Legislature(2017 - 2018)SENATE FINANCE 532
03/06/2018 09:00 AM Senate FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| SB155 | |
| HB131 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | SB 155 | TELECONFERENCED | |
| + | HB 131 | TELECONFERENCED | |
| + | TELECONFERENCED |
SENATE BILL NO. 155
"An Act relating to the registration and regulation of
real estate appraisal management companies; relating
to the establishment of fees by the Department of
Commerce, Community, and Economic Development;
relating to the Board of Certified Real Estate
Appraisers; and relating to real estate appraisers."
9:02:52 AM
Vice-Chair Bishop MOVED to ADOPT proposed committee
substitute for SB 155, Work Draft 30-LS1295\D (Radford,
2/28/18).
Co-Chair MacKinnon OBJECTED for discussion.
JULI LUCKY, STAFF, SENATOR ANNA MACKINNON, discussed the
Committee Substitute (CS) for SB 155. She informed that the
changes to the bill were a result of questions that had
arisen related to concerns about the legislation.
Ms. Lucky read from the Explanation of Changes document
(copy on file):
? Increases the limit for the required surety bond to
$50,000 (previous bill limit was $25,000) see page 5,
line 21.
? Removes the fingerprinting requirement for the
"controlling person" - AS 08.87.135 (c) on page 5 of
the previous bill.
? Allows the department to collect fees to cover costs
by removing the specific references to subsection (j)
of AS 08.01.165 on page 4, line 18.
? Adds transition language with an immediate effective
date to allow the department to promulgate regulations
before the effective date of the act, per the
department's request.
? Conforming amendments, as required, including
deletion of:
Previous Section 8 removed due to deletion of
fingerprinting requirement
Previous Section 9 duplicative of language already
appearing in statute is AS 37.05.146(c)(24).
Co-Chair MacKinnon WITHDREW her OBJECTION. There being NO
OBJECTION, the proposed committee substitute was ADOPTED.
9:06:13 AM
SENATOR KEVIN MEYER, SPONSOR, introduced himself.
EDRA MORLEDGE, STAFF, SENATOR KEVIN MEYER, discussed the
bill. She shared that, due to the Dodd Frank Act of 2010,
there was a federal deadline for states to enact
comprehensive regulations regarding appraisal management
companies. The deadline was August 2018. Subsequently, the
department requested a one-year waiver to implement the
program, but there was no notification whether the state
had been granted that waiver. She stated that appraisal
management companies were business entities that
administered networks of independent appraisers to fulfill
real estate appraisal assignments on behalf of lenders. She
noted that the companies would no longer be able to operate
in the state without the comprehensive legislation. She
stated that it would cause problems for realtors, banks,
and other lenders; and have an adverse effect on the
economy. She noted that Alaska was one of four states plus
the District of Columbia that have yet to pass
comprehensive legislation on the subject. Those locations
were currently in the legislative process to address the
subject.
Co-Chair MacKinnon noted that there had been significant
changes to the bill, and there were people ready to answer
questions.
Senator Olson asked if the sponsor was in agreement with
the changes in the CS.
Senator Meyer answered in the affirmative. He continued
that he had wanted an immediate effective date, which would
allow for compliance by August 2018 without the need for an
extension. He thought there might be a difference of
opinion on the effective date, as well as with the bond
requirements.
9:10:31 AM
Co-Chair MacKinnon advised that the bill would not be
moving from committee in the current meeting. The committee
was working with the sponsor to address issues with due
consideration.
Co-Chair MacKinnon stated that the meeting would continue
with invited testimony.
DAVID DERRY, CHAIR, BOARD OF CERTIFIED REAL ESTATE
APPRAISERS, KENAI (via teleconference), spoke in support of
the bill. He stated that the Board of Certified Real Estate
Appraisers was ready to assume oversight of appraisal
management companies. He appreciated the changes identified
in the committee substitute. He spoke in support of the
amendments, except for the bond amount. He recalled that he
had originally requested that the bond amount be increased
from $25,000 to $150,000. He pointed out that the
Washington had a bond amount of $100,000. He felt that
since the appraisal management companies were all lower 48-
based companies, and that the board had fiduciary
responsibilities, the bond amount would provide some
coverage and protection. He reported that there was an
opinion that the $150,000 would be too costly, and he
disagreed. He remarked that, currently, Alaska real estate
appraisers currently paid a recertification fee of $1,130.
He furthered that all appraisers that worked for them, were
usually required to carry insurance, which could cost
between $1000 and $2500 per year. He shared that the
defense of keeping the bond amount low, was that it would
affect competition and result in higher consumer fees. He
disagreed with that argument. He pointed out that some of
the larger Alaska-based lenders did not use a third-party
mortgage initiator. He felt that it would not affect the
consumer.
9:15:02 AM
Co-Chair MacKinnon noted that she had a list of states with
bonding fees of $25,000. She queried a nationwide average
to consider.
Mr. Derry did not have an average, but had a list of states
that had the legislation enacted, but stated other states
had a $50,000 bonding amount.
Senator von Imhof wondered how the bill sponsor had chosen
the amount of $50,000.
Senator Meyer was not sure what the right amount should be.
He used the example of Hawaii, which would have a similar
geographical circumstances. He observed that the State of
Washington was at $100,000, but of the states he had
researched, most were lower than $100,000.
Co-Chair MacKinnon asked if there had been an average of
surety bond rates.
Ms. Morledge had found in her initial research that the
average was approximately $33,000.
9:19:14 AM
Senator Micciche asked Mr. Derry what costs would not be
covered by a $50,000 surety bond, and what other
protections would be available if there was a claim or
appraisal problem above that amount.
Mr. Derry replied that there may be a default payment from
an out of business appraisal company. He remarked that many
appraisals servicing rural areas must charge airfare, in
addition to the appraisal fee, which often exceed the fee
itself.
Senator Micciche asked if Mr. Derry was more concerned
about a collective cost rather than a single company
defaulting and having exposure on several appraisals.
Mr. Derry answered in the affirmative.
Co-Chair MacKinnon asked whether a company had had to use
its share of surety bonds.
Mr. Derry stated that he had no oversight
Co-Chair MacKinnon wondered whether there was anything
prohibitive in the bill that would restrict a company from
going above the $50,000 proposed limit.
Mr. Derry replied in the affirmative. He stated that they
could set any appraisal amount. He felt that normal
business practices would at least push to meet the minimum.
9:23:52 AM
Co-Chair Hoffman shared that he had several appraisals done
in rural Alaska. He noted that appraisers had not come to
the area unless there were multiple appraisals to complete.
He thought the practice was working well currently in
Western Alaska.
Co-Chair MacKinnon asked about the amount of the surety
bond.
Senator Meyer thought the amount of the surety bond was a
policy call by the committee. He thought if the amount was
set too high, it might dissuade some appraisers
Ms. Morledge reminded that the surety bond was a recurring
cost.
Co-Chair MacKinnon had no issue with the $50,000 surety
limit. She noted that the lending agencies were referred to
within the bill.
Ms. Morledge replied that the appraisal management
companies were standalone agencies. She stressed that
lending institutions would contact the individual agencies.
Vice-Chair Bishop thought the bill sponsor had made a
reasonable compromise.
9:27:07 AM
AT EASE
9:33:53 AM
RECONVENED
Senator Micciche thought there may have been a
misunderstanding about the need for surety bonds. He
understood that an appraisal management company could hire
the same individual to do multiple appraisals. He did not
know that $50,000 was adequate. He thought he better
understood Mr. Derry's concern.
Co-Chair MacKinnon asked Mr. Derry if Senator Micciche had
accurately reflected his concern.
Mr. Derry answered in the affirmative.
Co-Chair MacKinnon asked Mr. Derry to stay online to
comment on further topics.
Co-Chair MacKinnon referenced a letter dated February 8,
2018 (copy on file). She asked for comments about that
letter.
SARA CHAMBERS, DEPUTY DIRECTOR, DIVISION OF CORPORATIONS,
BUSINESS AND PROFESSIONAL LICENSING, DEPARTMENT OF
COMMERCE, COMMUNITY AND ECONOMIC DEVELOPMENT, relayed that
she had submitted a letter to the appraisal subcommittee
requesting an extension from the 2018 deadline to a 2019
deadline. She stated that the bulletin issued from the
subcommittee stated that draft legislation would be
considered a cause for an extension.
9:39:22 AM
Co-Chair MacKinnon thought the sponsor had indicated the
bill needed to move forward with implementation.
Ms. Chambers answered in the affirmative.
Co-Chair MacKinnon thought the sponsor was concerned that
without implementation, there would be consequences.
Ms. Chambers understood that there may be a period of time
(if Alaska did not receive the extension) that business
could continue. Without state oversight, federally-
regulated companies would still be able to operate. Her
assessment was that there could be a period of time that
non-federally-regulation would be available.
Co-Chair MacKinnon asked if there was an option for
emergency regulations.
Ms. Chambers stated that the Department of Law had advised
that emergency regulations should be reserved for matters
of public emergency, and not for administrative
emergencies.
Co-Chair MacKinnon asked why it would take over a year to
implement regulations for an existing board.
Ms. Chambers informed without the extension, the bill would
take effect and licensure would be required before the 3 to
4 month time period necessary to complete regulations.
Co-Chair MacKinnon surmised that the issue was complex.
Senator von Imhof wondered if the extension was for an
"all-in" scenario.
Ms. Chambers answered in the affirmative.
Vice-Chair Bishop thought Ms. Chambers had provided the
worst case scenario. He asked if there was a better
scenario to consider.
Ms. Chambers stated that what she had described was likely
the best case scenario.
Co-Chair MacKinnon asked when the federal compliance
deadline.
Ms. Chambers stated that the federal compliance deadline
was July 2018; unless an application for extension was
submitted.
Co-Chair MacKinnon felt that there needed to be contingency
language.
9:46:30 AM
Vice-Chair Bishop referenced Ms. Chambers comment regarding
federal loans being currently processed within the state,
and asked for more information about that statement.
Ms. Chambers understood that there were federally-regulated
appraisal management companies currently that would
continue to operate without the legislation.
Senator Micciche wondered why the bill was up against a
deadline.
Ms. Chambers stated that the board worked to secure a
sponsor to accomplish the goal of legislation two years
previously. The board was unable to do so.
9:49:04 AM
Mr. Derry thought there was a question of implementation of
regulations, and recalled that there was effectively only
one or two AMCs that were federally regulated.
Co-Chair MacKinnon asked Mr. Derry to help elucidate the
consequences if regulations were not put into place.
Mr. Derry supported Ms. Chambers. was not aware if either
of the federally-regulated AMCs.
Co-Chair MacKinnon stated that the committee would work
with the sponsor on this particular issue. She stated that
there was an issue about a "controlling person" within the
bill. It had been proposed to remove the requirement that
the controlling person be within the state.
9:55:26 AM
WILLIAM SCROGGINS, REAL ESTATE VALUATION ADVOCACY
ASSOCIATION, NORTH CAROLINA (via teleconference),
association had worked with many states to push forward
legislation to satisfy Dodd-Frank Act requirements. He
viewed $50,000 to be excessive but did not oppose the
provision. He did not want to limit the certification. He
thought it had been a drafting oversight.
Co-Chair MacKinnon asked Mr. Scroggins to be available for
questions later in the meeting.
Co-Chair MacKinnon referenced page 4, lines 28 through 30
of the bill, which talked about uniform standards of
professional appraisal practices. She wondered whether the
standards were "like" or "exact."
Mr. Derry queried the requirement that the controlling
person be within the state.
Co-Chair MacKinnon referenced page 5, line 22.
Mr. Derry supported the bill as it was currently written.
Co-Chair MacKinnon stated that the committee would get
legal clarification on the matter.
10:03:02 AM
Ms. Chambers stated that the bill section referenced being
active was the same as Mr. Derry's. She agreed that the
person must be certified, but did not have to be physically
a resident of the state.
Co-Chair MacKinnon stated that she had a comment from an
individual who believed that was a burden for larger out of
state management firms.
Senator Stevens asked Ms. Chambers to comment on
reciprocity with other states.
Ms. Chambers stated that licenses were fairly
transportable. She announced that if a state's requirements
were equal to or greater than Alaska's, there would be an
expedited process to recognize the standards.
Co-Chair MacKinnon relayed that the committee still awaited
a new fiscal note for the bill. The committee would have a
new CS drafted for a future meeting.
SB 155 was HEARD and HELD in committee for further
consideration.
| Document Name | Date/Time | Subjects |
|---|---|---|
| HB131 Sectional Analysis.pdf |
SFIN 3/6/2018 9:00:00 AM |
HB 131 |
| HB131 Sponsor Statement .pdf |
SFIN 3/6/2018 9:00:00 AM |
HB 131 |
| HB131 Supporting Documents-Rellocation Assistance Program Q&A.pdf |
SFIN 3/6/2018 9:00:00 AM |
HB 131 |
| SB 155 CS v. D Explanation.pdf |
SFIN 3/6/2018 9:00:00 AM |
SB 155 |
| SB 155 CS work draft version D.pdf |
SFIN 3/6/2018 9:00:00 AM |
SB 155 |
| SB 155 Sectional Version D.pdf |
SFIN 3/6/2018 9:00:00 AM |
SB 155 |
| SB 155 AK Board AMC extension request - Bulletin 2017-02 Extension of Implementation Period.pdf |
SFIN 3/6/2018 9:00:00 AM |
SB 155 |