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.