Legislature(2009 - 2010)BELTZ 105 (TSBldg)

03/31/2010 01:30 PM JUDICIARY


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01:33:57 PM Start
01:34:08 PM Confirmation Hearing Legislative Ethics Committee
01:40:05 PM SJR28
01:41:33 PM HB101
01:49:58 PM SB190
02:24:46 PM HB108
02:51:24 PM SB249
02:58:15 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ Confirmations: Select Committee on TELECONFERENCED
Legislative Ethics
+ SB 249 PUBLIC RECORDS/ELECTRONIC TRANSMISSIONS TELECONFERENCED
Heard & Held
+ HB 108 PROP. FORECLOSURE/EXECUTION/TRUST DEEDS TELECONFERENCED
Heard & Held
+ Bills Previously Heard/Scheduled TELECONFERENCED
+= HB 101 EXEMPTIONS: LIFE INSURANCE; ANNUITIES TELECONFERENCED
Heard & Held
+= SB 190 BIOMETRIC INFORMATION FOR ID TELECONFERENCED
Heard & Held
+= SJR 28 ECUMENICAL PATRIARCHATE OF TURKEY TELECONFERENCED
Moved SJR 28 Out of Committee
         HB 108-PROP. FORECLOSURE/EXECUTION/TRUST DEEDS                                                                     
                                                                                                                                
CHAIR FRENCH announced the consideration  of HB 108 and asked for                                                               
a motion to adopt the Senate committee substitute (CS).                                                                         
                                                                                                                                
2:24:46 PM                                                                                                                    
SENATOR WIELECHOWSKI moved to adopt Senate  CS for CS for HB 108,                                                               
labeled 26-LS0318\M, as the working document.                                                                                   
                                                                                                                                
CHAIR FRENCH objected for discussion purposes.                                                                                  
                                                                                                                                
JANE  PIERSON, Staff  to Representative  Jay Ramras,  provided an                                                               
explanation of the changes.                                                                                                     
                                                                                                                                
Section 2  - language  was deleted that  required a  newspaper to                                                               
have circulation  and distribution of  at least 500 copies  or 10                                                               
percent  of  the  judicial  district,   whichever  is  less.  The                                                               
circulation  requirements were  deleted because  it's covered  by                                                               
the second  class mailing  permit. The idea  is to  allow smaller                                                               
newspapers  to compete  and drive  down the  high price  of legal                                                               
notice of publication.                                                                                                          
                                                                                                                                
Section 7 -  the word "escrow" was replaced  with "trust account"                                                               
to make it easier for trustees to understand.                                                                                   
                                                                                                                                
Section 10 - five days was changed  to 10 days to allow more time                                                               
to find and correct errors from  a sale. This is borough friendly                                                               
since boroughs  are impacted when  property goes to sale  when it                                                               
shouldn't.                                                                                                                      
                                                                                                                                
Section  13 -  language  relating to  the  bonding exemption  for                                                               
title  providers  was deleted  from  page  11, lines  24-27.  The                                                               
reasoning  is that  small title  companies that  have no  special                                                               
expertise warranting an exemption shouldn't be granted one.                                                                     
                                                                                                                                
2:27:20 PM                                                                                                                    
A previous change  expanded the list of  qualified Internet sites                                                               
to  include newspapers  of general  circulation so  any newspaper                                                               
that qualifies to run legal ads  will be qualified as an Internet                                                               
site.                                                                                                                           
                                                                                                                                
Section  4  - the  language  requirement  related to  curing  the                                                               
default  up to  two  days  prior to  the  sale  date was  deleted                                                               
because a default can now be cured up to the time of the sale.                                                                  
                                                                                                                                
AS 34.20.070(e) adds language and  provides an exception to deeds                                                               
that were entered  into before the effective date of  the Act and                                                               
provides for a different time period to cure.                                                                                   
                                                                                                                                
Section  6 -  clarifies  the time  for the  sale  and curing  the                                                               
default.  It also  states that  if  the sale  is rescinded  under                                                               
subsection (g),  the deed  of trust  foreclosed in  the rescinded                                                               
sale is restored  to the validity and priority it  had before the                                                               
sale.                                                                                                                           
                                                                                                                                
2:30:38 PM                                                                                                                    
STEPHEN  ROUTH, Attorney  representing  himself, Routh  Crabtree,                                                               
APC, Anchorage, said he's worked  on this bill for several years.                                                               
He  reported   that  the  complex  Alaska   foreclosure  statutes                                                               
originally  came from  Oregon and  have not  been updated  as the                                                               
Internet has  grown. Thus, much  of the bill focuses  on updating                                                               
and cleaning  up the statutes so  that the court doesn't  have to                                                               
define the  statute. He noted  that many of the  proposed changes                                                               
are the result of expensive litigation.                                                                                         
                                                                                                                                
Probably  the  most  far-reaching change  that's  been  discussed                                                               
relates to  the Internet publication because  that's where people                                                               
today  get their  information as  opposed to  newspapers. If  the                                                               
bill were  to pass, Alaska  would be  the sixth state  to mandate                                                               
Internet  publication  of   foreclosures.  The  proposed  statute                                                               
includes information  about how to  do that so that  people could                                                               
actually find  the ads. The  current version also  opens Internet                                                               
advertisement  to newspapers  of  general  circulation. The  only                                                               
caveat  is that  the newspaper  cannot charge  a fee  to look  at                                                               
these ads on the Internet.                                                                                                      
                                                                                                                                
2:33:26 PM                                                                                                                    
MR. ROUTH said the overarching goal  of the changes is to enhance                                                               
fairness, much  of which is  geared to the auction  process. This                                                               
is important because  the foreclosure process does  violence to a                                                               
property right - a person's  property is being taken away outside                                                               
the  judicial process.  That person  would want  to know  that it                                                               
would  be  a  fair,  open and,  well-publicized  auction  without                                                               
opportunity for back-door deals.  Everybody wins when the auction                                                               
attracts  bidders, he  said. The  bank doesn't  get the  property                                                               
back in its  portfolio, which avoids losses;  the borrower likely                                                               
will get  more for the  property if  there are more  bidders; and                                                               
title  companies  avoid  litigation.   The  Internet  is  key  to                                                               
attracting bidders  and this bill  underscores that. Bids  can be                                                               
made on  the Internet if  the trustee  is so equipped.  "The idea                                                               
being  that somebody  can sit  in New  York and  buy property  in                                                               
Homer,"  he  said. This  helps  the  borrower by  increasing  the                                                               
bidding pool.                                                                                                                   
                                                                                                                                
SENATOR WIELECHOWSKI  referenced Section 5, page  5, and recalled                                                               
that  changing the  notice  requirement  to a  person  who is  in                                                               
actual physical possession  was a concern last time  the bill was                                                               
presented. He asked how that would work and why it's necessary.                                                                 
                                                                                                                                
2:36:04 PM                                                                                                                    
MR. ROUTH said  he doesn't recall that this was  an issue, but it                                                               
was  borne of  litigation. The  issue is  that you  wouldn't know                                                               
that there was a lien on  a property by examining the record. The                                                               
question  is how  to allow  for a  clean title  in a  foreclosure                                                               
auction process when there's an unrecorded lien.                                                                                
                                                                                                                                
SENATOR   WIELECHOWSKI  read   the  proposed   amendment  to   AS                                                               
34.20.070(c), which  talks about  mailing a  copy of  the default                                                               
notice within 10  days after recording the notice,  and asked the                                                               
necessity of adding that provision.                                                                                             
                                                                                                                                
MR. ROUTH  replied whoever is in  that house is entitled  to know                                                               
that  possession is  being disturbed.  It could  be a  tenant who                                                               
would need  to make  other living  arrangements. Responding  to a                                                               
further  question,  he  clarified  that  the  owner  gets  notice                                                               
separate from the actual physical possession.                                                                                   
                                                                                                                                
SENATOR  WIELECHOWSKI asked  the  rationale for  the proposed  AS                                                               
34.20.070(f) in Section 6.                                                                                                      
                                                                                                                                
MR. ROUTH  said this goes to  the point he made  earlier about an                                                               
unrecorded  lien on  a property.  Typically  these are  mechanics                                                               
liens.  He  explained that  a  number  of statutes  provide  that                                                               
people doing  work on a house  can record notice on  the title so                                                               
they're given notice  if there is a foreclosure and  they can act                                                               
to  protect their  lien.  If  they don't  do  that  it becomes  a                                                               
judgment call which leads to litigation.                                                                                        
                                                                                                                                
SENATOR WIELECHOWSKI  asked if  this is  common in  other states'                                                               
statues.                                                                                                                        
                                                                                                                                
2:39:53 PM                                                                                                                    
MR. ROUTH said he's only aware of litigation on this in Alaska.                                                                 
                                                                                                                                
SENATOR  WIELECHOWSKI  asked  if  the proposed  amendment  to  AS                                                               
34.20.080(e) in  Section 9, which  says a foreclosure may  not be                                                               
postponed for more than 12 months  unless a new notice of sale is                                                               
given  under  (a)(2)  of  the   section,  addresses  an  existing                                                               
problem.                                                                                                                        
                                                                                                                                
MR.  ROUTH said  that's right.  Prior to  this the  timeframe was                                                               
left  to the  discretion  of the  title  insurance companies  who                                                               
insure the sale so there was no certainty about the time.                                                                       
                                                                                                                                
SENATOR WIELECHOWSKI asked  if the proposed change  in Section 10                                                               
to  the  way  cash  proceeds  of  the  sale  are  distributed  is                                                               
substantially different than current law.                                                                                       
                                                                                                                                
MR. ROUTH replied this is  common practice, but this ensures that                                                               
everyone is compliant.                                                                                                          
                                                                                                                                
2:42:12 PM                                                                                                                    
DENNIS FENERTY,  Attorney, Groh Eggers LLC,  Anchorage, said he's                                                               
been doing  foreclosures on  behalf of lenders  for more  than 25                                                               
years and  he applauds Mr.  Routh for the  work he's done  on the                                                               
bill to  make the process  fair and to clarify  uncertainties. He                                                               
agreed  with  Mr.  Routh  that the  [unrecorded  lien  issue]  is                                                               
problematic. It leaves lenders uncertain  about whether they have                                                               
to look  for someone with  an interest  in the property  and that                                                               
creates  a   potential  cloud.  He   observed  that   the  notice                                                               
provisions are also being clarified  and made certain and said he                                                               
agrees  that  the distribution  of  proceeds  is common  practice                                                               
rather than following the law.  Among other good things, the bill                                                               
includes provisions  for deceased borrowers. The  current process                                                               
burdens the lender  with the requirement to go to  court and open                                                               
special  probate  whereas  the  bill  addresses  that  fairly  by                                                               
requiring reasonable notice.                                                                                                    
                                                                                                                                
MR. FENERTY said  he didn't have a copy of  the latest version of                                                               
the bill  and he wanted  to make  certain that it  still included                                                               
the Section  2 provision that  Internet publication  is available                                                               
to  any  newspaper  of  general   circulation  that  maintains  a                                                               
website.                                                                                                                        
                                                                                                                                
CHAIR FRENCH  confirmed that the proposed  new AS 09.35.140(c)(1)                                                               
hadn't changed.                                                                                                                 
                                                                                                                                
MR. FENERTY asked  if the change in  the description requirements                                                               
in  Section  2  for  a "newspaper  of  general  circulation"  had                                                               
relaxed the standard.                                                                                                           
                                                                                                                                
MS. PIERSON  explained that the current  version removed language                                                               
from Section 2 that required a  paid distribution of at least 500                                                               
copies, or  10 percent  of the total  population of  the judicial                                                               
district, whichever  is less. The  paid distribution of  at least                                                               
500 copies  is covered under  the second class mailing  permit in                                                               
the proposed AS 09.35.140(c)(2)(F)(3) in Section 2.                                                                             
                                                                                                                                
2:46:23 PM                                                                                                                    
MR.  FENERTY  expressed  satisfaction that  the  current  version                                                               
provides  that   newspapers  of  general  circulation   can  host                                                               
foreclosure notifications.  Previously he testified that  for his                                                               
business he needs an alternative  website to conduct foreclosures                                                               
and a place to post notifications.  "This is a very good bill and                                                               
I do believe it's long overdue," he concluded.                                                                                  
                                                                                                                                
MR.  PIERSON  summarized that  HB  108  will modernize  the  non-                                                               
judicial foreclosure process and do a lot of good for the state.                                                                
                                                                                                                                
MR. ROUTH  added his  belief that all  the comments  and concerns                                                               
that  were  expressed  over  the last  several  years  have  been                                                               
addressed to everyone's satisfaction.                                                                                           
                                                                                                                                
SENATOR  WIELECHOWSKI  asked  how the  notification  requirements                                                               
will fit rural Alaska.                                                                                                          
                                                                                                                                
MR. ROUTH explained that this  adds the Internet publication, but                                                               
the  requirement   to  advertize   in  a  newspaper   of  general                                                               
circulation won't change.                                                                                                       
                                                                                                                                
SENATOR  WIELECHOWSKI  asked   how  foreclosure  notification  is                                                               
currently done in rural Alaska.                                                                                                 
                                                                                                                                
MR.  ROUTH said  it's  by judicial  district  and every  judicial                                                               
district has  at least  one newspaper  of general  circulation so                                                               
that's  where foreclosures  are  advertized.  That won't  change.                                                               
This adds  the Internet publication,  which will level  the field                                                               
in  terms  of getting  the  information  to  more people  in  the                                                               
particular judicial  district. Right now it's  perfectly legal to                                                               
advertize a foreclosure  sale for a property in  Anchorage in the                                                               
Kodiak newspaper  because they're  in the same  judicial district                                                               
even though the  information may be of little  interest to people                                                               
in Kodiak. When it's on the  Internet, anyone who is looking will                                                               
see it, he said.                                                                                                                
                                                                                                                                
2:50:12 PM                                                                                                                    
MR. FENERTY  reported that several Bush  newspapers including the                                                               
Arctic Sounder  and Nome Nugget  already put  foreclosure notices                                                               
on  their  website   whenever  they  publish  a   notice  in  the                                                               
newspaper.                                                                                                                      
                                                                                                                                
CHAIR FRENCH announced he would hold HB 108 in committee.                                                                       
                                                                                                                                

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