CSHB 108(JUD) am-PROP. FORECLOSURE/EXECUTION/TRUST DEEDS  4:14:24 PM CHAIR PASKVAN announced CSHB 108(JUD) am to be up for consideration. 4:14:51 PM JANE PIERSON, staff to Representative Ramras, sponsor of HB 108, testified that this bill will clarify, simplify and modernize non-judicial property foreclosures and hopefully reduce litigation. It includes an Internet publication provision that will make it more likely that third-party bidders will be attracted. Third party bidders are desirable because they will drive up auction prices, which can result in funds going back to the borrower at the completion of the auction. The Internet publishing requirements are borrower-friendly and only kick in when there is an unavoidable foreclosure and all other efforts to rescue the loan have failed. Other changes to the bill make the process more efficient and less litigation-prone. Some of the state foreclosure laws were enacted before fax machines were invented, let alone the Internet. Foreclosures are on the upswing - California, Washington and Oregon are now buried in foreclosures and there has been a rise in Alaska. Modernizing the statutes will help reduce the huge impact that foreclosures can have on the economy. The bill will make property foreclosure auctions more open and accessible, which will benefit borrowers, lenders, title insurers, individuals and even neighbors and neighborhoods. HB 108 was drafted with the knowledge of the best practices of 11 other states. MS. PIERSON stated that currently banks are averaging a loss of $20,000 per foreclosure; so hopefully this will add more people into the foreclosure auctions. It will also clarify how foreclosure proceeds will be divided up. It will assure that foreclosure trustees are fiscally responsible by imposing reasonable bond requirements and creating deadlines to deter chilled bidders and unnecessary delays. It allows trustees to nullify sales when mistakes are made that negatively impact the integrity of the sale. It sets up procedures to follow involving a deceased borrower, creates common sense rules to govern times and methods for posting foreclosure properties; it creates Internet publication procedures and allows acceptance of foreclosure auction bids via e-mail, Internet and telephone - for greater accessibility to auctions. She pointed out a House floor amendment to get rid of a provision that said that the sale had to happen two days before the auction in order to be cured. She explained that language on page 5, lines 20-23, was inadvertently left in and is now superfluous since the sale can happen up to the time of sale. So it needed to be removed. SENATOR BUNDE asked if a particular precipitating event inspired this legislation. MS. PIERSON replied no. 4:20:10 PM SENATOR THOMAS pointed out an inaccuracy on page 2, line 3, that says "an inaccuracy in the street address may now be used to set aside a sale if the legal description is correct." It seemed a little unusual that if someone put the wrong street address in, either on purpose or by mistake, that it shouldn't have some impact on the sale. MS. PIERSON said that language is currently in statute. 4:21:00 PM ROBERT SCHMIDT, representing himself and his law firm, said HB 108 was originally written by his colleague and competitor, Stephan Routh, and his associate, Bridget Olstrom, and that his law firm ran a distant second in terms of volume of foreclosures handled at 100 per year. He supported HB 108. It significantly modernizes Alaska foreclosure laws. Among the items already mentioned, it adds a five-day do-over period where the trustee under a deed of trust may elect to undo the foreclosure sale and return ownership of the property to the borrower, a great protection to borrowers. MR. SCHMIDT explained how he had grappled with Mr. Routh over the necessity and extent of Internet publication, but he supports the current version of HB 108, which codifies the current practice of a newspaper running a print ad and simultaneously running an Internet ad. SENATOR BUNDE said with the increasing demise of newspapers, Mr. Schmidt leans heavily toward them for advertising, but he wanted to know if he had other suggestions. MR. SCHMIDT agreed that newspapers are falling on hard times. His concerns with the Internet publication provisions as previously written were that the Internet website would have to have 5,000 unique visitors per month and would have to have senior management located in the state; it would also have to have been used primarily to advertise real property foreclosures. Under that definition only one website would qualify and that is owned by Mr. Routh. His firm has a website, too, but it advertises things other than foreclosures. He explained that at one point the Internet publications provisions were pulled and language saying if you buy a print ad and it simultaneously runs an Internet ad was inserted. He is skeptical that an Internet site should be required to get 5,000 unique visitors a month. In his opinion about 1 percent of the Alaskan population is interested in buying foreclosure property; he wonders whether the website would have to be just a foreclosure website and whether or not it would have to be located in Alaska. He concluded saying that the current language is acceptable to him. 4:26:40 PM CHAIR PASKVAN asked if he was aware of any opposition. MR. SCHMIDT replied the original provisions for Internet advertisement were of concern to several people within the foreclosure related industry, and they have been appropriately addressed. But he might change the 5,000 hits per month to a more appropriate number, because it lacks connection to the reality of foreclosure sales in Alaska where perhaps a dozen people know and follow them. SENATOR BUNDE said Alaska has prohibitions against special interest legislation, and asked if that one firm is an issue. MS. PIERSON replied yes; they have worked to make this language more open. SENATOR BUNDE asked why choose 5,000 hits? MS. PIERSON replied that they picked that number because it is not a lot of hits for an Internet website. It was a number so that someone couldn't say they had met the provision by publishing on some secure website somewhere. The sponsor would have no problem with changing the number. 4:30:32 PM STEPHEN ROUTH, representing himself, said he has been an attorney in Anchorage for over 27 years and supported HB 108. His primary focus is representing mortgage banks. He said this bill was drafted in response to problems other states have, as well as Alaska, with selling foreclosures. Certain laws hadn't been updated and were causing litigation and problems for borrowers, banks and title companies. It should have been done long ago. Many letters of support are in their packets - without qualification. He explained that current state law mandates that foreclosures are posted in a post office, which made sense 60 years ago when people went to the post office to get news, but today it doesn't. Also it's against federal law to publish estate notices in a post office; federal employees tear them down. It does other things like change the three-month period to 90 days because it the number of days varies depending on which months you are going through. Things in the past have caused tremendous amounts of grief for borrowers and their families, title companies and financial institutions - things like what happens if the borrower is deceased. Current law doesn't provide any guidance whatsoever on foreclosures for deceased persons. HB 108 cleans that up as well. MR. ROUTH said they looked at ways to reduce foreclosure litigation -how to give notice, how to post a property, what to do if you can't get to the property because there is no house there, and little things like that. On the Internet piece he said that 5,000 hits a month in Internet-speak is literally nothing. The last time he looked, the Anchorage Daily News (ADN) was getting over 80,000 hits a day. He thought Mr. Smith's website would qualify if he actually would count the number of hits he has. 4:35:31 PM He stated that things are often going wrong by the time you get to a foreclosure, and if there is equity in the house, the borrower should get it. Foreclosures need transparency; people can investigate it and help the neighborhood increase in value. If that process is hidden from everyone but the elite few, the light of transparency is not shining on it. 4:38:08 PM CHAIR PASKVAN closed public testimony. 4:38:18 PM SENATOR THOMAS moved conceptual Amendment 1 to delete language on page 5, lines 20-23. There were no objections and it was so ordered. SENATOR BUNDE said he thinks Internet advertising is a wise idea and expands opportunity to share information, but he was concerned about only one firm being able to provide the service because of the 5,000 hit qualification. So, he asked if there was interest in adopting another conceptual amendment to insert language on page 3, line 12(E), to indicate that advertising on the Internet where at least one of the websites has 5,000 hits. CHAIR PASKVAN recalled that he read that the ADN doesn't qualify because it is not an Internet site exclusively devoted to real estate sales. MS. PIERSON said that was one of the changes they worked very hard to get. SENATOR THOMAS said he didn't read that language to be exclusive. SENATOR BUNDE said this is talking about one website and he wanted it to apply to websites plural at least one of which would have 5,000 hits per month. MS. PIERSON remarked that language in (A)-(F) on page 3, also describes the qualifications for a website. 4:44:12 PM SENATOR MEYER moved to report SCS CSHB 108(L&C) from committee with individual recommendations and attached fiscal note(s). There were no objections and it was so ordered. At ease from 4:44 p.m. to 4:47 p.m.