Legislature(2009 - 2010)BELTZ 105 (TSBldg)
03/02/2010 01:30 PM Senate LABOR & COMMERCE
| Audio | Topic |
|---|---|
| Start | |
| SB117 | |
| SB279 | |
| SB258 | |
| SB129 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | SB 279 | TELECONFERENCED | |
| + | SB 258 | TELECONFERENCED | |
| + | SB 129 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| = | SB 117 | ||
SB 279-MORTGAGE LENDING
1:45:51 PM
CHAIR PASKVAN announced SB 279 to be up for consideration. He
related that this committee had been working with the
administration for over one year and this bill is now good for
Alaska.
LORIE HOVANEC, Director, Division of Banking and Securities,
Department of Commerce, Community & Economic Development
(DCCED), said her division administers the Alaska Mortgage
Lending Regulation Act. She said the abuses in mortgage lending
and securities led to much of the financial crises the US is now
experiencing. To address some of these problems, both state and
federal regulators came up with regulatory reform and a new
system to license both mortgage loan originators and mortgage
lenders and brokers. In 2003, the state regulators, through the
Conference of State Banks Supervisors and the American
Association of Residential Mortgage Regulators (ARMOR), began
developing a uniform licensing registry similar to what had been
done by state agencies in the securities and investment advisor
industries.
She said this regulatory system for mortgage loan originator
licensing is known as the Nationwide Mortgage Licensing System
and Registry; it was launched in 2008 and since then nearly
every state is a participant. This system increases consumer
protection, enhances state regulators' ability to supervise, and
streamlines the licensing process.
MS. HOVANEC continued that in 2008 the federal SAFE Act was
passed which requires states to license mortgage loan
originators through this nationwide registry. It also requires
states to amend their mortgage lending laws to meet certain
minimum standards, which they can exceed if they want to. Alaska
began licensing mortgage loan originators through this registry
on August 1, 2009 and is, therefore, in compliance with the
first part of the federal law. SB 279 will bring Alaska into
compliance with the second part of the SAFE Act by amending its
statutes to meet the federal minimum standards.
She said the objectives of these amendments are to increase
accountability in education and tracking of mortgage lending
professions to reduce fraud in the residential mortgage loan
origination process and to provide consumers with free and
easily accessible information through the national database.
She explained that if Alaska does not comply with these minimum
federal licensing requirements through passage of SB 279, the
SAFE Act requires that the US Department of Housing and Urban
Development begin enforcing the standards. The effective date of
this bill is July 1, 2010 - also to meet the state's extension
deadline.
1:50:55 PM
MS. HOVANEC said she would next address some of the major
changes to Alaska's law. Technical changes included changing
"originator" to "mortgage loan originator" wherever it was used.
MS. HOVANEC said the first substantive change was to section 9
on page 6, line 8, where license renewal was changed from
biennial to annual on the calendar year, December 31.
1:53:34 PM
She said section 85 on page 41, line 20, repealed AS 06.60.017
that exempts small mortgage lenders from licensing, because the
SAFE Act does not allow exemptions of this sort. She said
references to the "small mortgage lender" exemption were deleted
throughout.
1:55:08 PM
MS. HOVANEC said the SAFE Act requires that fingerprint cards
for criminal background checks be sent to the registry as well
as the Department of Public Safety (DPS). Under current statutes
fingerprint cards must be submitted just to the Department of
Public Safety (DPS).
Section 11 on page 6, line 23, says permit fees are to be set in
regulation for flexibility. Currently they are set in statute.
They anticipate potentially decreasing the fee for mortgage loan
originators so that originators and companies are paying similar
renewal fees rather than originators paying a larger fee.
Section 12 on page 6, line 28, requires 20 hours of pre-
licensing education as per the SAFE Act; three hours in federal
statutes and regulations to mortgage origination, fraud
prevention, consumer protection, three hours in ethics and two
hours related to lending standards for non-traditional mortgage
products and the additional hours to be of the licensee's
choosing. Current law has no education requirements.
Section 18 on page 10, line 21, authorizes the division to issue
a provisional license if the fingerprint card processing is
excessively delayed but all other requirements for licensing
have been met. This is to prevent holding up commerce when it
appears a person is qualified.
In section 22 on page 12, line 21, the references to paper were
eliminated. Because the national database is accessible to
consumers on the Internet, they will be going paperless.
Section 29 on page 14, line 9, is a new section permitting
branch office registration, something the national database
requires, and the department wants the ability to track all the
branches that mortgage lenders and originators are opening.
Section 35 on page 15, line 25, modifies Alaska's continuing
education requirements from 24 hours every 2 years to 8 hours
annually.
SENATOR MEYER asked if the US Department of Housing and Urban
Development would take over without action on this bill.
MR. HOVANEC replied yes, but they don't really take over. They
would set up their own licensing system in addition to the
state's system. So industry would be required to comply with two
regulatory schemes.
SENATOR DAVIS asked if the state would be a penalized if it
didn't meet the deadline.
MS. HOVANEC replied not to her knowledge.
2:02:06 PM
CHAIR PASKVAN said they had been working on this for a whole
year and he is comfortable with language in the bill, but he has
been close to it for a while.
MS. HOVANEC explained that the fiscal note adds $65,000/year for
a new occupational licensing position and $3,000 for materials
required for the position. The amount of work being generated by
participation in the national registry is more than their one
occupational licensing person is able to handle, because they
also handle their money service business regulations. Travel
would increase by $20,000/yr. They have approximately 72 out-of-
state lenders and are able to do some examinations of them
through a joint exam with the states in which the primary
location of the lender is located, but they are expected to
participate in a certain number of exams - as part of this joint
protocol they have joined. This budget would allow them to
participate in approximately three to four exams per year
depending on where they are located. It also adds a membership
fee to the National Mortgage Regulatory Association and funding
for the division to "upfront" the state background fee which is
about $50-150/yr.
They expect that revenue will increase substantially due to
expansion of the definition of "licensee" to include the loan
modification and servicing companies as well as changing from a
biennial renewal to an annual renewal.
CHAIR PASKVAN explained that the expenditures for fiscal year
(FY) 2011 are about $131,000, but the income would be about
$384,000. So it has a positive impact on the state's treasury.
MS. HOVANEC agreed.
SENATOR DAVIS said that she appreciated Ms. Hovanec's review and
that she saved her a lot of work by visiting the office.
2:06:07 PM
CHAIR PASKVAN closed public testimony.
SENATOR MEYER moved to report SB 279 from committee with
individual recommendations and attached fiscal note(s). There
were no objections and it was so ordered.
2:08:29 PM
At ease
2:11:16 PM
CHAIR PASKVAN called the meeting back to order at 2:11.
| Document Name | Date/Time | Subjects |
|---|---|---|
| CS SB 129 Bill Packet.pdf |
SL&C 3/2/2010 1:30:00 PM SL&C 3/9/2010 1:30:00 PM |
SB 129 |
| SB 279 Bill Packet.pdf |
SL&C 3/2/2010 1:30:00 PM |
SB 279 |
| SB 258 Bill Packet.pdf |
SL&C 3/2/2010 1:30:00 PM |
SB 258 |