Legislature(2009 - 2010)BELTZ 105 (TSBldg)
03/09/2010 01:30 PM Senate LABOR & COMMERCE
| Audio | Topic |
|---|---|
| Start | |
| SB153 | |
| SB302 | |
| SB129 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | SB 129 | TELECONFERENCED | |
| *+ | SB 302 | TELECONFERENCED | |
| += | SB 153 | TELECONFERENCED | |
| + | TELECONFERENCED |
SB 153-MOBILE HOMES AS REAL PROPERTY
1:36:30 PM
CHAIR PASKVAN announced SB 153 to be up for consideration. He
said Senator Meyer had identified a concern and had already
spoken to the bill's sponsor about it.
SENATOR HOLLIS FRENCH, sponsor of SB 153, read the sponsor
statement as follows:
SB 129 establishes procedures to convert manufactured
homes to real property through a defined process
within the Division of Motor Vehicles (DMV). This
change will give the owners of manufactured homes
better access to traditional mortgage financing which
often features lower interest rates, and it will help
home owners increase the value of their house by
allowing them to convert their manufactured home into
real property. The legislation will also prevent
clouded titles that often hinder clean transactions
involving manufactured homes.
Currently, when a manufactured home is affixed to a
permanent foundation on land owned by an individual,
the vaguely defined title surrender procedure
currently used by the Division of Motor Vehicles lacks
a record notice. Without a record notice, a homeowner
is often left with an unmarketable title and an
unperfected security interest in their house placing
all parties in a real estate transaction - the buyer,
the lender, and the seller - at risk.
Many Alaskans live in manufactured homes. This
legislation will treat residents that permanently
affix a manufactured home to land they own the same
way that traditional homeowners are treated in the
state. I urge you to support this fair legislation.
SENATOR FRENCH pointed out that Alaska is one of the very few
states without a process similar to the one presented in his
bill. While it is a simple concept, SB 153 spans several
different aspects of state law and requires significant changes.
SENATOR BUNDE said he could think of two kinds of manufactured
homes - one was never on wheels and is placed on a foundation
and those that are "trailer houses." He asked Senator French if
his definition of "manufactured" covers both types.
SENATOR FRENCH said this is meant for "mobile homes" on wheels.
SENATOR BUNDE asked if SB 153 allows traditional mortgages, but
does nothing to compel a lending agency to provide a mortgage
where it did not feel it was a best business practice.
1:39:46 PM
SENATOR DAVIS joined the committee.
SENATOR FRENCH answered, "Exactly, there is absolutely no state
sort of arm twisting." SB 153 simply allows mobile homeowners to
stand on the same footing as any other mortgagee who goes to the
bank and asks for financing.
SENATOR MEYER said he was still confused by the difference
between a mobile home and a manufactured home. He always thought
a mobile home as being something on wheels and a manufactured
home as being attached to a foundation. He asked if this bill
was saying they are one and the same.
SENATOR FRENCH responded that the definition for both is found
in AS 45.29.102.
1:41:36 PM
SENATOR MEYER asked what kind of certification you get from the
DMV if you have a mobile home or trailer.
SENATOR FRENCH replied that the point of the bill is to make
them the same.
SENATOR MEYER asked if this process change costs the homeowner
any more money to get a secure title.
SENATOR FRENCH deferred that answer to Wells Fargo.
CHAIR PASKVAN interjected that "manufactured home" was defined
in AS 45.29.102, subsection 65 as:
A structure transportable in one or more sections that
is eight body feet or more in width, forty body feet
or more in length, and that is built on a permanent
chassis and designed to be used as a dwelling with or
without a permanent foundation.
1:43:31 PM
SENATOR FRENCH said he lived in a mobile home when he was 20,
and it had wheels that had been placed underneath the skirting.
He lived in it for 10 years and then sold it to someone who took
it to Girdwood. It was still able to move after all those years,
and he thought the chassis was the key aspect.
SENATOR MEYER said his potential amendment has to do with the
concern that mobile home transactions will still not be covered
by the Real Estate Surety Fund.
SENATOR FRENCH said it would make sense to him to let consumers
have access to that Surety Fund.
1:45:50 PM
GEORGE GINSBERG, McGlinchey & Stafford, outside counsel to Wells
Fargo, said he didn't have prepared testimony, but wanted to
answer one question - that "mobile home" and "manufactured home"
refers to the same thing. He explained that it is the common
terminology used particularly in Department of Housing and Urban
Development regulations. They are not talking about modular
homes that are stick built, prefabricated and assembled on site.
"These are mobile homes that are made at a factory and then
either installed just on blocks or permanently affixed to real
estate."
SENATOR BUNDE asked if financing for the mobile home depended on
whether it remained on the chassis or was permanently affixed to
a foundation.
MR. GINSBERG answered yes. He explained that the whole point of
the bill is that Alaska currently has no procedure for
converting a mobile home with a certificate of title to real
property. A car it is covered by a certificate of title, but a
home is financed by having the lender's name listed as a secured
lien holder on the title. Unlike a car, a home can be
permanently affixed to the real property on which it sits. Once
that happens, it is commonly taxed as real property and the
intent is to treat it as real property, which means transferring
ownership by deed and financing it by a mortgage. The problem is
that Alaska currently has no reliable procedure for converting a
home covered by a certificate of title to real estate, so that
it can, in fact, be transferred by deed and be encumbered by a
mortgage.
The bill is designed to create a new section of real estate law
which sets forth procedures for converting a home to real
property and in order for that to happen the home has to be
permanently affixed to land, a certain affidavit has to be
recorded in the land records, certain documents have to be filed
with the DMV, and depending upon whether the home is covered by
a certificate of title, a manufacturer's certificate of origin,
or neither, procedures are set forth to surrender the title or
surrender the certificate of origin and have the division
confirm in its records that conversion had occurred.
MR. GINSBERG said the advantage is that then there will be a
record, not only in the DMV, but in the real estate records
where deeds and mortgages are recorded that people can rely
upon. After that, the home along with the rest of the real
estate can be transferred by deed and encumbered by mortgage.
Right now, very few people are willing to extend credit for
purchasing a mobile home based on a mortgage because there is
nothing that establishes the home as part of the real estate.
Likewise, it can't be financed as personal property because the
division will not issue a title to a mobile home that has been
permanently affixed to property. The result is that not only the
lender, but the owner of the home, is "in no man's land." He has
a home that he can't sell because there is no way to document
ownership and he can't encumber because there is no way to
secure a lien against it. It's really unmarketable for
everybody.
SENATOR BUNDE asked if a mobile home in a trailer court where a
space is being rented and not owned would qualify for a
mortgage.
MR. GINSBERG replied if the owner had a long-term lease (defined
in statute as 20 years or more), the conversion process would
apply to them as well.
SENATOR BUNDE said most mobile home parks have month-to-month
agreements and not long-term leases. He said he had heard all
too often about a park closing and people having no place to
take their mobile homes.
SENATOR BUNDE asked if this would apply to manufactured homes on
leased land, but not to the more normal month-to-month
arrangement.
MR. GINSBERG replied that was correct, and chances were that the
mobile home park owner wouldn't permit it anyway, because he
owns the real estate and doesn't want anybody else to own a
small piece of it.
SENATOR THOMAS asked if these types of homes are still
manufactured, because he had not seen any new ones lately.
MR. GINSBERG replied yes; in the 1970s, manufactured housing
accounted for 20-25 percent of new housing starts, but demand is
way down now.
SENATOR THOMAS asked if SB 153 covers everything that is 8 ft. X
40 ft. or larger.
MR. GINSBERG answered yes.
CHAIR PASKVAN asked how many units converted by this law in
Alaska would likely take advantage of the mortgage loans.
MR. GINSBREG said he didn't know.
1:54:29 PM
CARL SPRINGER, Division of Motor Vehicles (DMV), Department of
Administration (DOA), said he was available for questions.
1:54:46 PM
TIFFANY KALDOR, Wells Fargo Home Mortgage, Fairbanks, said she
supported SB 153. She said it would provide a formal method in
Alaska for eliminating the certificate of title to a
manufactured home in converting the home to real property when
the home is or will be permanently affixed to real property and
obtaining a new certificate of title when a home previously
affixed to real property is later physically severed from it.
MS. KALDOR said that Alaska, unlike the vast majority of states,
has no formal statutory procedure for converting a manufactured
home to real property. Under current Alaska law, including the
Alaska Uniform Commercial Code (UCC), a security interest in a
manufactured home permanently affixed to land can be perfected
only by noting it on the home certificate of title and recording
a deed of trust with a fixtures clause and an appropriate
description of the home. The need for legislation arises from
the fact that the Alaska DMV would not issue a title for a
manufactured home that is affixed to a permanent foundation. It
has created an administratively vaguely defined procedure with
no notice of record. The result for many Alaskan manufactured
homeowners is an unmarketable title to their home and for many
lenders an unperfected security interest in their collateral.
She said they feel the bill will help manufactured homeowners in
the state increase the value of their manufactured homes by
allowing them to convert them to real property including
manufactured homes not covered by certificates of title or for
which the certificate of title cannot be found but permanent
affixed to real property before the effective date of the
legislation. It would also help lenders to gain perfected
security interest in manufactured homes and help the DMV by
putting a formalized procedure in place for canceling a title
when a manufactured home is put on a permanent foundation. And
finally, it would increase property tax revenues in the
municipalities that levy property taxes.
SENATOR BUNDE asked if she knew of any negative aspects to
passing this bill.
MS. KALDOR answered no.
SENATOR MEYER said one negative might be how the owner would be
able pay increased property taxes. He asked on the other hand,
if it would assist people in getting a better interest rate for
their mobile home, since they would have to pay higher interest
rate for raw land.
MS. KALDOR said that was not correct.
SENATOR MEYER asked what kind of loan he would get to buy a
mobile home on a city lot - the lower interest loan that someone
who was buying a single family house would get or the higher
interest loan that someone would pay if they were just buying
raw land.
MS. KALDOR answered that currently a manufactured home can be
financed by Freddie Mac, Fannie May, FHA or VA, and possibly by
AHFC depending on the type of foundation and if it sits on its
own lot. They insure through a certification process that a home
is permanently affixed to a foundation and that the wheels and
tongue have been removed. The buyer gets a better rate and loan
program than for purchasing raw land.
CHAIR PASKVAN asked how many units might be converted in her
area or statewide under this program should it become law.
MS. KALDOR answered that she didn't know.
CHAIR PASKVAN asked the spread in rates and terms of financing
between mobile homes and conventional homes.
MS. KALDOR deferred that answer to a technical expert who was
online.
2:00:40 PM
MARC LEFSET, McGlinchey & Stafford, outside counsel for Wells
Fargo Bank, said he agreed with Mr. Ginsberg's comments. The
only point he would add is that by creating a procedure in
Alaska that allows lenders and borrowers to work together to
formally convert a manufactured home from personal property to
real property would make loans secured by that property eligible
for sale to Fannie Mae and Freddie Mac as well as making them
eligible for insurance under FHA and VA programs. He said it
would open up the market for better interest rates that are
available for onsite-built homes.
CHAIR PASKVAN asked if he saw any downside if this law were
enacted.
MR. LEFSET said he didn't see any downside.
SENATOR MEYER asked if he was currently buying a mobile home on
a 7000 sq. ft. lot, would the loan be primarily for the lot or
would it be the same loan as he would get for a residential
house on the same-sized lot.
MR. LEFSET answered if this bill is enacted and the homeowner
follows the procedures under the law to make the home legally
real estate, he would qualify for the same rates as a site-built
home. Now when the home is not considered real estate (not
affixed to a permanent foundation) it is subject to rates that
are typically 3 or 4 points higher like the ones that are
available to someone financing a home in a mobile home park.
SENATOR MEYER said he thought this change would assist people in
his district in buying mobile homes.
MR. LEFSET offered that manufactured homes are often the only
viable form of new housing that is workable in rural areas,
because it is fully assembled in the factory and transported to
the home site and installed on the foundation. The materials and
labor are minimal.
CHAIR PASKVAN asked Mr. Lefset if he did legal work for other
financial institutions.
MR. LEFSET answered yes, many financial institutions including
most of the major manufactured home lenders and several park
operators.
CHAIR PASKVAN said he wanted to make sure they weren't missing
something that other institutions would find.
MR. LEFSET responded that he is the chair of the Finance Lawyers
Committee of the Manufactured Housing Institute, the national
trade association for manufactured housing, and he has been
authorized by them to support SB 153. He said he is also counsel
to Vanderbuilt Mortgage Clayton Homes, the country's largest
manufacturer of manufactured homes, who also favors this
legislation.
CHAIR PASKVAN asked if he saw any downside.
MR. LEFSET replied, "Only an upside."
2:06:42 PM
CHAIR PASKVAN announced an at ease at 2:06 p.m. to 2:07 p.m.
JEFF HARRIS, Wells Fargo Bank, said he agreed with all the
previous testimony on SB 153.
2:07:43 PM
PAT GREEN, Wells Fargo Bank, added to that SB 153 also has the
endorsement of the Alaska Bankers Association whose other
members include Alaska Pacific Bank, Denali State Bank, First
Bank Ketchikan, First National Bank Alaska, Key Bank, Mt.
McKinley Bank, North Rim Bank as well as Wells Fargo.
MR. GREEN said from internal conversations he has had with Wells
Fargo people and Rod Jackson, their area manager for home
mortgages, they anticipate this change affecting 2-3 customers
per month for Wells Fargo. So that would translate out to 24-36
per year.
SENATOR MEYER said he didn't see a fiscal note, but was ready to
move it on.
Finding no further comments, Chair Paskvan closed public
testimony.
SENATOR FRENCH said he didn't think a fiscal note was an
absolute requirement, but he pledged to get one and to work with
Senator Meyer to incorporate his ideas into the bill. All the
members were present and agreed with this understanding.
SENATOR MEYER moved to report SB 153 from committee with
individual recommendations and forthcoming fiscal note. There
were no objections and it was so ordered.
2:13:03 PM
CHAIR PASKVAN announced an at ease from 2:13 p.m. to 2:15 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| CS SB 129 Bill Packet.pdf |
SL&C 3/2/2010 1:30:00 PM SL&C 3/9/2010 1:30:00 PM |
SB 129 |
| SB 153 Bill Packet.pdf |
SL&C 3/9/2010 1:30:00 PM |
SB 153 |
| SB 302 Bill Packet.pdf |
SFIN 3/23/2010 9:00:00 AM SL&C 3/9/2010 1:30:00 PM |
SB 302 |
| CS for SB 129 Side-by-Side.pdf |
SL&C 3/9/2010 1:30:00 PM |
SB 129 |