As a result of our yearly audit of state-specific disclosure requirements, we will be providing the following three new disclosures for Alaska:
AK Depository Institution Insurance Disclosure (Cx17687)
This document will be provided, upon request, due to the provisions of Alaska Stat. § 21.36.323 (West 2013). This section requires a disclosure to be given in connection with the sale of insurance by a financial institution, which informs the borrower that the insurance is not a deposit with the institution, is not guaranteed by certain entities, that the borrower is not required to obtain an insurance policy through a particular entity, and that the insurance contains an investment risk (if applicable).
This disclosure must be given both orally and in writing and the borrower must acknowledge that he received both types of disclosures. Both types of disclosures must be given “in a meaningful form and in a conspicuous, simple, direct, and understandable manner that is designed to call attention to the information provided.” (Ibid. § 21.36.323[e])
We will be providing this document “upon request” due to the fact that “financial institution” is defined as meaning certain bank holding companies, credit unions, banks, savings banks, savings and loan associations, trust companies, depository institutions, and other entities authorized in Alaska to insure deposits and to make loans (see Ibid. § 23.36.325). Not all of our clients fit such a definition and, even for the ones who do, they may not be selling insurance, so this document will only print for clients who believe that these requirements apply to them and who request it.
Once requested, it will print in all Initial Disclosure packages for loans secured by property in Alaska.
AK Commitment Agreement (Cx17686)
This document is being provided due to the provisions of Alaska Stat. § 06.60.340(19) & (22) (West 2013), which states the following (in relevant part):
“A person who is required to be licensed under this chapter [i.e. a licensee under the Alaska Secure and Fair Enforcement for Mortgage Licensing Act of 2010] and a person who is licensed under AS 06.20 [i.e. a licensee under the Alaska Small Loans Act] may not, in connection with a mortgage loan transaction,
(19) fail to disburse money in accordance with a written commitment or agreement to make a mortgage loan;
(22) make a false or misleading statement in a mortgage loan commitment or prequalification letter, or omit material information necessary to make the statements made not misleading, if the person know or reasonably should have known the statement was false or misleading or the omission consisted of material information necessary to make the statements made not misleading.”
While our policy has been to only make commitment agreements where required or necessitated by law (e.g. such as where certain content is required to be included in the commitment or it is necessary to enforce an agreement due to a state’s Statute of Frauds), we have decided to provide an optional commitment for Alaska in order to help clients avoid “making a false or misleading statement” in a commitment.
Since this agreement is not required, it will also be only available upon request. Once requested, it will print in Initial Disclosure packages when “Mortgage Loan Commitment” equals “Yes.”
AK Consumer Credit Insurance Disclosure (Cx17164)
This document is being provided due to the provisions of Alaska Stat. § 21.57.120 (West 2013), as follows:
“When consumer credit insurance is required as additional security for a debt, the debtor shall, upon request to the creditor, have the option of furnishing the required amount of insurance through existing policies of insurance owned or controlled by the debtor or of procuring and furnishing the required coverage through an insurer authorized to transact an insurance business in this state.”
Cx17164 will inform the borrower of their option to request that they be allowed to obtain the required insurance policies through either a current plan, or through an insurer of their choice.
Again, this document is not required, but is being provided for “good practice” purposes for any clients who would like to use it. It would only need to be provided in connection with a second lien transaction of a loan amount of $30,000 or less (see Ibid. § 21.57.020).
If this document is requested, it will print in Initial Disclosure packages under the following conditions:
1. “Lender is a Broker” equals “No”;
2. “Lien Position” equals “SecondLien”; and
3. “Loan Amount Less Than or Equal to 30k” equals “Yes.”
Please note that if this document is requested, it will take some time to finish configuring it for use, due to enhancements which would need to be made to our software to support cases where credit insurance is required, rather than optional.
These three documents are now available upon request.
August 12, 2013