Legislature(1993 - 1994)

03/17/1994 08:00 AM House STA

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
  HB 410 - REAL ESTATE APPRAISERS                                              
  CHAIRMAN VEZEY opened CSHB 410, sponsored by the House Labor                 
  & Commerce Committee, for discussion.                                        
  Number 556                                                                   
  ECONOMIC DEVELOPMENT (CED), addressed CSHB 410.  She stated                  
  CED had asked the House Labor & Commerce Committee to                        
  introduce HB 410 because they realized they had a problem                    
  which would soon affect many Alaskans.  The sponsor                          
  statement read 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 Corporation, and the                   
  Resolution Trust Corporation.  These requirements may extend                 
  to loans provided through FDIC-insured banks and credit                      
  "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                           
  "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 involve federal                        
  financing, however, it is highly probably that the vast                      
  majority of 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."                                            
  MS. MULDER commented the House Labor & Commerce committee                    
  had concerns expressed to them by the banking industry that                  
  the board would not set the requirements to exceed the                       
  federal requirements.  Therefore, HB 410 was changed on line                 
  12, page 1, by adding language which states "to comply with,                 
  but not exceed."  They also decided to grant the extension                   
  to the board, rather than having to do it again in 1995.                     
  (REPRESENTATIVE SANDERS rejoined the meeting at 9:28 a.m.)                   
  Number 619                                                                   
  CHAIRMAN VEZEY moved to the Anchorage teleconference site.                   
  Number 621                                                                   
  ESTATE APPRAISERS, supported CSHB 410.  He stated the                        
  problem they face is that Alaska, unlike other states, has                   
  put in statute the hours required.  CSHB 410 would basically                 
  give the board the right to meet the hours as they change on                 
  a national level.  He emphasized the hours will continue to                  
  change because the federal law came in at minimal levels in                  
  order to meet the requirements of most states and not                        
  deprive individuals of their livelihood.                                     
  MR. FERRARA stated the FIRREA has been broadened to cover                    
  any bank or credit union loan, therefore, nothing would be                   
  financed by any lending institution unless they have a                       
  certified appraiser perform the appraiser reports.  Agencies                 
  such as the Federal Highway Administration are now requiring                 
  work be done by certified appraisers.  He noted most active                  
  appraisers are certified in Alaska because of this trend.                    
  Number 653                                                                   
  REPRESENTATIVE ULMER moved to pass CSHB 410 from committee                   
  with individual recommendations.                                             
  Number 655                                                                   
  CHAIRMAN VEZEY asked REPRESENTATIVE ULMER to hold her motion                 
  in order to hear from another witness.  He asked MS. MULDER                  
  to outline the sections of CSHB 410 for the committee.  He                   
  stated section 1 extends the board for four more years, and                  
  asked about section 2.                                                       
  Number 668                                                                   
  MS. MULDER responded section 2 amends the powers and duties                  
  of the board to clarify authority to adopt regulations                       
  necessary to comply with FIRREA.  She deferred the rest of                   
  the sectional analysis to KARL LUCK.                                         
  Number 672                                                                   
  COMMERCE & ECONOMIC DEVELOPMENT, gave a sectional analysis                   
  of CSHB 410.  He said Section 2 gives authority to the board                 
  to set the education hour requirement and directs them to                    
  not exceed the FIRREA requirement.  Section 3 repeals the                    
  specific number of classroom hours in each category, thereby                 
  requiring the board to put the requirements into                             
  regulations.  He stated section 3 referred to the general                    
  real estate appraisers and section 4 referred to the                         
  residential real estate appraisers.                                          
  TAPE 94-33, SIDE A                                                           
  Number 000                                                                   
  MR. LUCK continued.  Section 5 is the continuing education                   
  requirement for renewal of certification for both general                    
  and residential.  Section 6 refers to the registration of                    
  trainees and places them subject to the hours set forth by                   
  the board.                                                                   
  MR. LUCK felt CSHB 410 was "straightforward" and the                         
  statutory requirement should be placed back into regulation                  
  to enable the board to maintain the federal requirement.                     
  Number 027                                                                   
  CHAIRMAN VEZEY asked if the current requirement for 150 or                   
  more hours of classroom instruction is greater than the                      
  federal requirement.                                                         
  MR. LUCK answered the General Real Estate Appraiser                          
  certificate program meets the federal requirement; however,                  
  he would have to research to find out what the general                       
  requirement is.  If the general requirement did exceed the                   
  federal requirement, the board would be required to reduce                   
  it.  He emphasized the intent of CSHB 410 is to "ratchet up"                 
  the requirements so over a period of time they would be much                 
  higher than the original FIRREA.  He did not know what the                   
  federal intent would be in the future in regards to the                      
  general real estate appraisers, whether or not they would                    
  raise the requirements.                                                      
  Number 059                                                                   
  CHAIRMAN VEZEY commented Alaska currently has a stricter                     
  licensing requirement for general real estate appraisers                     
  than it does for residential real estate appraisers.  He                     
  mentioned MAI and asked if it was a form of state licensing                  
  or national recognition.  Would CSHB 410 produce one                         
  category of licensing from the present two.                                  
  Number 075                                                                   
  MR. LUCK replied he was not familiar with MAI.  He answered                  
  there would still be general and residential licensing.                      
  Only the education requirements would be changed with CSHB
  Number 082                                                                   
  CHAIRMAN VEZEY inquired how many hours were currently                        
  required for general real estate appraisal.                                  
  MR. LUCK responded 150 classroom hours, of which 15 hours                    
  are in a specific area.                                                      
  Number 088                                                                   
  REPRESENTATIVE OLBERG cited the sponsor statement that the                   
  FIRREA requirement for a general real estate appraisal is                    
  120 hours as of 1994.  He noticed the statement references                   
  the Alaska Legislature complying with FIRREA standards, but                  
  he believed they exceeded them.                                              
  Number 101                                                                   
  CHAIRMAN VEZEY commented CSHB 410 did not seem to be                         
  amending the statute for residential real estate appraisers.                 
  Number 106                                                                   
  MR. LUCK directed the committee to section 4, which states                   
  the board shall issue a residential real estate appraisal                    
  certificate.  Line 30, page 2, amends the residential                        
  section.  Section 3 specifically addresses the general real                  
  estate appraisal certificate.                                                
  Number 113                                                                   
  CHAIRMAN VEZEY clarified CSHB 410 provides a less stringent                  
  requirement on the general real estate appraisal and a more                  
  stringent requirement on the residential real estate                         
  Number 115                                                                   
  MR. LUCK added "than current requirement."  He deferred to                   
  ALFRED FERRARA to confirm his statement.                                     
  MR. FERRARA commented the federal requirement for the                        
  general appraisal license is 150 hours, plus 15 hours of a                   
  standards course.  The residential requirement is 120 hours,                 
  plus a standards course.  He clarified Alaska does comply                    
  with the federal standards.   Alaska is not above the                        
  federal minimum on a general appraiser, but it is below the                  
  minimum on the residential.  CSHB 410 would enable the board                 
  to meet both of the federal sections.  Residential, not                      
  general would have to change.  He added Alaska currently has                 
  a higher requirement on recertification credit hours than                    
  the FIRREA.  The reason for this is if more courses were                     
  offered in Alaska, more people would be able to receive the                  
  education and become certified.  CSHB 410, however, would                    
  lower the Alaska requirement to meet the federal standards.                  
  He noted the registered trainee was an internship way to                     
  start someone in the business, offering a lesser experience                  
  requirement than if they started working as an appraiser                     
  without a certified person.                                                  
  MR. LUCK referred to CHAIRMAN VEZEY's previous question                      
  about an MAI designation, stating it was a nationally known                  
  designation issued by a private organization.  MAI is not                    
  part of the Alaska program at all.                                           
  Number 152                                                                   
  CHAIRMAN VEZEY commented he thought there was only a                         
  "handful" of MAI appraisers in Alaska.                                       
  Number 153                                                                   
  MR. FERRARA continued Alaska has about 22 MAI appraisers                     
  which he felt was a really high percentage.  He noted                        
  Alaskan appraisers are typically more educated and                           
  experienced than those in other states.                                      
  Number 162                                                                   
  CHAIRMAN VEZEY stated he would hold CSHB 410 in committee so                 
  he may further research it.  CSHB 410 would be rescheduled.                  
  Having no more business before the committee, CHAIRMAN VEZEY                 
  adjourned the meeting at 9:45 a.m.                                           

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