SENATE BILL NO. 221 "An Act relating to negatively amortizing loans originated under a program approved or sponsored by the state or federal government." JERRY BURNETT, STAFF, SENATOR RANDY PHILLIPS, commented that many of Alaska's seniors are faced with the prospect of reduced income and the inability to keep their homes. One option for seniors is a "reverse annuity mortgage", a mortgage wherein the financial institution provides a stream of payments to the borrower in return for an equity position in the borrower's home. The senior would be able to stay in the home while receiving the financial benefits of home ownership. Mr. Burnett continued, Fannie Mae and Freddie Mac developed the "Homekeeper" loan program. The national program would allow seniors to extract equity without a payment plan or to purchase a home without high payments. The program has several options, one of which is an equity share agreement that would allow for a higher income allowance for the senior. The option cannot be utilized in Alaska because of a prohibition in current law. SB 21 would change State law, AS 45.45.010(f), to enable certain shared equity loans that are sponsored by the State of Alaska or the federal government. Mr. Burnett concluded that passage of SB 221 would benefit many Alaskan seniors by allowing them an additional tool to help retain their homes. Representative J. Davies asked the difference between a loan and a shared equity. AMBER HUTCHENS, (TESTIFIED VIA TELECONFERENCE), PRESIDENT, ALASKA MORTGAGE BANKERS ASSOCIATION, ANCHORAGE, stated that the reversed mortgage programs normally go by the appraised value of the property, and do not consider equity in the future. The Homekeepers Program will allow the seniors to extract more in estimating that the property will grow in value. Other programs do not take into consideration the growth of the property. Representative J. Davies asked if there were any reversed mortgage plans in the State of Alaska that were not offered through the nationally chartered organizations such as Fannie Mae. Ms. Hutchens replied that there are none offered by Alaskan lenders at this time. Representative J. Davies pointed out that the Homekeeper loan program contained protections so that there would be no eviction or forced sale prior to when the senior moves. It also contains provisions that there be no cost to the heirs in excess of the equity in the home. He asked if those protections should be written in statute. Co-Chair Therriault asked how the State would rate the program. Mr. Burnett understood that Alaska Housing Finance Corporation (AHFC) could approve such a program. Representative J. Davies pointed out that the section of statute being amended simply refers to bank, credit union, savings and loan institution, pension fund, insurance and mortgage companies and changing what they could do. He assumed that any bank could propose a reverse mortgage. Ms. Hutchens commented that section of the bill was well written, pointing out that the program would be approved or sponsored by the State. Normally, a bank does not go through the State to get their program approved unless it is a federally approved program. Representative J. Davies recommended removing language on Page 1, Line 11, "by the state". Representative Kelly voiced concern with the proposed program in that it removes money from the senior population and places it back in the government. Ms. Hutchens advised that there are few seniors who would need this option. Mr. Burnett commented that currently, there are no State sponsored programs and that the federal and national sponsored programs are sufficient. He advised that removal of the language would require a title change. Co-Chair Therriault recommended so as to avoid a title change, the Committee should specify items which any prospective State program should insure. CS SB 221 (FIN) was HELD in Committee for further consideration.