Legislature(2009 - 2010)BELTZ 211

04/16/2009 03:45 PM LABOR & COMMERCE

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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
-- Time Change --
Moved CSSB 60(L&C) Out of Committee
Moved SCS CSHB 108(L&C) Out of Committee
Moved SCS CSHB 177(L&C) Out of Committee
Moved CSHB 175(L&C) Out of Committee
Moved HB 222(TITLE AM) Out of Committee
Bills Previously Heard/Scheduled
    CSHB 108(JUD) am-PROP. FORECLOSURE/EXECUTION/TRUST DEEDS                                                                
4:14:24 PM                                                                                                                    
CHAIR  PASKVAN   announced  CSHB  108(JUD)   am  to  be   up  for                                                               
4:14:51 PM                                                                                                                    
JANE PIERSON, staff to Representative  Ramras, sponsor of HB 108,                                                               
testified  that this  bill will  clarify, simplify  and modernize                                                               
non-judicial   property   foreclosures   and   hopefully   reduce                                                               
litigation. It  includes an  Internet publication  provision that                                                               
will  make  it  more  likely that  third-party  bidders  will  be                                                               
attracted. Third  party bidders  are desirable because  they will                                                               
drive up auction prices, which can  result in funds going back to                                                               
the  borrower at  the  completion of  the  auction. The  Internet                                                               
publishing requirements  are borrower-friendly  and only  kick in                                                               
when there  is an unavoidable  foreclosure and all  other efforts                                                               
to rescue the loan have failed.                                                                                                 
Other changes  to the  bill make the  process more  efficient and                                                               
less litigation-prone.  Some of  the state foreclosure  laws were                                                               
enacted  before  fax  machines   were  invented,  let  alone  the                                                               
Internet.  Foreclosures   are  on   the  upswing   -  California,                                                               
Washington and  Oregon are now  buried in foreclosures  and there                                                               
has been  a rise  in Alaska. Modernizing  the statutes  will help                                                               
reduce  the  huge  impact  that  foreclosures  can  have  on  the                                                               
economy. The  bill will make  property foreclosure  auctions more                                                               
open  and  accessible,  which will  benefit  borrowers,  lenders,                                                               
title    insurers,   individuals    and   even    neighbors   and                                                               
neighborhoods. HB 108 was drafted  with the knowledge of the best                                                               
practices of 11 other states.                                                                                                   
MS. PIERSON stated  that currently banks are averaging  a loss of                                                               
$20,000 per foreclosure;  so hopefully this will  add more people                                                               
into  the   foreclosure  auctions.  It  will   also  clarify  how                                                               
foreclosure  proceeds will  be divided  up. It  will assure  that                                                               
foreclosure  trustees   are  fiscally  responsible   by  imposing                                                               
reasonable  bond requirements  and  creating  deadlines to  deter                                                               
chilled  bidders and  unnecessary delays.  It allows  trustees to                                                               
nullify sales when  mistakes are made that  negatively impact the                                                               
integrity of the sale. It  sets up procedures to follow involving                                                               
a deceased borrower,  creates common sense rules  to govern times                                                               
and  methods  for  posting  foreclosure  properties;  it  creates                                                               
Internet   publication  procedures   and  allows   acceptance  of                                                               
foreclosure  auction bids  via e-mail,  Internet and  telephone -                                                               
for greater accessibility to auctions.                                                                                          
She  pointed  out  a  House  floor amendment  to  get  rid  of  a                                                               
provision that said  that the sale had to happen  two days before                                                               
the auction in order to be  cured. She explained that language on                                                               
page  5,  lines 20-23,  was  inadvertently  left  in and  is  now                                                               
superfluous since the sale can happen  up to the time of sale. So                                                               
it needed to be removed.                                                                                                        
SENATOR BUNDE asked if a  particular precipitating event inspired                                                               
this legislation.                                                                                                               
MS. PIERSON replied no.                                                                                                         
4:20:10 PM                                                                                                                    
SENATOR THOMAS pointed out an inaccuracy  on page 2, line 3, that                                                               
says "an inaccuracy in the street  address may now be used to set                                                               
aside a  sale if the legal  description is correct." It  seemed a                                                               
little unusual that  if someone put the wrong  street address in,                                                               
either  on purpose  or by  mistake, that  it shouldn't  have some                                                               
impact on the sale.                                                                                                             
MS. PIERSON said that language is currently in statute.                                                                         
4:21:00 PM                                                                                                                    
ROBERT SCHMIDT,  representing himself and  his law firm,  said HB
108  was  originally written  by  his  colleague and  competitor,                                                               
Stephan Routh, and  his associate, Bridget Olstrom,  and that his                                                               
law firm ran a distant second  in terms of volume of foreclosures                                                               
handled at  100 per year.  He supported HB 108.  It significantly                                                               
modernizes  Alaska  foreclosure  laws. Among  the  items  already                                                               
mentioned, it  adds a five-day  do-over period where  the trustee                                                               
under a deed of trust may  elect to undo the foreclosure sale and                                                               
return  ownership  of  the  property to  the  borrower,  a  great                                                               
protection to borrowers.                                                                                                        
MR. SCHMIDT  explained how  he had grappled  with Mr.  Routh over                                                               
the  necessity  and  extent  of   Internet  publication,  but  he                                                               
supports  the  current version  of  HB  108, which  codifies  the                                                               
current  practice  of   a  newspaper  running  a   print  ad  and                                                               
simultaneously running an Internet ad.                                                                                          
SENATOR BUNDE said with the  increasing demise of newspapers, Mr.                                                               
Schmidt leans heavily toward them  for advertising, but he wanted                                                               
to know if he had other suggestions.                                                                                            
MR. SCHMIDT  agreed that  newspapers are  falling on  hard times.                                                               
His  concerns   with  the  Internet  publication   provisions  as                                                               
previously written were  that the Internet website  would have to                                                               
have  5,000 unique  visitors per  month  and would  have to  have                                                               
senior management  located in  the state; it  would also  have to                                                               
have   been   used   primarily   to   advertise   real   property                                                               
foreclosures.  Under  that  definition  only  one  website  would                                                               
qualify and that  is owned by Mr. Routh. His  firm has a website,                                                               
too, but it advertises things other than foreclosures.                                                                          
He  explained  that  at  one   point  the  Internet  publications                                                               
provisions were pulled and language saying  if you buy a print ad                                                               
and it  simultaneously runs  an Internet ad  was inserted.  He is                                                               
skeptical that an  Internet site should be required  to get 5,000                                                               
unique visitors  a month. In his  opinion about 1 percent  of the                                                               
Alaskan population is interested  in buying foreclosure property;                                                               
he  wonders  whether  the  website   would  have  to  be  just  a                                                               
foreclosure  website and  whether  or  not it  would  have to  be                                                               
located in Alaska. He concluded  saying that the current language                                                               
is acceptable to him.                                                                                                           
4:26:40 PM                                                                                                                    
CHAIR PASKVAN asked if he was aware of any opposition.                                                                          
MR.  SCHMIDT   replied  the  original  provisions   for  Internet                                                               
advertisement  were  of  concern  to several  people  within  the                                                               
foreclosure related  industry, and  they have  been appropriately                                                               
addressed. But  he might  change the  5,000 hits  per month  to a                                                               
more  appropriate  number, because  it  lacks  connection to  the                                                               
reality  of foreclosure  sales in  Alaska where  perhaps a  dozen                                                               
people know and follow them.                                                                                                    
SENATOR  BUNDE  said  Alaska  has  prohibitions  against  special                                                               
interest legislation, and asked if that one firm is an issue.                                                                   
MS. PIERSON replied  yes; they have worked to  make this language                                                               
more open.                                                                                                                      
SENATOR BUNDE asked why choose 5,000 hits?                                                                                      
MS. PIERSON  replied that they  picked that number because  it is                                                               
not a  lot of hits  for an Internet website.  It was a  number so                                                               
that  someone  couldn't  say  they   had  met  the  provision  by                                                               
publishing on  some secure website  somewhere. The  sponsor would                                                               
have no problem with changing the number.                                                                                       
4:30:32 PM                                                                                                                    
STEPHEN  ROUTH,  representing  himself,   said  he  has  been  an                                                               
attorney in  Anchorage for  over 27 years  and supported  HB 108.                                                               
His primary  focus is representing  mortgage banks. He  said this                                                               
bill was  drafted in response  to problems other states  have, as                                                               
well as  Alaska, with selling  foreclosures. Certain  laws hadn't                                                               
been  updated  and  were  causing  litigation  and  problems  for                                                               
borrowers, banks  and title companies.  It should have  been done                                                               
long ago. Many letters of support  are in their packets - without                                                               
He explained  that current state  law mandates  that foreclosures                                                               
are posted in  a post office, which made sense  60 years ago when                                                               
people  went  to the  post  office  to  get  news, but  today  it                                                               
doesn't. Also it's against federal  law to publish estate notices                                                               
in  a post  office; federal  employees  tear them  down. It  does                                                               
other  things  like change  the  three-month  period to  90  days                                                               
because it  the number of  days varies depending on  which months                                                               
you are going through.                                                                                                          
Things in  the past have  caused tremendous amounts of  grief for                                                               
borrowers  and  their  families, title  companies  and  financial                                                               
institutions  -  things like  what  happens  if the  borrower  is                                                               
deceased. Current law doesn't provide  any guidance whatsoever on                                                               
foreclosures  for deceased  persons.  HB 108  cleans  that up  as                                                               
MR.  ROUTH  said  they  looked  at  ways  to  reduce  foreclosure                                                               
litigation -how to  give notice, how to post a  property, what to                                                               
do if  you can't get  to the property  because there is  no house                                                               
there,  and little  things like  that. On  the Internet  piece he                                                               
said  that 5,000  hits  a month  in  Internet-speak is  literally                                                               
nothing. The last time he  looked, the Anchorage Daily News (ADN)                                                               
was  getting over  80,000  hits  a day.  He  thought Mr.  Smith's                                                               
website would  qualify if he  actually would count the  number of                                                               
hits he has.                                                                                                                    
4:35:31 PM                                                                                                                    
He stated that  things are often going wrong by  the time you get                                                               
to  a foreclosure,  and  if there  is equity  in  the house,  the                                                               
borrower should  get it.  Foreclosures need  transparency; people                                                               
can investigate it  and help the neighborhood  increase in value.                                                               
If that  process is hidden from  everyone but the elite  few, the                                                               
light of transparency is not shining on it.                                                                                     
4:38:08 PM                                                                                                                    
CHAIR PASKVAN closed public testimony.                                                                                          
4:38:18 PM                                                                                                                    
SENATOR THOMAS  moved conceptual  Amendment 1 to  delete language                                                               
on page  5, lines 20-23. There  were no objections and  it was so                                                               
SENATOR BUNDE said he thinks  Internet advertising is a wise idea                                                               
and  expands  opportunity  to  share   information,  but  he  was                                                               
concerned about only  one firm being able to  provide the service                                                               
because of  the 5,000  hit qualification. So,  he asked  if there                                                               
was interest  in adopting another conceptual  amendment to insert                                                               
language on page  3, line 12(E), to indicate  that advertising on                                                               
the Internet where at least one of the websites has 5,000 hits.                                                                 
CHAIR PASKVAN recalled that he  read that the ADN doesn't qualify                                                               
because it  is not an  Internet site exclusively devoted  to real                                                               
estate sales.                                                                                                                   
MS. PIERSON  said that was  one of  the changes they  worked very                                                               
hard to get.                                                                                                                    
SENATOR  THOMAS  said   he  didn't  read  that   language  to  be                                                               
SENATOR  BUNDE said  this is  talking  about one  website and  he                                                               
wanted  it to  apply to  websites plural  at least  one of  which                                                               
would have 5,000 hits per month.                                                                                                
MS. PIERSON  remarked that  language in (A)-(F)  on page  3, also                                                               
describes the qualifications for a website.                                                                                     
4:44:12 PM                                                                                                                    
SENATOR MEYER  moved to report  SCS CSHB 108(L&C)  from committee                                                               
with  individual  recommendations  and attached  fiscal  note(s).                                                               
There were no objections and it was so ordered.                                                                                 
At ease from 4:44 p.m. to 4:47 p.m.                                                                                             

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