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Jan. 27, 2012

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Legislature Back In Session This Week
The Georgia General Assembly took a week off for the Martin Luther King, Jr. Day and to have a series of budget hearings to hear from the Governor and agency heads about their priority programs. While revenues to the State have continued to be more positive recently, the leadership is taking a cautious approach. When he spoke at our Legislative & Economic Forum a couple of weeks ago, the Governor emphasized that he intends to work toward building the "rainy day fund," which was essentially depleted during the downturn. Zero-based budgeting is getting a much harder look this year and the Legislature is asking agencies to not build their budget requests on what they've historically been appropriated, but to look closely at various programs to ensure their continued need and effectiveness.

GBA Priority Garnishment Bill Passes House
The House overwhelmingly passed this week H.B. 683, the bill that overturns a State Bar of Georgia-requested and Supreme Court of Georgia-approved rule that requires a garnishment from a court of record to be answered by a lawyer. Most banks and other businesses have been answering these garnishments with staff, and we forcefully made the point that there was simply no justification to add additional legal fee expenses to what is essentially an administrative function. We worked with a committee of the State Bar that developed this bill that will allow garnishments to be answered by non-lawyers, The bill was introduced by House Judiciary Chairman, Wendell Willard, (R-Sandy Springs) and he ably managed the bill on the floor. Our attorney friends in the Legislature had to endure some good-natured ribbing about their fees in general; however, all the attorneys but one on the Judiciary Committee voted for the bill knowing it could potentially cut into their revenues. That one attorney, Rep. Mark Hatfield (R-Waycross) was not concerned about the loss of fees, but had a minority report issued against the bill and he pressed members strongly to oppose it on the floor. He had a theory, that others disagreed with, that the bill would somehow not allow individual business owners to pass this administrative task on to employees. The final vote was 150-20. The bill is now pending in the Senate Judiciary Committee which we hope will consider it soon.



No Additional Action Yet on Foreclosure Registries
In our last e-Legislative Update, we told you about a bill GBA had been working on with a coalition of other interested organizations dealing with foreclosure registries. The bill, H.B. 110, is designed to create uniform statewide standards for any municipality or county that decides to create a foreclosure registry. The registration fee would be capped at $175 and failure to register was capped at $500 per month to a maximum of $2,000. We mentioned to you that representatives of county and municipal governments objected to certain provisions in the legislation. We've been meeting with the governmental representatives and find that we can still accomplish what we need if their changes are included in
the bill. However, other parties want to expand the reach of the bill and ban additional vacant property ordinances that are also becoming more common. The House author, Rep. Mike Jacobs (R-Atlanta) also favored including vacant properties in the new statute. Senate Banking and Financial Institutions Committee Chairman Jack Murphy (R-Cumming), who is handling the bill in the Senate, is weighing all the options and we should know more soon about his plans.



Some Bills We're Following Advanced This Week or Were Heard in Committee
Committees are continuing to meet on all the bills that have been referred to them. This week, we saw action on a several bills we've been following:

Guarantor Notice of Default. One bill introduced last session deals with notification of all parties when a loan has defaulted. Rep. Rusty Kidd (I-Milledgeville) introduced HB 245 that will require cosigners or guarantors of loans to be notified upon default. The bill uses the term "surety" instead of "guarantor" in the legislation, but Rep. Kidd says he intends that to mean guarantor. We understand most banks provide notification to guarantors in default, but there may be some inconsistency as to those guarantors being notified every time a notice is sent to the borrower. The bill would seem to require contemporaneous notice in each instance. A House Judiciary Subcommittee accepted GBA-supported changes on where notice could be sent and that failure to comply would not affect the obligation. GBA's Elizabeth Chandler testified in support of those changes, but encouraged the committee to consider their actions before adding yet another legislated requirement on the industry. The subcommittee decided to advance the bill to the full Judiciary Committee and it is scheduled for an additional hearing next Tuesday. GBA monitoring with concerns.

Condo Association Transfers. Another bill we worked on last session was SB 136 by Sen. Bill Hamrick (R-Carrollton). As introduced, the bill provided that any lien filed by a homeowners association for past-due condo fees would be superior to the lien of any mortgage in a foreclosure for amounts represented by the lien equal to the previous 12 months of fees. At GBA's request, the author amended the bill to remove these provisions. The remaining provisions in the bill addressing how declarants transfer condo association governance to unit owners remained intact. That version was reported out of the Senate Judiciary Committee this week. The proponents of adding language back that would allow liens for past-due condo fees to survive a foreclosure are asking members to support their efforts. Putting homeowner association dues in a priority position over a mortgage in Georgia’s foreclosure statute would be bad public policy and GBA continues to oppose that effort. GBA monitoring.

Mortgages Fraud. At this same Senate Judiciary Committee meeting, the legislators considered HB 237 by Rep. Rich Golick (R-Smyrna), on behalf of Attorney General Sam Olens. The bill would extend the mortgage fraud statutes through the foreclosure process. We worked with the Attorney General and got certain provisions in the bill changed to narrow the focus to mortgage fraud. The bill passed the House, but members of the Senate Judiciary Committee continue to raise concerns mostly related to giving additional subpoena power to local district attorneys. The committee held the bill for further study. GBA monitoring.




Ralston Wants to Reduce Regulatory Burden
Speaker David Ralston (R-Blue Ridge) has been an outspoken proponent of ensuring that Georgia's business community has the most efficient set of laws and subsequent regulations on the books to allow these businesses to spend time on growing their business rather than filling out needless paperwork. This week in an unusual appearance before a committee, Speaker Ralston met with the House Special Committee on Small Business Development and Job Creation chaired by Rep. David Knight (R-Griffin) and charged them with a big task of hearing from all areas within the business community and taking action to reduce regulatory burden. The committee quickly got to work hearing from representatives of business interests. If you have recommendations of state-level burdens that affect your bank, please share those with us so we can pass them along to Chairman Knight and Speaker Ralston.



New Bills Added this Week to Our Tracking List
We saw several bills introduced this week that we've added to our tracking list. Obviously not all bills introduced will pass, but as decisions are made at the committee level on the fate of these bills, we'll let you know.

Foreclosure Notice. Sen. Jesse Stone (R-Waynesboro) introduced SB 333 that expands who receives a notice of foreclosure. Right now those notices are sent to those involving residential properties. This bill will require those notices to be sent to any property being foreclosed including commercial and bank-owned property. The bill is pending in the Senate Judiciary Committee of which he is a member. GBA monitoring.

Closing Protection Letters. At the request of Insurance Commissioner Ralph Hudgens, Sen. David Shafer introduced SB 331, which creates a new type of instrument title insurance companies may issue to indemnify a buyer, lender, or seller in transactions where title to real estate is being conveyed solely against losses not to exceed the amount of the settlement funds under certain circumstances. The bill is pending in the Senate Insurance and Labor Committee. GBA monitoring.

Mortgages and Ban on Default Judgments. Rep. Dar'shun Kendrick (D-Lithonia) introduced H.B. 781 would expand the kinds of documents that would be considered a mortgage and prohibits a court from entering a deficiency decree for any portion of any deficiency, if one exists. The bill further says that no suit to recover any such deficiency shall be maintained against the mortgagor or his or her heirs or assigns. GBA opposes.

Credit Reports and Hiring. Rep. Kendrick also introduced H.B. 780 that would make it unlawful for an employer to fail or refuse to hire, bar, discharge from employment, or otherwise discriminate against an individual because of the individual's credit history or credit report unless the information in the credit history or credit report  directly relates to a bona fide occupation qualification reasonably necessary to the normal operation of that business or enterprise. The bill further says that any employer or agent of such employer who violates this new statute would be liable to the injured employee for all actual damages thereby suffered by the employee and for reasonable attorney's fees incurred by the employee in asserting successful claim. GBA opposes.

Reconveyances and Fees. HB 739 has been introduced Rep. Doug McKillip (R-Athens) that is designed to prevent certain fees from being assessed on property that would be collected every time the property is sold. This bill is identical to legislation he introduced last year and on the closing day of the session got expanded greatly with amendments unrelated to the original purpose. The bill was introduced at the request of the State Bar of Georgia and all concerned felt they needed to start over with a fresh version for the 2012 session. GBA monitoring.






Other Legislation We Expect to Surface This Session
There are several other pieces of legislation we expect we will be involved with this session, so please watch future editions of our Legislative Update. Here are just a few:

Banking Department Housekeeping Bill. Two issues of interest to banks will be in the bill. One would allow banks with Department approval to sell shares for less than par and the other would allow, also with Department approval, a bank to pay dividends from sources other than retained earnings. GBA will support.

Derivatives Within Bank Lending Limits. At last count, we only had 19 Georgia-chartered banks with any sort of derivatives exposure. The Dodd-Frank Act requires derivatives exposure to be counted within the banks legal lending limits or banks can no longer participate in the derivatives market after Dec. 31, 2012. The Comptroller of the Currency will be issuing guidelines for nationally-chartered banks, but it will take a change in state statute to give state-chartered banks this same opportunity. GBA will support.

Subcontractor Notification. We expect legislation to be offered on behalf of various subcontractor groups that would require lenders to notify subcontractors if the bank decides to cease funding the bank's client these subcontractors are performing work for. The bill will be loosely patterned after similar requirements in Florida that applies to residential construction. We expect the Georgia version to also apply to commercial construction. GBA will oppose.

Additional Renter Rights in Foreclosure. Legislation was introduced last session, HB 445, by Rep. Andy Welch (R-McDonough) that would give rights to renters in a foreclosure beyond those in Federal law. We understand another bill is forthcoming that is expected to go even further than Welch's bill. GBA will oppose

Foreclosure Process Halted While Modifications Under Consideration. We expect to see legislation introduced that would prohibit lenders to dual track a foreclosure while a modification is under consideration. GBA will monitor.

GBA at the Capitol
Stay tuned and follow our updates on the GBA’s State Issues Page on our website as it’s updated daily. If you Tweet – follow us on Twitter – we’ll be Tweeting significant events as they occur. GBA will be well-represented again this year at the Capitol with Elizabeth Chandler, GBA’s Senior Vice President of Government Relations, coordinating our lobbying efforts. With questions about the session, bills of interest or anything related to the process, just give her a call at 404.420.2027.


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