Legislature(1995 - 1996)
04/11/1996 03:32 PM Senate 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 192 AHFC HOUSING LOANS
CHAIRMAN SHARP brought up HB 192 as the next order of business
before the Senate State Affairs Committee. He called the sponsor's
representative to testify.
Number 050
BRYCE EDGMON, Aide to Representative Richard Foster, prime sponsor
of HB 192, stated the bill is directed towards helping meet home
financing needs in rural Alaska. Mr. Edgmon read the sectional
analysis in members' bill packets, which was submitted by AHFC.
Section 1 would allow regional housing authorities to originate and
service mortgage loans.
Section 2 would allow supplemental housing development grant funds
to be used for both on-site and off-site water and sewer
facilities.
Section 3 attempts to clarify the existing statute. It does not
make any substantive changes.
Section 4 establishes a priority system for the allocation of
supplemental housing development grant funds used to pay for off-
site water and sewer facilities.
Section 5 exempts projects constructed under the Building Material
Loan Program from energy standards provided under AS 18.56.096(c).
Section 6 exempts projects constructed under the Building Material
Loan Program from construction standards provided under AS
18.56.300.
Section 7 amends the statute regarding the Rural Assistance Loan
Program to allow for the refinancing of rural mortgages in the same
manner as AHFC's mortgage programs allow for the refinancing of
urban loans.
Section 8 would allow AHFC to make loans for rural non-owner
occupied housing, to the extent feasible, to someone who already
has an AHFC loan for an existing owner-occupied residence.
Section 9 expands the existing Building Materials Loan Program to
allow for small ($20,000.00 or less), unsecured loans for borrowers
who have either restrictive deed lands or have no title to their
HUD Mutual Help home. [Mr. Edgmon informed the committee that
federal law prohibits people who own homes on native allotments
from using the land as collateral in securing a loan.]
Section 10 is a conforming change to coordinate this statute with
the change made in the first part of Section 12.
Section 11 is a conforming change to coordinate this statute with
with the change made in the first part of Section 12.
Section 12 clarifies the definition of non-owner occupied housing
as rental housing. In addition, the definition of multi-family
rental house is changed from an 8 to a 16 unit dwelling.
Section 13 would bring the term "housing" into compliance with
industry standards that view the term as owner-occupied housing of
up to 4 units.
Number 185
BRUCE KAVAROK, Executive Director, Bering Straits Regional Housing
Authority, testifying from Nome, stated the authority serves Nome
and sixteen other communities in the Nome area. Mr. Kavarok stated
the Bering Straits Regional Housing Authority and the Association
of Alaska Housing Authorities, which represents Alaska's fourteen
regional housing authorities and AHFC, support HB 192. The bill
has significant importance for Alaska's regional housing
authorities in their mission to provide decent, safe, sanitary, and
affordable housing to families throughout Alaska. Several of the
housing programs now available from AHFC and other sources like the
Farmers' Home Administration and the Veterans' Administration are
severely under-utilized in rural Alaska. Part of the reason is
village economics, but another part is the lack of rural access to
information and the basic mechanics of loan programs. There are
low and moderate-income families in his region and throughout the
state who could benefit from one or more of these programs and
achieve their goals of home ownership.
MR. KAVAROK stated that there is virtually no tradition for
conventional mortgage lending in housing development in rural
Alaska. Expanding access to AHFC loans, as HB 192 would do,
coordinating with lending institutions, and the recent willingness
of the secondary mortgage market (FHA, Fannie Mae, Freddie Mac, for
example) to participate in rural housing programs appear as a few
bright spots on the horizon. Mr. Kavarok also gave a run-down of
the sections of HB 192.
Number 245
SENATOR RANDY PHILLIPS asked Mr. Kavarok if he could explain the
language on page 6, lines 4-7 regarding the restricted deed issued
by the Secretary of the Interior.
MR. KAVAROK replied there are two types of deeds that he runs into.
The Native Allotment act of 1909 specified that native allotments
above 260 acres could be selected. The deed is held in trust by
the Secretary of the Interior on behalf of the allottee.
SENATOR RANDY PHILLIPS asked if it is held in trust forever.
MR. KAVAROK responded, yes. A development that HB 192 doesn't
address is the Federal Housing Development Act of 1992. That act
established a home-loan guarantee program which provides for a
federal subsidized loan guarantee for financial institutions,
including AHFC, to protect them when they make mortgage loans on
these types of restricted deeds. The drive behind that legislation
was Indian reservations in the lower forty-eight, where
reservations are all trust land held by the federal government. He
believes AHFC has either participated or is looking at
participating in one of the first loans of this kind in Alaska that
would take advantage of that federal home loan guarantee.
Number 290
JOHN BITNEY, Alaska Housing Finance Corporation, stated AHFC
supports HB 192.
Number 295
SENATOR RANDY PHILLIPS asked if refinancing is not allowed right
now.
MR. BITNEY responded that currently, refinancing is not an option
under state statutes relating to AHFC. If a person were to
refinance their mortgage right now, they would have to do
substantial improvements to their home in order to get a new loan.
SENATOR RANDY PHILLIPS asked if that is an oversight in the laws
dealing with AHFC.
MR. BITNEY stated he is not familiar with the history, but he would
say it's definitely an oversight, since it's a very common mortgage
option nation-wide.
CHAIRMAN SHARP asked Mr. Bitney if he's received copies of the
amendments, and if so, how does AHFC feel about the amendments?
MR. BITNEY responded he has seen 3 1/2 amendments. He stated he
would like to address the amendment applying to Section 1. That
amendment would attempt to limit regional housing authorities to
making loans only in rural areas of the state. Apparently there
was some concern expressed that, by bringing regional housing
authorities into urban Alaska, they might compete with traditional
mortgage lenders. AHFC worked with the Mortgage Bankers
Association to come up with compromise language. Committee members
have that amendment, which is labeled amendment #2. Amendment #2
would limit the regional housing authorities to making loans in
rural areas. There would be an exception for making loans in urban
areas to under-served borrowers.
SENATOR RANDY PHILLIPS asked what the mortgage bankers think about
amendment #2.
MR. BITNEY replied he did not speak to them directly, but it is his
understanding that the "under-served borrowers" term was their
suggestion for a compromise.
CHAIRMAN SHARP stated that is his understanding also.
Number 335
MR. BITNEY stated that AHFC does not have a position on the other
amendments.
SENATOR DONLEY made a motion to adopt amendment #1 for purposes of
discussion.
CHAIRMAN SHARP stated that amendment #1 would allow regional
housing authorities to originate and service loans in rural areas,
as defined in HB 192. It would also allow them to originate and
service loans to "under-served urban borrowers". This amendment
seemed to be satisfactory to all concerned parties.
SENATOR LEMAN asked if amendment #1 would be a new Section 1.
MR. BITNEY responded amendment #1 would be a revision to Section 1.
Number 355
SENATOR RANDY PHILLIPS asked if this would prohibit a mortgage
lending institution from serving a small community.
MR. BITNEY replied it would not. Section 1 only applies to the
ability of a regional housing authority to get into the loans
business.
SENATOR RANDY PHILLIPS asked if this would be in competition with
mortgage lending institutions.
MR. BITNEY responded that was a concern that the banks had. This
language was compromise language worked up with the Mortgage
Bankers Association. They were concerned with regional housing
authorities getting into making loans in urban areas, in
competition with them. This would limit urban activities to just
serving under-served borrowers.
CHAIRMAN SHARP asked if there were objections to amendment #1.
SENATOR RANDY PHILLIPS objected. He stated he wanted to check it
out. How many bankers have looked at this?
SENATOR LEMAN stated the amendment would limit the agency a little
bit more.
CHAIRMAN SHARP asked that the roll be called on amendment #1.
Amendment #1 passed by a vote of 3 yeas, 1 nay, and 1 absent.
Voting for the amendment were Senators Sharp, Leman, and Donley.
Voting against the amendment was Senator Phillips. Senator Duncan
was absent.
Number 385
SENATOR LEMAN made a motion to adopt amendment #2.
CHAIRMAN SHARP stated the purpose of amendment #2, of which
language was contained in the original bill but was removed on the
House floor, is to establish age 55.
SENATOR LEMAN stated that "age 55" is the definition under federal
law.
SENATOR DONLEY asked who took the language out.
CHAIRMAN SHARP responded it was Representative Martin.
SENATOR LEMAN thought that Representative Martin thought "age 55"
was broadening it. But it was actually hurting seniors that the
state definition didn't match the federal definition. "Age 55" was
taken out on the floor of the House, and he probably didn't realize
the ramifications.
CHAIRMAN SHARP asked if there was any objection to amendment #2.
Hearing no objection, he stated the amendment was adopted.
SENATOR DONLEY made a motion to adopt amendment #3 for purposes of
discussion.
CHAIRMAN SHARP stated that amendment #3 would assure that any funds
coming from AHFC to the regional corporations would be used in
accordance with the Equal Housing Opportunity laws.
Number 405
CHAIRMAN SHARP asked if there was objection to amendment #3.
Hearing no objection, he stated the amendment was adopted.
SENATOR DONLEY made a motion to discharge HB 192 from the Senate
State Affairs Committee with individual recommendations.
CHAIRMAN SHARP, hearing no objection, stated HB 192 was discharged
from the Senate State Affairs Committee.
SENATOR RANDY PHILLIPS asked who in the Mortgage Bankers
Association approved the language in amendment #1.
MR. BITNEY responded it was the president of the Mortgage Bankers
Association.
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