Legislature(2005 - 2006)BELTZ 211
04/04/2006 01:30 PM Senate LABOR & COMMERCE
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* first hearing in first committee of referral
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= bill was previously heard/scheduled
SB 272-MORTGAGE LENDING CHAIR CON BUNDE announced SB 272 to be up for consideration. SENATOR RALPH SEEKINS moved to adopt CSSB 272, version P, as the working document. There were no objections and it was so ordered. AMY SEITZ, staff to Senator Wagoner, sponsor of SB 272, reviewed changes that were on a memo from Terry Bannister, Legal Drafter. 1:45:21 PM CHAIR BUNDE referenced a memorandum from Terry Bannister with a question about interstate commerce. MS. SEITZ replied that it was her understanding that if out-of- state companies and instate companies were treated the same, that was not an issue. ROGER PRINCE, Financial Institution Examiner, Division of Banking and Securities, Department of Commerce, Community & Economic Development (DCCED), referenced a letter from Ed Sniffen, Department of Law, regarding the Payday Loan Act that covered the same enforcement concerns against both instate and out-of-state companies as well as on-line companies. It said that as long as the Division of Banking and the law, itself (SB 272), treats interstate and out-of-state companies identically, there is no violation of interstate commerce clauses. CHAIR BUNDE asked him if this bill treated both equally. MR. PRINCE replied yes. 1:48:02 PM LAURIE HOLTE, Alaska Housing Finance Corporation, said she supported SB 272. 1:48:45 PM KEN GAIN, Independent Lenders of Alaska, said he reviewed the draft and considered the changes to be technical. The substance hadn't been changed and he still supported it. 1:49:33 PM KEVIN BREELAND, President, Alaska Mortgage Bankers Association, said he also found the changes acceptable. 1:50:08 PM JOE BRAMMER, member, Legislative Board, Alaska Association of Mortgage Brokers (AKAMB). He said they were told at the last public hearing that the program administration fee as outlined in AS 06.60.600 would be applicable to all mortgage loan instruments recorded. He wanted clarification that exempt folks would still be required to charge the application $10 fee. He had suggested making the fee negotiable to be paid by the buyer or the seller in the transaction, because he didn't know if that would comply with HUD guidelines. MR. BRAMMER believed that the exemptions were fine and that a lot of them would be regulated by the feds, but felt that all parties who believed they were exempt should be required to apply for the exemption and pay an annual fee - much like Nevada's model legislation. This would insure that they have a full list of all the players and make certain that no one slides through the cracks in believing they are exempt and then harm is done to the consumer when it's too late to correct. He urged passage of this legislation. 1:52:20 PM CHAIR BUNDE asked if his concerns about the revisions been discussed by the bill's sponsor. MS. SEITZ replied that the sponsor hadn't heard of these concerns, but she assured him that they would be addressed in the next committee of referral. 1:53:09 PM JOHN MARTIN said he was testifying for himself from Anchorage and had testified several times on the need to designate the mortgage broker as a lending institution since they are not a depository organization and do not have a depository relationship with their clients. Language in AS 06.60.010 clearly indicates that residential property transactions are to be covered by the license and will be a concern of the licensee. AS 06.60.025 would require an independent contractor to obtain a license and he asked why they would let someone be responsible for the independent contractor especially when he must agree to abide by the requirements of the chapter anyway. It just makes sense to delete this exemption. He also pointed out that licenses are issued on a biennial basis, not an annual basis, and he recommended the same for this license. Also, the initial fee for most licenses is $50 and the majority of license fees are under $300 and he recommended adopting the same figures. MR. MARTIN said an article in the October 2005 issue of Mortgage Originator Magazine indicated that the cost of background checks vary from $10 to $125 and he suggested capping the fee at $125 with the balance to be refunded to the licensee if not used. He recommended in Section .070 that the Department issue a license within 30 days rather than 90 days, because a person could waste a quarter of a year waiting around to be licensed to try and earn money and he didn't think that was fair to the licensee or the general public. Regarding Section 250(b), loan files are two or more inches thick and he thought the Department needed to clarify exactly which information it wants retained. He didn't think it proper for the Department to have every single piece of paper, which may contain privacy issues that would catch the attention of the FTC. He thought this should be investigated. He also suggested combining Sections 250(c) and 250(d) and have both entities accountable on the same level. In Section 610(b), he found it convenient that the Department would mandate a $10 fee, but it wouldn't be responsible or liable for an agent's defilification and he thought there should be some recourse. However, he thought the biggest component missing on this bill was licensing of originators because that's where 98 percent of the problem comes from in this business. MR. MARTIN said he just received the new P version and hadn't had the opportunity to review it and wanted to be able to submit written comments on it. CHAIR BUNDE thanked him and asked him to submit his comments to Senator Wagoner after his review. 1:57:45 PM SENATOR SEEKINS moved to pass CSSB 272(L&C), version P, out of committee with individual recommendations and attached fiscal note. Senators Ben Stevens, Ellis, Davis, Seekins and Chair Bunde voted yea; and CSSB 272(L&C) moved from committee with the assurance that their questions would be address in the Finance Committee.