Legislature(1993 - 1994)
03/17/1994 08:00 AM House STA
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HB 410 - REAL ESTATE APPRAISERS CHAIRMAN VEZEY opened CSHB 410, sponsored by the House Labor & Commerce Committee, for discussion. Number 556 WENDY MULDER, SPECIAL ASSISTANT, DEPARTMENT OF COMMERCE & ECONOMIC DEVELOPMENT (CED), addressed CSHB 410. She stated CED had asked the House Labor & Commerce Committee to introduce HB 410 because they realized they had a problem which would soon affect many Alaskans. The sponsor statement read as follows: "The U.S. statutes enacted the Financial Institutions Reform, Recovery and Enforcement Act of 1989 (FIRREA). This act requires federal lending programs to have the appraisal certified by a state-certified appraiser. "Initially, FIRREA set the number of classroom instruction hours required for residential appraisers at 75. In 1990, the Alaska Legislature enacted legislation which complied with FIRREA standards. However, in 1992 FIRREA increased the minimum required classroom hours to 105. Again in 1994, they increased the minimum number of hours to 120. "Officials from the Federal Financial Institutions Examinations Council (FFIEC) audited the Alaska certifying program. They granted the Alaska board an extension to meet the new requirements through December 31, 1993. "The FFIEC has advised that appraisers who do not meet 120 hours of training, will no longer be recognized as certified appraisers and therefore, will not be qualified to conduct appraisals in which federally-financed loans are involved. "Examples of federally-financed programs include such programs as Federal National Mortgage Corporation, and the Resolution Trust Corporation. These requirements may extend to loans provided through FDIC-insured banks and credit unions. "Currently, there are 73 residential real estate appraisers and 73 general real estate appraisers licensed by the Alaska Real Estate Appraiser Board. The general real estate appraisers do meet FIRREA requirements and are recognized for federal appraisals; however, general real estate appraisers work with commercial properties and it is very unlikely that they will begin conducting residential appraisals. The 73 residential appraisers are no longer in compliance with FIRREA and may not be recognized as certified appraisers if the FFIEC removes Alaska's certification. "There were approximately 12,000 residential loan closures this past year in Alaska (this figure includes refinancing). It is unclear how many of these loans involve federal financing, however, it is highly probably that the vast majority of loans in Alaska do involve a federal program and it will only take a few loans in this category to create a statewide crisis. "The proposed changes in HB 410 will remove the reference to a specific number of hours required for certification in the statute and will allow the board to set the minimum requirements in regulation. By allowing the minimum number of hours to be set in regulation, the Alaska Real Estate Appraiser Board will be able to make changes as they occur to meet the FIRREA requirements." MS. MULDER commented the House Labor & Commerce committee had concerns expressed to them by the banking industry that the board would not set the requirements to exceed the federal requirements. Therefore, HB 410 was changed on line 12, page 1, by adding language which states "to comply with, but not exceed." They also decided to grant the extension to the board, rather than having to do it again in 1995. (REPRESENTATIVE SANDERS rejoined the meeting at 9:28 a.m.) Number 619 CHAIRMAN VEZEY moved to the Anchorage teleconference site. Number 621 ALFRED FERRARA, CHAIRMAN, ALASKA BOARD OF CERTIFIED REAL ESTATE APPRAISERS, supported CSHB 410. He stated the problem they face is that Alaska, unlike other states, has put in statute the hours required. CSHB 410 would basically give the board the right to meet the hours as they change on a national level. He emphasized the hours will continue to change because the federal law came in at minimal levels in order to meet the requirements of most states and not deprive individuals of their livelihood. MR. FERRARA stated the FIRREA has been broadened to cover any bank or credit union loan, therefore, nothing would be financed by any lending institution unless they have a certified appraiser perform the appraiser reports. Agencies such as the Federal Highway Administration are now requiring work be done by certified appraisers. He noted most active appraisers are certified in Alaska because of this trend. Number 653 REPRESENTATIVE ULMER moved to pass CSHB 410 from committee with individual recommendations. Number 655 CHAIRMAN VEZEY asked REPRESENTATIVE ULMER to hold her motion in order to hear from another witness. He asked MS. MULDER to outline the sections of CSHB 410 for the committee. He stated section 1 extends the board for four more years, and asked about section 2. Number 668 MS. MULDER responded section 2 amends the powers and duties of the board to clarify authority to adopt regulations necessary to comply with FIRREA. She deferred the rest of the sectional analysis to KARL LUCK. Number 672 KARL LUCK, DIRECTOR OF OCCUPATIONAL LICENSING, DEPARTMENT OF COMMERCE & ECONOMIC DEVELOPMENT, gave a sectional analysis of CSHB 410. He said Section 2 gives authority to the board to set the education hour requirement and directs them to not exceed the FIRREA requirement. Section 3 repeals the specific number of classroom hours in each category, thereby requiring the board to put the requirements into regulations. He stated section 3 referred to the general real estate appraisers and section 4 referred to the residential real estate appraisers. TAPE 94-33, SIDE A Number 000 MR. LUCK continued. Section 5 is the continuing education requirement for renewal of certification for both general and residential. Section 6 refers to the registration of trainees and places them subject to the hours set forth by the board. MR. LUCK felt CSHB 410 was "straightforward" and the statutory requirement should be placed back into regulation to enable the board to maintain the federal requirement. Number 027 CHAIRMAN VEZEY asked if the current requirement for 150 or more hours of classroom instruction is greater than the federal requirement. MR. LUCK answered the General Real Estate Appraiser certificate program meets the federal requirement; however, he would have to research to find out what the general requirement is. If the general requirement did exceed the federal requirement, the board would be required to reduce it. He emphasized the intent of CSHB 410 is to "ratchet up" the requirements so over a period of time they would be much higher than the original FIRREA. He did not know what the federal intent would be in the future in regards to the general real estate appraisers, whether or not they would raise the requirements. Number 059 CHAIRMAN VEZEY commented Alaska currently has a stricter licensing requirement for general real estate appraisers than it does for residential real estate appraisers. He mentioned MAI and asked if it was a form of state licensing or national recognition. Would CSHB 410 produce one category of licensing from the present two. Number 075 MR. LUCK replied he was not familiar with MAI. He answered there would still be general and residential licensing. Only the education requirements would be changed with CSHB 410. Number 082 CHAIRMAN VEZEY inquired how many hours were currently required for general real estate appraisal. MR. LUCK responded 150 classroom hours, of which 15 hours are in a specific area. Number 088 REPRESENTATIVE OLBERG cited the sponsor statement that the FIRREA requirement for a general real estate appraisal is 120 hours as of 1994. He noticed the statement references the Alaska Legislature complying with FIRREA standards, but he believed they exceeded them. Number 101 CHAIRMAN VEZEY commented CSHB 410 did not seem to be amending the statute for residential real estate appraisers. Number 106 MR. LUCK directed the committee to section 4, which states the board shall issue a residential real estate appraisal certificate. Line 30, page 2, amends the residential section. Section 3 specifically addresses the general real estate appraisal certificate. Number 113 CHAIRMAN VEZEY clarified CSHB 410 provides a less stringent requirement on the general real estate appraisal and a more stringent requirement on the residential real estate appraisal. Number 115 MR. LUCK added "than current requirement." He deferred to ALFRED FERRARA to confirm his statement. MR. FERRARA commented the federal requirement for the general appraisal license is 150 hours, plus 15 hours of a standards course. The residential requirement is 120 hours, plus a standards course. He clarified Alaska does comply with the federal standards. Alaska is not above the federal minimum on a general appraiser, but it is below the minimum on the residential. CSHB 410 would enable the board to meet both of the federal sections. Residential, not general would have to change. He added Alaska currently has a higher requirement on recertification credit hours than the FIRREA. The reason for this is if more courses were offered in Alaska, more people would be able to receive the education and become certified. CSHB 410, however, would lower the Alaska requirement to meet the federal standards. He noted the registered trainee was an internship way to start someone in the business, offering a lesser experience requirement than if they started working as an appraiser without a certified person. MR. LUCK referred to CHAIRMAN VEZEY's previous question about an MAI designation, stating it was a nationally known designation issued by a private organization. MAI is not part of the Alaska program at all. Number 152 CHAIRMAN VEZEY commented he thought there was only a "handful" of MAI appraisers in Alaska. Number 153 MR. FERRARA continued Alaska has about 22 MAI appraisers which he felt was a really high percentage. He noted Alaskan appraisers are typically more educated and experienced than those in other states. Number 162 CHAIRMAN VEZEY stated he would hold CSHB 410 in committee so he may further research it. CSHB 410 would be rescheduled. ADJOURNMENT Having no more business before the committee, CHAIRMAN VEZEY adjourned the meeting at 9:45 a.m.
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