Legislature(1995 - 1996)

04/11/1996 03:32 PM Senate STA

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
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                  HB 192 AHFC HOUSING LOANS                                  
                                                                               
 CHAIRMAN SHARP brought up HB 192 as the next order of business                
 before the Senate State Affairs Committee.  He called the sponsor's           
 representative to testify.                                                    
                                                                               
 Number 050                                                                    
                                                                               
 BRYCE EDGMON, Aide to Representative Richard Foster, prime sponsor            
 of HB 192, stated the bill is directed towards helping meet home              
 financing needs in rural Alaska.  Mr. Edgmon read the sectional               
 analysis in members' bill packets, which was submitted by AHFC.               
                                                                               
 Section 1 would allow regional housing authorities to originate and           
 service mortgage loans.                                                       
                                                                               
 Section 2 would allow supplemental housing development grant funds            
 to be used for both on-site and off-site water and sewer                      
 facilities.                                                                   
                                                                               
 Section 3 attempts to clarify the existing statute.  It does not              
 make any substantive changes.                                                 
                                                                               
 Section 4 establishes a priority system for the allocation of                 
 supplemental housing development grant funds used to pay for off-             
 site water and sewer facilities.                                              
                                                                               
 Section 5 exempts projects constructed under the Building Material            
 Loan Program from energy standards provided under AS 18.56.096(c).            
 Section 6 exempts projects constructed under the Building Material            
 Loan Program from construction standards provided under AS                    
 18.56.300.                                                                    
                                                                               
 Section 7 amends the statute regarding the Rural Assistance Loan              
 Program to allow for the refinancing of rural mortgages in the same           
 manner as AHFC's mortgage programs allow for the refinancing of               
 urban loans.                                                                  
                                                                               
 Section 8 would allow AHFC to make loans for rural non-owner                  
 occupied housing, to the extent feasible, to someone who already              
 has an AHFC loan for an existing owner-occupied residence.                    
                                                                               
 Section 9 expands the existing Building Materials Loan Program to             
 allow for small ($20,000.00 or less), unsecured loans for borrowers           
 who have either restrictive deed lands or have no title to their              
 HUD Mutual Help home.  [Mr. Edgmon informed the committee that                
 federal law prohibits people who own homes on native allotments               
 from using the land as collateral in securing a loan.]                        
                                                                               
 Section 10 is a conforming change to coordinate this statute with             
 the change made in the first part of Section 12.                              
                                                                               
 Section 11 is a conforming change to coordinate this statute with             
 with the change made in the first part of Section 12.                         
                                                                               
 Section 12 clarifies the definition of non-owner occupied housing             
 as rental housing.  In addition, the definition of multi-family               
 rental house is changed from an 8 to a 16 unit dwelling.                      
                                                                               
 Section 13 would bring the term "housing" into compliance with                
 industry standards that view the term as owner-occupied housing of            
 up to 4 units.                                                                
                                                                               
 Number 185                                                                    
                                                                               
 BRUCE KAVAROK, Executive Director, Bering Straits Regional Housing            
 Authority, testifying from Nome, stated the authority serves Nome             
 and sixteen other communities in the Nome area.  Mr. Kavarok stated           
 the Bering Straits Regional Housing Authority and the Association             
 of Alaska Housing Authorities, which represents Alaska's fourteen             
 regional housing authorities and AHFC, support HB 192.  The bill              
 has significant importance for Alaska's regional housing                      
 authorities in their mission to provide decent, safe, sanitary, and           
 affordable housing to families throughout Alaska.  Several of the             
 housing programs now available from AHFC and other sources like the           
 Farmers' Home Administration and the Veterans' Administration are             
 severely under-utilized in rural Alaska.  Part of the reason is               
 village economics, but another part is the lack of rural access to            
 information and the basic mechanics of loan programs.  There are              
 low and moderate-income families in his region and throughout the             
 state who could benefit from one or more of these programs and                
 achieve their goals of home ownership.                                        
                                                                               
 MR. KAVAROK stated that there is virtually no tradition for                   
 conventional mortgage lending in housing development in rural                 
 Alaska.  Expanding access to AHFC loans, as HB 192 would do,                  
 coordinating with lending institutions, and the recent willingness            
 of the secondary mortgage market (FHA, Fannie Mae, Freddie Mac, for           
 example) to participate in rural housing programs appear as a few             
 bright spots on the horizon.  Mr. Kavarok also gave a run-down of             
 the sections of HB 192.                                                       
                                                                               
 Number 245                                                                    
                                                                               
 SENATOR RANDY PHILLIPS asked Mr. Kavarok if he could explain the              
 language on page 6, lines 4-7 regarding the restricted deed issued            
 by the Secretary of the Interior.                                             
                                                                               
 MR. KAVAROK replied there are two types of deeds that he runs into.           
 The Native Allotment act of 1909 specified that native allotments             
 above 260 acres could be selected.  The deed is held in trust by              
 the Secretary of the Interior on behalf of the allottee.                      
                                                                               
 SENATOR RANDY PHILLIPS asked if it is held in trust forever.                  
                                                                               
 MR. KAVAROK responded, yes.  A development that HB 192 doesn't                
 address is the Federal Housing Development Act of 1992.  That act             
 established a home-loan guarantee program which provides for a                
 federal subsidized loan guarantee for financial institutions,                 
 including AHFC, to protect them when they make mortgage loans on              
 these types of restricted deeds.  The drive behind that legislation           
 was Indian reservations in the lower forty-eight, where                       
 reservations are all trust land held by the federal government.  He           
 believes AHFC has either participated or is looking at                        
 participating in one of the first loans of this kind in Alaska that           
 would take advantage of that federal home loan guarantee.                     
                                                                               
 Number 290                                                                    
                                                                               
 JOHN BITNEY, Alaska Housing Finance Corporation, stated AHFC                  
 supports HB 192.                                                              
                                                                               
 Number 295                                                                    
                                                                               
 SENATOR RANDY PHILLIPS asked if refinancing is not allowed right              
 now.                                                                          
                                                                               
 MR. BITNEY responded that currently, refinancing is not an option             
 under state statutes relating to AHFC.  If a person were to                   
 refinance their mortgage right now, they would have to do                     
 substantial improvements to their home in order to get a new loan.            
                                                                               
 SENATOR RANDY PHILLIPS asked if that is an oversight in the laws              
 dealing with AHFC.                                                            
                                                                               
 MR. BITNEY stated he is not familiar with the history, but he would           
 say it's definitely an oversight, since it's a very common mortgage           
 option nation-wide.                                                           
                                                                               
 CHAIRMAN SHARP asked Mr. Bitney if he's received copies of the                
 amendments, and if so, how does AHFC feel about the amendments?               
                                                                               
 MR. BITNEY responded he has seen 3 1/2 amendments.  He stated he              
 would like to address the amendment applying to Section 1.  That              
 amendment would attempt to limit regional housing authorities to              
 making loans only in rural areas of the state.  Apparently there              
 was some concern expressed that, by bringing regional housing                 
 authorities into urban Alaska, they might compete with traditional            
 mortgage lenders.  AHFC worked with the Mortgage Bankers                      
 Association to come up with compromise language.  Committee members           
 have that amendment, which is labeled amendment #2.  Amendment #2             
 would limit the regional housing authorities to making loans in               
 rural areas.  There would be an exception for making loans in urban           
 areas to under-served borrowers.                                              
                                                                               
 SENATOR RANDY PHILLIPS asked what the mortgage bankers think about            
 amendment #2.                                                                 
                                                                               
 MR. BITNEY replied he did not speak to them directly, but it is his           
 understanding that the "under-served borrowers" term was their                
 suggestion for a compromise.                                                  
                                                                               
 CHAIRMAN SHARP stated that is his understanding also.                         
                                                                               
 Number 335                                                                    
                                                                               
 MR. BITNEY stated that AHFC does not have a position on the other             
 amendments.                                                                   
                                                                               
 SENATOR DONLEY made a motion to adopt amendment #1 for purposes of            
 discussion.                                                                   
                                                                               
 CHAIRMAN SHARP stated that amendment #1 would allow regional                  
 housing authorities to originate and service loans in rural areas,            
 as defined in HB 192.  It would also allow them to originate and              
 service loans to "under-served urban borrowers".  This amendment              
 seemed to be satisfactory to all concerned parties.                           
                                                                               
 SENATOR LEMAN asked if amendment #1 would be a new Section 1.                 
                                                                               
 MR. BITNEY responded amendment #1 would be a revision to Section 1.         
                                                                               
 Number 355                                                                    
                                                                               
 SENATOR RANDY PHILLIPS asked if this would prohibit a mortgage                
 lending institution from serving a small community.                           
                                                                               
 MR. BITNEY replied it would not.  Section 1 only applies to the               
 ability of a regional housing authority to get into the loans                 
 business.                                                                     
                                                                               
 SENATOR RANDY PHILLIPS asked if this would be in competition with             
 mortgage lending institutions.                                                
                                                                               
 MR. BITNEY responded that was a concern that the banks had.  This             
 language was compromise language worked up with the Mortgage                  
 Bankers Association.  They were concerned with regional housing               
 authorities getting into making loans in urban areas, in                      
 competition with them.  This would limit urban activities to just             
 serving under-served borrowers.                                               
                                                                               
 CHAIRMAN SHARP asked if there were objections to amendment #1.                
                                                                               
 SENATOR RANDY PHILLIPS objected.  He stated he wanted to check it             
 out.  How many bankers have looked at this?                                   
                                                                               
 SENATOR LEMAN stated the amendment would limit the agency a little            
 bit more.                                                                     
                                                                               
 CHAIRMAN SHARP asked that the roll be called on amendment #1.                 
                                                                               
 Amendment #1 passed by a vote of 3 yeas, 1 nay, and 1 absent.                 
 Voting for the amendment were Senators Sharp, Leman, and Donley.              
 Voting against the amendment was Senator Phillips.  Senator Duncan            
 was absent.                                                                   
                                                                               
 Number 385                                                                    
                                                                               
 SENATOR LEMAN made a motion to adopt amendment #2.                            
                                                                               
 CHAIRMAN SHARP stated the purpose of amendment #2, of which                   
 language was contained in the original bill but was removed on the            
 House floor, is to establish age 55.                                          
                                                                               
 SENATOR LEMAN stated that "age 55" is the definition under federal            
 law.                                                                          
                                                                               
 SENATOR DONLEY asked who took the language out.                               
                                                                               
 CHAIRMAN SHARP responded it was Representative Martin.                        
                                                                               
 SENATOR LEMAN thought that Representative Martin thought "age 55"             
 was broadening it.  But it was actually hurting seniors that the              
 state definition didn't match the federal definition.  "Age 55" was           
 taken out on the floor of the House, and he probably didn't realize           
 the ramifications.                                                            
                                                                               
 CHAIRMAN SHARP asked if there was any objection to amendment #2.              
 Hearing no objection, he stated the amendment was adopted.                    
                                                                               
 SENATOR DONLEY made a motion to adopt amendment #3 for purposes of            
 discussion.                                                                   
                                                                               
 CHAIRMAN SHARP stated that amendment #3 would assure that any funds           
 coming from AHFC to the regional corporations would be used in                
 accordance with the Equal Housing Opportunity laws.                           
                                                                               
 Number 405                                                                    
                                                                               
 CHAIRMAN SHARP asked if there was objection to amendment #3.                  
 Hearing no objection, he stated the amendment was adopted.                    
                                                                               
 SENATOR DONLEY made a motion to discharge HB 192 from the Senate              
 State Affairs Committee with individual recommendations.                      
                                                                               
 CHAIRMAN SHARP, hearing no objection, stated HB 192 was discharged            
 from the Senate State Affairs Committee.                                      
                                                                               
                                                                               
 SENATOR RANDY PHILLIPS asked who in the Mortgage Bankers                      
 Association approved the language in amendment #1.                            
                                                                               
 MR. BITNEY responded it was the president of the Mortgage Bankers             
 Association.                                                                  

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