Legislature(1997 - 1998)
03/23/1998 01:50 PM House FIN
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE FINANCE COMMITTEE
March 23, 1998
1:50 P.M.
TAPE HFC 98 - 74, Side 1.
TAPE HFC 98 - 74, Side 2.
CALL TO ORDER
Co-Chair Therriault called the House Finance Committee
meeting to order at 1:50 P.M.
PRESENT
Co-Chair Therriault Representative Kelly
Representative Kohring Representative Grussendorf
Representative J. Davies Representative Martin
Representative G. Davis Representative Moses
Representative Foster
Representatives Hanley and Mulder were not present for the
meeting.
ALSO PRESENT
Jerry Burnett, Staff, Senator Randy Phillips.
TESTIFIED VIA TELECONFERENCE:
Amber Hutchens, President, Alaska Mortgage Bankers
Association, Anchorage; Debra Joslin, District Chair-
Republican Party, District #35, Delta Junction; Marla
Willis, Delta Junction.
SUMMARY
HB 390 An Act relating to marriage; and amending Rules
54 and 56, Alaska Rules of Civil Procedure.
HB 390 was HELD in Committee for further
consideration.
SB 221 An Act relating to negatively amortizing loans
originated under a program approved or sponsored
by the state or federal government.
SB 221 was HELD in Committee for further
consideration.
HOUSE BILL NO. 390
"An Act relating to marriage; and amending Rules 54
and 56, Alaska Rules of Civil Procedure."
REPRESENTATIVE PETE KELLY commented that HB 390 was written
in an attempt to remedy some of the no-fault divorce
decisions which were passed into law in 1969.
Representative Kelly provided the Committee multiple
statistics about divorce. Since 1970, the divorce rate in
the country has increased 279%; children living with a
divorced parent has increased to 352%; children living in a
single parent family has gone up 108%; couples living
outside of marriage has increased 533%. He advised that
there have been numerous studies undertaken regarding how
this has negatively impacted children.
Representative Kelly commented that HB 390 would create a
new option for persons seeking a marriage license from the
State. Couples could receive a license for a "testament
marriage", already provided for under existing statute, or
they could apply to receive a license for a "charter
marriage".
Representative Kelly continued, each option offers each
couple different rights and responsibilities. A charter
marriage would be a union more difficult to enter into and
more difficult to dissolve. Couples seeking a charter
marriage would receive premarital counseling and would also
sign a "declaration of intent" acknowledging that their
marriage would be a lifelong commitment. The couple would
agree to seek counseling in the event of marital
difficulties.
Representative Kelly noted that establishing two types of
marriage contracts under State law would provoke useful
discussions among engaged couples, and hopefully each
couple would decide which option was best for them. He
suggested that if couples make more educated decisions
about their marriage, that would result in fewer failed
marriages and broken homes. Alaska's divorce rate is
higher than the national average, with 5.2 divorces per
year for every one thousand people, compared to the
national rate of 4.1.
Representative Kelly pointed out that many social problems
which the Legislature struggles to address are linked to
broken marriages and separated families including domestic
violence, teenage pregnancy, drug and alcohol abuse, and
increased juvenile crime. If a charter marriage law could
succeed in keeping some marriages intact or in preventing
some marriages from occurring in the first place, this
would do more to mitigate social pathologies than any
government program could hope to accomplish.
Representative Kelly stated that the original bill as
structured relied on a conviction of a felony to encompass
spousal or sexual abuse. He noted that Representative
Caren Robinson suggested that language was unclear. The
proposed amendment would address that concern. [Amendment
Co-Chair Therriault proposed that through the legislation,
an agreement to not enter into the marriage would be
obvious earlier, rather than working through the system
with an offense ending in a conviction.
DEBRA JOSLIN, (TESTIFIED VIA TELECONFERENCE), DISTRICT
CHAIR REPUBLICAN PARTY, DISTRICT #35, DELTA JUNCTION, spoke
in support of the proposed legislation. In addition, she
thought that the bill should include a specific amount of
required counseling time. Ms. Joslin also recommended that
"marriage" should be expressed as a "covenant" rather than
a "charter".
In conclusion, Ms. Joslin indicated concern that there was
no mention included which would tie the division of
property "to fault" if the marriage should fail.
MARLA WILLIS, (TESTIFIED VIA TELECONFERENCE), DELTA
JUNCTION, testified in support of the proposed legislation
echoing sentiments voiced by Ms. Joslin.
Representative J. Davies asked if in the proposed
legislation, would suspension of a three-year felony charge
affect the marriage contract. Representative Kelly replied
that would not make a difference; the divorce intent would
be based on actions previously listed. He continued, a
felony conviction should not affect the marriage unless it
was a crime against a person or sexual abuse.
Representative J. Davies reiterated his question regarding
a person in jail and how that would affect the grounds for
a divorce.
He inquired how the legislation would work if one of the
parties had moved from State. Representative Kelly replied
that the legislation would be in effect in the State of
Alaska; marriages from other states are recognized,
although, those couples would not be bound to the same
contract.
Representative J. Davies asked if a couple could continue
to enter into a civil contract without the State changing
statutes. Representative Kelly reiterated that the intent
of the bill was to emphasize that the "contract of
marriage" is a binding contract, as any other business
agreement would be. Under current statutes, there is no
binding force.
Representative Grussendorf questioned the enforcement of
the prenuptial agreement and how that would affect court
change rules. Representative Kelly replied that the State
would be the entity which recognizes the contract. Most
people rely on that contract and the legislation would add
additional steps to it. Co-Chair Therriault advised that
the prenuptial agreement usually deals with the
philosophical, emotional and practical similarities and
differences the couples share, not necessarily with the
breakup of the marriage.
Representative Kelly spoke to Amendment #1. Language of
the amendment would be added to Page 4, Section 7 to
address concerns indicated by Representative Robinson.
Representative J. Davies pointed out that language had been
listed on Page 7. Representative Kelly agreed, although
noted that it had inadvertently been excluded in Section 7,
and by inserting it should provide further clarification.
Representative Kelly MOVED to adopt conceptual Amendment
Co-Chair Therriault asked if there was a reason why the
"charter" rather than "covenant" had been chosen.
Representative Kelly felt that a "covenant" marriage would
appear to be more stringent.
Representative J. Davies pointed out that current language
added to the legislation stipulates that: "The spouse may
obtain judgement only upon proof of one of the following:".
He believed that concept would raise legal concerns when
establishing the standard of proof; he asked if that
language would create a double jeopardy. Representative
Kelly advised that it is important that the language is
different. The grounds for divorce criteria is contained
in Section #6. For those couples who opt for a higher
standard, they will then be held responsible to meet that
standard. The contract, as specified, would be brought to
court and the couple would have to prove that it did not
work. He pointed out that nothing in the contract stops
people from living apart.
Representative J. Davies stated that this would create a
new standard of proof. He asked if the legislation would
support that standard. Representative Kelly advised that
Section #6 lists criteria related to the standard of proof.
He stressed that it would be voluntary. Representative J.
Davies suggested that the requirement of proof proposed in
the legislation could create something more harmful than
exists in current law.
(Tape Change HFC 98-74, Side 2.)
Discussion followed between Representative Kelly and
Representative J. Davies regarding current the statute
addressing "incompatibility of commitment" and the waiting
period associated with the decision for finalizing the
divorce. Representative J. Davies ascertained that couples
go into marriage fully intending to commit for life. There
are circumstances, which arise, when regretfully, it
becomes obvious that divorce is the best thing to do for
the entire family. He stated that "no fault" marriages are
not the "cause" but rather the "symptom" of marriages not
working in our society. "No fault" divorces exist to
alleviate the unintended consequences. Representative J.
Davies reiterated that the vast majority of people getting
married intend to stay married for the rest of their lives.
Co-Chair Therriault spoke to the intention before entering
into the marriage contract and the role of pre-marital
counseling. Representative J. Davies noted that he would
be more likely to support mandatory counseling for all
people considering marriage than the current language of
the bill.
Representative Kelly reiterated that a charter marriage
would not be mandatory, but instead would be strictly
voluntary. Representative Grussendorf voiced concern that
some churches or religious institutions might be willing to
perform only charter marriages and that other options would
not be available to them. Representative Kelly explained
that situation currently does exist.
Co-Chair Therriault requested that a work draft, including
Amendment #1, be prepared for the Committee's final
approval. He requested that the Committee note the fiscal
impact.
HB 390 was HELD in Committee for further consideration.
SENATE BILL NO. 221
"An Act relating to negatively amortizing loans
originated under a program approved or sponsored by
the state or federal government."
JERRY BURNETT, STAFF, SENATOR RANDY PHILLIPS, commented
that many of Alaska's seniors are faced with the prospect
of reduced income and the inability to keep their homes.
One option for seniors is a "reverse annuity mortgage", a
mortgage wherein the financial institution provides a
stream of payments to the borrower in return for an equity
position in the borrower's home. The senior would be able
to stay in the home while receiving the financial benefits
of home ownership.
Mr. Burnett continued, Fannie Mae and Freddie Mac developed
the "Homekeeper" loan program. The national program would
allow seniors to extract equity without a payment plan or
to purchase a home without high payments. The program has
several options, one of which is an equity share agreement
that would allow for a higher income allowance for the
senior. The option cannot be utilized in Alaska because of
a prohibition in current law. SB 21 would change State
law, AS 45.45.010(f), to enable certain shared equity loans
that are sponsored by the State of Alaska or the federal
government.
Mr. Burnett concluded that passage of SB 221 would benefit
many Alaskan seniors by allowing them an additional tool to
help retain their homes.
Representative J. Davies asked the difference between a
loan and a shared equity.
AMBER HUTCHENS, (TESTIFIED VIA TELECONFERENCE), PRESIDENT,
ALASKA MORTGAGE BANKERS ASSOCIATION, ANCHORAGE, stated that
the reversed mortgage programs normally go by the appraised
value of the property, and do not consider equity in the
future. The Homekeepers Program will allow the seniors to
extract more in estimating that the property will grow in
value. Other programs do not take into consideration the
growth of the property.
Representative J. Davies asked if there were any reversed
mortgage plans in the State of Alaska that were not offered
through the nationally chartered organizations such as
Fannie Mae. Ms. Hutchens replied that there are none
offered by Alaskan lenders at this time.
Representative J. Davies pointed out that the Homekeeper
loan program contained protections so that there would be
no eviction or forced sale prior to when the senior moves.
It also contains provisions that there be no cost to the
heirs in excess of the equity in the home. He asked if
those protections should be written in statute.
Co-Chair Therriault asked how the State would rate the
program. Mr. Burnett understood that Alaska Housing
Finance Corporation (AHFC) could approve such a program.
Representative J. Davies pointed out that the section of
statute being amended simply refers to bank, credit union,
savings and loan institution, pension fund, insurance and
mortgage companies and changing what they could do. He
assumed that any bank could propose a reverse mortgage.
Ms. Hutchens commented that section of the bill was well
written, pointing out that the program would be approved or
sponsored by the State. Normally, a bank does not go
through the State to get their program approved unless it
is a federally approved program.
Representative J. Davies recommended removing language on
Page 1, Line 11, "by the state". Representative Kelly
voiced concern with the proposed program in that it removes
money from the senior population and places it back in the
government. Ms. Hutchens advised that there are few
seniors who would need this option. Mr. Burnett commented
that currently, there are no State sponsored programs and
that the federal and national sponsored programs are
sufficient. He advised that removal of the language would
require a title change.
Co-Chair Therriault recommended so as to avoid a title
change, the Committee should specify items which any
prospective State program should insure.
CS SB 221 (FIN) was HELD in Committee for further
consideration.
ADJOURNMENT
The meeting adjourned at 3:10 P.M.
H.F.C. 8 3/23/98
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