Legislature(1997 - 1998)

03/23/1998 01:50 PM FIN

Audio Topic
* first hearing in first committee of referral
+ 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.                                                  
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                     
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.                                                        
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                                      
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                                      
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                           
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                               
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.                                        
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.                               
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                         
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                     
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                       
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.                                                      
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                              
The meeting adjourned at 3:10 P.M.                                             
H.F.C. 8 3/23/98                                                               

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