HB 104-MORTGAGE LOAN ORIGINATOR LICENSING  1:43:26 PM CHAIR REINBOLD reconvened the meeting and announced that the final order of business would be CS FOR HOUSE BILL NO. 104(L&C) am, "An Act relating to exemptions from mortgage lender, mortgage broker, and mortgage loan originator licensing requirements; and providing for an effective date." 1:44:05 PM REPRESENTATIVE TAMMIE WILSON, Alaska State Legislature, Juneau, paraphrased from her sponsor statement on HB 104, which read as follows: The current Alaska SAFE Act allows a seller to finance his or her residence. If a person had more than one residence (a second home for example) they could sell and finance it themselves without a license under AS 06.60.015(b)(3). If the second home had been rented it would be considered an income property and the seller would be required to have a mortgage loan originator license in order to seller finance it. CSHB104(L&C) would allow a person to seller-finance up to 5 of their own properties which are secured by a dwelling, whether they are an income property or not. Interior and more rural community property owners have parcels with trailers or cabins on them; some with water and electric, some without. These types of properties are historically difficult to finance through the traditional mortgage process and many times lenders require more money down, shorter loan terms, higher interest rates, and in some cases, will not finance them at all. Those wishing to take on the responsibility of home ownership and establish roots in the community may find, for many reasons, that they do not qualify for a traditional mortgage. Seller financing is another tool that can be utilized to make it affordable for one to realize their dream of having a place they can finally call their home. Seller financing is a reasonable and practical option for both sellers and buyers of these type properties. CSHB 104 would give more opportunity for the dream of home ownership to those who might not otherwise realize it and would relieve the financial burden of bona fide non-profit organizations assisting Alaskans in making their dream come true. 1:46:09 PM REPRESENTATIVE WILSON said that she discovered that many people are doing seller financing with their income property believing that it was legal in Alaska to do so. Unfortunately, one person found out through the court system that it is not. She said that she discovered it was an issue throughout Alaska. She remarked that very few people believed it was not possible to seller finance properties. For example, a person might rent a home for five years and decide to purchase it but could not do so without having a mortgage loan originator license. This bill would allow people to self-finance their residential loan. 1:46:52 PM SENATOR COSTELLO clarified that the bill before the committee was the committee substitute (CS) for HB 104 (L&C) am, work order LS0275/S.A. Chair Reinbold objected for discussion purposes. 1:47:32 PM CHAIR REINBOLD opened public testimony on HB 104. 1:47:51 PM PATRICE WALSH, Director, Division of Banking and Securities, Department of Commerce, Community and Economic Development (DCCED), Anchorage, stated the division's support for the bill. 1:49:00 PM NADINE WINTERS, Executive Director, Fairbanks Neighborhood Housing Service (FNHS), Fairbanks, spoke in support of HB 104. She stated that FNHS provides affordable rental housing and provides second mortgage payment assistance for income-eligible first-time home buyers. The FNHS specifically supports the non- profit exemption provision. Although the organization only provides mission-driven second mortgages under market rates, it is regulated like a bank that does first mortgages at market rate. As a small organization, it can be difficult to comply. For example, last year the FNHS closed 13 loans at zero percent through a federal funding source targeted specifically for people who are at 80 percent of area-median income. She characterized their organization as a mission-driven process whose funders specifically direct what can and cannot be done. She said that having another layer of regulation is onerous and problematic for them. The federal Secure and Fair Enforcement for Mortgage Licensing (SAFE) Act was amended in 2010 to allow states to exempt nonprofits such as theirs. She reported that 22 states have an exemption and 24 states have conditions similar to ones in HB 104. MS. WINTERS reiterated support for the bill, stating that it would be immensely helpful. She predicted it would impact four or five other non-profits that do the same thing. The FNHS does not compete with banks since it offers a totally separate product. In fact, FNHS actually enhances what the banks do because with the closing costs and down payment assistance, more people can afford to buy homes. SENATOR BIRCH echoed her sentiments. He remarked that allowing a seller to finance his/her residence increases flexibility and improve lives for many. 1:51:31 PM STACY HARVILL, Associate Broker, Liaison, Legislative Committee, Alaska Association of Realtors, Fairbanks, spoke in support of HB 104. 1:52:10 PM CHAIR REINBOLD after first determining no one wished to testify, closed public testimony on HB 104. 1:52:20 PM REPRESENTATIVE WILSON read a list of bona fide nonprofit organizations that would be affected by the bill, including Anchorage Habitat for Humanity, Mat-Su Habitat for Humanity, Alaska Community Development Corporation, Fairbanks Neighborhood Housing Services, Rural Alaska Community Action Program, and Alaska EnTech Capital, LLC. She explained that individuals found out that private mortgage contracts were not legal. She said that some title companies were not moving forward with processing and that individuals were not able to move into their homes. She said she was surprised when she discovered this but would like people to be able to have their own homes in ways that they can afford. CHAIR REINBOLD asked for further clarification that her comments reflected changes between bill version U and Version S. She referred to work order 31-LS0275\S, page 1, lines 13-14, which read, ";or (5) a bona fide nonprofit organization. REPRESENTATIVE WILSON agreed. She said that this issue was brought to her attention by the Division of Banking and Securities. The original bill did not contain the nonprofit provision, which would allow nonprofits to assist more individuals in obtaining financing for homes. In further response to Chair Reinbold, she said that one additional change was made on the House floor to ensure that that a grandfather provision was added to ensure that anyone who was currently in a mortgage contract would not lose their home since these individuals purchased their homes in good faith. [HB 104 was held in committee.] 1:54:58 PM CHAIR REINBOLD reviewed upcoming committee announcements. 1:55:23 PM SENATOR BIRCH remarked that the legislature is tight on time. He offered his support to move the bill. CHAIR REINBOLD expressed an interest in holding the bill over, in part, to allow Senator Bishop to review the fiscal note at the next hearing. 1:56:39 PM SENATOR GRAY-JACKSON thanked the sponsor for bringing the bill forward. She also appreciated that the stakeholders were involved in the process. [HB 104 was held in committee.]