03/31/2009 01:00 PM Senate LABOR & COMMERCE
| Audio | Topic |
|---|---|
| Start | |
| Governor's Appointments | |
| SB170 | |
| SB60 | |
| SB149 | |
| Adjourn |
+ teleconferenced
= bill was previously heard/scheduled
| + | TELECONFERENCED | ||
| += | SB 149 | TELECONFERENCED | |
| += | SB 60 | TELECONFERENCED | |
| *+ | SB 170 | TELECONFERENCED | |
| + | TELECONFERENCED |
ALASKA STATE LEGISLATURE
SENATE LABOR AND COMMERCE STANDING COMMITTEE
March 31, 2009
1:08 p.m.
MEMBERS PRESENT
Senator Joe Paskvan, Chair
Senator Joe Thomas, Vice Chair
Senator Bettye Davis
Senator Kevin Meyer
Senator Con Bunde
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
Confirmation of Governor's Appointments
CONFIRMATIONS ADVANCED
SENATE BILL NO. 170
"An Act modifying the Alaska unemployment insurance statutes to
comply with the requirements of the federal economic stimulus
bill by redefining the base period for determining eligibility
for unemployment benefits; and providing for an effective date."
MOVED SB 170 OUT OF COMMITTEE
SENATE BILL NO. 60
"An Act relating to the Uniform Probate Code, including wills,
trusts, nonprobate transfers, augmented estates, personal
representatives, and trustees; and amending Rules 3 and 8,
Alaska Rules of Civil Procedure, Rule 1, Alaska Rules of Probate
Procedure, and Rule 37.5, Alaska Rules of Administration."
HEARD AND HELD
SENATE BILL NO. 149
"An Act relating to the regulation of residential real property
mortgage lending, including the licensing of mortgage lenders,
mortgage brokers, and mortgage loan originators and compliance
with certain federal laws relating to residential mortgage
lending; and providing for an effective date."
HEARD AND HELD
PREVIOUS COMMITTEE ACTION
BILL: SB 170
SHORT TITLE: UNEMPLOYMENT AMENDMENTS: FED STIMULUS
SPONSOR(s): SENATOR(s) ELLIS
03/27/09 (S) READ THE FIRST TIME - REFERRALS
03/27/09 (S) L&C, FIN
03/31/09 (S) L&C AT 1:00 PM BUTROVICH 205
BILL: SB 60
SHORT TITLE: UNIFORM PROBATE CODE; TRUSTS, WILLS
SPONSOR(s): SENATOR(s) MCGUIRE
01/21/09 (S) PREFILE RELEASED 1/16/09
01/21/09 (S) READ THE FIRST TIME - REFERRALS
01/21/09 (S) L&C, JUD
03/24/09 (S) L&C AT 1:30 PM BELTZ 211
03/24/09 (S) Scheduled But Not Heard
03/31/09 (S) L&C AT 1:00 PM BUTROVICH 205
BILL: SB 149
SHORT TITLE: MORTGAGE LENDING
SPONSOR(s): SENATOR(s) PASKVAN
03/13/09 (S) READ THE FIRST TIME - REFERRALS
03/13/09 (S) L&C, FIN
03/19/09 (S) L&C AT 1:30 PM BELTZ 211
03/19/09 (S) Heard & Held
03/19/09 (S) MINUTE(L&C)
03/31/09 (S) L&C AT 1:00 PM BUTROVICH 205
WITNESS REGISTER
SENATOR JOHNNY ELLIS
Alaska State Legislature
Juneau, AK
POSITION STATEMENT: Sponsor of SB 170.
MAX HENSLEY
Staff to Senator Ellis
Alaska State Legislature
Juneau, AK
POSITION STATEMENT: Commented on SB 170 for the sponsor.
PAULA SCAVARA, Special Assistant/Legislative Liaison
Department of Transportation and Public Facilities (DOTPF)
POSITION STATEMENT: Commented on SB 170.
JAMES WILSON, Economist, Research and Analysis Section,
Department of Labor and Workforce Development (DOLWD)
POSITION STATEMENT: Available to answer questions on SB 170.
TOM NELSON, Director
Division of Employment Security
Department of Labor and Workforce Development (DOLWD)
POSITION STATEMENT: Available to answer questions on SB 170.
DENNY DEWITT
National Federation of Independent Businesses (NFIB)
POSITION STATEMENT: Supported SB 170.
TREVOR FULTON
Staff to Senator McGuire
Alaska State Legislature
Juneau, AK
POSITION STATEMENT: Commented on SB 60 for the sponsor.
DAVID SHAFTEL, Estate Planning Attorney
POSITION STATEMENT: Supported SB 60.
DOUGLAS BLACKMACHER
Alaska Trust Company
POSITION STATEMENT: Supported SB 60.
TYSON FICK, Legislative Liaison
Department of Commerce, Community & Economic Development (DCCED)
POSITION STATEMENT: Supported SB 149.
LORIE HOVANEC, Director
Division of Banking and Securities
Department of Commerce, Community & Economic Development (DCCED)
POSITION STATEMENT: Supported CSSB 149, version E.
PATRICE WALSH, Consumer Finance Chief
Division of Banking and Securities
Department of Commerce, Community & Economic Development (DCCED)
POSITION STATEMENT: Available to answer questions on SB 149.
JOHN MARTIN, President
Alaska Association of Mortgage Brokers
POSITION STATEMENT: Answered questions about SB 149.
LOUANNE WEYHRAUCH, Assistant Attorney General
Department of Law (DOL)
POSITION STATEMENT: Available to take questions on SB 149.
JULIA COSTER
Consumer Protection Unit
Department of Law (DOL)
POSITION STATEMENT: Answered questions on SB 149.
ACTION NARRATIVE
1:08:00 PM
CHAIR JOE PASKVAN called the Senate Labor and Commerce Standing
Committee meeting to order at 1:08 p.m. Present at the call to
order were Senators Meyer, Thomas, Bunde and Paskvan.
^Governor's Appointments
Governor's Appointments
CHAIR PASKVAN announced consideration of the Governor's
appointments. He opened up public testimony. There was no one on
teleconference, no one in the audience to testify and there were
no questions from members. He closed the public hearing.
1:10:29 PM
SENATOR THOMAS moved to forward the names of the Governor's
appointments. There were no objections and it was so ordered.
At ease from 1:11 p.m. to 1:13 p.m.
SB 170-UNEMPLOYMENT AMENDMENTS: FED STIMULUS
1:13:09 PM
CHAIR PASKVAN announced the consideration of SB 170.
SENATOR DAVIS joined the committee.
SENATOR ELLIS, sponsor of SB 170, thanked the Alaska State
Chamber of Commerce and the National Federation of Independent
Business (NFIB) for their work on making this bill as beneficial
as possible.
He explained that the bill represents a small change in the UI
eligibility standards in the State of Alaska even though the
state has modernized its UI system already. This is one minor
change that would bring great benefits to some unemployed people
and has no strings attached.
He explained that current eligibility is based on meeting
minimum earnings in the first four of the five previously
completed quarters. SB 170 gives workers who do not meet that
qualification the option of recalculating using their earnings
from the last four completed quarters. This would benefit about
1,300 people who would otherwise become eligible for UI payments
three months later by eliminating the three-month lag time. If
this policy had been in place in 2008 it would have provided $8
million in benefits. The really good news, too, is that the
federal stimulus dollars fully fund this minor change bringing
in $17 million for job training as well as enhancing the UI
trust fund. If some money is deposited in the UI trust fund,
there would be no impact to business taxes. That is why the NFIB
and the State Chamber think this is a good opportunity.
The Department of Labor and Workforce Development (DOLWD) and
Representative Hawker's office are taking the lead on the exact
amount. The department has not taken a position on the bill, but
has been very helpful and professional in representing the Palin
administration.
Representative Hawker thinks between $3 million and $5 million
needs to go into the UI trust fund that currently is more than
solvent with a $350 million balance.
1:17:28 PM
He said that these are one-time dollars and that Alaska is
already experiencing the highest unemployment in a generation;
it may feel the effects of the national and world-wide recession
even more later this year. Alaska is also preparing for the
largest infrastructure project in U.S. history with the gasline.
There is a perfect confluence of events that gives Alaska a
perfect opportunity to use federal dollars allocated to Alaska
for a targeted and timely expansion of job training. This is a
reasonable act to take and has a net gain on two or three
levels.
He said this bill comes out of the intent of the legislative
leaders of both bodies and both parties to closely examine all
available stimulus dollars and accept only those that make sense
for Alaska in the long term.
1:19:04 PM
MAX HENSLEY, staff to Senator Ellis, said the bill is one
section; it gives unemployed workers the option if they do not
qualify for unemployment insurance based on their earnings to
recalculate them using the most recent four completed calendar
quarters rather than the first four quarters of their last five.
It takes effect on January 1, 2010. He informed them that the
DOLWD generally calculates unemployment insurance benefits on a
calendar year rather than a fiscal year basis.
He said a number of states are concerned that the unemployment
insurance modernization, which actually totals about $7 billion
in incentive money from the federal stimulus package, would
require significant expansions to eligibility requirements, but
the federal stimulus makes the pot of money that is allocated to
each state dependent on two sets of criteria. The first third of
the money is available to states that offer the alternative base
period, which Alaska currently does not and SB 170 will provide.
The second two-thirds of the stimulus money is based on a state
offering UI benefits to unemployed workers who are members of at
least two of the following four categories: part time workers,
workers who are enrolled in training programs, workers who leave
their jobs for compelling family reasons and additional benefits
for workers with dependents.
1:21:15 PM
Alaska already meets the final two categories; if we make the
change to become eligible for the initial one-third of the
money, we will get the full pot of money without any further
changes. The reason this is a big issue in other states is that
they would have to make all the changes at once and those could
be substantial for some.
1:21:50 PM
MR. HENSLEY said another concern is that usually an expansion of
benefits expands employer/employee contributions to the trust
fund, but Alaska's UI trust fund is one of the healthiest in the
nation with a balance of about $350 million in 2008. The
additional monies in the stimulus package are more than enough
to cover this small addition in liability.
1:22:24 PM
A third major question that people have asked is whether this
change would expose the state to a permanent and ongoing
liability. It has been found that nothing in the stimulus
provides that states can't change their laws back at some point
in the future, but it can't be explicitly temporary or
sunsetted. A letter from the federal Department of Labor
certified that there are "no claw back provisions."
1:23:04 PM
The additional money beyond what is needed to shore up the UI
trust fund could be used for increased administration and job
training, although the department feels it doesn't need to
increase administration.
He noted also that this is a one-time grant, and after the money
goes into the UI trust fund it can be appropriated by the state
without an end date, unlike many other stimulus funds which must
be spent over the next year or two. The state could choose to
space this money out more widely, and no state match is
required.
MR. HENSLEY said the funds have already been appropriated by the
federal government and funds we do not accept will be sent to
another state to either benefit their job training or their
unemployed workers.
1:24:59 PM
SENATOR THOMAS asked him to review the criteria again on what
would be new.
MR. HENSLEY said there are two pots of money within Alaska's
portion of the UI modernization incentive. The first third is
contingent on the acceptance of the alternative base period,
which it outlined in this bill. The second two-thirds is
contingent on the state offering UI benefits to at least two of
the four categories: part time workers, extended benefits to
workers who are enrolled in training programs, workers who leave
their jobs for compelling personal reasons, and the expanded
benefits for workers who have dependents. Alaska meets the final
two criteria and would not need to change its statutes to
receive the second two-thirds of the money. However we cannot
receive the second two-thirds unless we receive the first third.
SENATOR THOMAS asked if the department would testify or be
available for questions.
1:27:45 PM
PAULA SCAVARA, Special Assistant/Legislative Liaison to the
Department of Transportation and Public Facilities (DOTPF), said
she brought a couple of department people to answer questions,
Tom Nelson and James Wilson.
JAMES WILSON, Economist, Research and Analysis Section,
Department of Labor and Workforce Development (DOLWD),
introduced himself and said he was available to answer
questions.
1:29:53 PM
SENATOR BUNDE asked why the department hadn't done this already
if it's such a good idea, and "before we were bribed by this
money." He was concerned that if we make this change the extra
$2 million would likely be an ongoing cost, and after the
stimulus money goes away, that would be a continuing impact on
the program.
TOM NELSON, Director, Division of Employment Security,
Department of Labor and Workforce Development (DOLWD), answered
that they calculated an actual number of 1,293 individuals that
otherwise would have been eligible for benefits in 2008. Of the
$1.9 million impact to the trust fund, 26 percent is borne by
the actual worker. If approximately $3 million would be left in
the trust fund, the trust fund solvency factor would cover at
least the first year of the costs in the years outgoing.
1:31:37 PM
SENATOR BUNDE asked about putting a sunset on this.
MR. NELSON replied that 18 states already have this program
before the stimulus package came out, and some of them had a
sunset provision. The federal guidance is that they understand
the ability of state legislatures to change laws after this is
over with and they only require a certification that the states
are acting on good faith.
SENATOR BUNDE commented that the feds might not understand the
politics behind trying to change unemployment benefits.
1:32:42 PM
SENATOR BUNDE remarked that one of the bones of contention in
changing UI in Alaska has always been that workers who are fired
for cause can claim UI insurance, and this doesn't change that.
MR. NELSON replied that is correct, but he added that they go
through a six-week waiting period.
1:33:24 PM
SENATOR THOMAS asked the department's position.
MS. SCAVARA replied the department and the administration is
neutral.
SENATOR THOMAS asked in that case if the attached zero fiscal
note goes out to only 2015 or to a point beyond that when the
federal money is gone.
1:34:15 PM
MR. NELSON explained that the fiscal note is zero because
regardless of how many claims they process throughout a year,
the workload actually dictates what the federal government
reimburses back to the state. He couldn't speculate on why the
fiscal note only goes out to 2015.
MS. SCAVARA added that the form goes to 2015, so they just put
zeros across.
SENATOR THOMAS asked if the department agreed with the
explanation from Senator Ellis' staff.
1:35:03 PM
MR. NELSON replied yes.
1:35:33 PM
SENATOR BUNDE said he is stuck on the idea that calculating
eligibility for more than 1,300 people seems like a fairly minor
technicality, but he was curious about why the department did
not choose to do that in the first place. Would there be an
economic impact?
MS. SCAVARA responded that UI eligibility would require a
statutory change, and she has worked at the department for six
years and has not heard of it being brought up.
1:36:39 PM
DENNY DEWITT, National Federation of Independent Businesses
(NFIB), supported SB 170. They worked hard with the department,
legislators, staff and consultants on this issue in the federal
arena to unwind all the requirements particularly whether or not
the expanded benefits changed the character of the program and
what the impact on premiums would be. And they are satisfied
that the deposits via the Finance committees will offset the
costs quite a ways into the future.
In terms of change in the base period and how ongoing benefits
are paid, they have been assured that the character of the
program will remain intact. He thanked Senator Ellis and his
staff for their work and help.
1:39:44 PM
CHAIR PASKVAN closed public testimony. He observed that this is
the type of bill that deserves the support of this committee and
added that the business community supports it.
1:40:15 PM
SENATOR THOMAS moved to report SB 170, version E, from committee
with individual recommendations and attached fiscal note(s).
There were no objections and it was so ordered.
At ease from 1:40 p.m. to 1:43 p.m.
SB 60-UNIFORM PROBATE CODE; TRUSTS, WILLS
1:43:05 PM
CHAIR PASKVAN announced the consideration of SB 60.
TREVOR FULTON, staff to Senator McGuire, sponsor of SB 60,
explained that probate is the legal process in which a will is
reviewed to determine whether it is valid and authentic. Probate
also refers to the general administering of the deceased
person's will or the estate of a deceased person without a will.
A trust is similar to a will with one very important
distinction. With a trust, your property won't go through
probate when you die. With a will during probate, much of the
estate is taken by taxes (mostly federal) and sometimes
attorneys. When you create a trust you transfer your properties
and assets to it while you are still alive and it continues on
through your death and thus does not need to go through the same
costly legal proceedings that a will does.
SB 60 deals specifically with trusts and the Uniform Probate
Code by clarifying, updating, and adding to existing Alaskan
probate laws with the aim of improving the ease of
administration of wills, estates and trusts for Alaskan
residents, and secondly with the aim of making Alaska a more
attractive place to do trust business.
Most of these changes involved either clarifying language or
omitting unnecessary verbiage. Other changes include clarifying
issues relating to representation of an incapacitated person,
clarifying property transfers involving a deceased spouse,
creating a procedure for the establishment of will and trust
validity before death and addressing the venue proceeding if a
decedent lives outside of Alaska, but held significant assets
within the state.
These changes in SB 60 were brought to him by experts in the
probate and trust field, and they had not received any negative
feedback on them. The trust business is a highly competitive,
multi-billion dollar sector that often crosses state lines in
order to take advantage of more attractive state trust laws. SB
60 makes Alaska a more attractive place to do trust business and
by doing so, creates jobs and revenue that would otherwise go
Outside.
The State of Alaska has directly received millions of dollars in
tax revenue and many Alaskan jobs have been created in trust
banking, insurance and legal professions due to its competitive
and contemporary trust laws. It diversifies the state's economy
and makes it an attractive place to invest.
1:47:38 PM
DAVID SHAFTEL, Estate Planning Attorney, said he is a member of
an informal group that has worked with the Alaska Legislature
since 1997 to improve the state's trust statutes. He is familiar
with all the provisions of SB 60.
Section 1 allows a person who creates a trust to designate a
representative who can represent incapacitated persons - for
example - miner children, unborn children or an incapacitated
adult. This provision was first drafted into Florida law a few
years ago.
Section 2 corrects a typo in existing law.
Sections 3 and 4 fix updates Alaska law that conforms with
language Delaware and New Hampshire have dealing with an
irrevocable trust that is created by a "seflor," someone who
could be a discretionary beneficiary of the trust. The seflor's
creditors couldn't reach the assets of the trust, but it would
be done well before the seflor has any claims against him. If
you do this with your spouse's consent or before you marry, then
your spouse has no claim against the assets in that trust.
Sections 5, 6 and 7 are technical provisions.
1:52:29 PM
Section 8 allows a person who has drafted a will or trust to
have it validated in court before he dies so that it can't be
challenged, by a family member, for instance. Several other
states have provisions like this, but not as well written.
1:54:17 PM
Section 9 updates the venue statute for probate of a will of a
person who is not a resident of Alaska when he dies. Examples
include people who move out of Alaska to a warmer place.
Sections 10 and 11 allow a fiduciary, personal representative or
trustee to consider discretionary distributions as coming from
capital gains. This is a provision that will result in better
tax planning for beneficiaries of estates and trusts, because of
the lower overall tax consequences of a distribution.
He noted that there were three other bills in this legislature
on the same subjects.
1:56:23 PM
SENATOR BUNDE asked if he said the changes created a typo in
section 2.
MR. SHAFTEL clarified that it corrected an existing typo in the
statute.
CHAIR PASKVAN asked if the irrevocable trust and the
discretionary beneficiary provision lessened the need for
prenuptial agreements.
MR. SHAFTEL answered yes; that is one of the functions this type
of trust can serve. If you want to make sure certain assets
would not be subject to divorce down the line, you could create
this type of a trust 30 days prior to marriage. It could be done
after marriage if the spouse consented to it.
CHAIR PASKVAN asked if this is intended to attract other people
to Alaska to use this type of irrevocable trust or is this for
Alaskans' needs.
MR. SHAFTEL responded that most of his clients from medium and
large estates almost take advantage of this kind of trust, which
is called a self-settled discretionary spend thrift trust. Many
Alaskans are using it, but it also has been an attraction for
non-residents. When Alaska created this law in 1997, it was the
first state to have a usable statute allowing for this kind of
trust; now there are 12 states. His office uses it primarily for
residents of Alaska.
CHAIR PASKVAN asked for a definition of medium and large asset
value clients.
MR. SHAFTEL replied his office defines "medium estates" as
starting with estates that are larger than the applicable credit
amount. That amount has increased from $1 million since 2001 to
$3.5 million in 2009; it was $2 million last year. The talk on
the street is that it would stay at $3.5 million and be indexed
in the future. He said that they are watching to see if Congress
does anything more with this definition. A "large estate" is
anything over that - about twice that amount. Typically a
married couple could protect twice that credit amount or $7
million.
2:01:45 PM
SENATOR THOMAS asked if the venue section refers to wills only,
but to trusts as well.
MR. SHAFTEL answered that this section of the work draft only
deals with wills. Another venue provision deals with pre-mortem
proceedings that he described before dealing with validating a
will or trust.
SENATOR THOMAS said he was looking at section 8. The real
question is if it says the original court proceedings would take
place in a particular state that may not be the person's
residence; and if that is the case, what happens if the State of
California, for instance, had similar laws that required that
all people residing in their state, regardless of such a term in
a will or trust, would be settled in that state.
MR. SHAFTEL replied that his first question deals with "pre-
mortem proceedings" in section 8, which covers venue for both
wills and trusts. Regarding his second question, he was not
aware of any state saying a person's estate must be probated in
that state. He remembered when a number of states fought over
the right to tax Howard Hughes property. It was very complicated
and the states eventually agreed to divide up the state taxing
power for that instance.
2:05:28 PM
CHAIR PASKVAN asked if a non-domiciled person could in the
document, itself, establish Alaska as the venue for resolution
of these trust and will issues.
MR. SHAFTEL answered yes. The new provision (section 8) allowing
for establishment of the validity of a will or trust before
death anticipates that the person who created that document if
they weren't a resident of Alaska, would come to Alaska to file
the proceeding.
CHAIR PASKVAN said his concern was focused on the cost to the
court system.
2:07:21 PM
MR. SHAFTEL said he could only give his opinion, but four other
states have this or similar processes, so it's not as if Alaska
would have a monopoly. This particular statute is written
particularly well, and he thought it would be copied by a number
of other states. This provision will serve Alaskan residents and
some people who decide to choose to have this proceeding in
Alaska. He reminded them that a lot of people view Alaska as
being "a tremendous distance away," and he thought that most
people would probably go to other states that are closer. He
thought that the costs of people who come up here and use the
state's professional services would at least match and probably
be significantly greater than the cost to the court system.
2:08:51 PM
SENATOR BUNDE noted that there is a zero fiscal cost to the
state, but he thought maybe the Department of Revenue should
give them a ballpark figure for what the state is making off of
the trust arena.
2:10:14 PM
MR. SHAFTEL commented that he didn't want to leave them with the
wrong impression. The estate statutes they have been working on
for 12 years primarily benefit Alaskans. It has only been made
available to other non-residents.
2:11:52 PM
SENATOR THOMAS asked if the venue aspect is available to people
who have no assets in Alaska, but simply want their will
probated or the procedures for the trust to happen here.
MR. SHAFTEL answered yes. "The statement of trust, for example,
makes it clear that a person can choose what state's trust law
they want to have apply to their trust." So, there is a lot of
crossing of state lines by persons using estate and trust laws.
2:13:17 PM
DOUGLAS BLACKMACHER, Alaska Trust Company, supported SB 60. They
know the state has received a number of millions of dollars over
the last 10 years because of these changes to its estate
statutes. He hasn't noticed a significant increase in use of the
Alaska court system, however.
2:14:59 PM
CHAIR PASKVAN closed public testimony.
MR. FULTON noted CS SB 60(), labeled 26-LS0320\E.
2:16:59 PM
SENATOR MEYER moved to bring version E before the committee.
There were no objections and it was so ordered.
SENATOR BUNDE wanted to hear about the substantial differences
between the original SB 60 and the CS.
MR. FULTON explained that changes came from continued
conversations between Mr. Shaftel and Terry Bannister, LAA
attorney.
2:18:47 PM
He explained section 1 changed "represent or bind" to "represent
and bind" when you are the designated representative. In section
2 the "decedent" replaces "self"; there were no changes in
section 3.
2:22:02 PM
The only substantive change is the venue change that was already
discussed in section 9.
2:23:24 PM
CHAIR PASKVAN closed public testimony on the CS.
2:23:57 PM
SENATOR MEYER asked if this would require a 2/3 vote - referring
to section 12, page 14, lines 23-26.
2:25:18 PM
MR. SHAFTEL said his understanding is because this is a venue
provision that affects the rules of the court it requires a 2/3
vote.
SENATOR MEYER asked for the effective date.
MR. FULTON answered they didn't request an effective date.
CHAIR PASKVAN held CSSB 60, version E, for further thought.
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
practices.
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
149.
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
frequently.
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.
2:58:44 PM
There being no further business to come before the committee,
Chair Paskvan adjourned the meeting at 2:58 p.m.
| 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 |