Legislature(2009 - 2010)BELTZ 105 (TSBldg)

03/15/2010 01:30 PM JUDICIARY

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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
Moved SB 244 Out of Committee
Heard & Held
Heard & Held
+ Bills Previously Heard/Scheduled TELECONFERENCED
              SB 153-MOBILE HOMES AS REAL PROPERTY                                                                          
1:38:55 PM                                                                                                                    
CHAIR FRENCH  announced the consideration  of SB 153.  Speaking as                                                              
the sponsor,  he related  that the  intent is  to give  homeowners                                                              
who  have mobile  homes  that are  located  on  real property  the                                                              
ability  to  convert  their  homes  to  real  property.  Currently                                                              
mobile homes  are titled  through the  Division of Motor  Vehicles                                                              
(DMV) like a  motor vehicle. This change would  give the homeowner                                                              
access  to  traditional  home financing,  which  often  has  lower                                                              
interest  rates.  Converting  the  mobile home  to  real  property                                                              
would  increase  the  value  of  the  home  and  help  to  prevent                                                              
"clouded" titles  that often  hinder clean transactions  involving                                                              
manufactured homes.                                                                                                             
KATE  HERRING,   Staff  to  Senator  French,  offered   to  answer                                                              
questions about SB 153.                                                                                                         
SENATOR  COGHILL asked  for an  explanation of  the mechanism  for                                                              
combining  a  motor  home  title  that's  with  DMV  and  a  title                                                              
guarantee that is tied to the property.                                                                                         
MS. HERRING deferred to Mr. Ginsberg.                                                                                           
1:41:56 PM                                                                                                                    
GEORGE S. GINSBERG,  Attorney, McGlinchey Stafford,  said his firm                                                              
is outside  council to Wells  Fargo. Providing some  background he                                                              
explained  that a  manufactured home,  like a  car, is  documented                                                              
for  ownership  by  a certificate  of  title.  That  ownership  is                                                              
transferred  by a certificate  of  title, again  like a car.  Also                                                              
like  a car,  financing of  a manufactured  home is  secured by  a                                                              
lien,  which is  physically  noted on  the  certificate of  title.                                                              
Unlike a  car, a manufactured home  can be permanently  affixed to                                                              
real property. In Alaska that creates problems.                                                                                 
Currently,  Alaska law  says that  the only  way for  a lender  to                                                              
perfect a  security interest  in a  manufactured home  that's been                                                              
affixed  to  real  property  is  both to  note  the  lien  on  the                                                              
certificate  of title  and  to file  a  fixture  filing under  the                                                              
Alaska Uniform  Commercial Code  (AUCC). The  problem is  that the                                                              
Alaska  DMV   will  not  issue   a  certificate  of  title   to  a                                                              
manufactured  home  that  has been  permanently  affixed  to  real                                                              
estate claiming  that it  is no  longer a  vehicle. This  places a                                                              
homeowner  who  has  a  manufactured   home  that  is  permanently                                                              
affixed to  real estate  in no  man's land.  They cannot  sell the                                                              
manufactured home because  there is no way to  document the change                                                              
of ownership  and they can't  finance it  because there is  no way                                                              
to perfect a security interest in the public record.                                                                            
MR. GINSBERG  explained  that SB  153 is designed  to establish  a                                                              
conversion  procedure  by  which  a  manufactured  home  would  be                                                              
considered  real  estate  for  all   legal  purposes.  This  would                                                              
involve a  surrender and cancelation  of the certificate  of title                                                              
after which  an affidavit of affixation  would be recorded  on the                                                              
real  estate records.  After  the affidavit  is  recorded, a  copy                                                              
would be sent to  DMV and any existing certificate  of title would                                                              
be canceled.  If there isn't  a certificate  of title or  it can't                                                              
be found, there  is a conversion procedure to  accomplish the same                                                              
purpose. After this  happens the manufactured home is  part of the                                                              
real estate;  it can be sold  by a deed  and can be financed  by a                                                              
real estate mortgage.                                                                                                           
The bill likewise  has a procedure  to follow in the event  that a                                                              
home is  physically detached  from the  land. The homeowner  would                                                              
file an  affidavit of severance  and then  apply for a  title from                                                              
DMV. It  would then  be treated  as personal  property just  as it                                                              
had been before the conversion.                                                                                                 
SENATOR EGAN asked if this would affect modular homes.                                                                          
MR. GINSBERG said no.                                                                                                           
1:51:38 PM                                                                                                                    
SENATOR WIELECHOWSKI  asked if there  is a downside to  doing this                                                              
with respect to increasing property taxes.                                                                                      
MR. GINSBERG replied  he believes the answer would  be yes because                                                              
it would  increase  the value of  the real  estate and  presumably                                                              
the real property tax, but that's not necessarily a downside.                                                                   
SENATOR WIELECHOWSKI  said  if this will  increase property  taxes                                                              
for many  of the people  in his district  he would have  a problem                                                              
with that.                                                                                                                      
MR.  GINSBERG reminded  him  that  this bill  will  help the  many                                                              
people who may not  pay real estate taxes, but they  can't sell or                                                              
finance their  homes. So far we  haven't run into  opposition from                                                              
consumer groups  in Alaska or other  states because it's  to their                                                              
advantage to do this, he said.                                                                                                  
1:54:17 PM                                                                                                                    
CHAIR  FRENCH informed  the members  that this  will not apply  to                                                              
mobile homes  and trailers that are  located in a trailer  park on                                                              
rented space.  This applies to people  who have put a  mobile home                                                              
on a piece  of property he or she  owns and now wants  to affix it                                                              
to  a  permanent  foundation.  The  only  exception  would  be  to                                                              
property on  which there is a 20  year lease because that  term is                                                              
sufficiently  long   to  qualify   for  the  conversion   to  real                                                              
MR. GINSBERG concurred.                                                                                                         
MS.  HERRING added  that  this is  voluntary  process,  it is  not                                                              
1:55:47 PM                                                                                                                    
CARL  SPRINGER,  Registrar,  Division  of  Motor  Vehicles  (DMV),                                                              
Department  of Administration, said  DMV does  not oppose  SB 153,                                                              
but it  has concerns  about the  requirements  it imposes  on DMV.                                                              
DMV has  expertise  in the area  of driver  licensing and  titling                                                              
and  registering motor  vehicles.  It has  no  experience in  real                                                              
property law.  Currently DMV is  required to title  a manufactured                                                              
mobile  home if  the  owner  so requests,  but  the  owner is  not                                                              
required to title a manufactured mobile home.                                                                                   
Currently  there  are 8,291  manufactured  mobile  homes that  are                                                              
titled in this  state. He surmised that a healthy  percentage have                                                              
had  the  wheels  removed  and been  placed  on  a  semi-permanent                                                              
foundation  with   skirting.  This  would  possibly   qualify  the                                                              
manufactured mobile  home as real  property, but he  imagines that                                                              
many are located in trailer parks.                                                                                              
MR. SPRINGER  said SB 153 would  have DMV duplicating  the efforts                                                              
of  the  recorder's   office  and  real  estate   title  insurance                                                              
agencies. Currently  DMV records  the primary lien  or encumbrance                                                              
that  the   owner  discloses   and  this   bill  would   make  DMV                                                              
responsible  for determining  the  existence or  non existence  of                                                              
other liens  or encumbrances. Essentially  it would  be performing                                                              
real  property  title  searches.   He  said  that  the  attachment                                                              
severance  requirements are  of  little consequence  if the  owner                                                              
can  execute  these  affidavits   even  if  they  only  intend  to                                                              
permanently  affix  or sever  the  manufactured mobile  home  from                                                              
real  property  rather  than  actually doing  it  when  the  event                                                              
occurs.  He said  that for  these reasons  DMV feels  that SB  153                                                              
needs further clarification.  He offered to work  with the sponsor                                                              
to address these concerns.                                                                                                      
CHAIR  FRENCH asked  him  to  let his  office  know  with as  much                                                              
specificity as possible, which sections DMV seeks to amend.                                                                     
1:58:28 PM                                                                                                                    
BRENDA MIERNYK,  Branch Manager,  Wells Fargo Home  Mortgage, said                                                              
she is testifying  in support of  SB 153. She related  that Alaska                                                              
statutes  do not  meet  eligibility  requirements  for lenders  to                                                              
sell  a mortgage  loan for  a manufactured  home to  Fanny Mae  or                                                              
Freddy Mac,  including the  process to  legally classify  the home                                                              
as real  property and placing the  lender in first  lien position.                                                              
Wells Fargo  has had to  turn away business  because of  this, she                                                              
said. If  SB 153 were to  pass, state definitions  of manufactured                                                              
homes would  be aligned  with HUD definitions  to create  a system                                                              
for  title  transfer and  property  conversion.  Additionally,  it                                                              
would  create a  means for  titling manufactured  homes that  have                                                              
been affixed to property but the title cannot be found.                                                                         
MS. MIERNYK said  stated that this bill would 1)  help home owners                                                              
whose manufactured  home is already affixed to  real property gain                                                              
better access  to credit and make  it easier to sell  their homes;                                                              
2) help increase  manufactured home values by allowing  the owners                                                              
to convert  them to real property  including those not  covered by                                                              
certificates of title  or for which a certificate  of title cannot                                                              
be found;  3) help lenders gain  a perfected security  interest in                                                              
manufactured  homes;   4)  help  DMV  by  establishing   a  formal                                                              
procedure  for cancelling  a  title when  a  manufactured home  is                                                              
affixed to  a permanent foundation;  and 5) increase  property tax                                                              
revenue as a  result of manufactured homes being  converted to and                                                              
considered real property.                                                                                                       
2:00:59 PM                                                                                                                    
GEORGE CARNAHAN,  representing himself, Nikiski, said  he lives in                                                              
a home  that falls  under AS  29.45.070.  It is not  hooked  up to                                                              
electricity, sewer  or other utilities  and it is not  attached to                                                              
the ground.  Current law dictates  that if  a property has  any of                                                              
these three  elements it  is classified  as real estate  property.                                                              
He  questioned why  the  existing  law should  be  tossed out  the                                                              
window. This will  simply increase taxes and they  are already too                                                              
high, he said.                                                                                                                  
2:03:12 PM                                                                                                                    
CHAIR  FRENCH  closed   public  testimony  and  held   SB  153  in                                                              

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