05/05/2023 03:15 PM House LABOR & COMMERCE

            HB 145-LOANS UNDER $25,000; PAYDAY LOANS                                                                        
                                                                                                                                
3:46:01 PM                                                                                                                    
                                                                                                                                
VICE CHAIR  RUFFRIDGE announced that  the final order  of business                                                              
would  be HOUSE  BILL NO. 145,  "An Act  relating  to loans  in an                                                              
amount  of   $25,000  or  less;   relating  to  deferred   deposit                                                              
advances; and providing for an effective date."                                                                                 
                                                                                                                                
3:46:38 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  SADDLER  moved  to adopt  the  proposed  committee                                                              
substitute  (CS)  for  HB  145,   labeled,  33-LS0508\U,  Dunmire,                                                              
3/28/23, ("Version  U"), as  a working document.   There  being no                                                              
objection, Version U was before the committee.                                                                                  
                                                                                                                                
3:47:17 PM                                                                                                                    
                                                                                                                                
PI RIORDAN-RANDALL,  Staff, Representative Stanley  Wright, Alaska                                                              
State  Legislature,  on  behalf of  Representative  Wright,  prime                                                              
sponsor,  gave  the  summary  of   changes  for  Version  U  [copy                                                              
included  in  the   committee  packet],  which  read   as  follows                                                              
[original punctuation provided]:                                                                                                
                                                                                                                                
     The  committee  substitute  for HB145  version  U  would                                                                   
     make the following changes:                                                                                                
                                                                                                                                
        Amend Section  3,  adding new  subsection  (d) to  AS                                                                 
     06.20.025  to clarify  that lenders  who issue loans  to                                                                   
     Alaskan residents  where the borrower completes  the in-                                                                   
     person   or    electronic   transaction    while   being                                                                   
     physically  present  must   register  as  a  small  loan                                                                   
     licensee.                                                                                                                  
          o This  change would  protect Alaskan consumers  by                                                                   
     regulating  lenders   who  say  they  do  not   have  to                                                                   
     register  in  Alaska  because   their  server  or  other                                                                   
     infrastructure is located out of state.                                                                                    
          o It would  also provide clarity to  businesses who                                                                   
     may be unclear if they need to register.                                                                                   
                                                                                                                                
     Add the following new sections:                                                                                            
     • Section 4,  adding new section AS  06.20.025 "National                                                                 
     Registry"   allowing   the   Department   of   Commerce,                                                                   
     Community,  and Economic Development  to participate  in                                                                   
     the   Nationwide   Multistate   Licensing   System   and                                                                   
     Registry  (NMLS) and  utilize the  registry to  register                                                                   
     licensees   and   have   licensees   apply,   renew   an                                                                   
     application, submit  reports, pay fees,  submit reports,                                                                   
     upload  surety  bonds, challenge  information  input  by                                                                   
     the  department  into  the  registry,  and  input  other                                                                   
     information and forms into the registry.                                                                                   
          o  This  change should  reduce  the  administrative                                                                   
     burden   on   licensees.   Currently,   licensees   must                                                                   
     complete a  pdf application,  email it to the  division,                                                                   
     and mail a  check or fax a credit card  authorization to                                                                   
     pay  application   fees.  These   processes  should   be                                                                   
     streamlined  if licensees apply  through NMLS,  which is                                                                   
     used in over 50 U.S. states and territories.                                                                               
               ? Renewal  applications would simply  note any                                                                   
     changes (versus  having to  fill out a full  application                                                                   
     each  year),  surety  bonds  could be  uploaded  by  the                                                                   
     insurance company,  fees could be paid by  ACH or credit                                                                   
     card  directly, and  no more  emails or  PDFs to  submit                                                                   
     the application.                                                                                                           
          o Additionally,  this change  will reduce  the work                                                                   
     required by the division to process applications.                                                                          
     •  Section  5, amending  AS  06.20.030(a)  allowing  the                                                                 
     department  to  collect application  investigation  fees                                                                   
     through the NMLS registry.                                                                                                 
        Section  6, amending  AS  06.20.030(b)  allowing  the                                                                 
     department  to  collect  application  fees  through  the                                                                   
     NMLS  registry   as  well  as  bringing   the  licensing                                                                   
     structure for small loan licenses to the modern era.                                                                       
          o The  proposed licensing  structure is similar  to                                                                   
     the  licensing  structure currently  found  in  deferred                                                                   
     deposit advance (DDA or "payday") licensing.                                                                               
          o  This   change  is   not  expected  to   increase                                                                   
     application  fees on  current small  loan licensees  and                                                                   
     will  keep  fees  constant  for  any  DDA  licensee  who                                                                   
     migrates to a small loan license.                                                                                          
        Section  7, repealing  and  reenacting  AS  06.20.090                                                                 
     "Places of  Business" to update the licensing  structure                                                                   
     of small loan licenses.                                                                                                    
         Section   8,   amending   AS   06.20.170   "Periodic                                                                 
     Examinations"  to   change  the  requirement   that  the                                                                   
     department  examine small loan  licensees at least  once                                                                   
     every 18 months  to "as often as necessary  to carry out                                                                   
     the purposes of this chapter."                                                                                             
          o This  change would  reduce the regulatory  burden                                                                   
     and  costs on  licensees  by  allowing the  division  to                                                                   
     examine  based  on  risk  rather   than  being  calendar                                                                   
     driven.                                                                                                                    
          o This  "as needed" examination structure  is found                                                                   
     in mortgage  (AS 06.60), money services (AS  06.55), and                                                                   
     DDA  lending  (AS  06.50);   this  change  would  create                                                                   
     consistency and fairness among programs.                                                                                   
         Section  11,   adding  new   section  AS   06.20.325                                                                 
     "Criminal  Threats"  to prohibit  small  loan  licensees                                                                   
     from threatening  a borrower  with criminal  prosecution                                                                   
     as a result of the borrower's default.                                                                                     
          o This  change would increase consumer  protections                                                                   
     by implementing  language similar  to what is  currently                                                                   
     found in AS 06.50 (DDA or "payday" lending).                                                                               
        Section 12,  adding  new  paragraph to  AS  06.20.900                                                                 
     "Definitions"  defining  "registry"  as  the  Nationwide                                                                   
     Multistate Licensing System (NMLS) and registry.                                                                           
                                                                                                                                
3:52:51 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE SADDLER questioned what Section 4 would cover.                                                                   
                                                                                                                                
3:53:36 PM                                                                                                                    
                                                                                                                                
ROBERT  SCHMIDT,   Director,  Alaska   Division  of   Banking  and                                                              
Securities,  Department   of  Commerce,  Community   and  Economic                                                              
Development, answered  that the division would use  the Nationwide                                                              
Multistate Licensing  System and Registry  (NMLS), and it  is used                                                              
for many  types of  financial and  lending regulations,  including                                                              
mortgages.                                                                                                                      
                                                                                                                                
3:55:22 PM                                                                                                                    
                                                                                                                                
TRACY  RENO, Chief  of Examinations,  Alaska  Division of  Banking                                                              
and   Securities,    Department   of   Commerce,    and   Economic                                                              
Development,  stated  that NMLS  is  already  used in  Alaska  for                                                              
mortgage  lending, and  for small,  short-term loans  in 33  other                                                              
states.                                                                                                                         
                                                                                                                                
3:56:10 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  SADDLER  expressed concern  about  using NMLS  for                                                              
the purposes outlined in the proposed legislation.                                                                              
                                                                                                                                
3:56:43 PM                                                                                                                    
                                                                                                                                
The committee took an at-ease from 3:56 p.m. to 3:58 p.m.                                                                       
                                                                                                                                
3:58:11 PM                                                                                                                    
                                                                                                                                
VICE CHAIR RUFFRIDGE announced that HB 145 was held over.