Legislature(2017 - 2018)SENATE FINANCE 532

02/21/2018 09:00 AM FINANCE

Note: the audio and video recordings are distinct records and are obtained from different sources. As such there may be key differences between the two. The audio recordings are captured by our records offices as the official record of the meeting and will have more accurate timestamps. Use the icons to switch between them.

Download Mp3. <- Right click and save file as

* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
-- Meeting Postponed to 9:15 --
+ SB 155 REAL ESTATE APPRAISAL MNGMT. COMPANIES TELECONFERENCED
Heard & Held
+ HB 195 INSURER'S USE OF CREDIT HISTORY/SCORES TELECONFERENCED
Heard & Held
+ Bills Previously Heard/Scheduled TELECONFERENCED
SENATE BILL NO. 155                                                                                                           
                                                                                                                                
     "An Act relating to the  registration and regulation of                                                                    
     real  estate appraisal  management companies;  relating                                                                    
     to  the  establishment of  fees  by  the Department  of                                                                    
     Commerce,   Community,    and   Economic   Development;                                                                    
     relating  to   the  Board  of  Certified   Real  Estate                                                                    
     Appraisers; and relating to real estate appraisers."                                                                       
                                                                                                                                
9:18:14 AM                                                                                                                    
                                                                                                                                
SENATOR KEVIN MEYER, SPONSOR, explained the legislation:                                                                        
                                                                                                                                
     An  Appraisal   Management  Company,  or  AMC,   is  an                                                                    
     independent  entity  through   which  mortgage  lenders                                                                    
     order  residential real  estate valuation  services for                                                                    
     properties  on  which  they are  considering  extending                                                                    
     loans  to homebuyers.  AMCs  fulfill an  administrative                                                                    
     function in the  appraisal process, including selecting                                                                    
     an  appraiser and  delivering the  appraisal report  to                                                                    
     the  lender. Individual  appraisers who  work for  AMCs                                                                    
     provide the actual property valuation services.                                                                            
                                                                                                                                
     AMCs  existed well  before  the  2008 global  financial                                                                    
     crisis, and  today they play an  increasingly important                                                                    
     role as a third-party  service provider in the consumer                                                                    
     mortgage   process.  AMCs   have  become   increasingly                                                                    
     popular  by  lenders  across   the  country  to  ensure                                                                    
     federal   and    state   regulatory    compliance   and                                                                    
     independence   between   lenders  and   appraisers   as                                                                    
     required  by  the  Dodd-Frank Wall  Street  Reform  and                                                                    
     Consumer  Protection Act  of 2010.  Dodd-Frank requires                                                                    
     that  states  enact  comprehensive  AMC  oversight  and                                                                    
     registration programs with an August 2018, deadline.                                                                       
                                                                                                                                
Senator Meyer  believed that the  legislation would  help to                                                                    
promote  public trust,  consumer  protection, and  establish                                                                    
oversight and enforcement.                                                                                                      
                                                                                                                                
9:20:32 AM                                                                                                                    
                                                                                                                                
Senator  Olson  asked  whether  commercial  properties  were                                                                    
affected by the appraisals.                                                                                                     
                                                                                                                                
Senator Meyer  thought that the  appraisals applied  only to                                                                    
residential property but  deferred to his staff  for a final                                                                    
answer.                                                                                                                         
                                                                                                                                
9:21:14 AM                                                                                                                    
                                                                                                                                
EDRA  MORLEDGE, STAFF,  SENATOR KEVIN  MEYER, affirmed  that                                                                    
the  bill  applied  only to  residential  real  estate.  She                                                                    
discussed the Sectional Analysis (copy on file):                                                                                
                                                                                                                                
     Section  1: Adds  a  new subsection  'j'  to allow  the                                                                  
     Dept. of  Commerce, Community and  Economic Development                                                                    
     to  establish   a  fee  for  regulatory   costs  and  a                                                                    
     mechanism for reporting those fees.                                                                                        
                                                                                                                                
     Section  2:  Requires  the department  to  establish  a                                                                  
     registry fee as required  by the federal government and                                                                    
     permits  the  department to  remit  those  fees to  the                                                                    
     federal government.                                                                                                        
                                                                                                                                
     Section 3:  Amends the powers  and duties of  the Board                                                                  
     of   Certified  Real   Estate  Appraisers   to  require                                                                    
     regulations for Appraisal Management Companies.                                                                            
                                                                                                                                
     Section 4:  Authorizes the Board to  examine records of                                                                  
     AMCs,  requires those  companies to  submit information                                                                    
     to  the Board,  and  allows  investigations of  alleged                                                                    
     violations.                                                                                                                
                                                                                                                                
     Sections 5  and 6:  Adds a new  section to  the statute                                                                  
     regarding  Appraisal   Management  Companies  including                                                                    
     provisions   for    registration,   reporting   records                                                                    
     retention,  and  inspection  requirements,  exemptions,                                                                    
    prohibited practices, and disciplinary proceedings.                                                                         
                                                                                                                                
     Section   7:   Definitions      "appraisal   management                                                                  
     services,"  "appraisal  panel,"  "company,  controlling                                                                    
     person," and "principal dwelling."                                                                                         
                                                                                                                                
     Section 8: Allows for fingerprinting of a controlling                                                                    
     person of an Appraisal Management Company through the                                                                      
     Department of Public Safety.                                                                                               
                                                                                                                                
     Section  9:  Allows  real estate  Appraisal  Management                                                                  
     Company registry fees to be  included in the definition                                                                    
     of  program  receipts   and  non-general  fund  program                                                                    
     receipts.                                                                                                                  
                                                                                                                                
     Section 10: Applicability clause  this act applies to                                                                    
     a person offering or providing appraisal.                                                                                  
                                                                                                                                
Co-Chair MacKinnon OPENED public testimony.                                                                                     
                                                                                                                                
9:24:28 AM                                                                                                                    
                                                                                                                                
MARK SCHIFFMAN,  EXECUTIVE DIRECTOR, REAL  ESTATE EVALUATION                                                                    
ADVOCACY    ASSOCIATION,     (REEVA),    MINNEAPOLIS    (via                                                                    
teleconference),  spoke in  support of  the legislation.  He                                                                    
said that the association  had supported similar legislation                                                                    
in  other  states.  He  believed  that  the  bill  supported                                                                    
consumer   protections  in   the   appraisal  process;   the                                                                    
independent  third party  created  a  valuable firewall  and                                                                    
addressed   undue  influence.   He  said   that  AMCs   were                                                                    
integrated  into the  mortgage  lending process  as well  as                                                                    
secondary markets and the products  provided by AMCs insured                                                                    
proper valuations for the investment marketplace.                                                                               
                                                                                                                                
9:27:58 AM                                                                                                                    
                                                                                                                                
Senator Stevens  wondered whether  a full-time  new position                                                                    
would need  to be established  to carry out  the legislation                                                                    
requirements.                                                                                                                   
                                                                                                                                
Mr.  Schiffman  replied that  licensing  fees  paid for  the                                                                    
program. He said  that the need for  additional staffing was                                                                    
not unusual and varied from state to state.                                                                                     
                                                                                                                                
9:29:30 AM                                                                                                                    
                                                                                                                                
WILLIAM   SCOGGIN,    REAL   ESTATE    EVALUATION   ADVOCACY                                                                    
ASSOCIATION,    NORTH    CAROLINA   (via    teleconference),                                                                    
introduced himself  and indicated that he  was available for                                                                    
questions.                                                                                                                      
                                                                                                                                
9:29:56 AM                                                                                                                    
DAVID DERRY, CHAIR, CERTIFIED  REAL ESTATE APPRAISERS, KENAI                                                                    
(via   teleconference),   testified   in  support   of   the                                                                    
legislation  and  indicated  that  the board  was  ready  to                                                                    
assume oversight of  AMCs. He said that  the appraisal board                                                                    
had  been  self-funded  since 1991.  He  lamented  that  the                                                                    
fingerprinting  requirement  for  AMCs  was  cumbersome  and                                                                    
should  be removed  from the  bill. He  also recommended  an                                                                    
increased  bond amount  of $150,000.  He believed  that this                                                                    
would provide a more fiduciary cushion for the state.                                                                           
                                                                                                                                
9:34:26 AM                                                                                                                    
                                                                                                                                
Co-Chair  MacKinnon  clarified  that  the  board  listed  in                                                                    
Section 3  was an existing  board; the powers and  duties of                                                                    
that existing board would be modified by the legislation.                                                                       
                                                                                                                                
Mr. Derry agreed.                                                                                                               
                                                                                                                                
Co-Chair  MacKinnon asked  whether  the legislation  created                                                                    
another board in state government.                                                                                              
                                                                                                                                
Mr. Derry replied no.                                                                                                           
                                                                                                                                
9:36:49 AM                                                                                                                    
                                                                                                                                
SARA  CHAMBERS, DEPUTY  DIRECTOR, DIVISION  OF CORPORATIONS,                                                                    
BUSINESS   AND   PROFESSIONAL   LICENSING,   DEPARTMENT   OF                                                                    
COMMERCE, COMMUNITY  AND ECONOMIC DEVELOPMENT,  testified in                                                                    
support of  the legislation  - with certain  amendments. She                                                                    
felt that the  federal deadline created a  sense of urgency.                                                                    
She suggested  that the  authority to set  fees in  order to                                                                    
recoup  costs  should be  granted  in  the legislation.  She                                                                    
added that  an extension to  the effective date  would allow                                                                    
the  board   and  the  department   the  ability   to  adopt                                                                    
regulations  and  set  fees.   She  said  that  transitional                                                                    
language would be  needed in advance of  the effective date.                                                                    
She said that the department  supported on PCN in the fiscal                                                                    
note and did not believe  that a full-time person would need                                                                    
to  be added  to  staff.  She said  that  the  PCN would  be                                                                    
supporte4d by fees and not general funds.                                                                                       
                                                                                                                                
9:40:20 AM                                                                                                                    
                                                                                                                                
Co-Chair MacKinnon  requested that the department  work with                                                                    
her office on any amendments to the legislation.                                                                                
                                                                                                                                
9:40:33 AM                                                                                                                    
                                                                                                                                
Senator  Olson wondered  about  the  self-regualtion of  the                                                                    
appraisers and worried that an appraiser could "go rouge."                                                                      
                                                                                                                                
Ms. Chambers  replied that the program  would be self-funded                                                                    
and  regulated  by  the existing  Board  of  Certified  Real                                                                    
Estate Appraisers;  self-regualtion was  a misnomer,  as the                                                                    
board would be governed by the existing board process.                                                                          
                                                                                                                                
9:41:27 AM                                                                                                                    
                                                                                                                                
Senator Stevens understood that  the program would require a                                                                    
half-time  position but  that the  PCN was  for a  full-time                                                                    
position. He  wondered what the  PCN would do for  the other                                                                    
half of their duties.                                                                                                           
                                                                                                                                
Ms. Chambers replied  that the department would  use the PCN                                                                    
to  manage  the licensing  work  of  other boards  that  had                                                                    
produced more work than had been initially expected.                                                                            
                                                                                                                                
9:42:44 AM                                                                                                                    
                                                                                                                                
Senator Micciche  wondered how many licensees  were expected                                                                    
and the approximate cost of licensing.                                                                                          
                                                                                                                                
Ms. Chambers  responded that the  department was  working on                                                                    
developing  the  licensing  fee,   200  new  licensees  were                                                                    
expected.  This  would  be   the  only  federally  regulated                                                                    
program for  boards under the  department and  would require                                                                    
additional scrutiny.                                                                                                            
                                                                                                                                
9:43:57 AM                                                                                                                    
                                                                                                                                
Vice-Chair  Bishop wondered  what the  economic loss  to the                                                                    
state would be if the bill were not passed.                                                                                     
                                                                                                                                
Ms.   Chambers  thought   that   the  appraisal   management                                                                    
companies  that were  not federally  regulated would  not be                                                                    
able to  operate in the  state. She said that  anything that                                                                    
required  federal   oversight  would  not  be   able  to  be                                                                    
regulated  by a  non-federally  regulated  AMC, which  would                                                                    
slow the process in the state.                                                                                                  
                                                                                                                                
Co-Chair  MacKinnon  queried  Mr. Derry's  thoughts  on  the                                                                    
matter.                                                                                                                         
                                                                                                                                
Mr.  Derry  shared that  it  could  constrict potential  for                                                                    
financing for home purchases,  which would negatively affect                                                                    
the entire residential market.                                                                                                  
                                                                                                                                
9:47:16 AM                                                                                                                    
                                                                                                                                
Co-Chair MacKinnon understood  that 10 to 15  percent of the                                                                    
mortgages  in Alaska  were processed  through  Fanny Mae  or                                                                    
Freddy Mac.                                                                                                                     
                                                                                                                                
Mr.  Derry replied  that  the mortgage  funder  was not  the                                                                    
issue,  whether  the  transaction  was  federally  regulated                                                                    
would be what would impact AMCs under the Dodd-Frank Act.                                                                       
                                                                                                                                
9:49:00 AM                                                                                                                    
                                                                                                                                
Co-Chair MacKinnon CLOSED public testimony.                                                                                     
                                                                                                                                
Co-Chair MacKinnon  stated that amendments would  be due the                                                                    
following Friday at 5pm.                                                                                                        
                                                                                                                                
SB  155  was  HEARD  and   HELD  in  committee  for  further                                                                    
consideration.                                                                                                                  
                                                                                                                                

Document Name Date/Time Subjects
SB 155 AMC Framework - Lexology Article.pdf SFIN 2/21/2018 9:00:00 AM
SB 155
SB 155 AMC Registry Fees - Lexology Article.pdf SFIN 2/21/2018 9:00:00 AM
SB 155
SB 155 Enacted State AMC Laws.pdf SFIN 2/21/2018 9:00:00 AM
SB 155
SB 155 Sponsor Statement.pdf SFIN 2/21/2018 9:00:00 AM
SB 155
SB 155 Support Alaska Bankers Association.pdf SFIN 2/21/2018 9:00:00 AM
SB 155
SB155 Sectional Summary - Sponsor.pdf SFIN 2/21/2018 9:00:00 AM
SB 155
SB 155 Support Wells Fargo.pdf SFIN 2/21/2018 9:00:00 AM
SB 155
SB 155 Support REVAA.pdf SFIN 2/21/2018 9:00:00 AM
SB 155
SB 155 Support Alaska Chamber.pdf SFIN 2/21/2018 9:00:00 AM
SB 155
HB 195 Background Document.pdf SFIN 2/21/2018 9:00:00 AM
HB 195
HB 195 Sectional Analysis.pdf SFIN 2/21/2018 9:00:00 AM
HB 195
HB 195 Support Letters.pdf SFIN 2/21/2018 9:00:00 AM
HB 195
HB 195 Transmittal Letter.pdf SFIN 2/21/2018 9:00:00 AM
HB 195
HB 195 Opposition Lynch.pdf SFIN 2/21/2018 9:00:00 AM
HB 195
HB 195 Letter of Support McCue.pdf SFIN 2/21/2018 9:00:00 AM
HB 195
HB 195 Opposition Opheim.pdf SFIN 2/21/2018 9:00:00 AM
HB 195