Legislature(1993 - 1994)
02/17/1994 03:00 PM L&C
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
HOUSE LABOR AND COMMERCE STANDING COMMITTEE Febraury 17, 1994 3:00 p.m. MEMBERS PRESENT Rep. Bill Hudson, Chairman Rep. Joe Green, Vice Chair Rep. Brian Porter Rep. Bill Williams Rep. Eldon Mulder Rep. Joe Sitton Rep. Jerry Mackie MEMBERS ABSENT None COMMITTEE CALENDAR SB 186: "An Act relating to state agency publications." PASSED OUT OF COMMITTEE *HB 410: "An Act relating to real estate appraisers and the Board of Certified Real Estate Appraisers." PASSED OUT OF COMMITTEE (* First public hearing.) WITNESS REGISTER DUGAN PETTY, Director Division of General Services Department of Administration P.O. Box 110210 Juneau, Alaska 99811-0210 465-2250 Position Statement: Answered questions on SB 186 RESA JERREL, Lobbyist National Federation of Insurance Brokers 9159 Skywood Lane Juneau, Alaska 99801 789-4278 Position Statement: Supported SB 186 WENDY MULDER, Legislative Liaison Department of Commerce and Economic Development P.O. Box 110800 Juneau, Alaska 99811-0800 465-2500 Position Statement: Presented HB 410 ALFRED FERRARA 1116 Shady Lane Anchorage, Alaska 99516 561-1031 Position Statement: Supported HB 410 (Spoke via teleconference) CHRIS ANDERSON Real Estate Appraisers Board 19220 McCrary Rd. Eagle River, Alaska 99577 694-9613 Position Statement: Supported HB 410 (Spoke via teleconference) CRAIG INGHAM Alaska Bankers Association P.O. Box 73880 Fairbanks, Alaska 99707 452-1751 Position Statement: Supported HB 410 (Spoke via teleconference) TERRY LAUTERBACK, Staff Attorney Legislative Affairs Agency 130 Seward St., Ste 402 Juneau, Alaska 99801-2105 465-2450 Position Statement: Answered questions on HB 410 PREVIOUS ACTION BILL: SB 186 SHORT TITLE: STATE AGENCY PUBLICATIONS SPONSOR(S): SENATOR(S) FRANK JRN-DATE JRN-PG ACTION 04/07/93 1221 (S) READ THE FIRST TIME/REFERRAL(S) 04/07/93 1221 (S) STATE AFFAIRS 04/14/93 1354 (S) STA RPT 3DP 04/14/93 1354 (S) ZERO FISCAL NOTE (ADM) 04/14/93 (S) STA AT 09:00 AM BUTROVICH ROOM 205 04/14/93 (S) MINUTE(STA) 04/14/93 (S) MINUTE(RLS) 04/26/93 1761 (S) RULES 4 CALENDAR 4/26/93 04/26/93 1762 (S) READ THE SECOND TIME 04/26/93 1762 (S) AM NO 1 ADOPTED UNAN CONSENT 04/26/93 1763 (S) AM NO 2 ADOPTED UNAN CONSENT 04/26/93 1764 (S) AM NO 3 FAILED Y10 N10 04/26/93 1764 (S) ADVANCE TO THIRD READING FAILED Y11 N9 04/26/93 1764 (S) THIRD READING 4/27 CALENDAR 04/27/93 1842 (S) READ THE THIRD TIME SB 186 AM 04/27/93 1842 (S) PASSED Y20 N- 04/27/93 1842 (S) DONLEY NOTICE OF RECONSID ERATION 04/28/93 1891 (S) RECONSIDERATION NOT TAKEN UP 04/28/93 1893 (S) TRANSMITTED TO (H) 05/06/93 1661 (H) READ THE FIRST TIME/REFERRAL(S) 05/06/93 1661 (H) L&C, STATE AFFAIRS,JUDICIARY, FINANCE 02/17/94 (H) L&C AT 03:00 PM CAPITOL 17 BILL: HB 410 SHORT TITLE: REAL ESTATE APPRAISERS SPONSOR(S): LABOR & COMMERCE BY REQUEST JRN-DATE JRN-PG ACTION 01/28/94 2177 (H) READ THE FIRST TIME/REFERRAL(S) 01/28/94 2177 (H) L&C, STATE AFFAIRS, FINANCE 02/17/94 (H) L&C AT 03:00 PM CAPITOL 17 ACTION NARRATIVE TAPE 94-13, SIDE A Number 001 SECRETARY'S NOTE: DUE TO TECHNICAL DIFFICULTIES THE FIRST 10 MINUTES OF THIS MEETING WAS NOT RECORDED. CHAIRMAN HUDSON convened the meeting at 3:10 p.m. SB 186 - STATE AGENCY PUBLICATIONS DUGAN PETTY, Director, Division of General Services, Department of Administration, testified that the Department had no problem with SB 186. RESA JERREL, National Federation of Independent Business, testified of her associations support for SB 186. REP. MULDER moved SB 186 with individual recommendations and fiscal note. No objections were heard; it was so ordered. HB 410 - REAL ESTATE APPRAISERS Number 100 WENDY MULDER, Legislative Liaison, Department of Commerce and Economic Development, read a sponsor statement for the record as follows: The U.S. statutes enacted the Financial Institutions Reform, Recovery and Enforcement Act of 1989 (FIRREA). This act requires federal lending programs to have the appraisal certified by a state certified appraiser. Initially, FIRREA set the number of classroom instruction hours required for residential appraisers at 75. In 1990, the Alaska Legislature enacted legislation which complied with FIRREA standards. However, in 1992 FIRREA increased the minimum required classroom hours to 105. Again in 1994 they increased the minimum number of hours to 120. Officials from the Federal Financial Institutions Examinations Council (FFIEC) audited the Alaska certifying program. They granted the Alaska board an extension to meet the new requirements through December 31, 1993. The FFIEC has advised that appraisers who do not meet 120 hours of training will no longer be recognized as certified appraisers and, therefore, will not be qualified to conduct appraisals in which federally financed loans are involved. Examples of federally financed programs include such programs as federal National Mortgage Association, the Federal Home Loan Mortgage Corporation, and the Resolution Trust Corporation. These requirements may extend to loans provided through FDIC insured banks and credit unions. Currently, there are 73 residential real estate appraisers and 73 general real estate appraisers licensed by the Alaska Real Estate Appraiser Board. The general real estate appraisers do meet FIRREA requirements and are recognized for federal appraisals; however, general real estate appraisers work with commercial properties and it is very unlikely that they will begin conducting residential appraisals. The 73 residential appraisers are no longer in compliance with FIRREA and may not be recognized as certified appraisers if the FFIEC removes Alaska's certification. There were approximately 12,000 residential loan closures this past year in Alaska (this figure includes refinancing). It is unclear how many of these loans in Alaska do involve a federal program and it will only take a few loans in this category to create a statewide crisis. The proposed changes in HB 410 will remove the reference to a specific number of hours required for certification in the statute and will allow the board to set the minimum requirements in regulation. By allowing the minimum number of hours to be set in regulation, the Alaska Real Estate Appraiser Board will be able to make changes as they occur to meet the FIRREA requirements. Number 150 REP. MULDER asked Mr. Ferrara if it was true that one of the requirements of being a trainee was that the applicant must do two years work in real estate. Number 175 ALFRED FERRARA, testifying via teleconference from Anchorage, clarified that it was actually two years in full time appraisal work under the supervision of a certified appraiser. Number 182 CHAIRMAN HUDSON asked if there was any kind of reciprocity between the states for real estate appraisers. Number 200 MR. FERRARA explained that they do have a provision for licensure by endorsement. This means that if you are certified in another state you can provide proof of that licensure and prove any additional experience necessary to fulfill Alaska's requirements. Number 215 CHRIS ANDERSON, member of the Real Estate Appraisers Board, testified via teleconference in support of HB 410. She emphasized the importance of HB 410 to the banking community. Ms. Anderson stated that a majority of the loans made in Alaska are federal related transactions and the lending community is in a position of selling these loans on the secondary market. The appraisers within the state do need to be certified in order to be able to deal with federal loans. Number 255 CRAIG INGHAM, Alaska Bankers Association, testified via teleconference that his organization supports HB 410 with the exception of the board having the regulatory powers that would allow for regulations that would change what was required by federal law. Mr. Ingham thought more stringent regulations would have the effect of cutting down on the number of appraisers we currently enjoy. REP. GREEN asked if there was a possibility that by passing HB 410 we could be setting up a situation that would allow the board to further restrict the number of appraisers in the state. Number 311 MR. INGHAM responded that was one of the Bankers Association's main concerns. Depending on the makeup, the requirements could be tailored to be so stringent to eliminate many qualified appraisers. REP. GREEN suggested that perhaps the bill should be changed from "required by the board to meet federal standards" so that the bill just read "required by the board." Number 315 MR. INGHAM agreed. Number 326 REP. SITTON explained that the regulatory process being a public process is the arena for this particular discussion. REP. SITTON indicated his support for HB 410. Number 331 REP. PORTER asked if there was some balance that could be reached between not exceeding federal standards but allowing for some local applications. Number 342 MR. INGHAM answered that he didn't think that was possible. He stated the reason was that the purpose of an appraisal was to arrive at a fair market value of a property. Number 368 REP. PORTER stated his major concern was turning over control to an agency that is far away from here. Furthermore, once something is ensconced in federal law, it is difficult to change it. Number 375 MR. INGHAM responded that if the state doesn't comply with the minimum federal standards for certification, the appraisers will no longer be certified and the banks will not be able to process loans that involve federal money. This could shut down the real estate market. Number 400 CHAIRMAN HUDSON stated that a home that meets the Alaska's craftsmen standards and is certified through that process is given a better loan to value rate. Number 410 MR. INGHAM stated that as a banker he would look at the appraisal as well as any unique qualities the home may have, including energy efficiency. REP. MULDER stated that the committee does not want to limit the field, so he suggested a conceptual amendment that would allow some flexibility within the board to structure the hours to fit the needs and uniqueness of Alaska. Number 455 TERRY LAUTERBACK, Legislative Legal Counsel, Division of LEgal Services, Legislative Affairs Agency, asked if the committee was only talking about classroom hours or were there other minimum qualifications under federal law we are concerned about here. Number 457 MR. FERRARA responded that the amendments to the regulations only deal with classroom hours, no other requirements. Number 462 MS. LAUTERBACK followed up with her concern about complying with FIRREA, not with HB 410. Number 480 REP. SITTON moved Amendment 1 to HB 410, page 1, line 12, to read, "adopt regulations necessary to minimally comply with requirements of," and so forth. Number 500 MS. LAUTERBACK pointed out that some other federal agency may have set out some other qualifications or requirement higher than FIRREA. Should the committee guard against this possibility? Number 511 REP. MULDER asked Mr. Ferrara if there were other regulatory agencies affecting our credential procedures. Number 520 MR. FERRARA stated it does exist in certain agencies that have some additional experience requirements to suit their particular needs. TAPE 94-13, SIDE B Number 001 REP. PORTER moved the following amendment starting on line 12 of page 1, to read "adopt regulations necessary to comply with but not exceed the requirements of 12 U.S.C. 3331-3351 (Title XI Financial Institutions Reform, Recovery, and Enforcement Act of 1989 or other Federal Law." Number 026 MR. FERRARA asked if the committee could include the word "education" to clarify requirements in the amendment above. Number 052 REP. PORTER clarified what he thought the previous speaker wanted. He MS. LAUTERBACK suggested the committee leave the language in the bill as it is presently and add a new sentence to read on line 1 of page 2, after 1989, "the regulations adopted by the board for educational requirements under AS 08.87.110 120 and 310 may not be more stringent then the corresponding minimum requirements for receiving approval of the states program for certifying real estate appraisers under FIRREA or other federal law." Number 110 REP. MULDER restated that it was his concern that the appraiser field was too restrictive due to the number of years of experience required over and above federal law. Number 126 MR. FERRARA stated he believes experience is a necessary component of the overall picture. Number 148 MS. LAUTERBACK questioned whether FIRREA had any minimum requirements for continuing education or only the initial licensure. Number 151 MR. FERRARA responded that FIRREA provided that the Appraisal Qualifications Board would set the requirements for both prior education and continuing education. At present, it's 20 hours per two year period and the Alaska requirements are 40 hours per two year period. Number 156 MS. LAUTERBACK stated her concern was whether we were drafting this language only to relate to initial licensure. Number 180 MR. INGHAM stated he feels we should mirror federal law. Number 190 CHAIRMAN HUDSON clarified the intent is to not exceed the federal requirements. Number 220 MR. FERRARA stated that the Real Estate Appraisal Board would be very concerned regarding lowering the number of hours of continuing education. He believed the board would want to keep the 40 hour requirement. Number 240 MR. INGHAM stated that there already is more restrictive statutes regarding experience. He believed the educational requirements should not exceed federal standards. Number 255 REP. SITTON withdrew Amendment 1. Number 260 MS. LAUTERBACK repeated the amendment. Number 269 REP. MULDER moved the amendment. No objections were heard; it was so ordered. Number 282 REP. MULDER moved to amend HB 410 to include the extension of the board to June 30, 1998. No objections were heard; it was so ordered. Number 306 REP. GREEN moved CSHB 410(L&C) with a zero fiscal note and individual recommendations. No objections were heard; it was so ordered. Number 324 CHAIRMAN HUDSON adjourned the meeting at 4:18 p.m.