Lawmaker shifts on foreclosure fee

HB1006 counts out elected officials

— A state legislator said Wednesday that he decided the best way to prevent circuit clerks from earning big profits from selling foreclosed properties is to remove them from the process altogether.

Rep. Eddie Cheatham, D-Crossett, filed House Bill 1006 last week. It’s a far different version from what he previously discussed as a way to rein in the extra income circuit clerks earn from judicial foreclosure auctions.

Previously, Cheatham had talked about a fee of $100 per foreclosure that elected circuit clerks could charge for their work as judge-appointed sales commissioners during property auctions. He suggested any other fee income collected from the sale should be placed in the county’s general fund.

Now his proposal would allow sales commissioners to continue earning one-tenth of 1 percent of a judicial foreclosure’s sale price as a fee as described in Arkansas Code Annotated 21-6-412, but it would prevent circuit clerks or any other elected official from acting as a sales commissioner.

“I got some legal advice around the Capitol that if we did that we might have issues with Amendment 55 [of the Arkansas Constitution],” Cheatham said.

Matthew Miller, an attorney with the Arkansas Bureau of Legislative Research, said he told Cheatham about the conflict with Amendment 55. Paying a $100 fee to circuit clerks who act as sales commissioners and placing the remainder of the sales-commission fee in the general fund “would be an acknowledgment that they [circuit clerks] are receiving it as part of their county job,” Miller said.

Article 5 of Amendment 55 of the Arkansas Constitution says, in part, that “fees of the office shall not be the basis of compensation for officers or employees of county offices.”

“That’s the language that’s problematic,” Miller said.

The Arkansas Democrat-Gazette first reported Oct. 3 about how state law and Northwest Arkansas’ high number of judicial foreclosures allowed Washington County Circuit Clerk Bette Stamps to earn $104,458 last year in addition to her $80,459 salary.

Benton County Circuit Clerk Brenda DeShields is on pace to earn more than $100,000 in sales commission fees this year on top of her $73,586 salary. She made $24,100 on Sept. 28 when she sold 10 Pinnacle Point buildings for $24.1 million.

Some state lawmakers and others who saw circuit clerks profit from the financial troubles of others were angry.

“I don’t think the state, the county or the commissioner should profit from people’s misfortune,” said Bill Schwyhart, the Rogers developer who lost the Pinnacle Point buildings. “Forget about Pinnacle. It is an extraordinary situation, but to people losing homes, a fee collected by a clerk is a big deal.

“Any commission going to the government or an elected official for [the sale of] foreclosed property is just wrong.”

The clerks have said they are only collecting what is allowed by the law. They are reliable and conduct the sales well, said Stone County Circuit Clerk Donna Wilson, president of the Arkansas Circuit Clerks Association. She said she has not reviewed Cheatham’s proposal.

“We’re definitely interested in this,” Wilson said. “We will be following it and having some input. We want this done right.”

Cheatham said he doesn’t know who would be able to replace the circuit clerks in the process. There are times where private lawyers step in as sales commissioners, but that’s infrequent, he said.

“I just know the elected officials shouldn’t be doing the work and receiving other income, and we know they are doing the majority of it in the time they are normally at the courthouse when they are supposed to be working on circuit-clerk business,” Cheatham said.

Arkansas, Pages 16 on 11/25/2010

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