Legislature(2009 - 2010)BELTZ 105 (TSBldg)
03/31/2010 01:30 PM Senate JUDICIARY
| Audio | Topic |
|---|---|
| Start | |
| Confirmation Hearing Legislative Ethics Committee | |
| SJR28 | |
| HB101 | |
| SB190 | |
| HB108 | |
| SB249 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | TELECONFERENCED | ||
| + | SB 249 | TELECONFERENCED | |
| + | HB 108 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| += | HB 101 | TELECONFERENCED | |
| += | SB 190 | TELECONFERENCED | |
| += | SJR 28 | TELECONFERENCED | |
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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