Legislature(2009 - 2010)BUTROVICH 205

03/31/2009 01:00 PM LABOR & COMMERCE

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Audio Topic
01:08:00 PM Start
01:10:29 PM Governor's Appointments
01:13:09 PM SB170
01:43:05 PM SB60
02:27:07 PM SB149
02:58:44 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
-- Time & Location Change --
+ Confirmation of Governor's Appointments TELECONFERENCED
Heard & Held
Heard & Held
Moved SB 170 Out of Committee
+ Bills Previously Heard/Scheduled TELECONFERENCED
                    SB 149-MORTGAGE LENDING                                                                                 
2:27:07 PM                                                                                                                    
CHAIR PASKVAN announced the consideration of SB 149.                                                                            
2:27:29 PM                                                                                                                    
TYSON   FICK,  Legislative   Liaison,   Department  of   Commerce,                                                              
Community  & Economic  Development  (DCCED) said  all the  parties                                                              
involved  -  interest  groups,  Department  of  Law,  Division  of                                                              
Banking  and  Securities,  especially  Director  Lorie  Hovanec  -                                                              
agreed  they want  to get  to federal  compliance especially  with                                                              
the national  data base. SB 149  would take large portions  of the                                                              
Alaska's  current  mortgage  licensing  statute and  put  it  into                                                              
regulation  that would, then,  be in  compliance with  the federal                                                              
Secure Fair  enforcement  for Mortgage Licensing  Act (SAFE)  that                                                              
was  enacted and  signed  about a  month  after Alaska's  mortgage                                                              
licensing bill went into effect.                                                                                                
2:29:20 PM                                                                                                                    
SENATOR THOMAS  moved to adopt  CSSB 149 version\E  for discussion                                                              
purposes. There were no objections and it was so ordered.                                                                       
2:30:41 PM                                                                                                                    
LORIE  HOVANEC,  Director,  Division of  Banking  and  Securities,                                                              
Department  of Commerce,  Community &  Economic Development,  said                                                              
she was very happy with the language in the CS to SB 149.                                                                       
2:32:56 PM                                                                                                                    
Rather  than  having  the general  authority  to  create  regulate                                                              
mortgage lending,  which is  in AS 06.01.050  starting on  page 1,                                                              
at the Legislature's  direction they added a lot  of federal "nuts                                                              
and  bolts"  requirements.  The  CS  adds  various  sections  with                                                              
background   checks,   investigation,    education   requirements,                                                              
testing  requirements,  issuance  of  a  license  -  duration  and                                                              
renewal  standards, surrender  of  license, licensee  obligations,                                                              
records  that  mortgage  licensees   are  required  to  keep,  and                                                              
disciplinary  actions  that the  division  has available.  Page  7                                                              
outlines the  investigation and  examination authority  in detail.                                                              
The section on  duties and restrictions and  prohibited activities                                                              
are  mostly taken  from current  law,  but items  3-15 were  added                                                              
from  the SAFE  Act.  More specifics  on  criminal penalties  were                                                              
added  along   with  civil   penalties  addressing   unfair  trade                                                              
2:35:46 PM                                                                                                                    
CHAIR  PASKVAN  asked  if  there are  time  requirements  for  the                                                              
committee to consider.                                                                                                          
MS. HOVANEC  replied that the  federal statutes require  enactment                                                              
by July  30, 2009.  The department also  needs authority  from the                                                              
Legislature  to join the  National Mortgage  Licensing System  and                                                              
Registry  (NMLSR)  so  that  the   division  can  start  licensing                                                              
mortgage loan originators  through it. They are  scheduled to join                                                              
that system  on August 1,  2009. Section 13  on the last  page has                                                              
an effective date  language of July 30 for certain  portions. They                                                              
also have to pay a $50,000-one time fee to participate.                                                                         
2:37:07 PM                                                                                                                    
SENATOR  BUNDE said  earlier this  year  the licensing  division's                                                              
workload was  backed up under just  the state's law, and  asked if                                                              
she  thought  there  was  enough  lead  time  for  people  to  get                                                              
licensed in  a timely fashion  now that  they have to  be licensed                                                              
on the federal level as well.                                                                                                   
MS.  HOVANIK replied  yes. She  explained  that current  licensees                                                              
have  even more  time  than  a brand  new  applicant  who will  be                                                              
seeking a  license. "I  think the  way the  statute is  written is                                                              
very fair."                                                                                                                     
2:38:22 PM                                                                                                                    
PATRICE WALSH,  Consumer  Finance Chief,  Division of Banking  and                                                              
Securities,   Department  of   Commerce,   Community  &   Economic                                                              
Development,  said she  was available  to answer  questions on  SB
SENATOR  THOMAS asked  if anything  corrects issues  like the  one                                                              
from Countrywide  that was licensing  people as insurance  agents,                                                              
but they were doing other things like mortgage lending as well.                                                                 
MS. WALSH said she wasn't familiar with that issue.                                                                             
2:39:52 PM                                                                                                                    
JOHN MARTIN,  President, Alaska  Association of Mortgage  Brokers,                                                              
said he  is a mortgage Licensee  and originator Licensee  under AS                                                              
06.60  mortgage licensing  law.  He explained  that some  entities                                                              
under current  law were  exempt from  being licensed under  Alaska                                                              
law, and  Countrywide ended up becoming  a bank. So  under federal                                                              
regulations, they  were exempt from the state's  current AS 06.60.                                                              
They would have  to apply for an exemption for that  and he didn't                                                              
know that they had - or some of the other banks either.                                                                         
He  said that  the Alaska  Association of  Mortgage Brokers  along                                                              
with  the Alaska  Mortgage Bankers  Association were  instrumental                                                              
and  heavily  involved  in  the   creation  of  Alaska's  existing                                                              
statute.  It  took two  years  of  concentrated work  and  working                                                              
closely with  the Division of Banking  to update the  statutes. He                                                              
explained  that Congress  enacted  the  SAFE Act  as  part of  the                                                              
Housing and  Recovery Act of 2008,  which is why the  current bill                                                              
is  before  them.   Generally  states  are  free   to  regard  the                                                              
requirements  of the SAFE  Act as  a floor,  not a ceiling,  which                                                              
they  may   build  on   in  enacting   their  own  licensing   and                                                              
registration laws.  The SAFE Act encourages states  to establish a                                                              
National Mortgage  Licensing System  and Registry to  be developed                                                              
and maintained  by the  Conference of  State Bank Supervisors  and                                                              
the  American  Association  of  Residential  Mortgage  Regulators.                                                              
Alaska  signed a  letter of  intent  to join  the organization  on                                                              
August 1, 2009.                                                                                                                 
It's intended to  streamline the licensing process  and reduce the                                                              
regulatory  burden.  While  the   states  must  meet  the  federal                                                              
requirements of  SAFE, overall responsibility  for interpretation,                                                              
implementation and  compliance with it rests with HUD.  Title 5 of                                                              
the  Act  for mortgage  licensing  affirms  that  any  residential                                                              
mortgage  loan  originator  must   be  either  state  licensed  or                                                              
registered by August 1, 2009.                                                                                                   
MR.  MARTIN   explained  that  under   section  15.08,   HUD  must                                                              
determine  if  the  state  has met  the  requirements  of  Section                                                              
15.05,  15.06, 15.08(d)  or that  it does not  participate  in the                                                              
National Mortgage Licensing System and Registry.                                                                                
2:45:43 PM                                                                                                                    
CHAIR  PASKVAN  called  an  at   ease  because  of  teleconference                                                              
technical difficulties.                                                                                                         
2:48:35 PM                                                                                                                    
CHAIR  PASKVAN called  the  meeting  back to  order  at 2:48,  and                                                              
continued by asking how all 50 states could comply by August 1.                                                                 
MR. MARTIN explained  the SAFE Act provided a waiver  for up to 24                                                              
months for  states that  show a good  faith effort for  compliance                                                              
by August  1, 2009. He  said that compliance  was mandated  by the                                                              
SAFE Act,  but no  funds were  provided for  it. With  the state's                                                              
existing law and  joining NMLSR, it will be able  to get a waiver.                                                              
Forty  other states  are working  on legislation;  just nine  have                                                              
enacted legislation  so far. AS 06.60 substantially  conforms with                                                              
the   SAFE  Act;   in  fact   it   references  Alaska's   statutes                                                              
2:50:36 PM                                                                                                                    
He asked them  to hold the bill,  so if any changes  are needed to                                                              
the new  CS, they  can do  them in a  couple of  days and  get the                                                              
bill passed this year.                                                                                                          
2:53:56 PM                                                                                                                    
LOUANNE WEYHRAUCH,  Assistant Attorney General, Department  of Law                                                              
(DOL) representing  the Division  of Banking and  Securities, said                                                              
she  would take  questions  today and  reserve  her comments.  She                                                              
said that Julia  Coster, Assistant Attorney General,  who works in                                                              
the  Consumer Protection  Division of  DOL was  also available  to                                                              
answer questions.                                                                                                               
2:54:47 PM                                                                                                                    
SENATOR BUNDE  asked if  they supported the  changes in  version E                                                              
of SB 149.                                                                                                                      
2:55:19 PM                                                                                                                    
JULIA COSTER, Consumer  Protection Unit, Department  of Law (DOL),                                                              
said she  had a small  provision in section  9 (page 35,  line 10)                                                              
is  a repeal  of AS  45.50.471(b)(52)  referring  to the  Consumer                                                              
Protection Act. This  provision makes a violation  of the Mortgage                                                              
Lending Act  a violation of the  Consumer Protection Act  as well.                                                              
The  DOL  doesn't  necessarily   object  to  the  repeal  of  this                                                              
section,  but they  wanted the  committee to  consider adopting  a                                                              
letter of intent relating to it.                                                                                                
MS. COSTER  said if  they are going  to hold  the bill  anyway, it                                                              
might be  good to  wait until  the committee  has the  language of                                                              
the letter of intent  before it first; then she  could discuss why                                                              
she thought it was necessary.                                                                                                   
CHAIR PASKVAN agreed with her and held SB 149 for further work.                                                                 

Document Name Date/Time Subjects
Governor's Appointments.pdf SL&C 3/26/2009 1:30:00 PM
SL&C 3/31/2009 1:00:00 PM
CSSB 149 version E.pdf SL&C 3/31/2009 1:00:00 PM
SB 149
SB 149 Bill Packet.pdf SL&C 3/19/2009 1:30:00 PM
SL&C 3/31/2009 1:00:00 PM
SB 149
SB 60 Bill Packet.pdf SL&C 3/24/2009 1:30:00 PM
SL&C 3/31/2009 1:00:00 PM
SL&C 4/16/2009 1:00:00 PM
SB 60
SB 170 Bill Packet.pdf SL&C 3/31/2009 1:00:00 PM
SB 170