HB 12: "An Act relating to mortgage lending, mortgage loan originators, depository institutions, nonprofit organizations, and nonprofit organization employees; and providing for an effective date."
00 HOUSE BILL NO. 12 01 "An Act relating to mortgage lending, mortgage loan originators, depository 02 institutions, nonprofit organizations, and nonprofit organization employees; and 03 providing for an effective date." 04 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 05 * Section 1. AS 06.60.012(b) is amended to read: 06 (b) An individual required to be licensed as a mortgage loan originator shall 07 (1) register with the registry and maintain a valid unique identifier 08 issued by the registry; 09 (2) work under 10 (A) an exclusive contract for, or as an employee of, a mortgage 11 licensee; or 12 (B) an exclusive contract for a registered depository 13 institution; and 14 (3) be sponsored in the registry by a mortgage licensee under a
01 sponsorship approved in the registry by the department or be sponsored by a 02 registered depository institution under AS 06.60.014; in this paragraph, 03 "sponsored" means authorized to conduct business as a mortgage loan originator under 04 the supervision of a mortgage licensee or a registered depository institution. 05 * Sec. 2. AS 06.60 is amended by adding a new section to read: 06 Sec. 06.60.014. Registered depository institutions. (a) A depository 07 institution may sponsor a mortgage loan originator under AS 06.60.012(b) if the 08 depository institution is registered with the department under this section, has an 09 exclusive written contract to sponsor a mortgage loan originator licensed under this 10 chapter, is otherwise in compliance with this chapter, and satisfies the other 11 requirements of this section. Registration under this section does not affect the 12 exemption of the depository institution under AS 06.60.015(a). 13 (b) To register under (a) of this section, a depository institution shall 14 (1) complete a registration form established by the department; the 15 form must identify the mortgage loan originator to be sponsored by the depository 16 institution; and 17 (2) pay a registration fee established by the department. 18 (c) Registration under (b) of this section expires after one year. To renew a 19 registration, the depository institution shall file a renewal application with the 20 department and pay a renewal fee established by the department. 21 (d) The department may deny an initial or renewal registration under this 22 section, or may suspend or revoke the registration of a depository institution that is 23 registered under (b) of this section, if the department determines that the depository 24 institution 25 (1) failed to satisfy a requirement of this section; 26 (2) failed to supervise its sponsored mortgage loan originator 27 adequately; or 28 (3) made a material misstatement or withheld information on the 29 application for registration, on an application for the renewal of the registration, or on 30 another document required to be filed with the department. 31 * Sec. 3. AS 06.60.015 is amended to read:
01 Sec. 06.60.015. Exemptions. (a) The following persons are exempt from the 02 mortgage lender or mortgage broker licensing requirements of this chapter: 03 (1) a depository institution; 04 (2) a subsidiary that is 05 (A) owned and controlled by a depository institution; and 06 (B) regulated by a federal banking agency; [OR] 07 (3) an institution regulated by the Farm Credit Administration; or 08 (4) a bona fide nonprofit organization. 09 (b) The following individuals are exempt from the mortgage loan originator 10 licensing requirements of this chapter: 11 (1) a registered mortgage loan originator, when acting for an entity 12 described in (a)(1), (2), or (3) of this section; 13 (2) an individual who offers or negotiates terms of a residential 14 mortgage loan with or on behalf of an immediate family member of the individual; in 15 this paragraph, "immediate family member" means a spouse, child, stepchild, sibling, 16 stepsibling, parent, stepparent, grandparent, or grandchild; 17 (3) an individual seller who offers or negotiates terms of a residential 18 mortgage loan secured by a dwelling that serves as the individual's residence; 19 (4) a licensed attorney who negotiates the terms of a residential 20 mortgage loan on behalf of a client as an ancillary matter to the attorney's 21 representation of the client, unless the attorney is compensated by a lender, a mortgage 22 broker, or another mortgage loan originator or by an agent of a lender, a mortgage 23 broker, or another mortgage loan originator; 24 (5) an employee of a bona fide nonprofit organization, if the 25 employee acts as a mortgage loan originator only with respect to 26 (A) the employee's duties to the bona fide nonprofit 27 organization; and 28 (B) residential mortgage loans that have terms that are 29 favorable to the borrower by being consistent with mortgage loan 30 origination for a public or charitable purpose rather than in a commercial 31 context.
01 * Sec. 4. AS 06.60.015 is amended by adding new subsections to read: 02 (c) For a nonprofit organization to qualify as a bona fide nonprofit 03 organization under (a)(4) of this section, the department shall determine that the 04 nonprofit organization 05 (1) has and maintains the status of a tax-exempt organization under 26 06 U.S.C. 501(c)(3) (Internal Revenue Code); 07 (2) promotes affordable housing or provides home ownership 08 education or similar services; 09 (3) conducts its activities in a manner that serves a public or charitable 10 purpose rather than a commercial purpose; 11 (4) receives funding, receives revenue, and charges fees in a manner 12 that does not provide an incentive for the organization or its employees to act other 13 than in the best interests of its clients; 14 (5) compensates its employees in a manner that does not provide an 15 incentive to its employees to act other than in the best interests of its clients; 16 (6) provides or identifies for a borrower residential mortgage loans 17 with terms favorable to the borrower and comparable to mortgage loans and housing 18 assistance provided under government housing assistance programs; for residential 19 mortgage loans to have terms that are favorable to the borrower, the terms must be 20 consistent with mortgage loan origination for a public or charitable purpose rather than 21 in a commercial context; and 22 (7) meets other standards that the department determines are 23 appropriate. 24 (d) The department may establish by regulation the information that an 25 organization shall provide to qualify as a bona fide nonprofit organization under (c) of 26 this section. 27 (e) The department shall establish by regulation 28 (1) the procedure for determining that an organization meets the 29 criteria identified under (c) of this section; 30 (2) how long the determination made under (c) of this section shall 31 remain in effect and the fee to be paid by the organization;
01 (3) how often and under what circumstances the department shall 02 examine the books and activities of the organization to determine that the organization 03 continues to meet the criteria identified under (c) of this section; and 04 (4) the procedure for denying an organization the status of a bona fide 05 nonprofit organization, for suspending or revoking an organization's status as a bona 06 fide nonprofit organization if the organization does not continue to meet the criteria 07 identified under (c) of this section, and for taking disciplinary action against an 08 organization arising out of a violation of (c) - (e) of this section; the provisions of 09 AS 44.62 (Administrative Procedure Act) apply to an action of the department under 10 this paragraph. 11 * Sec. 5. AS 06.60.045(a) is amended to read: 12 (a) An applicant for a mortgage license shall file with the application 13 submitted to the department under AS 06.60.020, and an applicant for registration 14 under AS 06.60.014 shall file with the application filed under AS 06.60.014, a 15 bond with one or more sureties. The department shall establish by regulation the 16 amount of the required bond and the standards and procedures for recovery on the 17 bond. The bond must be satisfactory to the department. 18 * Sec. 6. AS 06.60.045(c) is amended to read: 19 (c) An applicant for a mortgage license that covers more than one location or 20 an applicant for registration that covers more than one location is not required to 21 file more than one bond. 22 * Sec. 7. AS 06.60.045(d) is amended to read: 23 (d) The bond required under (a) of this section must be continuous until three 24 years after the department revokes or otherwise terminates the license or registration. 25 * Sec. 8. AS 06.60.045(e) is amended to read: 26 (e) If the department determines that the bond required under (a) of this 27 section is unsatisfactory for any reason, the department may require the mortgage 28 licensee or the registered depository institution to file with the department, within 29 10 days after the receipt of a written demand from the department, an additional bond 30 that complies with the provisions of this section. 31 * Sec. 9. AS 06.60.100 is amended to read:
01 Sec. 06.60.100. Annual report. (a) Annually, on or before a date established 02 by the department by regulation, a mortgage licensee and a registered depository 03 institution shall file a report with the department providing relevant information that 04 the department requires concerning the business and operations of the mortgage 05 licensee or registered depository institution. The mortgage licensee and the 06 registered depository institution shall make the report under oath or on affirmation. 07 The content and form of the report shall be established by the department by 08 regulation. 09 (b) A mortgage licensee who or registered depository institution that fails 10 to file a report as required by this section is subject to a civil penalty of $25 for each 11 day's failure to file the report. 12 (c) A mortgage licensee and a registered depository institution shall submit 13 to the registry, as required by the registry, reports of the condition of the licensee or 14 registered depository institution, which must be in the form and contain the 15 information that the registry may require. 16 * Sec. 10. AS 06.60.135(a) is amended to read: 17 (a) The requirements of this section apply to the business transactions of a 18 mortgage licensee or registered depository institution that occur entirely or partially 19 in this state. 20 * Sec. 11. AS 06.60.135(b) is amended to read: 21 (b) A mortgage licensee or registered depository institution shall keep and 22 use in the [MORTGAGE LICENSEE'S] business of the mortgage licensee or 23 registered depository institution the accounting records that are in accord with 24 generally accepted accounting principles. 25 * Sec. 12. AS 06.60.135(c) is amended to read: 26 (c) A mortgage licensee and a registered depository institution shall 27 maintain a record of the account of each borrower and for each mortgage loan or 28 mortgage loan application that is related to the purchase or refinancing of an existing 29 mortgage loan. This record must contain all documents, work papers, electronic 30 correspondence, and forms that are produced or prepared for the mortgage loan by the 31 mortgage licensee or registered depository institution, and the mortgage licensee
01 and registered depository institution shall retain each document, work paper, 02 electronic correspondence, and form for 36 months from the date they were created. 03 * Sec. 13. AS 06.60.135(d) is amended to read: 04 (d) A mortgage licensee and a registered depository institution shall retain, 05 for at least three years after final payment is made on a mortgage loan, or three years 06 after a mortgage loan is sold, whichever occurs first, the original contract for the 07 [MORTGAGE LICENSEE'S] compensation of the mortgage licensee or registered 08 depository institution, copies of the note, settlement statement, and truth-in-lending 09 disclosure, an account of fees received in connection with the loan, and other papers or 10 records relating to the loan that may be required by department order or regulation. 11 * Sec. 14. AS 06.60.135(e) is amended to read: 12 (e) If a mortgage licensee or registered depository institution conducts 13 business as a mortgage loan servicing agent for mortgage loans that the mortgage 14 licensee or registered depository institution owns, or as an agent for other mortgage 15 lenders or investors, the mortgage licensee shall, in addition to complying with (b) and 16 (c) of this section, maintain a record for each mortgage loan. The record of each 17 mortgage loan must include the amount of the mortgage loan, the total amount of 18 interest and finance charges on the mortgage loan, the interest rate on the mortgage 19 loan, the amount of each payment to be made on the mortgage loan, a description of 20 the collateral taken for the mortgage loan, a history of all payments received by the 21 mortgage licensee or registered depository institution on the mortgage loan, a 22 detailed history of the amount of each payment that is applied to the reduction of the 23 mortgage loan principal, the interest that accrues on the mortgage loan, and any other 24 fees and charges that are related to the mortgage loan, as well as other papers required 25 by law, department order, or regulation. The mortgage licensee or registered 26 depository institution shall retain the record required by this subsection for three 27 years after the loan is sold to another mortgage loan servicing agent or after the 28 mortgage loan is satisfied, whichever occurs first. 29 * Sec. 15. AS 06.60.140 is amended to read: 30 Sec. 06.60.140. Availability of out-of-state records. A mortgage licensee 31 who or registered depository institution that operates an office or other place of
01 business outside this state shall, at the request of the department, 02 (1) make the records of the office or place of business available to the 03 department at a location within this state; or 04 (2) reimburse the department its reasonable costs, as provided in 05 AS 06.60.250(k), that are incurred by the department in conjunction with an 06 investigation or examination conducted at the office or place of business. 07 * Sec. 16. AS 06.60.410 is amended to read: 08 Sec. 06.60.410. Censure, suspension, or bar. (a) In addition to any other 09 remedy provided under this chapter, the department may, by order after appropriate 10 notice and opportunity for a hearing, censure a person, suspend the license of a person 11 for a period not to exceed 12 months, or bar a person from a position of employment, 12 management, or control of a licensee or registered depository institution if the 13 department finds that 14 (1) the censure, suspension, or bar is in the public interest; 15 (2) the person has knowingly committed or caused a violation of this 16 chapter or a regulation adopted under this chapter; and 17 (3) the violation has caused material damage to the licensee, to the 18 registered depository institution, or to the public. 19 (b) When a person who is the subject of a proposed order under this section 20 receives a notice of the department's intention to issue an order under this section, the 21 person is immediately prohibited from engaging in any activities for which a license is 22 required under this chapter or for which registration is required under 23 AS 06.60.014. 24 (c) A person who is suspended or barred under this section is prohibited from 25 participating in a business activity of a licensee or registered depository institution 26 and from engaging in a business activity on the premises where a licensee or 27 registered depository institution is conducting the [LICENSEE'S] business of a 28 licensee or registered depository institution. This subsection may not be construed 29 to prohibit a suspended or barred person from having the person's personal 30 transactions processed by a licensee or registered depository institution. 31 * Sec. 17. AS 06.60.900 is amended to read:
01 Sec. 06.60.900. Applicability of administrative procedures. Notwithstanding 02 AS 06.01.030(f), the provisions of AS 44.62 (Administrative Procedure Act) apply to 03 an action of the department to deny, revoke, or suspend a license or registration 04 under this chapter, to censure, suspend, or bar a person under AS 06.60.410, to take 05 other disciplinary action under this chapter, to hold disciplinary hearings, and to issue 06 disciplinary orders. In this section, "registration" means the registration of a 07 depository institution under AS 06.60.014. 08 * Sec. 18. AS 06.60.990 is amended by adding new paragraphs to read: 09 (35) "bona fide nonprofit organization" means an organization that the 10 department has determined qualifies as a bona fide nonprofit organization under 11 AS 06.60.015(c); 12 (36) "registered depository institution" means a depository institution 13 that is registered under AS 06.60.014. 14 * Sec. 19. The uncodified law of the State of Alaska is amended by adding a new section to 15 read: 16 TRANSITION: REGULATIONS. The Department of Commerce, Community, and 17 Economic Development may proceed under AS 06.60.910 to adopt regulations necessary to 18 implement this Act. The regulations take effect under AS 44.62 (Administrative Procedure 19 Act), but not before January 1, 2016. 20 * Sec. 20. Section 19 of this Act takes effect immediately under AS 01.10.070(c). 21 * Sec. 21. Except as provided in sec. 20 of this Act, this Act takes effect January 1, 2016.