SENATE BILL NO. 279 "An Act relating to regulation of residential 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." 1:35:59 PM SENATOR JOE PASKVAN stated that SB 279 is an act relating to the regulation of residential mortgage lending including the licensing of mortgage lenders, mortgage brokers, and mortgage loan originators in compliance with certain federal laws relating to residential mortgage lending. The purpose of the legislation is to bring Alaska's mortgage lending regulation act into compliance with federal law. He mentioned the SAFE act which requires each state to license mortgage loan originators through a nationwide database and to amend its statutes to meet minimum licensing standards. The Division of Banking and Securities will continue to review the uniform application submitted, and state regulators will continue to issue the licenses. This legislation is supported by the National Conference of State Legislators and the National Conference of Insurance Legislators. 1:39:31 PM TYSON FICK, LEGISLATIVE LIAISON, DEPARTMENT OF COMMERCE, COMMUNITY, AND ECONOMIC DEVELOPMENT (DCCED), explained the legislation further. He pointed out that abuses in the industry led to the current financial crisis in the United States. He explained the licensing regulation agency and their responsibilities. The national licensing system and registry increases consumer protection, enhances supervision, and streamlines the licensing process for licensees. He mentioned the passage of HB 221 which joined Alaska with the national registry. He noted that SB 229 will bring the state into compliance with the federal SAFE act by amending our statutes to reach the minimum standards. The objectives of the amendments are to provide increased accountability, education, and tracking of mortgage lending professions, reduce fraud, and provide consumers with free and accessible information. PATRICE WALSH, CHEIF EXAMINER, DCCED, delivered a sectional analysis. She explained that the changes were the minimum standards required by the federal government. She pointed out Page 5, Section 7, Line 9 and the reference to "transfers of mortgage loan originators license" where "mortgage loan" was added to "originator". She pointed out Page 6, Section 11, Line 14 referencing an annual license where the state requires renewal each year on December 31. She continued with Section 11, Line 24 regarding permit regulation to set application, examination, and license fees. She detailed Page 6, Line 31, Section 12 which requires 20 hours of pre licensing education. She continued with Page 10, Section 18, Line 22 which is a new section allowing for a provisional license while a background check is performed. 1:45:58 PM Ms. Walsh continued with Section 22, Page 12, Line 23 referring to paper licenses. The national registry has a section of consumer access where a licensee's licensing credentials can be accessed online. 1:47:18 PM Co-Chair Stedman asked if licenses will be posted in the licensee's office or would the public rely on the online version. Ms. Walsh explained that the department is striving to eliminate paper licenses. She commented that many businesses operate online. Ms. Walsh continued with Page 14, Section 29, Line 10 which is an addition permitting a branch office to track activity. She continued with Page 15, Section 35, Line 26 which modifies continuing education requirements. Currently the law offers 24 hours of continuing education for a two year time period. She pointed out Page 41, Section 85, Line 20 which includes the repealed sections. 1:50:15 PM Co-Chair Stedman asked about a potential sales transaction with an out of state licensee. Ms. Walsh answered that an out of state licensee must apply for a license in Alaska. Co-Chair Stedman asked if a licensee must be licensed in Alaska to solicit mortgage business. Ms. Walsh concurred that the person must have an Alaskan license to sell Alaskan property. Senator Huggins asked if the bill allows a person to handle the mortgage on their neighbor's house. Ms. Walsh stated that a person must have a license to sell a house that does not belong to them. Senator Thomas noted that real estate agents are not considered mortgage loan originators. Ms. Walsh concurred. Senator Olson asked about the education requirements listed on Pages 6 and 15. He asked about potential changes. Ms. Walsh responded that continuing education requirements already exist and she noted the changes. Senator Olson asked about classes. Ms. Walsh noted that classes are offered through a national mortgage licensing system. The classes are offered in a classroom, a classroom equivalent, or an instructor led webinar. 1:54:23 PM Senator Olson asked about Page 14 and the licensing of branch offices. He asked how the Alaska branch might address issues from the lower 48. Ms. Walsh responded that the branch application process requires branch identification although licensing and registration numbers are not used. A formal process would include a separate registration to allow observation of the branch activity. Senator Olson did not understand how this would cut down on fraud. Co-Chair Stedman asked about potential reciprocity between the states. Ms. Walsh noted that there is not reciprocity, but many companies are licensed in multiple states. Co- Chair Stedman asked why no reciprocity exists for the real estate industry. Ms. Walsh responded that the state has requirements about obtaining a license. She added that the steps for obtaining a license may be similar throughout various states. Co-Chair Stedman asked if the steps in the statute refer to the examination. 1:57:36 PM Ms. Walsh responded that an application for licensure requires financial statements and fingerprints. Felonies or bankruptcies can lead to denial of license. Co-Chair Stedman asked if a person licensed in another state is required to sit for an additional exam in Alaska. Ms. Walsh noted that the mortgage loan originator is required to take two tests. One test is a national test recognized in every state. The second component of testing is the Alaska state test. Co-Chair Stedman asked if other states have similar requirements. Ms. Walsh responded yes. Senator Paskvan stressed that the intent of the bill is to bring Alaska into conformance with the national SAFE act. Alaska's laws with respect to real estate can differ from other state's laws. Co-Chair Stedman mention one fiscal impact note from the Department of Commerce, Community and Economic Development for $131 thousand. SB 279 was HEARD and HELD in Committee for further consideration. 2:01:34 PM AT EASE 2:02:36 PM RECONVENE