SB 104-MANUFACTURED HOMES AS REAL PROPERTY  1:40:13 PM CHAIR HOLLIS FRENCH announced the consideration of SB 104 and noted that he was the sponsor. He read the following sponsor statement into the record: Senate Bill 104 establishes procedures to convert manufactured homes to real property, through a defined process within the Division of Motor Vehicles. This change will give the owners of manufactured homes better access to traditional mortgage financing, which often features lower interest rates. Currently, when a manufactured home is affixed to a permanent foundation on land owned by an individual, the vaguely defined title surrender procedure used by the Division of Motor Vehicles lacks a record notice. Without a record notice, homeowners are often left with unmarketable titles, and lenders hold unperfected security interests in the property, placing all parties in a real estate transaction - the buyer, the lender, and the seller - at risk. Conversion will help increase home values for consumers, give security to lenders and provide fixed procedures for the DMV to follow. Nothing requires the conversion of a manufactured home in the legislation, leaving that choice to consumers. Many Alaskans live in manufactured homes. This legislation treats residents that permanently affix a manufactured home to land they own the same as if their home was built on the property. CHAIR FRENCH noted the two letters of support from First American Title and the Alaska Land Title Association. He said that since the bill was reported from the last committee, the Department of Natural Resources (DNR) Recorder's Office proposed simple language changes that will better conform to the actual duties and procedures of that office. He added that a detailed sectional analysis will be provided once that language is incorporated into a committee substitute (CS). The legislation centers on bill sections 16 and 26. Section 16 establishes clear procedures within DMV to allow manufactured homeowners to convert their personal property to real property, if desired, and to convert it back to personal property by following certain severance procedures. Section 26 relates to the conditions that must be met before a manufactured home can be characterized as real property; it must be permanently affixed to the land, an affixation affidavit must be recorded, and the owner of the manufactured home must either own the land or have a 20 year or longer lease on the property. CHAIR FRENCH noted that George Ginsberg was online to testify and Jeff Harris with Wells Fargo, Vicky Backus with the State Recorder's Office, Colleen Moore with the Department of Law, and Stacy Oates with DMV were available to answer questions. 1:44:16 PM GEORGE GINSBERG, outside counsel to Wells Fargo, said SB 104 will help consumers. He explained that Fannie Mae and Freddie Mac don't treat a loan on a manufactured home as a real estate loan unless state statutes make it clear that a manufactured home affixed to land is in fact real estate. To the extent that financing is available for a manufactured home as personal property, it is at a higher rate than a real estate loan. Mr. Ginsberg noted that he was involved in the drafting of this bill as well as similar legislation in other states. CHAIR FRENCH asked how many states have passed and how many are considering similar legislation. MR. GINSBERG said he didn't have the exact number but most states have a statutory procedure for converting a home to real property when it is permanently affixed to land. Alaska is one of the few exceptions. North Carolina, Missouri, and other states have passed similar legislation and a similar bill is pending in Illinois. 1:47:23 PM SENATOR PASKVAN said he supports the intent of the bill, but he wants to know what the banking industry intends. He asked if these loans will be sold individually or bundled as an investment tool and if they're bundled if they will be clearly identified as a different type of real estate than has previously been marketed out of Alaska. MR. GINSBERG said he knows that no substantive change is intended in changing the terminology from "mobile home" to "manufactured home." Manufactured home is the term that's used in federal statutes and regulations as well as the Alaska Uniform Code. He deferred comment as to how these loans would be sold. 1:49:41 PM JEFF HARRIS, Loan Administration Manager, Wells Fargo Home Mortgage, said that Wells Fargo has been holding loans internally, but that decision is dependent on interest rates. When Wells Fargo does sell its loans to Fanny Mae and Freddy Mac, it abides by Fanny and Freddy rules to identify manufactured homes as such. The conversion documentation is also provided. SENATOR PASKVAN expressed interest in knowing if investors in a collateralized mortgage obligation would be aware if the financial instrument included manufactured mobile homes as opposed to Lindal Cedar homes, for example. There's quite a distinction to an investor as to the underlying value, he said. MR. HARRIS agreed that the investor would want to know if there were manufactured homes. He said the conversion document is an important piece of the collateral to ensure that the procedure in a particular state has been completed. At that point the home is considered similar to a "stick built" home. SENATOR PASKVAN asked if it would be possible to bundle packages of these loans. MR. HARRIS replied there could be a mix of manufactured homes and "stick" housing in a pool, but the lender would need to identify which of the loans were for manufactured housing. Right now, he said, there isn't sufficient volume to bundle loans of just manufactured homes. 1:53:31 PM CHAIR FRENCH announced he would hold SB 104 in committee.