CHAIRMAN TIM KELLY called the Labor and Commerce Committee meeting g to order at 1:40 p.m. He brought SB 361 (REAL ESTATE APPRAISERS) S) before the committee as the first order of business. FRED FERRARA, a licensed general real estate appraiser testifying from Anchorage, related that when FIREA was initially enacted, which required all the states to put into effect certification for appraisers they are licensing, they followed the legislation and the hours required. In the intervening time, the hours required for the residential appraiser have been changed and, as a result, as of January 1, 1994, any people that they do pass under the present authorized regulations and statutes would not meet the federal requirements. He said it is conceivable that these new appraisers that would be coming into the field would not be able to work in a federally related transaction. SB 361 would give the board the ability to change the hours in conforming to the FIREA requirements as they are modified over the years. Number 047 SENATOR KELLY asked if when an individual is purchasing a house and is going through a FHA of VA appraisal, does it require a FHA or a VA authorized appraiser. FRED FERRARA acknowledged that it does require a FHA or a VA authorized appraiser, and, at present, they are selected only from the panel of appraisers that are approved by those agencies. He added that the agency has some proposed changes underway and draft regulations have been circulated around the nation. Number 066 SENATOR RIEGER inquired as to what the definition of "appraisal" is supposed to describe. FRED FERRARA answered that there are number of market value definitions that have been adopted by different states and by different jurisdictions. At one point it did say the highest, most probable price that would be paid. That definition was changed in both the national appraisal organizations and in the additions to FIREA, as well as the uniform standards that have been adopted by states, which, basically, clarifies that it is the most probable price. SENATOR RIEGER asked what the liability was to an appraiser on an appraisal he has made. FRED FERRARA responded that the most risk an appraiser is facing is if he is making a factual error. SENATOR RIEGER said there is a lot frustration that appraisals come in far lower than actual transaction prices. MR. FERRARA agreed and said he has had some concerns himself where people are perhaps more conservative than they should be in some instances, but it is a judgement situation. Number 175 SENATOR KELLY asked if the legislation concerns commercial real estate appraisers as well as residential appraisers. FRED FERRARA responded that it doesn't, but it would serve to protect that group also in the future, because there is discussion at the federal level to raise the required hours from the present 165 hours to 190 hours. As a result, this would give the board the authority to change those hours when they do go up and conform to the federal requirement. Number 190 SENATOR KELLY asked for the will of the committee. SENATOR RIEGER said he was willing to move the bill out of committee, but he is still concerned with hearing so many tales of unreasonably low appraisals. He suggested the board should take a look at the circumstances that there are numerous reported instances of low ball appraisals that seem to have been correlated to the banking crunch over the last decade. SENATOR RIEGER moved that SB 361 be passed out of committee with individual recommendations. Hearing no objections, the Chairman stated the bill would move on to the Judiciary Committee.