particular, private rights of action. She was not certain how
the legislative intent would appear in the bound volume of the
statutes. If the legislative intent is contained in the
annotations it could reduce the confusion, but she was unsure
whether the legislative intent would appear in the on-line
version of the statutes that people increasingly use.
4:03:12 PM
CHAIR OLSON asked whether this is the first time the Attorney
General's office has expressed concern on the bill.
MS. DRINKWATER clarified her concern is with Amendment 1 that
was adopted and not the bill.
CHAIR OLSON acknowledged her concern.
4:03:32 PM
REPRESENTATIVE BUCH asked whether she had any recommendations to
remedy the matter.
MS. DRINKWATER stated that she did not have any further comment
or any concerns with the bill.
REPRESENTATIVE BUCH related that if the Department of Law was
uncomfortable with the statute perhaps some adjustments could be
made "down the road." He expressed interest in any specific
language to amend the bill to remove the ambiguity; such an
amendment could be presented in the next committee of referral.
MS. DRINKWATER suggested one alternative could be to consider an
amendment to AS 45.50.471 (b)(52), that would address the
concern rather than to rely on the legislative intent, which
would be separate from the statute.
CHAIR OLSON inquired as to whether Ms. Drinkwater would be
willing to work with the bill sponsor on suggested language for
the next committee of referral.
MS. DRINKWATER agreed to do so.
CHAIR OLSON, after first determining that no one else wished to
testify, closed the public hearing on SB 279.
4:05:33 PM
REPRESENTATIVE T. WILSON moved to report the CSSB 279(FIN), as
amended, out of committee with individual recommendations and
the accompanying fiscal notes. There being no objection, HCS
CSSB 279(L&C) was reported from the House Labor and Commerce
Standing Committee.