Legislature(2017 - 2018)BELTZ 105 (TSBldg)
02/08/2018 01:30 PM Senate LABOR & COMMERCE
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| Audio | Topic |
|---|---|
| Start | |
| SB105 | |
| SB155 | |
| SB116 | |
| HB126 | |
| SJR12 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | SB 155 | TELECONFERENCED | |
| *+ | SB 116 | TELECONFERENCED | |
| + | HB 126 | TELECONFERENCED | |
| *+ | SJR 12 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| += | SB 105 | TELECONFERENCED | |
SB 155-REAL ESTATE APPRAISAL MNGMT. COMPANIES
1:53:43 PM
CHAIR COSTELLO reconvened the meeting and announced the
consideration of SB 155.
SENATOR KEVIN MEYER, Alaska State Legislature, Juneau, Alaska,
sponsor of SB 155, said he introduced SB 155 after it was
brought to his attention that the Dodd-Frank Wall Street Reform
and Consumer Protection Act of 2010 imposed a federal deadline
for states to adopt comprehensive regulations regarding
appraisal management companies. That deadline is August 2018.
He explained that an appraisal management company (AMC) is an
independent entity through which mortgage lenders order
residential real estate valuation services for properties on
which they are considering extending loans to homebuyers. Unless
this or similar legislation passes, these companies will not be
able to do residential appraisals in Alaska after August 20,
2018. Alaska is one of four states that have not passed this
legislation.
SENATOR MEYER said SB 155 seeks to promote public trust and
consumer protection and establish oversight and enforcement
where there is none today.
1:55:55 PM
EDRA MORLEDGE, Staff, Senator Kevin Meyer, Alaska State
Legislature Juneau, Alaska, directed attention to a letter from
Sara Chambers, Deputy Director of the Department of Commerce,
Community and Economic Development (DCCED) requesting an
extension of the implementation period to establish an appraisal
management company (AMC) program until August 10, 2019. She said
the federal government also established minimum standards for
appraisal management companies and those are contained in the
bill.
1:57:23 PM
MS. MORLEDGE provided the following sectional analysis for SB
155:
Section 1: Adds a new subsection (j) to allow the
Department of Commerce, Community and Economic
Development to establish a fee for regulatory costs
and a mechanism for reporting those fees.
Section 2: Requires the department to establish a
registry fee as required by the federal government and
permits the department to remit those fees to the
federal government.
Section 3: Amends the powers and duties of the Board
of Certified Real Estate Appraisers to require
regulations for Appraisal Management Companies.
Section 4: Authorizes the Board to examine records of
AMCs, requires those companies to submit information
to the Board, and allows investigations of alleged
violations.
Sections 5 and 6: Adds a new section to the statute
regarding Appraisal Management Companies including
provisions for registration, reporting records
retention, and inspection requirements, exemptions,
prohibited practices, and disciplinary proceedings.
Section 7: Definitions "appraisal management
services," "appraisal panel," "company, controlling
person," and "principal dwelling."
Section 8: Allows for fingerprinting of a controlling
person of an Appraisal Management Company through the
Department of Public Safety.
Section 9: Allows real estate Appraisal Management
Company registry fees to be included in the definition
of program receipts and non-general fund program
receipts.
Section 10: Applicability clause this act applies to
a person offering or providing appraisal management
services on or after the effective date of this Act.
1:59:30 PM
SENATOR STEVENS asked if there was any indication that the
requested extension would be granted.
MS. MORLEDGE deferred the question to Ms. Chambers.
2:00:12 PM
SARAH CHAMBERS, Deputy Director, Division of Corporations,
Business and Professional Licensing, Department of Commerce,
Community and Economic Development (DCCED), Juneau, Alaska, said
she sent the letter to Mr. Parks this morning and believes it is
likely to be approved. The state meets the threshold for
receiving an extension and the Alaska Board of Certified Real
Estate Appraisers knows about the situation and agrees with the
extension request.
CHAIR COSTELLO asked if the extension would be needed if the
bill were to pass.
MS. CHAMBERS said yes. There isn't time to promulgate and
implement the required regulations by August.
SENATOR MEYER asked why the department or governor didn't bring
the bill forward if the looming deadline was known.
MS. CHAMBERS said she didn't know but it's fairly typically and
healthy for boards to identify their own needs and seek their
own legislation. She offered to follow up and provide a more
definitive answer.
SENATOR MEYER questioned whether it was healthy since Alaska is
one of the last states to pass the enabling legislation. He
referenced the fiscal note and questioned the need to hire a
full time occupational licensing examiner.
MS. CHAMBERS said she hoped that Mr. Derry, Chair of the Alaska
Board of Certified Real Estate Appraisers was online and could
speak to the timeliness. The department does not anticipate the
need for a fulltime examiner but is unable to request half a
person through a fiscal note. The request reflects the
anticipated time needed and any work the examiner does outside
this program will be billed to any of the other receipt-
supported program they might work on.
2:04:56 PM
SENATOR MEYER said he wouldn't quibble over the fiscal note.
2:05:17 PM
CHAIR COSTELLO opened public testimony on SB 155.
DAVID DERRY, Chair, Alaska Board of Certified Real Estate
Appraisers, Kenai, Alaska, said the board supports SB 155 and is
ready to assume oversight of appraisal management companies.
Speaking to the timeline, he said that in 2014 the Alaska
Chapter of the Appraisal Institute proposed legislation similar
to SB 155 but was unable to get support from the legislature to
introduce the bill. The matter died at that point but since 2016
the board has been working to get this legislation introduced.
He said he recently became aware of the extension to 2019 and
the legislation is important to show the state is working toward
that deadline.
He offered suggestions to change the bill in several areas. Page
5, lines [20-21] states that an appraisal management company
will post a surety bond of not more than $25,000 as required by
the board. He said the board recommends a surety bond of
$150,000 because $25,000 is inadequate in light of the cost of
appraisal reports, particularly in rural areas. Some states
establish the bond at not less than 150 percent of the AMC's
annual billings over the previous 12 months. This board believes
that is more complex than necessary, thus the $150,000 proposal.
The second suggestion relates to fingerprinting on page 6, lines
4-9. The board has received a determination from the federal
Appraisal Subcommittee that the current process for background
checks for appraisers is adequate without fingerprinting and
background checks. That would carry over to appraisal management
companies so that provision is not necessary.
2:11:22 PM
SENATOR GARDNER said she didn't understand how the fingerprint
and background check got in the bill if it's not required by
Dodd-Frank or some other act.
MR. DERRY said fingerprinting was originally part of the
requirements under Dodd-Frank and subsequently became a state-
by-state determination. The process the Alaska Board of
Certified Real Estate Appraisers uses for appraiser
qualifications is satisfactory without fingerprinting.
SENATOR GARDNER asked if real estate appraisers are currently
required to undergo background checks.
MR. DERRY answered no; the process the board is using and had
established in the application process for new certified
appraisers is adequate to meet the requirement without doing a
background check.
SENATOR MEYER asked for confirmation that fingerprinting and the
criminal history check were not required under Dodd-Frank.
MR. DERRY clarified that there was a determination by the
federal Appraisal Subcommittee that those were not required
under Dodd-Frank
SENATOR MEYER asked what other states require as a surety bond.
MR. DERRY said he didn't know the fixed bond amounts for other
states.
2:14:56 PM
GREG DEAL, President, Wells Fargo Bank of Alaska, Anchorage,
Alaska, stated support for SB 155. He agreed with the sponsor
that if the state does not set up a regulatory system for
Appraisal Management Companies by the deadline, home lenders
like Wells Fargo will not be able to use AMCs for federally
related mortgage loan transactions. This includes government
sponsored enterprises (GSEs) such as Fannie Mae and Freddie Mac.
Wells Fargo values the services of AMCs to ensure that there is
no direct contact between a loan officer and appraiser. This
eliminates even the perception of a conflict of interest and
ensures an independent evaluation process. Customers are also
assured that they are receiving an accurate valuation on their
homes.
SENATOR MICCICHE asked for clarification that this is only for
federally-regulated mortgage loan transactions.
MR. DEAL said that's correct.
SENATOR MICCICHE asked what percentage of Wells Fargo home loans
that represents.
MR. DEAL said in Alaska Wells Fargo has just 10 of 1,471 loans
that do not fall under the government sponsored enterprise rule.
2:17:25 PM
WILLIAM SCOGGIN, Counsel, Real Estate Valuation Advocacy
Association (REVAA), Raleigh, North Carolina, stated strong
support for SB 155. He described the legislation as important to
everyone in the residential real estate industry. He advised
that REVAA has worked carefully to get this legislation passed
in all states. Just four states and Washington, D.C. have yet to
pass the legislation.
SENATOR MEYER asked if the $150,000 surety bond the Alaska board
requested is standard.
MR. SCOGGIN said he didn't recall the surety provisions in all
other states but $150,000 would be on the high side. REVAA
believes the current drafting is probably adequate. What is
important is to pass the bill this legislative session.
SENATOR MEYER asked if it's his understanding that criminal
background checks and fingerprinting are unnecessary.
MR. SCOGGIN said it depends on whether the licensing board in
the state is able to satisfy the requirements of the federal
Appraisal Subcommittee. REVAA is comfortable with whatever is
established, he said.
2:19:39 PM
CHAIR COSTELLO closed public testimony on SB 155 and voiced
support for moving the bill. She said the finance committee
could address the surety bond issue and she's comfortable with
the fingerprinting as written in the bill.
SENATOR MICCICHE asked Ms. Chambers about the possibility of
managing the additional workload through contract instead of
adding a new state position.
MS. CHAMBERS said that would be precedent setting and may be
opposed by employment unions. She explained that the protocol
typically used is to request a receipt-supported position (no
UGF involved) to fulfill the requirements of the bill and then
allocate time to the other licensing programs. Because the
component level is at the division and not each board, the
appraisal board would not see the entire $80,000 plus increase
listed in the fiscal note. It is her hope that the other half of
the position could assist with applications for massage
therapist licenses because the division has seen twice the
number applications as anticipated since the program was added
in 2015.
CHAIR COSTELLO suggested that as a member of the finance
committee Senator Micciche could look into the hurtle that
prevents the department from asking for a part-time position.
SENATOR MEYER agreed and expressed hope that the finance
committee closely analyze the request for an additional
position.
2:23:18 PM
SENATOR MEYER moved to report SB 155 from committee with
individual recommendations and attached fiscal note(s).
2:23:24 PM
CHAIR COSTELLO found no objection and announced that SB 155
moves from the Senate Labor and Commerce Standing Committee.