Legislature(2007 - 2008)FAHRENKAMP 203
03/25/2008 01:30 PM Senate JUDICIARY
| Audio | Topic |
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| Start | |
| HJR34 | |
| HB163 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HJR 34 | TELECONFERENCED | |
| += | HB 163 | TELECONFERENCED | |
| + | TELECONFERENCED |
ALASKA STATE LEGISLATURE
SENATE JUDICIARY STANDING COMMITTEE
March 25, 2008
1:34 p.m.
MEMBERS PRESENT
Senator Hollis French, Chair
Senator Charlie Huggins, Vice Chair
Senator Bill Wielechowski
MEMBERS ABSENT
Senator Lesil McGuire
Senator Gene Therriault
COMMITTEE CALENDAR
HOUSE JOINT RESOLUTION NO. 34
Urging the United States Congress to reauthorize the Debbie
Smith DNA backlog grant program.
MOVED HRJ 34 OUT OF COMMITTEE
CS FOR HOUSE BILL NO. 163(JUD)
"An Act relating to real property foreclosures, to the sale of
property on execution, and to deeds of trust."
HEARD AND HELD
PREVIOUS COMMITTEE ACTION
BILL: HJR 34
SHORT TITLE: FEDERAL FUNDING FOR DNA TESTING
SPONSOR(s): REPRESENTATIVE(s) ROSES
02/13/08 (H) READ THE FIRST TIME - REFERRALS
02/13/08 (H) JUD
02/22/08 (H) JUD AT 1:00 PM CAPITOL 120
02/22/08 (H) Moved Out of Committee
02/22/08 (H) MINUTE(JUD)
02/25/08 (H) JUD RPT 5DP
02/25/08 (H) DP: LYNN, COGHILL, SAMUELS, HOLMES,
RAMRAS
03/10/08 (H) TRANSMITTED TO (S)
03/10/08 (H) VERSION: HJR 34
03/12/08 (S) READ THE FIRST TIME - REFERRALS
03/12/08 (S) JUD
03/21/08 (S) JUD AT 1:30 PM BELTZ 211
03/21/08 (S) -- MEETING CANCELED --
03/25/08 (S) JUD AT 1:30 PM FAHRENKAMP 203
BILL: HB 163
SHORT TITLE: PROPERTY FORECLOSURES AND EXECUTIONS
SPONSOR(s): REPRESENTATIVE(s) RAMRAS
02/28/07 (H) READ THE FIRST TIME - REFERRALS
02/28/07 (H) L&C, JUD
03/30/07 (H) L&C AT 3:00 PM CAPITOL 17
03/30/07 (H) -- MEETING CANCELED --
04/20/07 (H) L&C AT 3:00 PM CAPITOL 17
04/20/07 (H) Moved CSHB 163(L&C) Out of Committee
04/20/07 (H) MINUTE(L&C)
04/23/07 (H) L&C RPT 1DP 4NR
04/23/07 (H) DP: RAMRAS
04/23/07 (H) NR: BUCH, LEDOUX, NEUMAN, OLSON
04/27/07 (H) JUD AT 1:00 PM CAPITOL 120
04/27/07 (H) Heard & Held
04/27/07 (H) MINUTE(JUD)
04/30/07 (H) CORRECTED L&C RPT CS(L&C) NT 1DP 4NR
04/30/07 (H) DP: RAMRAS
04/30/07 (H) NR: BUCH, NEUMAN, LEDOUX, OLSON
04/30/07 (H) JUD AT 1:00 PM CAPITOL 120
04/30/07 (H) Moved CSHB 163(JUD) Out of Committee
04/30/07 (H) MINUTE(JUD)
05/01/07 (H) JUD RPT CS(JUD) NT 3DP 4NR
05/01/07 (H) DP: GRUENBERG, LYNN, RAMRAS
05/01/07 (H) NR: COGHILL, DAHLSTROM, SAMUELS, HOLMES
05/05/07 (H) TRANSMITTED TO (S)
05/05/07 (H) VERSION: CSHB 163(JUD)
05/07/07 (S) READ THE FIRST TIME - REFERRALS
05/07/07 (S) JUD, FIN
03/05/08 (S) JUD AT 1:30 PM BELTZ 211
03/05/08 (S) Heard & Held
03/05/08 (S) MINUTE(JUD)
03/21/08 (S) JUD AT 1:30 PM BELTZ 211
03/21/08 (S) -- MEETING CANCELED --
03/25/08 (S) JUD AT 1:30 PM FAHRENKAMP 203
WITNESS REGISTER
CRYSTAL KOENEMAN, Staff
to Representative Bob Roses
Alaska State Capitol
Juneau, AK
POSITION STATEMENT: Introduced HJR 34 on behalf of the sponsor.
JANE PIERSON, Staff
to Representative Jay Ramras
Alaska State Capitol
Juneau, AK
POSITION STATEMENT: Answered questions about HB 163.
STEPHEN ROUTH, Attorney at Law
Routh Crabtree, APC
Anchorage, AK
POSITION STATEMENT: Provided prospective on HB 163.
DENNIS FENERTY, Attorney at Law
Anchorage
POSITION STATEMENT: Offered suggestions on HB 163.
MIKE PRICE, Owner
Mat-Su Title Insurance Agency & Fidelity Title Insurance Agency
POSITION STATEMENT:
REPRESENTATIVE JAY RAMRAS
Alaska State Capitol
Juneau, AK
POSITION STATEMENT: Sponsor of HB 163,
ACTION NARRATIVE
CHAIR HOLLIS FRENCH called the Senate Judiciary Standing
Committee meeting to order at 1:34:50 PM. Present at the call to
order were Senators French, Huggins, and Wielechowski.
HJR 34-FEDERAL FUNDING FOR DNA TESTING
CHAIR FRENCH announced the consideration of HJR 34.
1:35:14 PM
CRYSTAL KOENEMAN, Staff to Representative Bob Roses, sponsor of
HJR 34, said that this resolution asks Congress to reenact the
Debbie Smith DNA Backlog Grant Program. The program, which was
originally passed in 2004 and is due to expire in fiscal year
2009, ensures that DNA evidence can be used to convict the
guilty and free the innocent. Alaska has about 400 backlog DNA
cases and reauthorizing the program will ensure continuation of
the grants so the backlog can be addressed.
She noted that the packets contain information on the federal
grants that Alaska has obtained and what has been done with that
money.
CHAIR FRENCH said he assumes that this would cost the state
nothing, and Ms. Koeneman agreed. He asked if the resolution has
a connection to the Innocence Project.
MS. KOENEMAN replied there really is no connection. She added
that according to the Innocence Project website, Alaska has not
had any post-conviction DNA exonerations.
1:37:32 PM
CHAIR FRENCH said he believes that's accurate, and noted that
Mr. Bill Oberly has been hired to head the Alaska Innocence
Project. He asked how much Alaska might get if Congress elects
to reauthorize the program.
MS. KOENEMAN estimated that the state has, on average, received
about $160,000 a year.
CHAIR FRENCH noted that the grants total $151 million, and
commented that he'd like Alaska to get a little more of that
money.
Hearing and seeing no one else who wished to testify, he closed
public testimony. Finding no discussion, he asked for a motion.
1:39:02 PM
SENATOR HUGGINS motioned to report HJR 34 from committee with
individual recommendations and attached fiscal note(s).
CHAIR FRENCH announced that without objection, HJR 34 is moved
from the Senate Judiciary Committee.
HB 163-PROPERTY FORECLOSURES AND EXECUTIONS
CHAIR FRENCH announced the consideration of HB 163.
1:39:39 PM
JANE PIERSON, Staff to Representative Jay Ramras, said that HB
163, "An act relating to real property foreclosures, to the sale
of property on execution, and to deeds of trust.", has been
changed since it was last heard in this committee. She
highlighted the following changes between Version \O, 25-
LS0630\O, and Version \N, 25-LS0630\N:
Page 2, line 31 - AS09.35.140(c)(3) was amended to
include newspapers that have a circulation of over
50,000 copies of each issue as qualified Internet
websites to which non-foreclosure notices may be
published.
Page 6, line 31, through page 7, line 3,
AS34.20.080(a)(1) was amended so that the trustee must
bring an action under AS22.10.020(g) to establish
procedures for accepting bids on the Internet.
Page 10, lines 4-19, adds a new section 34.20.125.
Trustee bond required. All references to the
Department of Commerce, Community, and Economic
Development (DCCED) were removed, pursuant to
discussions with DCCED and Department of Law (DOL).
This is a matter of private contract and the bonding
requirements will be overseen by the title insurance
companies that will not issue title insurance without
the bond in place.
CHAIR FRENCH questioned how many newspaper websites would
qualify under the definition that requires a distribution of
50,000 copies for each issue.
MS PIERSON said she believes that the Anchorage Daily News (ADN)
and the Alaska Journal of Commerce (AJOC) would qualify. She
suggested that Stephen Routh could elaborate.
1:42:45 PM
STEPHEN ROUTH, Attorney at Law, Routh Crabtree, APC, said he
only looked at the ADN on the theory that it was the largest.
That newspaper would qualify because it has a daily print
circulation of about 80,000; web visits are over 130,000 per
month. He didn't look at circulations of the AJOC or others, but
he would do so if the committee wanted more information.
CHAIR FRENCH said if the idea is to get the word out to as many
people as possible to return the most money to the lien holder,
he wonders whether it wouldn't be a better idea to make certain
that local papers carry the notices.
MR. ROUTH said he agrees with respect to local printed
publications, but the problem is that the statewide Internet
publication isn't restricted to a particular borough. If any
print publication can qualify to publish on the Internet, a very
small out-of-the-way publication could carry the Internet
advertisements for a large urban area. Those might not be
noticed as much. For that reason, having some circulation
threshold makes sense, he said.
1:45:25 PM
CHAIR FRENCH asked if his concern is that the Juneau paper or
The Tundra Drums, for example, might carry Anchorage
foreclosures.
MR. ROUTH said yes.
CHAIR FRENCH agreed that's to be avoided, but a Juneau resident
would probably never think to look on the ADN website to see if
there was a foreclosure in his or her neighborhood.
MR. ROUTH pointed out that a Juneau resident would still be able
to look in the local paper to find foreclosures in the area.
Because of the website visit requirements, search engines will
pick up foreclosure information for any particular area. But it
wouldn't ratchet the other way, which is why it's a good idea to
have some threshold, to make sure that the goal of reaching a
wide audience is met.
CHAIR FRENCH said it's a good point that the Internet
publication augments rather than supplants newspaper format
notification.
1:47:03 PM
CHAIR FRENCH turned to the second change on page 6, relating to
accepting bids by telephone and asked Ms. Pierson or Mr. Routh
to further explain what's entailed in establishing procedures
ahead of time.
MR. ROUTH explained that this change came about as a result of
the concern articulated about the new process for taking bids on
the Internet. The trustee will establish procedures for
accepting bids on the Internet that are fair, accessible, and
designed to result in money being immediately available for
disbursement, and a superior court judge will review the
process. In response to a question, he said that AS22.10.020(g),
on page 6, line 31, is the statutory reference to a procedure
set by a superior court judge.
CHAIR FRENCH asked if bids are currently allowed by telephone or
email.
MR. ROUTH replied they're not expressly allowed or disallowed,
but it's common practice to use both in foreclosures. This
provides statutory blessing, he said.
1:49:34 PM
CHAIR FRENCH questioned why only Internet bid procedures are to
be reviewed by the superior court; telephone and email are left
out.
MR. ROUTH said he believes it's because telephone and email
aren't new methods and wouldn't be viewed as suspect. He
understood the committee was concerned about mandating
protection of the superior court only on the Internet because
it's a new method.
1:51:14 PM
CHAIR FRENCH asked him to explain the changes made on page 10.
MR. ROUTH said that the Department of Law and the sponsor
decided that this is a private bond matter and there isn't any
need for DCEED to track and keep the information. He concurred.
Thus all reference to the Department of Commerce, Community and
Economic Development was dropped. The intent and the result are
the same; through bonding, Alaskans are provided some measure of
protection from unscrupulous trustees who might abscond with
funds.
CHAIR FRENCH summarized that the new Section 14 requires a
trustee to first obtain a surety bond that must be terminable at
any time by the surety. In the event that it's terminated, the
person who obtained the bond may not act as a trustee until the
person obtains another bond. He noted that title insurance
companies and title insurance limited producers are exempted
from the bonding requirement and asked what the latter is.
MR. ROUTH explained that one is the underwriter and the other is
the agent; in Alaska there's a mix. For example, First American
Title is the underwriter that actually provides the insurance.
It has licensed agents, some of which aren't owned by First
American, but those agents can bind the underwriter. This
provision provides protection for both the underwriter and the
agent.
CHAIR FRENCH asked if his analysis indicated that there's no
reason for oversight from DCCED with respect to keeping a list
of who is bonded and who is not.
MR. ROUTH replied that is correct.
1:53:57 PM
SENATOR WIELECHOWSKI asked what it costs to get a $250,000 bond.
MR. ROUTH estimated it's about $5,000.
SENATOR WIELECHOWSKI asked what percentage of trustees are not
title insurance companies or title insurance limited producers.
MR. ROUTH said that the majority of people who act as trustees
in Alaska are non title insurance related. He surmised that
close to a majority are entities from California.
SENATOR WIELECHOWSKI said he supports the concept of providing
protection, but he questions the $5,000. He'd be curious to hear
DCCED's perspective.
1:55:20 PM
CHAIR FRENCH asked Ms. Pierson if this provision was in the bill
when it passed the House.
MS. PIERSON said it was; yesterday DCCED, DOL, and the division
of insurance made the decision to take DCCED out of the
equation.
SENATOR WIELECHOWSKI said he doesn't want inadvertent
consequences for individuals who act as trustees.
1:56:10 PM
MR. ROUTH said he understands the concern about what happens to
someone who wants to do this one or two times, but the reality
is that it's fairly uncommon because it's become a professional
business. His concern is that without bonding requirements or
other indication of financial stability, borrowers in
foreclosure aren't adequately protected from unscrupulous
trustees. Now if a borrower wants to pay off a loan to cure a
foreclosure, the standard practice is to hand the money to the
trustee. If the trustee decides to run down the road with the
money, there's nobody to stop that. That's the evil this tries
to avoid, he said.
SENATOR WIELECHOWSKI asked if there's been a problem with
trustees committing fraud.
MR. ROUTH replied it hasn't happened in Alaska yet, but it has
happened in five or six Western states that he's aware of.
1:58:41 PM
DENNIS FENERTY, Attorney at Law, Anchorage said he's represented
lenders for more than 20 years and has done many foreclosures.
He noted that he commented on the bill during the work session,
and he believes the legislation is valuable and brings Alaska
into the modern age. However, Section 2, which amends
AS09.35.140 by adding new subsections, doesn't fix the problem
that he and others testified to earlier. His concern relates to
the qualifications for the hosts of the Internet publication.
The publisher of The Alaska Journal of Commerce indicated that
he has a paid subscription of 5,000 a week, which means that the
AJOC wouldn't qualify. The ADN would qualify under subsection
(c)(3), which requires a newspaper circulation of 50,000 copies
per issue, but it might not meet the test under subsection
(c)(5), which requires at least 5,000 website visits each month.
MR. FENERTY suggested the legislature incorporate the concept
that already applies to newspaper advertizing. That is to
authorize any newspaper to host Internet publications if they
are a newspaper of general circulation under AS09.35.140. That
statute establishes the standard for a newspaper that hosts
foreclosure sales in a judicial district where the sale will
occur. He suggested that subsection (c)(3) read as follows: "be
used primarily to advertise real property under foreclosure or
be operated by a newspaper of general circulation under
AS09.35.140." Under subsection (c)(5) he encouraged the
committee to reduce the number of websites visits to 1,000
because requiring 5,000 visits per month may exclude the ADN. He
believes that those two changes would open the host sites to
competition from the AJOC and others, while still protecting the
concept the committee was concerned about. In other respects,
this bill accomplishes good things, he said.
2:04:16 PM
MR. FENERTY, addressing Senator Wielechowski's concerns about
trustees, explained that under deed of trust the trustee owes
duty to the beneficiary and the borrower. It isn't a business
that the legislature should want people to get into easily so
posting a bond is prudent. A barrier to entry of a $5,000
premium for a $250,000 bond shouldn't concern the legislature,
he said.
He offered to answer questions and in conclusion said, "I would
certainly hope that we carefully not create a monopoly to host
the…website advertizing."
CHAIR FRENCH asked him to forward his written suggestions on
Section 2 to his office.
2:05:35 PM
MIKE PRICE, Owner, Mat-Su Title Insurance Agency in Wasilla and
Fidelity Title Insurance Agency in Anchorage, said he's been a
real estate attorney since 1975 and he's conducted many
foreclosures in his years of practice. He, too, opposes the
Internet provisions in Section 2 of the current draft. The
foreclosures he does on behalf of the title companies are
advertized in papers of general circulation as defined by a
circulation of either 500 papers or 10 percent of the judicial
district in which the paper is located. If the legislature is
going to encourage Internet advertizing, he would suggest
accepting the same language as is used for written publications.
With respect to the 5,000 visits per month requirement under
subsection (c)(5), he would suggest the committee not establish
an arbitrary number. If the newspaper is one of general
circulation, then subsection (c)(5) on page 3, could be
eliminated altogether.
MR. PRICE referred to page 4, lines 5-6, and noted that the new
phrase means that the lender only has to accept a cure of
default up to two days before the sale, which is inconsistent
with at least 100,000 existing deeds of trust in the state.
Those contracts between the borrower and the beneficiary
basically say that the borrower can cure any time up to the
moment of sale. He encouraged the committee to look at the ex
post facto implications of changing up to 100,000 deeds of
trusts. And, he said, if it is the legislature's intent to do
this, he would encourage establishing legislative history to
guide the court in the inevitably court challenge. Most of the
bill is good, but those two provisions are unconscionable and
they should be removed, he said.
2:12:29 PM
CHAIR FRENCH thanked Mr. Price and said that in these
specialized areas of law, it's particularly helpful to hear from
people who do this for a living.
SENATOR WIELECHOWSKI said that Mr. Price made good points, and
he wouldn't object to removing the two days before the sale
provision. The other issue is an interesting debate, he said.
Limiting advertisement to one or two Internet sites might not be
the best answer, but if a large number of Internet websites are
allowed, the sales could be buried and be very difficult to
find. There's a balance there somewhere, he said.
2:14:04 PM
CHAIR FRENCH agreed that the Internet section of the bill needs
further work. He noted that the two days before sale provision
was in the bill when it passed the House; he circled it at the
last hearing but there was no discussion. The testimony today
indicates that it may be contrary to a large number of deeds of
trust. He'll discuss with legislative legal the idea of adding
some qualifying language to keep the provision as long as it
doesn't conflict with the contract the borrower signed to
purchase the property.
SENATOR WIELECHOWSKI offered the perspective that if someone is
potentially losing their house, they should be able to cure
right up right up to the time of the sale. That seems fair to
me, he said.
2:15:38 PM
SENATOR HUGGINS said he agrees but he'd like to hear what the
debate was in the other body.
MS. PIERSON explained that the original draft said five days
prior to the sale. The House Judiciary Committee changed it to
two days in the belief that it struck a balance between the cost
that would be incurred and litigation that may arise if left up
to the day of the sale. After listening to Mr. Price's
testimony, she acknowledged that an amendment may be in order.
CHAIR FRENCH said it's clear that if some period of time to cure
remains in the bill, some modification will be necessary to make
sure that it's subsidiary to any language in existing deeds of
trust. He recognized that the sponsor had joined the meeting.
2:17:26 PM
REPRESENTATIVE JAY RAMRAS, Sponsor of HB 163, said he's amenable
to the suggested changes. He is concerned about potential
foreclosures in Fairbanks driven by an inability to service a
mortgage and the roster of skyrocketing utilities. Although he
uses banks, he's mindful that lenders are more interested in
their being made whole when a homeowner is distressed and has to
surrender their home. He is pleased that this committee is
interested in protecting a homeowner's remaining equity. "We
appreciate the improvements and the amendments that are going to
be offered by Senate judiciary at the appropriate time," he
said.
2:19:04 PM
SENATOR WIELECHOWSKI recapped his musing about the proper
tension between advertizing in one publication that reaches a
large number of people versus smaller local advertizing. He
asked the sponsor to provide the committee with information on
how other states deal with that problem.
REPRESENTATIVE RAMRAS said he supports the notion of having two
buyers rather than one.
MS. PIERSON added that there are provisions requiring local
posting one of which is to advertize the sale in the local
newspaper. The Internet provision is really an expansion to get
more bidders; it doesn't do away with the local provisions.
2:21:24 PM
MR. ROUTH relayed that the ADN in a previous month had 123,716
visits so it would qualify, and the Alaska Journal of Commerce
would probably qualify as well. He urged the committee not to
say that if a publication is qualified for print it's also
qualified for the Internet because there wouldn't necessarily be
wide publicity to attract bidders. It'd be a mistake to
advertize property that's for sale in Juneau primarily in the
Tundra Times. That would be a disservice to everyone involved in
the process. The bottom line is exposure; that's why real estate
companies buy full page ads in large newspapers, he said.
CHAIR FRENCH said everyone shares the same goal; it's a matter
of finding the best way to do that. He held HB 163 in committee.
There being no further business to come before the committee,
Chair French adjourned the Senate Judiciary Standing Committee
meeting at 2:23:02 PM.
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