Legislature(1995 - 1996)
01/23/1996 08:00 AM House STA
| Audio | Topic |
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE STATE AFFAIRS STANDING COMMITTEE
January 23, 1996
8:00 a.m.
MEMBERS PRESENT
Representative Jeannette James, Chair
Representative Scott Ogan, Vice Chair
Representative Joe Green
Representative Ivan Ivan
Representative Brian Porter
Representative Caren Robinson
Representative Ed Willis
MEMBERS ABSENT
All members present.
OTHER MEMBERS PRESENT
Speaker of the House of Representatives, Gail Phillips
COMMITTEE CALENDAR
* HOUSE BILL NO. 369
"An Act extending to certain partnerships and corporations the 10
percent procurement preference currently given to certain sole
proprietorships who are Alaska bidders and owned by persons with
disabilities."
- PASSED OUT OF COMMITTEE
* HOUSE BILL NO. 363
"An Act requiring banks to pay interest on money in reserve
accounts held in connection with mortgage loans."
- HEARD AND HELD
* HOUSE BILL NO. 348
"An Act requiring that all official interviews with children who
are alleged to have been abused or neglected be videotaped or
audiotaped."
- HEARD AND HELD
(* First public hearing)
PREVIOUS ACTION
BILL: HB 369
SHORT TITLE: PROCUREMENT PREF FOR DISABLED
SPONSOR(S): REPRESENTATIVE(S) JAMES
JRN-DATE JRN-PG ACTION
12/29/95 2362 (H) PREFILE RELEASED
01/08/96 2362 (H) READ THE FIRST TIME - REFERRAL(S)
01/08/96 2363 (H) STATE AFFAIRS, LABOR & COMMERCE
01/18/96 (H) STA AT 08:00 AM CAPITOL 102
01/18/96 (H) MINUTE(STA)
01/23/96 (H) STA AT 08:00 AM CAPITOL 102
BILL: HB 363
SHORT TITLE: INTEREST ON MORTGAGE ESCROW ACCTS
SPONSOR(S): REPRESENTATIVE(S) BUNDE
JRN-DATE JRN-PG ACTION
12/29/95 2361 (H) PREFILE RELEASED
01/08/96 2361 (H) READ THE FIRST TIME - REFERRAL(S)
01/08/96 2361 (H) STATE AFFAIRS, L&C, FINANCE
01/18/96 (H) STA AT 08:00 AM CAPITOL 102
01/18/96 (H) MINUTE(STA)
01/23/96 (H) STA AT 08:00 AM CAPITOL 102
BILL: HB 348
SHORT TITLE: VIDEO/AUDIOTAPE INTERVIEW OF ABUSED MINOR
SPONSOR(S): REPRESENTATIVE(S) JAMES, Therriault, Kelly, Toohey
JRN-DATE JRN-PG ACTION
05/13/95 2173 (H) READ THE FIRST TIME - REFERRAL(S)
05/13/95 2174 (H) STATE AFFAIRS, HES, JUD, FINANCE
08/26/95 (H) STA AT 01:00 PM
08/26/95 (H) MINUTE(STA)
01/08/96 2383 (H) COSPONSOR(S): KELLY, TOOHEY
01/23/96 (H) STA AT 08:00 AM CAPITOL 102
WITNESS REGISTER
WALTER WILCOX, Committee Aide
House State Affairs Committee
State Capitol, Room 102
Juneau, Alaska 99801-1182
Telephone: (907) 465-3743
POSITION STATEMENT: Provided information on HB 369.
STAN RIDGEWAY, Deputy Director
Division of Vocational Rehabilitation
Department of Education
801 West 10th Street, Suite 200
Juneau, Alaska 99801-1894
Telephone: (907) 465-2856
POSITION STATEMENT: Provided testimony in support of HB 369.
DUGAN PETTY, Director
Division of General Services
Department of Administration
P.O. Box 110210
Juneau, Alaska 99811-0210
Telephone: (907) 465-2250
POSITION STATEMENT: Provided comments on HB 369.
DAVE GERKE
1265 Norman Street Number 7
Anchorage, Alaska 99504
Telephone: (907) 337-4657
POSITION STATEMENT: Provided testimony in support of HB 369.
REPRESENTATIVE CON BUNDE
Alaska State Legislature
State Capitol, Room 108
Juneau, Alaska 99801-1182
Telephone: (907) 465-4843
POSITION STATEMENT: Provided sponsor statement on HB 363.
WILLIS KIRKPATRICK, Director
Division of Banking, Securities and Corporations
Department of Commerce and Economic Development
P.O. Box 110807
Juneau, Alaska 99811-0907
Telephone: (907) 465-2521
POSITION STATEMENT: Provided comments on HB 363.
ROBIN WARD, President
Summit Title Insurance Agency Ltd.
341 West Tudor Road, Suite 102
Anchorage, Alaska 99503
Telephone: (907) 562-3770
POSITION STATEMENT: Provided comments on HB 363.
BARBARA COTTING, Legislative Assistant
to Representative Jeannette James
State Capitol, Room 102
Juneau, Alaska 99801-1182
Telephone: (907) 465-3743
POSITION STATEMENT: Provided sponsor statement on HB 348.
GENE OTTENSTROER
P.O. Box 1059
Delta Junction, Alaska 99737
Telephone: (907) 895-4805
POSITION STATEMENT: Provided comments on HB 348.
NANCY BUELL, Director
Education Program Support
Department of Education
801 West 10th Street, Suite 200
Juneau, Alaska 99801-1894
Telephone: (907) 465-8689
POSITION STATEMENT: Provided comments on HB 348.
JAYNE ANDREEN, Executive Director
Council on Domestic Violence and Sexual Assault
Department of Public Safety
P.O. Box 111200
Juneau, Alaska 99811-1200
Telephone: (907) 465-4356
POSITION STATEMENT: Provided comments on HB 348.
DEL SMITH, Deputy Director
Office of the Commissioner
Department of Public Safety
P.O. Box 111200
Juneau, Alaska 99811-1200
Telephone: (907) 465-4322
POSITION STATEMENT: Provided comments on HB 348.
YVONNE CHASE, Deputy Commissioner
Office of the Commissioner
Department of Health and Social Services
P.O. Box 110601
Juneau, Alaska 99811-0601
Telephone: (907) 465-3030
POSITION STATEMENT: Provided comments on HB 348.
BETTY ROLLINS
P.O. Box 55163
North Pole, Alaska 99705
Telephone: (907) 488-9030
POSITION STATEMENT: Provided testimony in support of HB 348.
CHARLES ROLLINS
P.O. Box 55163
North Pole, Alaska 99705
Telephone: (907) 488-9030
POSITION STATEMENT: Provided testimony in support of HB 348.
LAUREE HUGONIN, Executive Director
Alaska Network on Domestic Violence and Sexual Assault
130 Seward Street, Room 501
Juneau, Alaska 99801
Telephone: (907) 586-3650
POSITION STATEMENT: Provided comments on HB 348.
JODI DELANEY
3200 Kris Kringle Drive
North Pole, Alaska 99705
Telephone: (907) 488-0334
POSITION STATEMENT: Provided comments on HB 348.
GENE ALTIG
4396 Al Cory Road
North Pole, Alaska 99705
Telephone: (907) 488-4216
POSITION STATEMENT: Provided comments on HB 348.
HARRY NIEHAUS
P.O. Box 55455
North Pole, Alaska 99705
Telephone: (907) 488-9328
POSITION STATEMENT: Provided comments on HB 348.
SCOTT CALDER
P.O. Box 75011
Fairbanks, Alaska 99707
Telephone: (907) 474-0174
POSITION STATEMENT: Provided comments on HB 348.
ACTION NARRATIVE
TAPE 96-02, SIDE A
Number 0000
The House State Affairs Committee was called to order by Chair
Jeannette James at 8:00 a.m. Members present at the call to
order were Representatives James, Ivan, Porter and Willis.
Members absent were Representatives Ogan, Green and Robinson.
HB 369 - PROCUREMENT PREF FOR DISABLED
The first order of business to come before the House State
Affairs Committee was HB 369.
Number 0056
CHAIR JEANNETTE JAMES announced Walter Wilcox, Committee Aide,
would present the sponsor statement for HB 369.
WALTER WILCOX, Committee Aide, House State Affairs Committee,
read the following sponsor statement into record.
"This Bill allows 100% disabled owned corporations and
partnerships to be eligible for a disabled bidder preference.
"Current law allows disabled owned sole proprietorships to take
advantage of the disabled bidder preference that excludes
partnerships and corporations. This bill rectifies that."
Number 0135
CHAIR JAMES asked if there were any questions or comments. She
called on the first witness Stan Ridgeway, Deputy Director,
Division of Vocational Rehabilitation.
Number 0156
STAN RIDGEWAY, Deputy Director, Division of Vocational
Rehabilitation, Department of Education, said the division
supported HB 369. He stated it would allow persons with
disabilities who were sole owners of corporations to qualify for
state bidders preference.
CHAIR JAMES asked if there were any further questions or
comments.
Number 0240
REPRESENTATIVE IVAN IVAN enquired to what extend a person needed
to be disabled to qualify for HB 369.
Number 0264
MR. RIDGEWAY responded the Department of Education defined an
individual severely disabled if a major life function was
restricted. For veterans, he stated, it was defined as 50
percent and above of a major life function restricted. Mr.
Ridgeway further cited examples of individuals blind, deaf or in
a wheelchair as severely disabled.
Number 0308
CHAIR JAMES announced the presence of Representatives Robinson,
Green and Ogan.
CHAIR JAMES asked if there were any further questions or
comments.
REPRESENTATIVE JOE GREEN said there was a similar bill passed and
modified in the Senate last year then vetoed. He asked, for the
record if those differences had been discussed.
Number 0340
CHAIR JAMES responded HB 369 was written the same way the Senate
bill was written before modification, and declared the
Administration agreed to support it. She further stated she
hoped the bill would move forward without modifications. Chair
James called on Dugan Petty, Director, Department of
Administration.
Number 0392
DUGAN PETTY, Director, Division of General Services, Department
of Administration, said the department did not object to HB 288
last year. Mr. Petty said HB 288 corrected the inequity by
adding the qualifying entities of partnership and corporation for
those with disabilities.
CHAIR JAMES asked if there were any further questions or
comments.
Number 0476
REPRESENTATIVE BRIAN PORTER moved that HB 369 move from
committee. Hearing no objection, HB 369 was moved from the House
State Affairs Committee with the attached fiscal note and
individual recommendations.
Number 0569
CHAIR JAMES agreed to take further testimony despite the bill had
been moved and passed from the committee. She called on Dave
Gerke via teleconference in Anchorage.
DAVE GERKE sole proprietor of Sunshine General said he had been
disabled due to a heart attack since 1983. He announced he
completely supported HB 369 and especially the qualifying entity
of corporation. He thanked the committee for their efforts.
HB 363 - INTEREST ON MORTGAGE ESCROW ACCTS
Number 0645
The next order of business to come before the House State Affairs
Committee was HB 363.
REPRESENTATIVE CON BUNDE read the following sponsor statement
into record.
"Congress found that many lenders were maintaining bloated escrow
accounts with a year or more of excess escrow payment in them.
Lenders called this excessive amount a "cushion," but are unable
to justify the need for such an excess. In response, Congress
has enacted the Real Estate Settlement Procedures Act (RESPA)
which prohibits lenders and mortgage servicers from requiring
consumers to maintain more than an extra two months' worth of the
yearly amount necessary to pay taxes and insurance premiums.
Some escrow accounts do not have more than two months' payment
available. However, the accounting system used by the
institutions holding the escrow account may cause the account to
be seriously over the two month ceiling set by RESPA.
"Lenders often invest these escrow accounts for the short term
and use the profits as their institution sees fit. The consumer
that pays into the escrow account gives the use of their money to
the bank and gains nothing."
Representative Bunde interjected and said it was considered
previously in Alaska to pay interest on escrow accounts but was
discovered it was only worth a few dollars. As a result, some
felt it was not worth the effort. Collectively, however, the
mortgages generated a great deal of money.
He continued to read his sponsor statement into the record.
"Therefore the institutions that hold escrow accounts have an
incentive to ignore RESPA and bloat their accounts in order to
maximize profits."
He further stated some mortgages did not allow the two month
cushion that RESPA supported. Most institutions, however, used
the two month cushion even though the underlying mortgage
prohibited any cushion or more than a one month cushion.
He continued to read his sponsor statement into the record.
"HB 363 would require lending institutions to pay interest on
money in escrow in reserve accounts. The interest shall be
credited to the principal balance of a mortgage or paid directly
to the borrower.
"It's certainly time lending institutions give the consumer a
better deal and I urge the committee to careful consideration of
passage of this legislation."
Representative Bunde said he would be happy to answer any
questions.
Number 0897
REPRESENTATIVE GREEN commented he understood the concept of a two
month pool built to pay insurance, but wondered about accounts
paid semi-annually such as property taxes.
Number 0929
REPRESENTATIVE BUNDE responded there was an accounting system
that separated the items.
Number 0965
REPRESENTATIVE GREEN stated it would be an additional safety if
an account was above the amount due.
Number 0975
REPRESENTATIVE PORTER enquired why a lending institution would
not make up the difference in fees performed on the loans for the
various costs they were reserving for the funds. They were
actively involved in paying and receiving bills, he said.
Number 1000
REPRESENTATIVE BUNDE responded there was a service and a cost
attached. However, an accounting for that cost needed to be
established rather than alluding to it as a "slush" fund, he
asserted.
Number 1037
REPRESENTATIVE SCOTT OGAN referred to the language "a bank" in HB
363, and questioned if there was a more generic term to cover
other entities such as credit unions. He recommended the term
"lending institution."
Number 1066
REPRESENTATIVE BUNDE agreed the more appropriate term was
"lending institution" and commented he did not attempt to single
out banks.
REPRESENTATIVE OGAN asked if it would be appropriate to make a
motion to amend the language.
REPRESENTATIVE BUNDE said it was an oversite on his part. He
thought the language had already been corrected.
Number 1109
REPRESENTATIVE GREEN suggested it be used in the definition of
"bank" to cover everything.
Number 1115
REPRESENTATIVE BUNDE said he was using the term "bank"
generically and suggested Willis Kirkpatrick, Director, Division
of Banking, Securities and Corporations, Department of Commerce
and Economic Development respond to the dialogue for technical
support.
Number 1135
REPRESENTATIVE IVAN asked how Representative Bunde arrived at the
2 percent figure stated in HB 363.
Number 1145
REPRESENTATIVE BUNDE responded it was an area of discussion and a
starting point for negotiation. He announced he was willing to
discuss the figure.
Number 1185
CHAIR JAMES asked why it was not the same as a savings account
interest rate.
Number 1190
REPRESENTATAIVE BUNDE responded it was a good suggestion.
Number 1195
REPRESENTATIVE GREEN said 2 percent mentioned in HB 363 narrowed
the difference more than a savings account. He stated there was,
more often than not, a larger gap than 2 percent between the
lending and saving account. He said he understood why
Representative Bunde wanted to close the gap.
Number 1211
CHAIR JAMES responded institutions would be obliged to stay at
the 2 percent rate rather than give an accelerated rate based on
the overall banking theory. Therefore, paying extra money, for
the use of money, in this case, challenged that concept. She
asserted this would result in more service charges because it
would cost the banks extra.
Number 1258
REPRESENTATIVE GREEN further stated this created a tendency not
to use the money. He alluded the bill was intended to reduce the
number of banks using the reserve accounts for their own gain.
Number 1266
CHAIR JAMES asked if Representative Bunde had any figures on the
discrepancy in reserved accounts. She said she knew of a number
of institutions where there were insufficient funds demanding
adjustments the following year. She stated this was especially
true when taxes were increased. She further questioned if the
cushion was sufficient - too much or too little.
Number 1300
REPRESENTATIVE BUNDE responded he had figures nationwide and
reminded the committee members many Alaskans took their mortgages
to banks outside. The purpose of the cushion, he further said,
was so that lending institutions would not have to dip into their
funds. He said institutions did not dip into their accounts
nationwide. The cushion sometimes was several months up to a
year in excess of what was needed to protect themselves.
Representative Bunde again stated Willis Kirkpatrick was here to
testify and to answer any technical questions.
Number 1355
CHAIR JAMES replied the balance in escrow accounts were
relatively small according to her experiences in tax preparation.
Number 1372
REPRESENTATIVE BUNDE stated a similar bill had been introduced to
the Alaska State Legislature several years ago. The impetus was
based on a situation where a woman could not move her money from
one mortgage to the next.
CHAIR JAMES asked if there were any further questions or
comments.
Number 1425
WILLIS KIRKPATRICK, Director, Division of Banking, Securities and
Corporations, Department of Commerce and Economic Development,
said he was not here to testify but to answer any questions.
Number 1465
REPRESENTATIVE GREEN referred to the question asked earlier, if
it was customary for lending institutions to have a "cushy"
amount or a modest amount in excess.
Number 1480
MR. KIRKPATRICK responded according to RESPA, institutions were
not allowed to have more than two months of cushion as far as
taxes and hazardous insurance were concerned. In his situation,
he shared, his escrow account was always short especially when
taxes were paid in September, and his payments tended to increase
every year due to the shortage. Mr. Kirkpatrick shared with the
committee member his tax bill was around $2,000 which meant he
would have around $2,000 in September in his escrow account. He
further stated 90 institutions outside of Alaska regulated under
Title VI - banks, credit unions and mutual savings banks - had a
certificate of authority to do lending business in the state. He
questioned how an escrow account outside of Alaska would be
affected by HB 363. He also commented mortgage loans were
accessed over the internet now and wondered how this would affect
the bill.
Number 1625
REPRESENTATIVE GREEN said there were many institutions not
adhering to the federal law. He also asserted the law was not
being enforced. He asked if there really was a problem, or was
something needed to reassure the federal law.
Number 1655
MR. KIRKPATRICK said he did not have the information available to
answer Representative Green's question. He felt the commercial
banks, credit unions and mutual savings banks were complying with
the federal law.
Number 1673
REPRESENTATIVE PORTER asked if HB 363 would put Alaska in an
inferior position.
Number 1693
MR. KIRKPATRICK responded financial institutions were targeted
under the generic term "bank." He stated it was a highly
competitive business and Congress was continually battling the
over regulation of banks. There were other financial
intermediaries that had no Congressional regulations, such as
American Express. He divulged there were other states that had
this law and were not put at a disadvantage. A financial
institution would have to look at the law as the cost of
conducting business, and it would increase their interest
expense. He concluded, he really did not know if HB 363 would
put Alaska at a disadvantage.
CHAIR JAMES asked if there were any further questions or
comments.
Number 1765
REPRESENTATIVE CAREN ROBINSON asked if the committee was going to
change the wording to read "financial institutions" rather than
"banks."
Number 1693
MR. KIRKPATRICK suggested to change the wording under Title VI,
chapter one, the administrative title, would direct all
institutions under the title. He was not sure how to include
mortgage companies, but agreed the term "bank" needed to be
broadened.
Number 1765
REPRESENTATIVE ROBINSON suggested Mr. Kirkpatrick think about the
wording further and return with a recommendation.
Number 1828
MR. KIRKPATRICK agreed with Representative Robinson's statement.
Number 1830
REPRESENTATIVE ROBINSON asked Mr. Kirkpatrick to respond to
Representataive Ivan's earlier question regarding the 2 percent
interest referenced in HB 363.
Number 1840
MR. KIRKPATRICK cited if the mortgage loan interest rate was 10
percent, therefore, according to HB 363, the escrow interest
would be 8 percent. That, he said, was a favorable rate. Mr.
Kirkpatrick shared with the committee his account was only paying
2.3 percent interest. He suggested looking at the relationship
between the deposit and the interest of a depository institution.
If, however, it was not a depository institution he did not know
what to recommend.
Number 1893
REPRESENTATIVE ROBINSON said this discussion made her curious
about her own mortgage account.
Number 1906
CHAIR JAMES called on a banking industry representative to
testify.
ROBIN WARD, President, Summit Title Insurance Agency Ltd., said
the Alaska Mortgage Bankers Association (AMBA) opposed HB 363.
She said it would cause a problem with competitive mortgage rates
within Alaska. There was a national law in effect that
restricted institutions to a small escrow cushion account.
Consequently, the institutions could no longer hold the excess
needed to pay the taxes, insurance or any other items held in
escrow. The important part, however, was that investors provided
a free flow of competitive rates in Alaska. With this
requirement came an administrative service cost to monitor each
loan, she asserted. Right now, the servicers were providing the
service at no charge. However, HB 363, would result in
institutions charging a fee for that service. She alleged it was
an administrative and an accounting nightmare to keep track of
and pay interest. As a result, interest rates would increase to
cover the fees. The greatest concern, she asserted, was the
possibility companies would not want to do business in Alaska
affecting the competitiveness of the interest rate and the
attractiveness of the state to loan money to.
Number 2071
REPRESENTATIVE GREEN enquired if Ms. Ward's banking institution
was not complying with federal law.
Number 2077
MS. WARD said as far as she knew the banking institutions were
complying with federal law and were holding a very small cushion
of two months in excess.
Number 2090
REPRESENTATIVE GREEN remarked that HB 363 did the same thing.
MS. WARD replied it did not.
REPRESENTATIVE GREEN asked where it was different from the
federal law.
Number 2093
MS. WARD said HB 363 required the servicer to pay interest on the
amount of money held to the buyer in reserve to pay their taxes
and insurance.
Number 2110
CHAIR JAMES commented escrow accounts were calculated at the
beginning of the year based on an estimate of the amount of
insurance and taxes due.
Number 2126
MS. WARD responded that was exactly what happened. That was the
only difference in a payment on a loan. She said they based it
on the past years taxes for the coming year.
Number 2138
CHAIR JAMES responded 1/6 of taxes and 1/6 in addition to the
requirement for the taxes and insurance was held.
Number 2146
MS. WARD said it was more complicated than the above description
by Chair James. She cited in Anchorage taxes were paid in two
separate installments and insurance was paid in one installment.
Ms. Ward agreed, however, that was the general idea.
Number 2159
REPRESENTATIVE BUNDE referred to a handout titled "Overcharging
on Mortgages: Violations of Escrow Account Limits by the
Mortgage Lending Industry" by the attorneys general of
California, Florida, Iowa, Massachusetts, Minnesota, New York and
Texas." The report found the banking industry was not as service
oriented as prior testimony had indicated. He referred the
committee members to page 8 of the report and called their
attention to the individual item analysis verbiage. He alluded
the accounting system allowed only a two month cushion the day
the insurance payment was due and an equal amount due in taxes in
six months. Therefore, the two month cushion sat for six months.
Representative Bunde said there was a cost for this service. It
was derived from the interest gained on the float. He stated it
might be equal to the cost of doing business, but no one really
knew. If interest were paid on the escrow, the state of Alaska
would attract more money and mortgages, he suggested.
Representative Bunde further said in response to a previous
comment, this was not an accounting nightmare due to computer
technology. He agreed with previous testimony the money belonged
to the homeowner. Representative Bunde further stated the entire
purpose of HB 363 was to make sure the bank complied with RESPA.
He advised the bill was an encouragement to comply with federal
law and further suggested banks should be required to pay
interest on anything over the two month cushion. He said, he did
not want the bank to use its own money nor charge a service fee.
However, there was no assurance the banks were only using the
amount of money they needed for the service charge now.
Number 2324
CHAIR JAMES stated the mortgage owner needed to take individual
responsibility. She questioned whether the mortgage escrow
account was setup for the benefit of the bank or the individual.
If it were setup for the individual they would have a choice
where their money went until it was required to make their
insurance and tax payments. Currently, individuals did not have
a choice. She further voiced there was little argument to pay
interest other than what was the standard passbook savings
interest. Lastly, Chair James declared the individual needed to
take more responsibility to ascertain if their account was being
handled legally.
REPRESENTATIVE BUNDE responded the market forces would respond if
there was a lending institution acting unlawfully. He further
stated the main issue was no one knew how much money was being
made on servicing a loan. The difference between the interest
and the charges, he asserted, was the problem. He agreed with
Chair James that passbook savings was a logical interest amount.
Number 2405
CHAIR JAMES stated we did not know the situation collectively,
but each person would be able to ascertain their situation
individually.
Number 2425
REPRESENTATIVE BUNDE cited an example where an individual
negotiated a mortgage with no escrow account so the individual
was responsible for paying his own taxes and insurance. He
further stated escrow accounts were a product of the 1930's when
individuals could not pay their taxes and insurance. However,
that was not the situation today. Representative Bunde lastly
pointed out there were 14 states that passed similar legislation
and mortgages were still being made.
TAPE 96-2, SIDE B
Number 0000
REPRESENTATIVE ROBINSON questioned why HB 363 was necessary when
a federal law existed and suggested a resolution requiring the
state financial lenders to follow the federal law.
Number 0037
REPRESENTATIVE BUNDE responded a state resolution would not have
an impact when they did not follow the federal law now.
Number 0042
CHAIR JAMES questioned if there was evidence the banks were not
following the federal law.
Number 0047
REPRESENTATIVE BUNDE said there was evidence at a nationwide
level.
CHAIR JAMES asked about Alaska.
REPRESENTATIVE BUNDE replied many mortgages went outside Alaska
and on a national level there was evidence they were not
following the federal law. Based on the individual item analysis
accounting system, literally billions of dollars were in excess
of actual expenses. He suggested billions of dollars was a lot
of money when considering the cost of servicing a loan.
Number 0071
REPRESENTATAIVE GREEN referred to page 9 of the report titled
"Overcharging on Mortgages: Violations of Escrow Account Limits
by the Mortgage Lending Industry" by the attorneys general of
California, Florida, Iowa, Massachusetts, Minnesota, New York and
Texas." He referred the committee members to the bar graph
depicted which illustrated the escalation in the account before
each payment. Representative Green questioned why passbook
interest could not be paid to the amount above the RESPA ceiling.
Number 0100
REPRESENTATIVE BUNDE replied that was his original idea.
However, the individual item analysis accounting method
calculated a two month cushion. The goal he reiterated was to
forbid the individual accounting method, require a collective two
month cushion, and mandate institutions to pay interest on
anything collected over the two month cushion. The consumer,
however, had no choice in the amount of money the bank required
for their mortgage payments to service the loan without interest.
He asserted, the question was how much was actually needed to
service the loan. He commented he would prefer to see the bank
charge a service fee and then pay interest.
Number 0163
REPRESENTATIVE GREEN said he knew of lending institutions that
paid interest on checking accounts without charging a service fee
and it did not appear to be an accounting nightmare as previous
testimony indicated. He suggested, the 1/4 to 1/2 percent
additional loan fee to cover the cost was inflated.
Representative Green further suggested there must be a method to
discourage the banks from collecting beyond the two month cushion
and perhaps charge a fraction of the amount of money they planned
to make on the excess. He cited, if the banks were making 10
percent and paying 3 percent on the excess they were still making
money as well as the customer.
Number 0215
REPRESENTATIVE BUNDE responded it was not a huge amount of money.
However, it was a forced participation as Chair James stated
earlier. He suggested the comfort level would increase if the
participants knew that only the amount of money necessary to
service the loan was being used. Representative Bunde further
said this was a highly competitive industry and when given the
chance to make money institutions would.
Number 0261
REPRESENTATIVE OGAN asked if Ms. Ward had any further comments.
Number 0282
MS. WARD said, due to possible liens on mortgages, taxes and
insurance, payments were necessary to protect the lender. Most
of the loans made in Alaska, she stated, were high ratio
requiring less than 10 percent down. Therefore, to protect the
lender the property was used as collateral.
Number 0319
CHAIR JAMES said she felt it was not an accounting nightmare if
passbook savings interest was paid on the balance in the escrow
account. She further alleged it was an advantage to the bank to
pay interest to help ensure there was sufficient money in the
account to pay the bills.
Number 0338
MS. WARD said that was true, except currently, the mortgage rates
were 7.5 to 8 percent and the majority of the interest rate went
to the investor and not the servicer.
Number 0366
CHAIR JAMES asked whether servicers, not banks, maintained
escrows in an interest bearing or a trust account.
Number 0382
MS. WARD replied it was held in an interest bearing account. She
further commented the servicer was working for the investor.
Number 0388
CHAIR JAMES said in this case the homeowner did not get any
benefit from the interest bearing account.
Number 0395
MS. WARD replied the impound account protected the loan and the
collateral according to the servicer. She cited she recently
received a refund from her impounded account.
Number 0412
CHAIR JAMES asked if there were any further questions or
comments.
REPRESENTATIVE BUNDE informed the committee members the statues
defined "bank" and "banking."
CHAIR JAMES also reported the term "bank" was defined broadly and
included all other financial institutions.
Number 0430
CHAIR JAMES said she would like to work closely with the sponsor
of HB 363 and address the interest dilemma. She proposed a
possible committee substitute was necessary.
Number 0461
REPRESENTATIVE BUNDE thanked the chair and quoted 3 percent as a
fair amount or tie it to a passbook savings interest.
Number 0472
CHAIR JAMES responded there were institutions that did not have
passbook savings.
Number 0480
REPRESENTATIVE BUNDE replied then an average of passbook savings
paid in Alaska was fair. He further reiterated Ms. Ward's
testimony that servicers made money on the interest in the escrow
accounts. He suggested there existed the potential to pad the
escrow and urged the committee members to require paying a
predetermined percentage on the entire account to prevent
dishonestly.
Number 0509
REPRESENTATIVE PORTER suggested the subcommittee address other
issues as well. He expressed he was not sure if a problem really
existed. He commented there was the unknown cost factor added to
the mortgage account based on the institution benefitting, but
the borrower benefited as well by not having to pay for the
services. Furthermore, the testimony today indicated the
services were required. Representative Porter, in conclusion,
stated, if we were to compensate the borrower for using the money
then we should also compensate the institution for the service.
He further said he was not comfortable passing a bill that could
potentially cost people money.
Number 0580
CHAIR JAMES disagreed with Representative Porter. She alleged
the institutions were providing a service for themselves and not
for the mortgage holder.
Number 0629
REPRESENTATIVE ROBINSON appreciated the consumer right aspect of
HB 363 but again questioned whether or not a bill was necessary.
She stated the committee should enforce the banks to comply with
the existing laws rather than produce another piece of
legislation.
Number 0670
CHAIR JAMES said the issues involved were putting money into an
interest bearing account and not getting a return and taking away
individual responsibility. Chair James expressed it was an
individual's responsibility to comply with the escrow laws. She
lastly asked for members who were interested in working on HB 363
further.
Number 0743
REPRESENTATIVE BUNDE replied to Representative Porter's previous
comment regarding the service fee. He said, the consumer was
paying a service fee now, however, they did not know how much.
CHAIR JAMES asked Ms. Ward if she would be available in the
future to answer further questions.
MS. WARD responded, "yes."
Number 0788
CHAIR JAMES excused Representative Ogan due to an Oil and Gas
Committee meeting.
HB 348 - VIDEO/AUDIOTAPE INTERVIEW OF ABUSED MINOR
Number 0797
The next order of business to come before the House State Affairs
Committee was HB 348.
CHAIR JAMES explained, Barbara Cotting, Legislative Assistant to
Representative Jeannette James, was here to read the sponsor
statement.
BARBARA COTTING, Legislative Assistant to Representative
Jeannette James, read the following statement into the record.
"The intent of the bill is to have a video camera or an audiotape
recorder turned on immediately at the start of the original,
initial official interview with an allegedly abused or neglected
child and top record the entire interview and all subsequent
interviews with the child.
"When dealing with emotion-lade situations, adults' perceptions
and memories are not necessarily reliable; and children can be
led to make imaginary happenings sound like fact and to finally
believe these fantasies themselves. The credibility of all
parties can become suspect and an accurate objective judgement is
then impossible. This bill would held dispel incorrect
perceptions and allow fairness to all parties involved.
"I met with strong resistance from DFYS and other state agencies
when I introduced a similar bill two years ago. This year the
agencies should be much more receptive due to a recent
Ombudsman's investigation, which found:
"Arguments in favor of videotaping or at least audiotaping are as
compelling as those against the practice....
"Administrative conveniences does not justify lack of agency
accountability in this sensitive area....
"Where video and audio recorders might have intimidated children
in the 1960's, the same likely cannot be said in the 1990's.
(Sponsor's insert: I also believe that taping makes the child
feel validated, not intimidated.) And finally....
"Social workers questioned by the ombudsman investigator either
said that audio taping would not be a problem and might be easier
than note taking, or said that a videotape would be the best way
to review a case.
"HB 348 will help implement sound public policy by requiring
accountability of agency action in the sensitive area of state
interference in private family life, and I strongly urge your
support for this important piece of legislation."
CHAIR JAMES asked if there were any questions or comments and
called on Gene Ottenstroer via teleconference in Delta Junction.
MS. COTTING said, for the record, Steve Grunstein, P.O. Box
32604, Juneau, Alaska 99803, (907) 789-2155, called and stated an
important line needed to be drawn between abuse and discipline.
GENE OTTENSTROER said HB 348 helped but was not the answer. He
referred the committee members to line 13, "A school official
shall be present during an interview at the school unless the
child objects...." Mr. Ottenstroer asserted a parent needed to
be present also. He alleged a child would be nervous without a
parent present when faced with officials. He also referred the
committee members to page 2, line 2, "The interview shall be
videotaped or audiotaped as required by AS 47.17.035." He stated
the interview should be done by a non-biased party. The police
department, he said, had been known to tamper with tapes to their
advantage. He further referred the committee members to line 6,
"the department or agency shall make every reasonable effort to
notify the child's parent, guardian, or custodian that the
interview occurred unless it appears to the department or agency
that notifying the child's parent, guardian, or custodian would
endanger the child." Mr. Ottenstroer questioned, who, had the
authority to make that decision. He stated, a social worker
would cause problems. He also cited the case described in the
State of Alaska Ombudsman report dated June 21, 1995. He said it
had gotten to the point where parents could not touch their
children.
CHAIR JAMES called on the next testifier, Nancy Buell, Director,
Education Program Support.
NANCY BUELL, Director, Education Program Support, Department of
Education, stated the protection of the child and the
availability of technology were the two issues the department was
concerned about. Ms. Buell alleged the factors that influenced
children were trust, stress, and technology. She further alleged
technology was not always reliable or available in rural areas
potentially keeping the child in a dangerous situation. She
stated the department did not oppose HB 348 but was concerned
administrative convenience would interfere with the intent of the
legislation.
Number 1430
CHAIR JAMES asked the committee members if they wanted to hold
questions until the end or after each testimony.
Number 1444
REPRESENTATIVE ROBINSON replied it was best to ask questions
after each testimony.
CHAIR JAMES asked if there were any further questions or
comments.
Number 1456
MS. BUELL further stated she was concerned about the cultural
protection of children. She cited for spiritual reasons some
cultures did not allow video/audiotaping.
CHAIR JAMES responded she was open to any suggestions.
Number 1475
REPRESENTATIVE IVAN said he would like to absorb the information
presented further before asking any questions.
CHAIR JAMES called on the next testifier, Jayne Andreen,
Executive Director, Council on Domestic Violence and Sexual
Assault.
Number 1503
JAYNE ANDREEN, Executive Director, Council on Domestic Violence
and Sexual Assault, said she was concerned about the initial
interview of children who had alleged abuse or neglect. She
asserted it was important to look at the children's needs upon
disclosure. Ms. Andreen cited the environment must be safe and
supportive, and the children must be surrounded by someone they
trust. She stated the majority of child abuse complaints did not
go beyond the initial complaint and was concerned HB 348 would
subject Alaskan children to a formal process potentially causing
damage.
Number 1675
REPRESENTATIVE ROBINSON asked Ms. Andreen what type of interviews
were being conducted around the state. She stated at one point
interview rooms were at the prosecutor's office and then at some
point all parties involved were videotaped in an official
interview.
Number 1715
MS. ANDREEN responded the ideal situation was to use a one-way
mirror with a camera in another room. The interview was usually
conducted after a determination had been made that it was
warranted by trained officials such as a police officer. The
idea was to get it on tape for the court and to eliminate the
number of times the child had to repeat his testimony.
Number 1783
REPRESENTATIVE ROBINSON suggested to the committee members more
information was needed statewide to ascertain exactly what was
being done to eliminate repeated testimony.
Number 1855
CHAIR JAMES called on the next testifier, Del Smith, Deputy
Commissioner, Office of the Commissioner, Department of Public
Safety.
DEL SMITH, Deputy Commissioner, Office of the Commissioner,
Department of Public Safety, stated the department had some
practical concerns regarding HB 348. Mr. Smith expressed the
logistical concerns of furnishing interview rooms throughout the
state and was afraid someone would not be prosecuted because of
technical problems. He suggested officials use a tape recorder
in the field to eliminate repetition and interpretation mistakes.
Number 1968
REPRESENTATIVE ROBINSON questioned if bringing all the parties
concerned together for an initial interview was the direction the
state should take.
Number 1993
MR. SMITH replied it was the best direction to take. Repeated
interviews were problematic and any way to capture the
information needed in the initial interview was less intrusive.
However, statutorily mandating this would cause problems, he
alleged.
Number 2044
REPRESENTATIVE ROBINSON asked Mr. Smith if children were
reporting the incident to a teacher, for example, whereupon the
teacher would contact the appropriate authorities.
Number 2073
MR. SMITH responded he imagined a child would tell a teacher what
happened and because it was not recorded he was concerned the
information would be suppressed.
CHAIR JAMES called on the next testifier, Yvonne Chase, Deputy
Commissioner, Office of the Commissioner, Department of Health
and Social Services.
Number 2121
YVONNE CHASE, Deputy Commissioner, Office of the Commissioner,
Department of Health and Social Services, said the department
conducted a study to look at videotaping. The report in summary
stated at this point no state had a mandatory videotaping policy.
However, 35 states actively use audio/videotaping. The
department did not oppose the use of videotaping, she asserted,
when useful, but there were problems inherent when mandating such
legislation. Ms. Chase further stated HB 348 clearly
demonstrated what happened during an interview affected the
outcome of a case. She informed the committee members staff at
the Department of Health and Social Services indicated they would
like to use audiotaping more widely for accountability and
training reasons. She lastly asked the committee to consider the
logistical and legal issues involved with this bill.
TAPE 96-3, SIDE A
Number 0000
CHAIR JAMES asked if there were any further questions or
comments.
Number 0070
REPRESENTATIVE PORTER said he was only familiar with Anchorage
cases and commented it was unlikely a DFYS professional, for
example, would be the initial contact person. He questioned if
there were in fact times when a DFYS professional was the initial
contact.
Number 0123
MS. CHASE responded teenagers self-referred themselves to DFYS.
CHAIR JAMES asked if there were any further questions or comments
and called on Betty Rollins via teleconference in Fairbanks.
Number 0140
BETTY ROLLINS said she could not imagine why a department such as
DFYS would object to videotaping an interview for the protection
of the child and the agency. Ms. Rollins asserted she supported
the mandate for fear of agencies using technical reasons as
excuses not to tape the interview. She further expressed parents
should be notified of the interview but not necessarily present
at the interview. Ms. Rollins also expressed her concerns of
agencies writing the bill for fear of changing the intent. She
suggested individuals carried the equipment with them as small
cameras were available. She said she preferred a videotape over
an audiotape for fear of tampering. In conclusion, she said, she
supported HB 348 because it protected the agency, the child, and
the parent.
CHAIR JAMES called on the next testifier, Charles Rollins via
teleconference in Fairbanks.
Number 0330
CHARLES ROLLINS said he supported HB 348. Child abuse was a
serious crime and the children were worth the expense of such a
bill.
CHAIR JAMES called on the next testifier, Lauree Hugonin,
Executive Director, Alaska Network on Domestic Violence and
Sexual Assault.
Number 0388
LAUREE HUGONIN, Executive Director, Alaska Network on Domestic
Violence and Sexual Assault, discussed the tenderness of child
abuse as a topic. It was a difficult dialogue and she
appreciated the legislature for addressing the issue. She stated
it was a surprise to learn in Alaska only certain professionals
were qualified to report child abuse. She asked the committee
members to think about the mitigation of false reporting and
suggested there needed to be an opportunity to check each report.
Ms. Hugonin said we needed to look at what was best for children.
She further suggested more training would be necessary to ensure
accurate interviews. She reiterated earlier testimony that the
fewer interviews the better for the children to lessen the
trauma. She suggested a solution was to provide a room with a
two-way mirror and video camera where the experienced personnel
were present behind the mirror asking the needed questions.
This, she hoped, would prevent repeated interviews. She also
suggested different requirements and expectations for different
ages. She said she was concerned about the storage of tapes in
the event of an unfounded case, for example. In conclusion, she
stated she was concerned about the good faith of people reporting
cases and was concerned about creating an environment which would
discourage reporting of abuse.
CHAIR JAMES called on the next testifier, Jodi Delaneyvia
telephone in North Pole.
Number 0888
JODI DELANEY said she lost her family due to a child abuse
allegation. Ms. Delaney asserted videotaping was a check and
balance in the system. She inferred there was not a check and
balance on the social workers and cited a case where her nephew
was sexually abused in a specialized foster home. She further
stated Alaska led the nation in false allegations of child abuse
and no one was available to pick up the pieces. She cited 60
percent of allegations were false and 80 hours minimum were spent
on investigating each case. Ms. Delaney felt a videotape of an
interview would decrease false allegations, and all individuals
involved would be working from the same report. She further
stated all laws on child abuse were written as if the parent was
the perpetrator. She declared a video camera was a very
inexpensive tool to save the lives of families. She questioned
the domino effect on the family in the event of a false
allegation. Ms. Delaney declared she had designed a chart to
illustrate how the state of Alaska could save money to help our
social workers. She stated she requested for two years a
grievance procedure after she was falsely accused. She cited
there were hidden agendas in the system and they needed to be
cleaned-up. She further asserted if there had been a videotape
in her case she would not have been falsely accused. In
conclusion, she cited her son was highly traumatized by the
process.
CHAIR JAMES introduced the next testifier, Gene Altig via
teleconference in North Pole.
Number 1444
GENE ALTIG suggested the teacher should be the interviewer. He
referred the committee members to line 12, page 1 and line 6,
page 2, and agreed parents needed to be notified. Mr. Altig
responded to earlier testimony regarding the storage of tapes.
He stated, technology already existed to conveniently store them.
He expressed his desire for videotaping over audiotaping and
cited the Rodney King court case.
CHAIR JAMES called on the next testifier, Harry Niehaus via
teleconference in North Pole.
Number 1515
HARRY NIEHAUS said HB 348 needed work for the simple reason an
audiotape could be turned off and manipulated. However, a
videotape displayed the time and date therefore protecting the
child. Mr. Niehaus also stated accountability and checks and
balances were needed in the system. He referred the committee
members to line 6, page 2 and suggested striking "make every
reasonable effort" and replace it with "the department shall."
He also referred the committee members to page 1, line 14, "A
school official shall be present during an interview at the
school unless the child objects." An official should be present
even if a child objected due to accountability, he asserted.
CHAIR JAMES called on the next testifier, Scott Calder via
teleconference in Fairbanks.
Number 1625
SCOTT CALDER said HB 348 moved in the right direction. He
stated, however, the provision for audiotaping was not a good
idea. Strong, empirical evidence was needed to prove or disprove
the actions of the government to protect family integrity. The
lack of public trust was the real issue, he alleged. Mr. Calder
said he could not think of any reason to trust the individuals
involved in an investigation. He expressed accountability was
needed in the departments interfering with family life. He said
there was an assumption the parents needed to be investigated on
the part of the department. He said he knew of many parents who
felt the departments needed to be investigated. He disagreed
with earlier testimony regarding the age of children and the type
of interview used. He felt it was a side issue. He also
suggested the departments were accountable for the potential mis-
use of information. He alleged there was an epidemic of hysteria
regarding the reporting of child abuse. Lastly, he commented, a
public review process was needed to address the foster care
system as established within the Department of Administration.
He cited for five years now Fairbanks wanted a review. In
conclusion, he reiterated a strong, empirical document was needed
in every situation where action was needed.
Number 1861
CHAIR JAMES recognized the presence of Gail Phillips, Speaker of
the House of Representatives.
Number 1882
REPRESENTATIVE ROBINSON responded Ms. Hugonin did not have a
problem regarding the storage of videotapes. Representative
Robinson further stated the budget for the foster care review
panel had been cut, and commented that was the reason Fairbanks
was not involved.
Number 1944
CHAIR JAMES said there was a problem and she would like to work
with the Department of Health and Social Services, the Department
of Public Safety, the Department of Law, and anyone on the
committee who was interested to ensure HB 348 addressed the
issues discussed today on a statewide basis.
Number 1983
MS. DELANEY asked if the public would be allowed to participate.
She further asked for someone to address the incident in Delta
Junction mentioned in previous testimony.
ADJOURNMENT
Number 2008
CHAIR JAMES adjourned the House State Affairs Committee Meeting
at 10:10 a.m.
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