Legislature(1999 - 2000)
02/23/1999 08:03 AM House CRA
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE COMMUNITY AND REGIONAL AFFAIRS
STANDING COMMITTEE
February 23, 1999
8:03 a.m.
MEMBERS PRESENT
Representative Andrew Halcro, Co-Chairman
Representative John Harris, Co-Chairman
Representative Carl Morgan
Representative Lisa Murkowski
Representative Fred Dyson
Representative Reggie Joule
Representative Albert Kookesh
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
* HOUSE BILL NO. 93
"An Act relating to the Alaska Housing Finance Corporation's rural
assistance loan program and to the definition of 'housing' for
purposes of the corporation's housing assistance loan program; and
providing for an effective date."
- MOVED HB 93 OUT OF COMMITTEE
(* First public hearing)
PREVIOUS ACTION
BILL: HB 93
SHORT TITLE: RURAL ASSISTANCE HOUSING LOANS
SPONSOR(S): REPRESENTATIVES(S) MORGAN, Phillips, Foster,
Austerman, Harris, Kapsner, Mulder, Joule
Jrn-Date Jrn-Page Action
2/10/99 198 (H) READ THE FIRST TIME - REFERRAL(S)
2/10/99 198 (H) CRA, FINANCE
2/23/99 (H) CRA AT 8:00 AM CAPITOL 124
WITNESS REGISTER
JOHN BITNEY, Legislative Liaison
Alaska Housing Finance Corporation
P.O. Box 101020
Anchorage, Alaska 99510-1020
Telephone: (907) 338-6100
POSITION STATEMENT: Testified in support of HB 93.
KAY MURPHY, Mortgage Operations Director
Alaska Housing Finance Corporation
P.O. Box 101020
Anchorage, Alaska 99510-1020
Telephone: (907) 330-8414
POSITION STATEMENT: Answered questions regarding HB 93.
ACTION NARRATIVE
TAPE 99-8, SIDE A
Number 0001
CO-CHAIRMAN ANDREW HALCRO called the House Community and Regional
Affairs Standing Committee meeting to order at 8:03 a.m. Members
present at the call to order were Representatives Halcro, Harris,
Morgan, Dyson and Joule. Representatives Murkowski and Kookesh
arrived at 8:04 a.m. and 8:05 a.m., respectively.
HB 93 - RURAL ASSISTANCE HOUSING LOANS
Number 0060
CO-CHAIRMAN HALCRO announced the committee would hear House Bill
No. 93, "An Act relating to the Alaska Housing Finance
Corporation's rural assistance loan program and to the definition
of 'housing' for purposes of the corporation's housing assistance
loan program; and providing for an effective date."
Number 0068
REPRESENTATIVE CARL M. MORGAN, JR., prime sponsor, came forward to
present the bill. He told members this legislation would allow two
simple changes. First, the rural mortgage program would allow for
refinancing of home loans in the same manner as for any
conventional mortgage. While many Alaskans have taken advantage of
these low interest rates to refinance their home mortgages, state
law does not provide this option for the rural lending program.
Second, current state law limits the term "housing" to single-
family homes and owner-occupied duplexes. This would allow owner-
occupied housing having up to four units. Because of rural housing
shortages, this would allow for more homes to rent to doctors or
teachers, for example.
REPRESENTATIVE MORGAN pointed out that whereas the current lending
rate is 6.125 percent for 30-year loans, the Alaska Housing Finance
Corporation (AHFC) rural loan program has more than 1,100 loans
with interest rates over 8 percent, and it has 500 loans at 9
percent interest. Refinancing would provide a big savings to the
home buyer. Representative Morgan emphasized that this is not a
giveaway, as the rural loan program is a revolving fund.
Number 0243
CO-CHAIRMAN HARRIS asked why urban dwellers, but not rural
dwellers, have been allowed to refinance their homes.
REPRESENTATIVE MORGAN said he didn't know whether it was an
oversight or if there was a reason when the legislation was passed.
He noted that a person can seek help from another lending
institution. This bill would make it a one-stop process, however,
lowering closing costs and other costs.
Number 0342
REPRESENTATIVE DYSON asked who had requested this bill.
REPRESENTATIVE MORGAN said he and his staff had been looking at
these regulations and had done it on their own.
REPRESENTATIVE DYSON asked what caused them to look at the
regulations in the first place.
REPRESENTATIVE MORGAN explained that where he comes from there is
a housing shortage. When looking at the refinancing, they had
discovered a discrepancy in the AHFC loan program. This would
provide equality under the lending statutes.
Number 0463
JOHN BITNEY, Legislative Liaison, Alaska Housing Finance
Corporation, testified via teleconference from Anchorage, noting
that Kay Murphy and Daniel Fauske (CEO/Executive Director) were
with him. He advised members that packets should contain a zero
fiscal note from the AHFC, as well as a two-page letter to the
sponsor from Mr. Fauske. He said the letter would speak for
itself; he himself would make general comments and then ask Kay
Murphy to address specific items in the letter.
MR. BITNEY advised members that the AHFC supports HB 93. Both
provisions in the bill have been introduced in prior legislatures
and have gone through various hearings; however, they were included
with legislation containing other matters that had raised
questions. At the start of this session, the AHFC had begun
working with Representative Morgan's office on some of those
provisions that appeared noncontroversial, and that related to
fairness between rural and urban borrowers.
Number 0630
CO-CHAIRMAN HARRIS asked whether HB 93 contains anything possibly
detrimental that the committee isn't aware of, discussed by
previous legislatures.
MR. BITNEY said no, he doesn't believe so. The prior provisions
had related to the AHFC's supplemental housing grant program and to
the extent that it would be allowed to do some other things. He
characterized the prior legislation as "nonglamorous," saying they
had been unable to get it through some of the end-of-session
bargaining and excitement. The provisions in HB 93 are very
straightforward, and there is nothing that he believes the
committee would be missing.
Number 0778
REPRESENTATIVE DYSON asked what public purpose is served by
financing four-plexes.
KAY MURPHY, Mortgage Operations Director, Alaska Housing Finance
Corporation, answered via teleconference from Anchorage that she
believes the public purpose is twofold. First, allowing the
financing of small multifamily housing units will provide
additional housing in rural Alaska, where there exists a severe
shortage. Second, allowing owner occupancy will provide for better
maintenance of the units.
REPRESENTATIVE DYSON asked the reason for four units, rather than
more.
MS. MURPHY said it is to bring the rural loan program in line with
traditional mortgage loan programs. The typical definition of a
single-family dwelling, in general secondary market terms, is "one-
to-four-family," whereas anything with five or more units is
"multifamily." Ms. Murphy pointed out that AHFC has a program for
multifamily financing, typically for investment property that is
not occupied by the owner.
Number 0894
REPRESENTATIVE MURKOWSKI asked whether an individual in a rural
community has an option to refinance his or her home, if that
person has a loan through the AHFC.
MS. MURPHY said current statutes do not specifically allow a person
to refinance an existing rural loan program loan. The AHFC does
have a streamlined refinancing program where the borrower applies
with a lender, provides very limited documentation, and can effect
a refinance, a lowering of interest rates, or a change in terms.
However, rural borrowers don't have that option under their rural
loan program, so they would have to refinance under other
conventional programs, through the AHFC or other lenders. They
would therefore not have the interest rates and terms associated
with the rural loan program.
Number 1031
REPRESENTATIVE JOULE commented that he himself had recently gone
through this process; after 15 years with the AHFC, he'd had to
borrow from another institution to refinance, at a higher interest
rate than he would have gotten from AHFC if he could have
refinanced with them. He said this is a very good step in the
right direction.
CO-CHAIRMAN HALCRO asked whether Representative Joule would have
been able to take advantage of the program proposed in HB 93, had
it been available.
REPRESENTATIVE JOULE said yes, at a whole percentage lower than the
rate he got.
Number 1110
REPRESENTATIVE MORGAN pointed out that the default rate is the
rural mortgage loan program is generally the same as for the urban
programs; in some cases, it is much less.
CO-CHAIRMAN HALCRO asked whether there were further questions, then
closed public testimony.
Number 1153
CO-CHAIRMAN HARRIS made a motion to move HB 93 from the committee
with the attached zero fiscal note and individual recommendations.
There being no objection, HB 93 moved from the House Community and
Regional Affairs Standing Committee.
ADJOURNMENT
Number 1167
There being no further business before the committee, the House
Community and Regional Affairs Standing Committee meeting was
adjourned at 8:15 a.m.
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