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
+ teleconferenced
= bill was previously heard/scheduled
Moved CSHB 394(L&C)am Out of Committee
Heard & Held
Heard & Held
Bills Previously Heard/Scheduled
Moved CSSB 272(L&C) Out of Committee
Moved CSHB 393(HES) Out of Committee
                    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                                                               
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                                                               

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