HOUSE BILL NO. 221 "An Act relating to the state's participation in the federal Nationwide Mortgage Licensing System and Registry, and to mortgage lending regulation and licensing; and providing for an effective date." CONRAD JACKSON, STAFF, REPRESENTATIVE KURT OLSON, SPONSOR, introduced HB 221. He reported that the bill is a quick fix at the request of the Department of Commerce, Community and Economic Development so that Alaska can participate in the National Mortgage Licensing System (NMLS). 8:42:49 AM TYSON FICK, LEGISLATIVE LIAISON, DEPARTMENT OF COMMERCE, COMMUNITY AND ECONOMIC DEVELOPMENT, related that shortly after the state passed its own mortgage licensing law, the federal government passed their own version called the Secure and Fair Enforcement of Mortgage Licensing Act of 2008 (SAFE). This Act sets a floor level for compliance made up of database, registry, and national background check, as well as statutory changes. He explained that the time sensitive piece of the bill is joining the database. He drew attention to the fiscal note for $98,000 from receipt supported services to pay for a $50,000 one-time fee, $20,000 to update the computer system, and the remainder for travel for training. 8:44:08 AM Representative Austerman noticed that the bill was introduced on April 8. He wondered when the federal act was passed. Mr. Fick thought it was last July. He related that HB 221 is part of a larger bill and deals only with the time-sensitive piece. Representative Austerman requested the bill number of the larger bill. Mr. Fick said it was HB 145 and SB 149. 8:45:23 AM Representative Fairclough asked how much research had been done regarding the exchange of information when Alaska provides information to a national database. LORIE HOVANEC, DIRECTOR, DIVISIONS OF BANKING & SECURITIES, DEPARTMENT OF COMMERCE, COMMUNITY AND ECONOMIC DEVELOPMENT testifying via teleconference, requested clarification of the question. Representative Fairclough restated the question to ask how data is shared with the rest of the nation. She was looking for "strings attached". Ms. Hovanek explained the purpose of the national data base is to share information about mortgage professionals and companies nationally, provide transparency, and streamline the licensing process. Representative Fairclough asked if the information would be shared with other national organizations. Ms. Hovanek assured that it was a closed, secure system. 8:47:42 AM Co-Chair Stoltze asked if there were any questions of policy concern. Representative Fairclough pointed out a letter of good faith from the Alaska Association of Mortgage Brokers which noted that HUD has the authority to grant an extension to the states. She wondered where the bill was held up. Representative Olson related that HB 145, a thirty-six page bill, was in Labor and Commerce. It was felt that the smaller bill would have an easier time moving through the system and would show a good faith effort to the federal government. Representative Fairclough wondered if there was a back out clause. Mr. Fick did not know. 8:50:29 AM Ms. Hovanec stated that there is no choice whether to join or not. Alaska is scheduled to join the national licensing system on August 1, which is very close to the July 30 deadline. Representative Fairclough voiced concerns about the consequences of not thoroughly understanding the issues related to mortgage lending. Ms. Hovanec opined that it is a great system. The intent is to handle all licensing through the national data base, but the state can still issue the license. The mortgage companies and professionals will submit their license information and their fingerprint cards to the national database. The FBI will do the background check, and then the information is passed back to the state. Current state statutes apply until the state comes into compliance with the SAFE Act. It is a federal requirement that the applicant submit the license information to the national database. 8:53:11 AM Representative Kelly asked what happens if the state does not join. Ms. Hovanec explained that if the state does not join, the US Department of Housing and Urban Development (HUD) will set up its own requirements, which would not be good for the industry. 8:53:57 AM Representative Austerman spoke of the issue of dealing with rogue companies. He wondered what options the state has to turn a company down. 8:54:29 AM PATRICE WALSH, CONSUMER FINANCE CHIEF, DIVISION OF BANKING & SECURITIES, DEPARTMENT OF COMMERCE, COMMUNITY AND ECONOMIC DEVELOPMENT, testified via teleconference, and explained the way suitability for licensing is determined. She related that the same criteria found in current mortgage statutes would be used to screen applicants. If an applicant has had a banking-related felony the license is denied. The national database will provide information about problems an applicant may have had in another state. Representative Fairclough noted that Representative Olson agrees with the bill. 8:56:24 AM Representative Fairclough MOVED to report CSHB 221 (L&C) out of Committee with individual recommendations and the accompanying fiscal note. Representative Austerman OBJECTED to comment. He spoke against the idea of "nationalization one step at a time". Representative Austerman WITHDREW his objection. There being NO OBJECTION, it was so ordered. CSHB 221 (L&C) was REPORTED out of Committee with "no recommendation" and with fiscal note #1 by the Department of Commerce, Community and Economic Development. AT-EASE: 8:57:53 AM RECONVENED: 8:59:27 AM