Legislature(2003 - 2004)

04/21/2004 01:15 PM JUD

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
HB 421 - DEED OF TRUST RECONVEYANCE                                                                                           
                                                                                                                                
Number 1033                                                                                                                     
                                                                                                                                
CHAIR McGUIRE announced that the  next order of business would be                                                               
HOUSE BILL  NO. 421, "An  Act relating to reconveyances  of deeds                                                               
of trust."  [Before the committee was CSHB 421(L&C).]                                                                           
                                                                                                                                
REPRESENTATIVE ANDERSON,  speaking as  the sponsor,  relayed that                                                               
HB 421 is  legislation proposed and requested by  the Alaska Land                                                               
Title  Association (ALTA),  and opined  that it  will help  clear                                                               
land records of  paid off mortgage liens.  After  a mortgage or a                                                               
deed  of trust  has  been  paid off,  a  title insurance  company                                                               
could, through the procedures established  via HB 421, record the                                                               
reconveyance.  A title insurance  company acting as trustee under                                                               
a deed  of trust could release,  by deed of reconveyance,  a lien                                                               
after notice  to the  lender if  the title  company paid  off the                                                               
deed of trust through a closing.   The lender would then be given                                                               
60 days to object to the proposed release of the lien.                                                                          
                                                                                                                                
REPRESENTATIVE  ANDERSON said  it  is common  in  Alaska for  the                                                               
company servicing  the mortgage on  a home  to be located  out of                                                               
state,  and so  HB 421,  which is  based on  Idaho law,  would be                                                               
helpful in cleaning  up many old liens that  have been unreleased                                                               
by lenders  who may  be out  of state  or who  have [gone  out of                                                               
business].    The  net  result, he  predicted,  will  be  quicker                                                               
closing and fewer hassles for  sellers, lenders, and agents.  For                                                               
example, any  previous liens  on the deed  could be  cleared away                                                               
before  they  become burdensome  on  any  future transactions  or                                                               
sales of the property.                                                                                                          
                                                                                                                                
REPRESENTATIVE ANDERSON  indicated that the  intent of HB  421 is                                                               
to  provide a  clear  and  clean process,  allowing  liens to  be                                                               
cleared  from deeds  after satisfactory  evidence of  payment has                                                               
been  presented  to  the  title  company.   This  bill  does  not                                                               
establish any  additional risks or  opportunities for  fraud, and                                                               
it  is  not  intended  to create  any  unnecessary  burdens  upon                                                               
Alaskan mortgage lenders.                                                                                                       
                                                                                                                                
REPRESENTATIVE GARA  said he wanted  assurance that HB  421 won't                                                               
jeopardize someone's property rights.                                                                                           
                                                                                                                                
REPRESENTATIVE ANDERSON said he did  not think HB 421 would cause                                                               
such  to  happen,  but suggested  that  industry  representatives                                                               
could respond to that concern as well.                                                                                          
                                                                                                                                
Number 1244                                                                                                                     
                                                                                                                                
BRYAN MERRELL relayed that he is the immediate past president of                                                                
the Alaska Land Title Association (ALTA), and is a member of the                                                                
ALTA's legislative committee.  He went on to say:                                                                               
                                                                                                                                
     The   Alaska  Land   Title  Association   is  a   trade                                                                    
     organization  representing title  insurance agents  and                                                                    
     underwriters who  do business  in ... Alaska.  ... Over                                                                    
     the  past   few  years  we've   been  very   active  in                                                                    
     attempting to  clear title records  as best we  can, to                                                                    
     assist the  consumer and our  customers, and  this bill                                                                    
     would   essentially   help   us    to   do   that,   as                                                                    
     Representative Anderson  has described.  To  respond to                                                                    
     Representative  Gara's [concern]:    ...  I think  that                                                                    
     this  bill  is protective  of  the  property rights  of                                                                    
     owners of real property in  that in a situation where a                                                                    
     mortgage lender, for whatever  reason, does not release                                                                    
     a paid off  deed of trust or mortgage  that is attached                                                                    
     to  a piece  of property,  this would  allow the  title                                                                    
     company  to assist  that consumer  in [releasing]  that                                                                    
     mortgage debt  with notice to the  mortgage lender, who                                                                    
     has been  paid, when  we have sufficient  evidence that                                                                    
     payoff  has occurred.    And  so in  that  sense it  is                                                                    
     protective of the property rights of individuals.                                                                          
                                                                                                                                
Number 1353                                                                                                                     
                                                                                                                                
TERRY  E.  BRYAN,  President, First  American  Title  of  Alaska,                                                               
relayed that his  company operates in 10  separate communities in                                                               
Alaska   and  perceives   HB  421   as  being   consumer-oriented                                                               
legislation  based on  statutes  similar to  those  in Idaho  and                                                               
Oregon.  He went on to say:                                                                                                     
                                                                                                                                
     I  am  currently  working  with   an  elderly  lady  in                                                                    
     Anchorage on  a 1983 deed  of trust for a  small amount                                                                    
     of money  that we know is  paid off - we  have evidence                                                                    
     that it's  paid off  - but ...  the mortgage  lender is                                                                    
     out  [of  state],  and  if they  do  not  reconvey  the                                                                    
     property,  she  cannot   take  advantage  of  refinance                                                                    
     because this  old lien  ... is there.   This  bill will                                                                    
     allow   a  title   company,  only,   ...   to  -   upon                                                                    
     acknowledgement and having  verification of substantial                                                                    
     evidence that it has been  paid off by the ... canceled                                                                    
     check and so  forth - in effect,  reconvey the property                                                                    
     as  trustee   for  the  individual.     Then   she  can                                                                    
     subsequently sell, refinance, or  remove the cloud from                                                                    
     the title. ...                                                                                                             
                                                                                                                                
     This  happens on  a daily  basis. ...  The Alaska  Land                                                                    
     Title  Association  has  received ...  written  support                                                                    
     from  ... the  Alaska  Home  Builders Association,  the                                                                    
     Alaska Mortgage Bankers  Association, [and] Wells Fargo                                                                    
     Bank.   Initially there  [were] concerns  [relayed] ...                                                                    
     by   the   Alaska   Bankers  Association   and,   after                                                                    
     discussions  with them  last week  and this  week, they                                                                    
     removed  their opposition  and  concerns regarding  the                                                                    
     legislation.  And it's primarily  (indisc.) the need to                                                                    
     assist consumers for outside  lenders, ... which we see                                                                    
     is  going  to  be  an increasing  role  in  the  Alaska                                                                    
     economy due  to mailing  programs, due to  the Internet                                                                    
     ... marketing for mortgages for consumers.                                                                                 
                                                                                                                                
Number 1466                                                                                                                     
                                                                                                                                
MR. BRYAN continued:                                                                                                            
                                                                                                                                
     I just  did a quick  check in our office  in Anchorage,                                                                    
     ... [and found that]  I have 1,485 non-reconveyed deeds                                                                    
     of trust in the  (indisc.) recording district that have                                                                    
     been paid off [but]  the people cannot easily refinance                                                                    
     or sell until we go  through the gyrations of trying to                                                                    
     get  the lender  to do  what they  should have  done [a                                                                    
     long  time ago].   And  we  have an  obligation to  the                                                                    
     consumer ...  to assist them  in the flow  of commerce,                                                                    
     assist them in closing the transaction.                                                                                    
                                                                                                                                
     And  we  are  a   controlled  industry  and  feel  that                                                                    
     restricting  this  ability  [to]  the  title  insurance                                                                    
     industry is  a safeguard for  the consumer and  for the                                                                    
     state of  Alaska, and that's  one of the  reasons we're                                                                    
     incorporating  the  actual   forms  utilized  into  the                                                                    
     statute.   So it would  be an established  standard and                                                                    
     an established process; ...  reconveyances could not be                                                                    
     done frivolously by non-insurance companies. ...                                                                           
                                                                                                                                
REPRESENTATIVE GARA  said he  wants to ensure  that HB  421 isn't                                                               
written such that resolving one  problem will create another.  He                                                               
directed attention to subsection (f)  on page 4, lines 10-12, and                                                               
asked  whether  the  language therein  might  extinguish  someone                                                               
else's valid interest in a piece of land.                                                                                       
                                                                                                                                
MR. MERRELL replied:                                                                                                            
                                                                                                                                
     Because of the  safeguards that have been  put into the                                                                    
     bill in terms  of notice to the lender,  and because of                                                                    
     the requirement  that we have sufficient  evidence that                                                                    
     the loan has  indeed been paid off, I  don't think that                                                                    
     parties  are going  to be  at  risk of  losing a  valid                                                                    
     debt,  because we're  going to  have proof  of payment.                                                                    
     And that proof  is going to [have to] take  the form of                                                                    
     a  ... written  statement from  the lender  [detailing]                                                                    
     how much  is owed [and]  a canceled check  showing that                                                                    
     that lender  got the  money sufficient  to pay  it off,                                                                    
     before we would even be willing to do it. ...                                                                              
                                                                                                                                
     And  in  any  event,  ...  we would  be  liable  for  a                                                                    
     wrongful reconveyance  to that  lender ..., so  I don't                                                                    
     think that we're  solving this problem on  the backs of                                                                    
     lenders  at all.    They've got  plenty  of ability  to                                                                    
     protect  themselves  through  the  payoff  process  and                                                                    
     through  objection  to  the   notice  that  they  would                                                                    
     receive  in order  to protect  themselves.   And again,                                                                    
     ... we've received support from  lenders as well, so it                                                                    
     isn't like they think that that's going to happen.                                                                         
                                                                                                                                
Number 1669                                                                                                                     
                                                                                                                                
REPRESENTATIVE  GARA clarified  that his  concern is  for persons                                                               
who have a valid claim to  an interest in a property, rather than                                                               
for lenders.                                                                                                                    
                                                                                                                                
MR.  MERRELL opined  that  HB 421  only speaks  to  the issue  of                                                               
reconveyances  of  deeds of  trust  -  releases of  the  mortgage                                                               
instrument  -  which  is the  preferred  mortgage  instrument  in                                                               
Alaska.   Under  the  deed of  trust form,  the  trustee has  the                                                               
ability  to release  the deed  of  trust when  instructed by  the                                                               
beneficiary who  is the  mortgage lender; as  a matter  of common                                                               
law,  that's  when  a  mortgage  lien  typically  gets  released.                                                               
Again,  HB 421  only addresses  the issue  of releasing  mortgage                                                               
loans; it  has nothing to do  with release of other  interests in                                                               
property, whether  it be  ownership interest,  easement interest,                                                               
or any other kind of interest.                                                                                                  
                                                                                                                                
REPRESENTATIVE  GARA asked  whether  "trust deed"  is defined  in                                                               
statute.                                                                                                                        
                                                                                                                                
MR. MERRELL indicated that "trust  deed" is described in the bill                                                               
and defined elsewhere in Title 34.                                                                                              
                                                                                                                                
REPRESENTATIVE  ANDERSON   noted  that   members  should   be  in                                                               
possession of two proposed amendments.                                                                                          
                                                                                                                                
MR. MERRELL indicated that he would  be willing to speak to those                                                               
amendments at the appropriate time.                                                                                             
                                                                                                                                
Number 1806                                                                                                                     
                                                                                                                                
MICHAEL PRICE,  Owner, Mat-Su Title  Insurance Agency,  Inc., and                                                               
Fidelity  Title Agency  of Alaska,  LLC, relayed  that before  he                                                               
owned  these companies  he'd  practiced real  estate  law for  27                                                               
years.  He  said he would speak  in favor of both HB  421 and the                                                               
proposed  amendments.    He  indicated a  desire  to  assure  the                                                               
committee that  the bill  would not  be a  problem with  what are                                                               
considered local lenders, those who  are domiciled in Alaska.  He                                                               
said  that such  lenders often  send his  companies requests  for                                                               
reconveyances and the  mortgages are then released.   The current                                                               
problem  is a  result  of both  failed  lending institutions  and                                                               
Internet  banking, and  a lot  of  loans come  from companies  in                                                               
other  states that  are  not as  responsive  about providing  the                                                               
appropriate paperwork to  the consumer when they are  paid off as                                                               
are  local  lenders.   For  example,  for Anchorage  property,  a                                                               
Mississippi  company  will  send  the release  to  Ketchikan  and                                                               
record it  there.  Additionally, in  the '80s and early  '90s, in                                                               
the Matanuska-Susitna  valley, there  were many  individual loans                                                               
made,  but  when  they  were paid  off,  the  individuals  didn't                                                               
realize that  the deed of trust  needed to be released,  and such                                                               
is creating an impediment to commerce.                                                                                          
                                                                                                                                
Number 1897                                                                                                                     
                                                                                                                                
REPRESENTATIVE  ANDERSON  made a  motion  to  adopt Amendment  1,                                                               
which read [original punctuation provided]:                                                                                     
                                                                                                                                
     DESCRIPTION                                                                                                                
     Currently  the   bill  requires  the   title  insurance                                                                    
     company to  notify the beneficiary  or the  servicer of                                                                  
     the deed before  a reconveyance can be  recorded.  This                                                                    
     amendment  will  change  the  "or"  to  "and"  so  that                                                                    
     notification must be sent to both parties.                                                                                 
                                                                                                                                
     On page 1, line 13                                                                                                         
          Delete "or a"                                                                                                         
          Insert "and the"                                                                                                      
                                                                                                                                
     On page 1, line 14                                                                                                         
          Delete "or"                                                                                                           
          Insert "and"                                                                                                          
                                                                                                                                
     On page 1, line 15                                                                                                         
          Delete "or"                                                                                                           
          Insert "and"                                                                                                          
                                                                                                                                
     On page 2, line 1                                                                                                          
          Delete "or"                                                                                                           
          Insert "and"                                                                                                          
                                                                                                                                
     On page 2, line 3                                                                                                          
          Delete "or"                                                                                                           
          Insert "and"                                                                                                          
                                                                                                                                
     On page 2, line 29                                                                                                         
          Delete "or" twice                                                                                                     
          Insert "and" twice                                                                                                    
                                                                                                                                
     DESCRIPTION                                                                                                                
     Amendment  [sic] the  number of  days that  must elapse                                                                    
     after  mailing a  notification from  60 days  up to  90                                                                    
     days.   The change from 60  to 90 days should  occur in                                                                    
     the following places:                                                                                                      
                                                                                                                                
     Page 2, line 24                                                                                                            
     Page 3, line 4                                                                                                             
     Page 4, line 1                                                                                                             
                                                                                                                                
Number 1920                                                                                                                     
                                                                                                                                
REPRESENTATIVE GRUENBERG objected for  the purpose of discussion.                                                               
He suggested that  Amendment 1 be divided into  Amendments 1a and                                                               
1b, with the "description" verbiage  delineating the two.  Should                                                               
his  suggestion  be  adopted, he  surmised,  Amendment  1a  would                                                               
encompass changing  "or" to "and"  in several places  to indicate                                                               
that notification should be sent  to both the beneficiary and the                                                               
servicer of  the deed, and  Amendment 1b would change  the number                                                               
of days that  must elapse after mailing  notification.  [Although                                                               
no formal motion was  made, Representative Gruenberg's suggestion                                                               
to divide  Amendment 1 into Amendments  1a and 1b was  treated as                                                               
adopted.]     Amendment  1a   then  read   [original  punctuation                                                               
provided]:                                                                                                                      
                                                                                                                                
     DESCRIPTION                                                                                                                
     Currently  the   bill  requires  the   title  insurance                                                                    
     company to  notify the beneficiary  or the  servicer of                                                                  
     the deed before  a reconveyance can be  recorded.  This                                                                    
     amendment  will  change  the  "or"  to  "and"  so  that                                                                    
     notification must be sent to both parties.                                                                                 
                                                                                                                                
     On page 1, line 13                                                                                                         
          Delete "or a"                                                                                                         
          Insert "and the"                                                                                                      
                                                                                                                                
     On page 1, line 14                                                                                                         
          Delete "or"                                                                                                           
          Insert "and"                                                                                                          
                                                                                                                                
     On page 1, line 15                                                                                                         
          Delete "or"                                                                                                           
          Insert "and"                                                                                                          
                                                                                                                                
     On page 2, line 1                                                                                                          
          Delete "or"                                                                                                           
          Insert "and"                                                                                                          
                                                                                                                                
     On page 2, line 3                                                                                                          
          Delete "or"                                                                                                           
          Insert "and"                                                                                                          
                                                                                                                                
     On page 2, line 29                                                                                                         
          Delete "or" twice                                                                                                     
          Insert "and" twice                                                                                                    
                                                                                                                                
REPRESENTATIVE  GRUENBERG, referring  to  Amendment 1a,  remarked                                                               
that if Amendment 1a is  adopted, the drafter should also correct                                                               
the corresponding  syntax regarding "notice" and  "address" where                                                               
appropriate.                                                                                                                    
                                                                                                                                
MR.  MERRELL concurred  with  Representative Gruenberg  regarding                                                               
the purpose  of Amendment  1a, and  relayed that  it came  at the                                                               
request of members  of the banking industry who  wanted to ensure                                                               
that those  who have an  interest in  the loan receive  notice as                                                               
well.                                                                                                                           
                                                                                                                                
Number 2039                                                                                                                     
                                                                                                                                
REPRESENTATIVE  GRUENBERG asked  that  Amendment  1a be  adopted.                                                               
There being no objection, Amendment 1a was adopted.                                                                             
                                                                                                                                
REPRESENTATIVE GRUENBERG  directed attention to page  1, lines 9-                                                               
11, which  read:   (b)  Not  less than 30  days after  payment in                                                               
full of  the obligation secured  by a  trust deed and  receipt of                                                               
satisfactory  evidence  of payment  in  full,  a title  insurance                                                               
company shall".  He asked  why the title insurance industry would                                                               
want to  wait 30 days,  since that  could result in  slowing down                                                               
the procedure.                                                                                                                  
                                                                                                                                
MR. MERRELL replied:                                                                                                            
                                                                                                                                
     It  was  something that  came  through  from the  Idaho                                                                    
     statute, and we never  really considered changing that.                                                                    
     ... And,  perhaps more importantly,  I think  that that                                                                    
     is, in  a sense, sort of  a cooling off period  ...; if                                                                    
     there are  any questions relating  to whether or  not a                                                                    
     payoff was sufficient, they're going  to come up within                                                                    
     the 30  days after a  transaction is closed.  ... [With                                                                    
     the  30-day stipulation]  you have  the opportunity  to                                                                    
     resolve  those  things  in  advance  of  attempting  to                                                                    
     reconvey.    Plus  ...  it does  give  the  lender  the                                                                    
     opportunity to do  the right thing and take  care of it                                                                    
     themselves.                                                                                                                
                                                                                                                                
MR.  MERRELL, in  response to  a further  question, said  that in                                                               
situations wherein  there is an  "ancient deed," the  30-day time                                                               
frame would have  long since passed, and so should  not result in                                                               
any problems.  Furthermore, if a  lender is ready to proceed with                                                               
the  reconveyance, the  lender would  have initiated  the process                                                               
rather  than the  title  company having  to take  care  of it  on                                                               
behalf of the consumer.                                                                                                         
                                                                                                                                
REPRESENTATIVE GRUENBERG directed attention  to Amendment 1b, and                                                               
surmised that  it would provide  the beneficiary and  servicer 90                                                               
days  within  which  to  object.   Amendment  1b  read  [original                                                               
punctuation provided]:                                                                                                          
                                                                                                                                
     DESCRIPTION                                                                                                                
     Amendment  [sic] the  number of  days that  must elapse                                                                    
     after  mailing a  notification from  60 days  up to  90                                                                    
     days.   The change from 60  to 90 days should  occur in                                                                    
     the following places:                                                                                                      
                                                                                                                                
     Page 2, line 24                                                                                                            
     Page 3, line 4                                                                                                             
     Page 4, line 1                                                                                                             
                                                                                                                                
REPRESENTATIVE GRUENBERG asked why 60 days is not sufficient.                                                                   
                                                                                                                                
Number 2186                                                                                                                     
                                                                                                                                
MR. BRYAN replied:                                                                                                              
                                                                                                                                
     Two  issues.   One  is,  this  was  a change  made  [by                                                                    
     request] of  several representatives within  the Alaska                                                                    
     [Bankers] Association,  and their thought was  ... that                                                                    
     some  of the  organizations are  quite large  and, [in]                                                                    
     receiving  notification,  they  wanted to  ensure  that                                                                    
     they could  do the right  thing and respond and  do the                                                                    
     reconveyance, and  they did not want  the documentation                                                                    
     provided from the title company  to be internally lost.                                                                    
     And [it] just  gave them more time to respond.   And as                                                                    
     a  matter  of  compromise   with  the  [Alaska  Bankers                                                                    
     Association]  we  ...  accepted  their  recommendation,                                                                    
     [and are now requesting] that change.                                                                                      
                                                                                                                                
     ... This  action is  not to  replace the  obligation of                                                                    
     the  lender or  the individual  beneficiary being  paid                                                                    
     off; they still have the  obligation to reconvey.  This                                                                    
     only is  appropriate when they have  not ... reconveyed                                                                    
     the property  - which,  traditionally, is  never within                                                                    
     the first  30 days - or  the lender cannot be  found or                                                                    
     [is] not  cooperative.   So it would  be 30  days after                                                                    
     the  ... original  payoff before  it would  even be  of                                                                    
     concern  (indisc.) the  title company  ...; the  30 day                                                                    
     window is an extremely narrow window. ...                                                                                  
                                                                                                                                
The committee took an at-ease from 2:40 p.m. to 2:41 p.m.                                                                       
                                                                                                                                
Number 2291                                                                                                                     
                                                                                                                                
REPRESENTATIVE GRUENBERG made a motion to adopt Amendment 1b.                                                                   
                                                                                                                                
REPRESENTATIVE GARA objected  for the purpose of  discussion.  He                                                               
asked whether,  if a former  owner is owed compensation  but says                                                               
nothing within  60 days  of receiving  notice, he/she  looses the                                                               
right to compensation.                                                                                                          
                                                                                                                                
MR.  MERRELL said  no.    He reiterated  that  the title  company                                                               
cannot  use this  procedure unless  it has  satisfactory evidence                                                               
that that person  has been paid.  Additionally,  he remarked, one                                                               
of the  forthcoming amendments  will stipulate  that satisfactory                                                               
evidence  must include  a payoff  statement in  writing from  the                                                               
person who  has been paid off  and a canceled check  showing that                                                               
he/she received the money.   Without satisfactory evidence, title                                                               
companies  would be  liable for  any damages  plus an  additional                                                               
penalty.                                                                                                                        
                                                                                                                                
REPRESENTATIVE GARA indicated that he was satisfied.                                                                            
                                                                                                                                
TAPE 04-69, SIDE B                                                                                                            
Number 2369                                                                                                                     
                                                                                                                                
CHAIR McGUIRE asked whether there  were any further objections to                                                               
Amendment 1b.  There being none, Amendment 1b was adopted.                                                                      
                                                                                                                                
REPRESENTATIVE HOLM asked what the  distinction is between a deed                                                               
of trust, a title, and a mortgage lien.                                                                                         
                                                                                                                                
MR. MERRELL explained  that a deed of trust is  a consensual lien                                                               
instrument that's signed by the  borrower, and that deed of trust                                                               
and trust  deed are interchangeable  terms.   Essentially signing                                                               
this consensual lien instrument says  that the borrower is giving                                                               
a lien to the bank to secure the debt.                                                                                          
                                                                                                                                
CHAIR  McGUIRE noted  that  Representative  Gruenberg's wife  and                                                               
some students were  present to watch the  proceeding, and invited                                                               
them to introduce themselves, which they did.                                                                                   
                                                                                                                                
Number 2281                                                                                                                     
                                                                                                                                
REPRESENTATIVE  ANDERSON  made a  motion  to  adopt Amendment  2,                                                               
which read [original punctuation provided]:                                                                                     
                                                                                                                                
     On page 1, line 8                                                                                                          
          Delete "the"                                                                                                          
                                                                                                                                
          Insert  "any"                                                                                                         
                                                                                                                                
      On page 2, line 2, after the word "section", insert                                                                       
     the following:                                                                                                             
                                                                                                                                
          ", and to the address for a beneficiary and                                                                           
        servicer personally known to the title insurance                                                                        
          company"                                                                                                              
                                                                                                                                
     On page 2, line 16, following the word "information"                                                                       
          Insert  "for a trust deed"                                                                                            
                                                                                                                                
     On page 2, following line 20                                                                                               
        Insert    "    Recording information for current                                                                        
          assignment of trust deed:                                                                                             
                         Serial number:………………                                                                                   
                         or                                                                                                     
                         Book number:………………                                                                                     
                         Page number:………………."                                                                                   
                                                                                                                                
     On page 3, following line 3                                                                                                
          Insert  "(Phone number)"                                                                                              
                                                                                                                                
     On  page  4,  following  line  27,  insert  a  two  new                                                                    
     definition as follows:                                                                                                     
          "  'beneficiary' means both the record owner of                                                                       
          the beneficiary's interest under a trust deed,                                                                        
          including successors in interest."                                                                                    
                                                                                                                                
          "  'satisfactory evidence' of the full payment of                                                                     
     an obligation  secured by a  trust deed means  a payoff                                                                    
     letter,  the  original  cancelled   check  or  a  copy,                                                                    
     including a  voucher copy, of  a check, payable  to the                                                                    
     beneficiary or  a servicer, and  reasonable documentary                                                                    
     evidence  that the  check was  intended to  effect full                                                                    
     payment  under the  trust deed  or an  encumbrance upon                                                                    
     the property covered by the trust deed."                                                                                   
                                                                                                                                
          Renumber the new and existing definitions                                                                             
          accordingly.                                                                                                          
                                                                                                                                
     On page  5, following line  1, insert a new  section as                                                                    
     follows:                                                                                                                   
                                                                                                                                
     (j)   If a  title insurance  company reconveys  a trust                                                                    
     deed  without having  satisfactory evidence  of payment                                                                    
     required  under  (b)  or without  providing  the  prior                                                                    
     notice  to the  beneficiary  and  servicer as  required                                                                    
     under  this section,  the  title  insurance company  is                                                                    
     liable  to   the  beneficiary,  the   heirs,  successor                                                                    
     interest,   representatives   and    assigns   of   the                                                                    
     beneficiary,  for   all  damages  occasioned   by  such                                                                    
     neglect  or willful  act.   A  title insurance  company                                                                    
     shall pay a penalty of $300 to the department."                                                                            
                                                                                                                                
Number 2274                                                                                                                     
                                                                                                                                
REPRESENTATIVE GRUENBERG suggested dividing Amendment 2 into                                                                    
Amendments 2a-2g as follows:                                                                                                    
                                                                                                                                
Amendment 2a:                                                                                                                   
                                                                                                                                
     On page 1, line 8                                                                                                          
          Delete "the"                                                                                                          
                                                                                                                                
          Insert  "any"                                                                                                         
                                                                                                                                
Amendment 2b:                                                                                                                   
                                                                                                                                
     On page  2, line  2, after  the word  "section", insert                                                                    
     the following:                                                                                                             
                                                                                                                                
          ", and to the address for a beneficiary and                                                                           
          servicer personally known to the title insurance                                                                      
          company"                                                                                                              
                                                                                                                                
Amendment 2c:                                                                                                                   
                                                                                                                                
     On page 2, line 16, following the word "information"                                                                       
          Insert  "for a trust deed"                                                                                            
                                                                                                                                
Amendment 2d:                                                                                                                   
                                                                                                                                
     On page 2, following line 20                                                                                               
          Insert    "    Recording information for current                                                                      
          assignment of trust deed:                                                                                             
                         Serial number:………………                                                                                   
                         or                                                                                                     
                         Book number:………………                                                                                     
                         Page number:………………."                                                                                   
                                                                                                                                
Amendment 2e:                                                                                                                   
                                                                                                                                
     On page 3, following line 3                                                                                                
          Insert  "(Phone number)"                                                                                              
                                                                                                                                
Amendment 2f:                                                                                                                   
                                                                                                                                
     On  page  4,  following  line  27,  insert  a  two  new                                                                    
     definition as follows:                                                                                                     
          "  'beneficiary' means both the record owner of                                                                       
          the beneficiary's interest under a trust deed,                                                                        
          including successors in interest."                                                                                    
                                                                                                                                
          "  'satisfactory evidence' of the full payment of                                                                     
     an obligation  secured by a  trust deed means  a payoff                                                                    
     letter,  the  original  cancelled   check  or  a  copy,                                                                    
     including a  voucher copy, of  a check, payable  to the                                                                    
     beneficiary or  a servicer, and  reasonable documentary                                                                    
     evidence  that the  check was  intended to  effect full                                                                    
     payment  under the  trust deed  or an  encumbrance upon                                                                    
     the property covered by the trust deed."                                                                                   
                                                                                                                                
          Renumber the new and existing definitions                                                                             
          accordingly.                                                                                                          
                                                                                                                                
Amendment 2g:                                                                                                                   
                                                                                                                                
     On page  5, following line  1, insert a new  section as                                                                    
     follows:                                                                                                                   
                                                                                                                                
     (j)   If a  title insurance  company reconveys  a trust                                                                    
     deed  without having  satisfactory evidence  of payment                                                                    
     required  under  (b)  or without  providing  the  prior                                                                    
     notice  to the  beneficiary  and  servicer as  required                                                                    
     under  this section,  the  title  insurance company  is                                                                    
     liable  to   the  beneficiary,  the   heirs,  successor                                                                    
     interest,   representatives   and    assigns   of   the                                                                    
     beneficiary,  for   all  damages  occasioned   by  such                                                                    
     neglect  or willful  act.   A  title insurance  company                                                                    
     shall pay a penalty of $300 to the department."                                                                            
                                                                                                                                
CHAIR  McGUIRE,  as  no  objection   was  heard,  indicated  that                                                               
dividing  Amendment  2  into  Amendments  2a-2g  was  acceptable;                                                               
[Amendments  2a-2e   were  subsequently  treated  as   moved  for                                                               
adoption].                                                                                                                      
                                                                                                                                
REPRESENTATIVE  GRUENBERG  directed  attention  to  Amendment  2a                                                               
[text provided previously], and said  he has an objection to such                                                               
a change  because he  thinks that  only the  trust deed  at issue                                                               
should be reconveyed, rather than just any trust deed.                                                                          
                                                                                                                                
MR.  MERRELL offered  his belief  that  the language  on page  1,                                                               
[lines 4-6], precludes it from being just any trust deed.                                                                       
                                                                                                                                
Number 2203                                                                                                                     
                                                                                                                                
REPRESENTATIVE ANDERSON withdrew Amendment 2a.                                                                                  
                                                                                                                                
Number 2196                                                                                                                     
                                                                                                                                
REPRESENTATIVE  GRUENBERG  directed  attention  to  Amendment  2b                                                               
[text provided previously], and made  a motion to amend Amendment                                                               
2b such  that "to the  address" is  changed to "to  any address".                                                               
There being no objection, Amendment 2b was amended.                                                                             
                                                                                                                                
Number 2178                                                                                                                     
                                                                                                                                
CHAIR  McGUIRE  asked  whether   there  were  any  objections  to                                                               
Amendment 2b,  as amended.   There being  none, Amendment  2b, as                                                               
amended, was adopted.                                                                                                           
                                                                                                                                
Number 2163                                                                                                                     
                                                                                                                                
REPRESENTATIVE  GRUENBERG  directed  attention  to  Amendment  2c                                                               
[text provided previously], and made  a motion to amend Amendment                                                               
2c such  that "for  a trust  deed" be changed  to "for  the trust                                                               
deed".  There being no objection, Amendment 2c was amended.                                                                     
                                                                                                                                
Number 2157                                                                                                                     
                                                                                                                                
CHAIR  McGUIRE  asked  whether   there  were  any  objections  to                                                               
Amendment 2c,  as amended.   There being  none, Amendment  2c, as                                                               
amended, was adopted.                                                                                                           
                                                                                                                                
Number 2141                                                                                                                     
                                                                                                                                
CHAIR  McGUIRE  asked  whether   there  were  any  objections  to                                                               
Amendment  2d  [text provided  previously].    There being  none,                                                               
Amendment 2d was adopted.                                                                                                       
                                                                                                                                
Number 2133                                                                                                                     
                                                                                                                                
CHAIR  McGUIRE  asked  whether   there  were  any  objections  to                                                               
Amendment  2e  [text provided  previously].    There being  none,                                                               
Amendment 2e was adopted.                                                                                                       
                                                                                                                                
Number 2121                                                                                                                     
                                                                                                                                
REPRESENTATIVE  ANDERSON  made a  motion  to  adopt Amendment  2f                                                               
[text provided previously].                                                                                                     
                                                                                                                                
REPRESENTATIVE GRUENBERG  opined that  Amendment 2f  doesn't make                                                               
sense  as currently  written.   He  suggested that  in the  first                                                               
portion  of Amendment  2f,  the word  "both"  should be  deleted,                                                               
since only  one aspect  is listed.   Additionally,  both portions                                                               
should be numbered:  (1) and (2) respectively.                                                                                  
                                                                                                                                
MR.  MERRELL  remarked  that Representative  Gruenberg  might  be                                                               
correct  with  regard to  the  word  "both", but  suggested  that                                                               
perhaps what was  meant was "and successors  in interest", rather                                                               
than "including successors in interest".                                                                                        
                                                                                                                                
Number 2089                                                                                                                     
                                                                                                                                
REPRESENTATIVE  GRUENBERG made  a  motion to  amend Amendment  2f                                                               
such  that "including"  be  changed  to "and".    There being  no                                                               
objection, Amendment 2f was amended.                                                                                            
                                                                                                                                
Number 2079                                                                                                                     
                                                                                                                                
CHAIR  McGUIRE  asked  whether   there  were  any  objections  to                                                               
Amendment 2f,  as amended.   There being  none, Amendment  2f, as                                                               
amended, was adopted.                                                                                                           
                                                                                                                                
Number 2071                                                                                                                     
                                                                                                                                
REPRESENTATIVE  ANDERSON  made a  motion  to  adopt Amendment  2g                                                               
[text provided previously].                                                                                                     
                                                                                                                                
REPRESENTATIVE  GRUENBERG made  a  motion to  amend Amendment  2g                                                               
such that  "In addition"  would be inserted  at the  beginning of                                                               
the  second  sentence;  such  a change  would  clarify  that  the                                                               
penalty is in addition to being  liable for damages.  There being                                                               
no objection, Amendment 2g was amended.                                                                                         
                                                                                                                                
Number 2033                                                                                                                     
                                                                                                                                
CHAIR  McGUIRE  asked  whether   there  were  any  objections  to                                                               
Amendment 2g,  as amended.   There being  none, Amendment  2g, as                                                               
amended, was adopted.                                                                                                           
                                                                                                                                
REPRESENTATIVE GARA remarked that  he has asked Legislative Legal                                                               
and Research  Services to  research the issue  of whether  HB 421                                                               
would accidentally extinguish anyone's  property rights, and that                                                               
he  expects to  hear  back from  Legislative  Legal and  Research                                                               
Services by  [4/23/04].  He  asked what happens if  an inaccurate                                                               
document  is relied  upon  by  a title  company  and the  payment                                                               
really hasn't been satisfied.                                                                                                   
                                                                                                                                
MR. MERRELL pointed out that such  a document would come from the                                                               
person who is owed  the money and if it is  in error, once notice                                                               
is  given,  the  person  can  bring  the  mistake  to  light;  he                                                               
suggested  that the  situation Representative  Gara is  concerned                                                               
with  is unlikely  to happen  very often  if at  all.   He added:                                                               
"The title companies are ... only going  to want to use this in a                                                               
situation  where [they've]  ...  exhausted all  other ability  to                                                               
have the thing released by the lenders themselves."                                                                             
                                                                                                                                
CHAIR  McGUIRE  surmised that  should  any  concerns arise  after                                                               
Legislative   Legal    and   Research   Services    responds   to                                                               
Representative Gara's request, he would inform the committee.                                                                   
                                                                                                                                
Number 1909                                                                                                                     
                                                                                                                                
REPRESENTATIVE  ANDERSON  moved  to   report  CSHB  421(L&C),  as                                                               
amended,  out of  committee with  individual recommendations  and                                                               
the accompanying  zero fiscal  note.   There being  no objection,                                                               
CSHB  421(JUD) was  reported from  the  House Judiciary  Standing                                                               
Committee.                                                                                                                      
                                                                                                                                

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