HB 145: "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."

00 HOUSE BILL NO. 145 01 "An Act relating to the regulation of residential real property mortgage lending, 02 including the licensing of mortgage lenders, mortgage brokers, and mortgage loan 03 originators and compliance with certain federal laws relating to residential mortgage 04 lending; and providing for an effective date." 05 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 06 * Section 1. AS 06.01.050(3) is amended to read: 07 (3) "financial institution" means an institution subject to the regulation 08 of the department under this title; in this paragraph, "institution" includes a 09 commercial bank, savings bank, credit union, premium finance company, small loan 10 company, bank holding company, financial holding company, trust company, savings 11 and loan association, deferred deposit advance licensee under AS 06.50, and a 12 licensee under AS 06.62 [AS 06.60, A SMALL MORTGAGE LENDER UNDER 13 AS 06.60, AND AN ORIGINATOR UNDER AS 06.60 WHO IS EMPLOYED BY 14 OR WORKS UNDER EXCLUSIVE CONTRACT FOR A SMALL MORTGAGE

01 LENDER; IN THIS PARAGRAPH, 02 (A) "LICENSEE UNDER AS 06.60" HAS THE MEANING 03 GIVEN TO "LICENSEE" IN AS 06.60.990; 04 (B) "ORIGINATOR UNDER AS 06.60" HAS THE 05 MEANING GIVEN TO "ORIGINATOR" IN AS 06.60.990; 06 (C) "SMALL MORTGAGE LENDER UNDER AS 06.60" 07 HAS THE MEANING GIVEN TO "SMALL MORTGAGE LENDER" IN 08 AS 06.60.990]; 09 * Sec. 2. AS 06 is amended by adding a new chapter to read: 10 Chapter 62. Regulation of Mortgage Lending. 11 Article 1. Regulation of Mortgage Lending. 12 Sec. 06.62.010. Regulation of mortgage lending. The department shall 13 regulate mortgage lending activities in the state, including regulating a person 14 operating as a mortgage lender, mortgage broker, or mortgage loan originator. 15 Sec. 06.62.020. Duties of the department. The department shall adopt 16 regulations necessary to implement, interpret, or make specific this chapter, including 17 provisions relating to 18 (1) licensing of a mortgage lender, mortgage broker, or mortgage loan 19 originator, including submission of fingerprints for criminal history background 20 checks for an applicant or licensee; 21 (2) examination, investigation, and discipline of a person required to 22 be licensed under this chapter; 23 (3) competency testing and continuing education requirements for 24 persons required to be licensed under this chapter; 25 (4) mortgage business duties and restrictions; 26 (5) compliance with federal requirements, including 12 U.S.C. 5101 - 27 5116 (Secure and Fair Enforcement for Mortgage Licensing Act of 2008); 28 (6) compliance with the requirements of the Nationwide Mortgage 29 Licensing System and Registry for licensing by the state of mortgage lenders, 30 mortgage brokers, and mortgage loan originators; in this paragraph, "Nationwide 31 Mortgage Licensing System and Registry" has the meaning given in 12 U.S.C.

01 5102(5); 02 (7) enforcement of provisions of law relating to mortgage lending; 03 (8) administration of the provisions of AS 06.62.100 - 06.62.180, 04 relating to the mortgage loan originator surety fund, and AS 06.62.200, relating to a 05 program administration fee; and 06 (9) the assessment of fees and other charges, including fund fees, late 07 payment penalties, and the reimbursement of investigation and examination expenses 08 related to the regulation of mortgage lending activities. 09 Article 2. Mortgage Loan Originator Surety Fund. 10 Sec. 06.62.100. Mortgage loan originator surety fund. The mortgage loan 11 originator surety fund is established as a separate account in the general fund. The 12 purpose of the fund is to pay fund claims against mortgage originator licensees. 13 Sec. 06.62.110. Composition of fund. The fund consists of payments made by 14 mortgage loan originator licensees under AS 06.62.120, filing fees for fund claims, 15 income earned on the investment of the money in the fund, and money appropriated to 16 the fund. 17 Sec. 06.62.120. Required fund fees. A person who applies for or renews a 18 mortgage loan originator license shall pay to the department a fee established by the 19 department. 20 Sec. 06.62.130. Maximum liability. (a) Payment of a fund claim out of the 21 fund may not exceed $15,000 for each claimant and $15,000 for each mortgage loan 22 transaction regardless of the number of persons injured or the number of pieces of 23 residential real property involved in the mortgage loan transaction. 24 (b) The liability of the fund for fund claims against one mortgage loan 25 originator licensee may not exceed $50,000. 26 (c) If the liability limit under (b) of this section is insufficient to pay in full the 27 valid fund claims of all persons who have filed fund claims regarding one mortgage 28 loan originator licensee, the $50,000 shall be distributed among the claimants in the 29 ratio that their individual fund claims bear to the aggregate of valid claims against that 30 mortgage loan originator licensee. The department shall distribute the money among 31 the persons entitled to share in the recovery without regard to the order in which their

01 fund claims were filed. 02 Sec. 06.62.140. Election to use small claims court. (a) Within 30 days after 03 receiving a copy of a fund claim under this chapter, the mortgage loan originator 04 licensee against whom the claim is made may elect to defend the fund claim as a small 05 claims action in district court under District Court Rules of Civil Procedure if the 06 claim does not exceed the small claims jurisdictional limit. 07 (b) A mortgage loan originator licensee who elects under (a) of this section to 08 defend a fund claim in district court under the small claims rules may not revoke the 09 election without the consent of the person who filed the fund claim. 10 (c) On receipt of a valid written election under (a) of this section, the 11 department shall dismiss the fund claim filed with the department and notify the 12 person who filed the fund claim that the fund claim will not be reimbursed by the 13 fund, but that the person who filed the fund claim may bring a small claims action in 14 the appropriate district court. 15 Sec. 06.62.150. False claims or documents. A person who knowingly files a 16 notice, statement, or other document under AS 06.62.100 - 06.62.160 that contains a 17 material misstatement of fact is guilty of a class A misdemeanor. In this section, 18 "knowingly" has the meaning given in AS 11.81.900. 19 Sec. 06.62.160. Right to subrogation. When the department has paid fund 20 money to a claimant, the department shall be subrogated to all of the rights of the 21 claimant to the amount paid, and the claimant shall assign all right, title, and interest in 22 that portion of the claim to the department. The department shall deposit in the fund 23 the money collected by the department under this section on the claim. 24 Sec. 06.62.170. Claim hearing. Except as otherwise provided by 25 AS 06.62.140, a hearing on a fund claim shall be handled by the office of 26 administrative hearings (AS 44.64.010). 27 Sec. 06.62.180. Definition. In AS 06.62.100 - 06.62.180, "fund claim" means a 28 claim against the fund. 29 Article 3. Program Administration Fee. 30 Sec. 06.62.200. Authorization of program administration fee. (a) The 31 department may establish and collect a program administration fee for each mortgage

01 loan transaction to reimburse the state for the cost of administering this chapter. 02 (b) The program administration fee shall be paid by a borrower who is 03 providing real property as security for the mortgage loan, except that, if the regulations 04 of a federal or state loan program that insures the loan and that applies to the mortgage 05 loan transaction prohibits the borrower from paying the program administration fee, 06 another party to the mortgage loan transaction shall pay the program administration 07 fee. 08 (c) If there are multiple mortgage loan instruments recorded for a single 09 mortgage loan transaction, the department shall collect only one program 10 administration fee. 11 (d) The program administration fees collected under this section shall be 12 separately accounted for and may be appropriated by the legislature to the department 13 for the operation of this chapter. 14 (e) In this section, "mortgage loan instrument" means a deed of trust, 15 mortgage, or another loan instrument recorded to encumber residential real property in 16 the state. 17 Article 4. Examination and Enforcement. 18 Sec. 06.62.300. Examination. Notwithstanding AS 06.01.015, the department 19 may conduct an examination every 36 months for a person required to be licensed 20 under this chapter. The department may conduct an examination more often if the 21 examination is part of the review of a complaint or other information received by the 22 department concerning the person. 23 Sec. 06.62.310. Unfair trade practices and consumer protection. (a) This 24 chapter may not be interpreted to prevent the attorney general or any other person 25 from exercising the rights provided under AS 45.50.471 - 45.50.561. 26 (b) If the department determines that a licensee or a person acting on behalf of 27 the licensee is in violation of, or has violated, a provision of this chapter or the 28 regulations adopted under this chapter, the department may refer the information to the 29 attorney general and request that the attorney general investigate the violation under 30 AS 45.50.495. The attorney general may enjoin a violation of this chapter and may 31 seek restitution, rescission, and other relief as allowed by law.

01 (c) In addition to another investigation allowed under this chapter, the 02 department may conduct other examinations, periodic audits, special audits, 03 investigations, and hearings as may be necessary and proper for the efficient 04 administration of this chapter. 05 Article 5. General Provisions. 06 Sec. 06.62.400. Definitions. In this chapter, unless the context otherwise 07 requires, 08 (1) "department" means the Department of Commerce, Community, 09 and Economic Development; 10 (2) "fund" means the mortgage loan originator surety fund established 11 under AS 06.62.100. 12 * Sec. 3. AS 09.38.065(a) is amended to read: 13 (a) Notwithstanding [SUBJECT TO AS 06.60.360(e), AND 14 NOTWITHSTANDING] other provisions of this chapter, 15 (1) a creditor may make a levy against exempt property of any kind to 16 enforce a claim for 17 (A) child support; 18 (B) unpaid earnings of up to one month's compensation or the 19 full-time equivalent of one month's compensation for personal services of an 20 employee; or 21 (C) state or local taxes; 22 (2) a creditor may make a levy against exempt property to enforce a 23 claim for 24 (A) the purchase price of the property or a loan made for the 25 express purpose of enabling an individual to purchase the property and used 26 for that purpose; 27 (B) labor or materials furnished to make, repair, improve, 28 preserve, store, or transport the property; and 29 (C) a special assessment imposed to defray costs of a public 30 improvement benefiting the property; and 31 (3) a creditor may make a levy against exempt property of any kind to

01 enforce the claim of a victim, including a judgment of restitution on behalf of a victim 02 of a crime or a delinquent act, if the claim arises from conduct of the debtor that 03 results in a conviction of a crime or an adjudication of delinquency, except that the 04 debtor is entitled to an exemption in property 05 (A) not to exceed an aggregate value of $3,000 chosen by the 06 debtor from the following categories of property: 07 (i) household goods and wearing apparel reasonably 08 necessary for one household; 09 (ii) books and musical instruments, if reasonably held 10 for the personal use of the debtor or a dependent of the debtor; and 11 (iii) family portraits and heirlooms of particular 12 sentimental value to the debtor; and 13 (B) not to exceed an aggregate value of $2,800 of the debtor's 14 implements, professional books, and tools of the trade. 15 * Sec. 4. AS 12.62.400 is amended to read: 16 Sec. 12.62.400. National criminal history record checks for employment, 17 licensing, and other noncriminal justice purposes. To obtain a national criminal 18 history record check for determining a person's qualifications for a license, permit, 19 registration, employment, or position, a person shall submit the person's fingerprints to 20 the department with the fee established by AS 12.62.160. The department may submit 21 the fingerprints to the Federal Bureau of Investigation to obtain a national criminal 22 history record check of the person for the purpose of evaluating a person's 23 qualifications for 24 (1) a license or conditional contractor's permit to manufacture, sell, 25 offer for sale, possess for sale or barter, traffic in, or barter an alcoholic beverage 26 under AS 04.11; 27 (2) licensure as a mortgage lender, a mortgage broker, or an originator 28 under AS 06.62 [AS 06.60]; 29 (3) admission to the Alaska Bar Association under AS 08.08; 30 (4) licensure as a collection agency operator under AS 08.24; 31 (5) a certificate of fitness to handle explosives under AS 08.52;

01 (6) licensure to practice nursing or certification as a nurse aide under 02 AS 08.68; 03 (7) a position involving supervisory or disciplinary power over a minor 04 or dependent adult for which criminal justice information may be released under 05 AS 12.62.160(b)(9); 06 (8) a teacher certificate under AS 14.20; 07 (9) licensure as a security guard under AS 18.65.400 - 18.65.490; 08 (10) a concealed handgun permit under AS 18.65.700 - 18.65.790; 09 (11) licensure as an insurance producer, managing general agent, 10 reinsurance intermediary broker, reinsurance intermediary manager, surplus lines 11 broker, or independent adjuster under AS 21.27; 12 (12) serving and executing process issued by a court by a person 13 designated under AS 22.20.130; 14 (13) a school bus driver license under AS 28.15.046; 15 (14) licensure as an operator or an instructor for a commercial driver 16 training school under AS 28.17; 17 (15) registration as a broker-dealer, agent, investment adviser 18 representative, or state investment adviser under AS 45.55.030 - 45.55.060. 19 * Sec. 5. AS 44.62.330(a)(48) is amended to read: 20 (48) Department of Commerce, Community, and Economic 21 Development relating to mortgage lending under AS 06.62 [AS 06.60]. 22 * Sec. 6. AS 44.64.030(a)(5) is amended to read: 23 (5) AS 06 (banks, financial institutions, and fund claims), except as 24 provided otherwise by AS 06.62.170 [AS 06.60.590]; 25 * Sec. 7. AS 45.50.471(b)(52) is amended to read: 26 (52) violating AS 06.62 [AS 06.60.010 - 06.60.380] (mortgage lending 27 regulation); 28 * Sec. 8. AS 45.50.481(c) is amended to read: 29 (c) The exemption in (a)(1) of this section does not apply to an act or 30 transaction regulated under AS 06.62 [AS 06.60]. 31 * Sec. 9. AS 06.60.010, 06.60.015, 06.60.017, 06.60.020, 06.60.025, 06.60.026, 06.60.027,

01 06.60.030, 06.60.035, 06.60.040, 06.60.045, 06.60.050, 06.60.060, 06.60.065, 06.60.070, 02 06.60.075, 06.60.080, 06.60.085, 06.60.090, 06.60.095, 06.60.097, 06.60.100, 06.60.105, 03 06.60.110, 06.60.115, 06.60.120, 06.60.130, 06.60.135, 06.60.140, 06.60.145, 06.60.150, 04 06.60.155, 06.60.157, 06.60.159, 06.60.160, 06.60.200, 06.60.210, 06.60.230, 06.60.240, 05 06.60.250, 06.60.260, 06.60.270, 06.60.280, 06.60.320, 06.60.330, 06.60.340, 06.60.350, 06 06.60.360, 06.60.370, 06.60.380, 06.60.400, 06.60.410, 06.60.420, 06.60.430, 06.60.440, 07 06.60.500, 06.60.510, 06.60.520, 06.60.530, 06.60.540, 06.60.550, 06.60.560, 06.60.570, 08 06.60.580, 06.60.590, 06.60.600, 06.60.610, 06.60.620, 06.60.630, 06.60.640, 06.60.650, 09 06.60.660, 06.60.670, 06.60.680, 06.60.690, 06.60.700, 06.60.710, 06.60.720, 06.60.730, 10 06.60.740, 06.60.745, 06.60.750, 06.60.800, 06.60.810, 06.60.850, 06.60.860, 06.60.890, 11 06.60.895, 06.60.900, 06.60.905, 06.60.910, 06.60.920, 06.60.990, 06.60.995; 12 AS 09.38.015(e); and AS 12.62.400(2) are repealed. 13 * Sec. 10. The uncodified law of the State of Alaska is amended by adding a new section to 14 read: 15 TRANSITION: EXISTING LICENSES ISSUED UNDER FORMER AS 06.60. (a) A 16 person holding a valid license issued under former AS 06.60 as of the effective date of sec. 2 17 of this Act may continue to operate under that license until the license expires, is revoked, or 18 is suspended, and AS 06.62, as enacted by sec. 2 of this Act, including its provisions on 19 expiration, renewal, expiration, prohibitions, revocation, suspension, and enforcement, apply 20 to the license and to the person's operation under the license. 21 (b) In (a) of this section, "AS 06.62" means AS 06.62 and the regulations adopted 22 under AS 06.62. 23 * Sec. 11. The uncodified law of the State of Alaska is amended by adding a new section to 24 read: 25 TRANSITION: REGULATIONS. The Department of Commerce, Community, and 26 Economic Development may adopt regulations necessary to implement the changes made by 27 this Act. The regulations take effect under AS 44.62 (Administrative Procedure Act), but not 28 before July 1, 2010. 29 * Sec. 12. Section 11 of this Act takes effect immediately under AS 01.10.070(c). 30 * Sec. 13. Except as provided in sec. 12 of this Act, this Act takes effect July 1, 2010.