Legal - Wisconsin REALTORS® Association

Transcription

PUBLIC POLICY FORUM
Should our constitution force
spending and taxing limits?
BEST OF THE
LEGAL HOTLINE
What is WRA’s Addendum R?
May 2004
$5.00
A PUBLICATION OF THE WISCONSIN REALTORS ASSOCIATION
®
NEWS.WRA.ORG
Mortgage Funding
Problems
What to do when lenders
fail to deliver at the closing
table
page 5
The Patriot Act
How this anti-terrorist
legislation impacts the
real estate industry
page 9
Gearing up for CE?
The end of the biennium is
approaching. Complete your
CE before the mad rush.
page 16
Quality of Life
Update
Job security and rising
healthcare costs concern
state residents
page 24
Turbo Charge Your
Business ...
online
how e-mail newsletters can help boost your
business in 2004
YO U R S O U R C E F O R T H E L AT E S T R E A L E S TAT E N E W S
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WISCONSIN REAL
REAL ESTATE
ESTATE MAGAZINE
MAGAZINE
WISCONSIN
THE OFFICIAL
OFFICIAL PUBLICATION
PUBLICATION OF
OF THE
THE WISCONSIN
WISCONSIN REALTORS
REALTORS®® ASSOCIATION
ASSOCIATION
THE
MAY 2004
MARCH
2004
VOL. 20,
20, NO.
NO. 78
VOL.
Contents
COVER STORY
FEATURES
5
Mortgage Funding Problems
A Solution?
Do you know who to call when you’re having
mortgage funding problems?
9
USA PATRIOT Act
How it Affects Real Estate
Anti-money laundering provisions may complicate
the real estate industry
12
e-mail
newsletters
Boost Your Business in 2004
When done correctly, e-mail
newsletters can be a great tool to
boost your business. We’ve highlighted
four strategies to help make your
newsletters stand out.
15
Appraisal Prelicense Course Planned
Get an Appraiser’s License Under Your Belt
Thinking about becoming an Appraiser?
Sign up before the requirements change!
21
Legislature Suspends Trans 233
Vote on rule will affect land adjacent to highways
DEPARTMENTS
2
3
4
6
Real Estate Notes
14 Education and Products
Inside the WRA
19 In the Spotlight
Save time and money when you
use UPS
A message from Senator Russ
Feingold
Chairman’s Corner
An update from your chairman.
Best of the Legal Hotline
Addendum R to the Offer to
Purchase
10 Legal - Mortgage Matters
HUD to implement a new federal
program for first time homebuyers.
WISCONSIN REAL ESTATE MAGAZINE, May 2004
A complete list of our upcoming
courses
WRA Board Member Roger Rushman offers tips and insight into the
real estate industry
20 Public Policy
Should our constitution force
spending and taxing limits?
22 New Faces in January
A close look at the 12 open Assembly seats
1
REAL ESTATE
n
o
t
e
s
Member Benefits:
Walter Hellyer, CRB, CRS, GRI, Chairman
[email protected]
Kitty Jedwabny, CRB, CRS, Chair-Elect
[email protected]
Jeff Kitchen, CRS, GRI, Treasurer
[email protected]
UPS. EASY TO SHIP, EASY TO SAVE
Go to UPS.com and ship now, right from your desk. Sign up for UPS savings, a valuable
benefit of your association membership.
Follow these simple steps:
William E. Malkasian, CAE, President
[email protected]
Editorial Staff
William E. Malkasian
Publisher
Robert Uhrina
Managing Editor
Prepare your label.
Visit UPS.com, select the “Shipping” tab, then select “create a Shipment.” Enter your
shipping information and print a label on your own paper. Pay for your shipment
online by credit card or through your UPS account. (First-time users will complete a
brief registration process.)
Give your package to us.
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Just request a pickup when you prepare your label on UPS.com, and we’ll come to
you. Or call 1-800-PICK-UPS and request a pickup. *
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Centers, a UPS drop Box, or with any UPS driver.
*Shipping cost per package will include an additional charge for pickup.
Can it be that easy?
Absolutely. International, overnight, or ground. All guaranteed and fully tracked. Get
the most from UPS technology by preparing packages at UPS.com. As a member of the
Wisconsin REALTORS® Association you receive discounts of:
§
$1.50 off Next Day Air Letters (there is no weight limit on UPS Next Day Air Lettersdelivery is guaranteed by the next morning-letter size and legal size and legal size
envelopes are available)
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10% off Next Day Air packages (guaranteed delivery by the next morning)
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10% off 2nd Day Air A.M. Letters and Packages
2nd business day by noon-available to
most cities)
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20% off Worldwide Express Letters and Packages (international
delivery guaranteed in 1 to 2
business days to most cities)
Call today to start shipping for
less at 800-325-7000 or go to
www.ups.com for drop box locations, to request a pickup and for
ordering free shipping supplies.
Wisconsin Real Estate Magazine is published by
the WISCONSIN REALTORS® ASSOCIATION
(guaranteed delivery on the
Laura Connolly and Erin Glodowski
Publication Editors
Wisconsin Real Estate Magazine, USPS 597850, ISSN 1096—9829, is published monthly
by the WISCONSIN REALTORS® ASSOCIATION,
4801 Forest Run Road, Ste. 201, Madison, WI
53704. Periodical postage paid in Madison,
WI and additional mailing offices. An annual
subscription rate of $5 is included in membership dues and a copy is mailed to every paid
REALTOR® and affiliate member of the association. Nonmember subscription rate: $60.
POSTMASTER: please send address changes to
the WISCONSIN REALTORS® ASSOCIATION, 4801
Forest Run Rd. Ste. 201, Madison WI 537047337
Permission to reprint or quote any material
from this issue is hereby granted, provided the
Wisconsin Real Estate Magazine is given proper
credit in all articles or commentaries, and the
WISCONSIN REALTORS® ASSOCIATION is provided with a copy of any reprint.
Contact
4801 Forest Run Rd., Suite 201
Madison, WI, 53704-7337
(608) 241-2047 • (800) 279-1972
legal hotline: (608) 242-2296 • (800) 799-4468
general fax: (608) 241-2901
products/education fax: (608) 241-5168
legal hotline fax: (608) 242-2279
president fax: (608) 242-2267
[email protected]
2
Bill Malkasian
WRA President
W
elcome to the May issue
of Wisconsin Real Estate
Magazine. This month
we are featuring a guest article by U.S.
Senator Russ Feingold regarding his
concerns and efforts on housing and
banking issues affecting Wisconsin
REALTORS®. As part of our committment to keep you informed during
this election year, we will report on
the efforts of representatives from both
parties as it relates to the Wisconsin
housing industry. We will be announcing official endorsements for major
offices up for election at a later date.
However, we will provide information on all major candidates, because
you must make the decision. We feel
it’s important all REALTORS® know
A Word from
Senator Russ Feingold
W
hen the Wisconsin REALTORS® Association (WRA)
called me in 2001 to alert me that a bill was about to be
introduced to stop national banks and other financial
institutions from offering real estate brokerage services, it was easy
for me to decide to cosponsor this important measure. My decision
was based on over 20 years of work with the WRA, and my own
long experience with individual REALTORS®, first as a state senator, and later as a member of the United States Senate.
From the work I did in my parents’ title company when I was younger
and later as a homeowner myself, I have long been aware of the essential role individual REALTORS® play in helping homeowners. But
I gained a much deeper understanding of the importance of Realtors
to local communities, and the broader national economy, when I was
elected to the Wisconsin state Senate.
In the state Senate, I represented parts of five counties in south centralWisconsin. In places like Portage, Columbus, Evansville, Mazomanie,
Mt. Horeb, New Glarus and Baraboo, I saw first-hand how the work
that REALTORS® do is so critical to the economic vitality of our communities, as both small businesses that contribute to the well-being of
the community, and as agents of economic growth.
Now, as a member of the U.S. Senate, I continue to hear from the WRA
as well as individual REALTORS®. As I noted earlier, thanks to their efforts I was pleased to cosponsor the “Community Choice in Real Estate
Act” to help ensure that the individual REALTORS® can preserve true
consumer choice in the marketplace.
where their elected officials stand on
key issues that impact the business
and the homeowners and property
owners we represent.
Sincerely,
Bill Malkasian
news.wra.org
Similarly, it has been the WRA and individual
REALTORS® that have alerted me to another
potentially serious problem, namely an effort by
the Department of Housing and Urban Development to change the rules stemming from the Real
Estate Settlement Procedure Act, or RESPA. The
proposed RESPA rule change could provide large
financial institutions with a significant
Senator
Russ Feingold
Feingold cont on p. 23
3
CHAIRMAN’S
Corner
with Walter “Corky” Hellyer
I
n my comments this month I will attempt to give
you a synopsis of current activities and concerns
involving your association — and also let you
know that your chairman isn’t loafing on the job!
We started in late March with a meeting of the Political
Strategy Committee in Madison to discuss with our lobbyists how we wanted to position the WRA for this fall’s
election through November of 2006, and to decide who
we should endorse and why. Once we were comfortable
with the recommendations, we needed to go to the local
boards where there were candidates we felt had earned
our endorsement. This prompted three trips around
the state that have solicited discussion and strategies.
If we’re right, we will strengthen the WRA’s ability to
contribute to legislation in the coming years.
It’s one thing to endorse a candidate; the real effort is
in getting that person elected. While we do an enviable
job politically amongst our peers in other states, I will
never be satisfied with 50 percent involvement from
our members. Just review what others have written in
this magazine about bills that we supported and the
legislature passed this last session. Our lobbying crew
deserves energetic accolades for a job well done. This
happened because the 50 percent that got involved
politically helped elect legislators from both sides of the
aisle that are favorable to our issues! RPAC is extremely
important, however, so are yard signs, receptions and
get out the vote phone banks.
Come on folks, we need 100 percent involvement …
NOW!
On April 5, I attended the signing of bill SB 369 regarding license reciprocity. We are grateful to the governor
for signing it and now must work with other states to
set up the procedures. The passing of this bill does not
automatically allow our members to go into neighboring
states
4
and practice. First, we must work out the agreements.
As soon as we do, we will notify you. Similarly, while
electronic commerce legislation has also passed and has
been signed into law, we have to work out the mechanics before we can use them.
Recently, the Executive Committee met at WRA
headquarters. Steve Murray, President of Real Trends,
Inc. gave us a strategic planning report based on six
focus group meetings throughout the state. We also
passed a revised budget, reviewed the Political Strategy
Committee’s report, prepared for the Board of Directors’
meeting on May 7, and prepared for the Midyear NAR
meetings in Washington, DC on May 10 – 15, where
President George W. Bush will be addressing the NAR
directors. Cathy Whatley, 2004 NAR immediate past
president, will be addressing our state directors May 7.
I’m happy to report that our finances are in good shape
due to good management and better renewals than we
had budgeted. The biggest contributors to our bottom
line were the 2,735 new members as of March, putting
our total membership at 15,707, with an additional 895
affiliate members.
I hope everyone is enjoying superb business and good
health. As always, I would appreciate hearing any
concerns you might have: [email protected].
WISCONSIN REAL ESTATE MAGAZINE, February 2004
Legal Matters
Mortgage Funding
PROBLEMS...
M
BY RICK STAFF
A Solution?
any Legal Hotline callers have complained about lenders who do not fund at the closing table. In some cases final loan and funding approvals are not completed until review of the closing documents by the funding source
following settlement. In many cases the loan funds are only wired to the settlement agent at specific times of
the day often leaving the parties in a waiting situation until the funds arrive. Sometimes the parties must wait until the
next business day before the funds arrive. The WRA has been working with the Department of Financial Institutions
(DFI) to resolve this problem. DFI has indicated a willingness to help enforce Wis. Stat. § 708.10, which prohibits this type
of funding delay. Section (2)(a) of the statue specifically states:
“… if a settlement agent is to deliver qualified loan funds to the borrower in a transaction, or to a 3rd party on behalf of the
borrower, a lender may not permit or require a borrower to complete a loan settlement unless the lender unconditionally
delivers qualified loan funds to the settlement agent before or immediately on completion of the loan settlement.”
DFI has indicated that parties or brokers experiencing mortgage funding delays can send complaints online at www.wdfi.org
Click on “Mortgage Banking,” and page down to the complaint form. Alternatively, inquiries or complaints may be sent
directly to the following persons:
John D. Walrath, Director
Wisconsin Department of Financial Institutions
Mortgage Banking Section
345 W. Washington Avenue, 4th Floor
P.O. Box 7876
Madison, WI 53707-7876
Direct Dial: 608-266-8308
E-mail: [email protected]
Fax: 608-267-6889
Jennifer Davenport, Mortgage Banking Examiner
Wisconsin Department of Financial Institutions
Mortgage Banking Section
345 W. Washington Avenue, 4th Floor
P.O. Box 7876
Direct Dial: 608-267-3332
E-mail: [email protected]
Fax: 608-267-6889
SOLUTION
55
Best of the Legal Hotline
ADDENDUM R
BY DEBBI CONRAD & TRACY RUCKA
T
he WRA Addendum R to the Offer to Purchase was designed for use in the sale of residential rental properties, regardless of the number of units involved. Addendum R tries
to contemplate many of the problems that may arise when tenants
do not pay their rent, abandon their units, damage the property or
terminate their tenancies between the date of the offer and closing.
Addendum R also addresses other concerns regarding leases, rent,
security deposits, personal property, eviction and vacancies.
The following questions concerning the sale of rental properties and
the use of the WRA Addendum R were recently asked of the Legal
Hotline.
Forms: When listing a 14-unit rental property, does the broker
use residential forms? What other forms should be used?
Residential or commercial forms may be used in multi-unit transactions. Use of the WRA Addendum R is also recommended. Addendum R is designed for residential rental property transactions, and
includes provisions addressing vacancies, evictions, indemnification
of the parties, rent schedules, lease terms and much more. Use of a
LBP addendum and brochure will be needed if the property was built
before 1978, and the buyer should receive a RECR if the property has
1-4 units.
Rent Proration: If the tenants do not pay rent to the current
owner - in the sale of residential rental property, is the seller
obligated to transfer the prorated amount of rent to the buyer?
Both the WB-11 Residential Offer To Purchase and Addendum R
obligate the seller to prorate all rent for the month of closing. Addendum R provides, at line 27, “All rent for the month of closing shall
be prorated through the day prior to closing.” If the tenant fails to pay
rent in a timely manner, the seller must react to the tenant’s breach
in a timely manner to avoid a breach of contract. The seller should
promptly give the buyer notice of the tenant’s rent delinquency and
then seek to obtain the delinquent rents from the tenant or negotiate a
mutually agreeable solution with the buyer.
Buyer Wants Unit Vacant: There is a tenant in each unit of the
duplex the buyer is purchasing. The buyer, per the Addendum R,
plans to occupy the side that had a six-month lease and now has
a tenant on a month-to-month basis. A 28-day notice to vacate
has been given to this tenant. This tenant refuses to leave, insisting that he had a verbal agreement to stay until next spring.
6
Legal Hotline
The dispute seems to be over what happened at the end of the tenant’s six-month
written lease. Either there was a verbal
lease, as claimed by the tenant and as
described in Wis. Stat. § 704.01(1), or this
was a holdover under Wis. Stat. § 704.25
that created a month-to-month tenancy.
Per the Addendum R provisions, it is
the seller’s (and the seller’s attorney’s)
responsibility to resolve this issue and get
the tenant out as promised in the offer and
in the Requested Vacancies section (lines
45-48) of Addendum R. The buyer may
wish to confer with his attorney because
the buyer should not close until the issue is
satisfactorily resolved. The buyer may have
a claim for monetary damages if the closing
and occupancy do not occur on time.
Tenant Terminates Tenancy: Prior to
closing, the owner did not disclose to
the buyer that a tenant was vacating
one of the units. The buyer assumed
that the unit was going to be rented.
The WRA Addendum R was used with
the offer but the new vacancies (lines
49-50) provision was not checked. Does
the seller owe the buyer the rent for the
month of closing? The seller claims that
the tenant used their security deposit
as the last month’s rent. Does the seller
owe the buyer the security deposit also?
Provided the tenant is still in the unit,
the security deposit must be assigned to
the buyer per the offer (lines 37-39) and
per Addendum R (lines 29-31). If the
buyer receives the security deposit, he
then becomes responsible for returning
the security deposit and/or a notice of
withholding within 21 days of the tenant’s
surrender of the premises. Unless the seller
is responsible to collect rent for the month
of closing (Addendum R, line 27), the seller
and buyer may agree to assign the claim for
the last month’s rent over to the buyer.
If, however, the tenant will be out of
the unit at the time of closing, the seller
appears to be in breach for failing to give
buyer immediate notice of the termination and for failing to attempt to re-rent
the unit (Addendum R, lines 36-39). The
buyer should consult with an attorney and
discuss whether he can request the security
deposit and rent and pursue any other
appropriate remedies.
Collecting Delinquent Rents: The
broker has a listing of a 10-unit and
is negotiating an offer. Three tenants
in the building have balances due the
seller for past rent due to illness and
medical problems. These amounts have
been approved and allowed by the
seller. Is it necessary to disclose those
amounts as delinquent on Addendum
R? The seller’s intent is to obtain promissory notes from these tenants and
make payment arrangements separate
from this transaction.
Wisconsin courts have indicated that
problematic tenant payment history may
be a material adverse fact in the sale of an
income property. See the summary of the
Kailin vs. Armstrong case, 2002 WI App
70, in Legal Update 03.01. Addendum R
states it is the seller’s obligation to collect
delinquent rents (see lines 36-39). Accordingly, the seller should disclose the rent
situation to the buyer. The situation may
be excluded from the standard Addendum
R provisions if the buyer agrees to accept
the promissory notes in lieu of current
rent payments and the offer is modified to
explain these circumstances.
Re-renting Vacant Units: The parties
have a rental property sale pending,
and Addendum R was included in the
offer. It is one month before closing
and the seller is going to enter into
a one-year lease for a vacant unit
where a month-to-month tenancy was
terminated. The seller believes that this
is appropriate because Addendum R
obligates the seller to re-rent vacant
news.wra.org
units. The buyer, however, had hoped to
raise the rent and modify other rental
conditions for this and other units after
she closed on the property.
It appears that the seller is acting in
accordance with lines 36-39 of Addendum
R. A preprinted form like Addendum R,
however, cannot contemplate and resolve
every possible situation. When buying a
rental property, it is important for the agent
working with the buyer to sit down with
the buyer and discuss what the buyer plans
to do with the units after closing and what
the buyer wants the seller to do prior to
closing. If the buyer wants to implement
certain rents or lease terms, either these
terms should be specified in an addendum
to the offer or the seller should be directed
to not rent any vacant units prior to closing.
Personal Property Schedule: The parties do not wish to give a value to the
personal property for the bill of sale is
referenced on Addendum R.
The parties may modify Addendum R to
eliminate the reference to the value of the
personal property on line ten. The offer
may be modified to provide that the personal property will be transferred by bill
of sale for one dollar and other good and
valuable consideration. The offer may also
specify that the parties will amend the offer
to allocate the value of personal property
prior to closing. It will be beneficial to
assign a value to the personal property
because that amount may then be deducted
from the value of the real property on
the real estate transfer return. The parties
may wish to confer with their attorneys or
accountants in this regard.
See pages 10-11 of Legal Update 03.11,
“Overcoming Residential Transaction
Obstacles,” www.wra.org/LU0311, for
further discussion of Addendum R.
7
Legal Matters
them
the DRL’s Division of Enforcement.
Confidential statements from a variety
of sources indicate action needs to be
taken to ensure that consumers and
licensees receive services in a timely
and appropriate manner. The WRA’s license law committee has proposed that
the WRA survey recent respondents
to determine what their experience
with DRL enforcement staff has been.
Contact Rick Staff ([email protected])
if you have any comments or suggestions regarding this issue.
DRL
Update
BY RICK STAFF
License
Reciprocity
License
reciprocity is
an agreement
between two
states to reduce
the requirements to get a real estate
license for licensees from the other
participating state. In Wisconsin, we
currently have an agreement with Minnesota that each state’s licensees can
take reduced “state-specific” education
requirements, then take the prelicense
exam. More flexibility than was available under former law was necessary to
negotiate agreements with other states.
With the passage of new reciprocity
legislation, the DRL now has statutory
authority to enter into more flexible
reciprocal agreements with other states.
For example, Illinois has requested that
we follow its reciprocity model, which
does not require an out-of-state licensee
to take the sales exam before taking the
broker exam. The DRL is determining
if it has the staff time to enter into
these negotiations. If you believe that
reciprocity with states like Illinois is
important, please forward an e-mail
to Rick Staff ([email protected]). Rick
will compile your e-mails and forward
8
to the DRL to show the importance of
moving forward on this issue. Please
circulate this request around your
office to ensure all interested persons
have an opportunity to weigh in.
Broker Supervision
2001 Act 16 revised Chapter 452 to
delete the requirement for a full-time
on-site broker at every branch office.
The bill also created 452.07 (1m) which
reads, “The department shall promulgate rules that specify the supervisory
duties of brokers under s. 452.12 (3).”
This mandate was issued in the belief
that the department would act in a
timely manner to promulgate rules that
would eliminate the gap left by deleting the on-site supervisor rule. Rules
have been drafted by a DRL work
group and were approved by the REB,
but they have not been acted upon by
the DRL. At the May REB meeting,
DRL Secretary Donsia Strong Hill will
be announcing her position on these
rules. We will update you on her report
to the REB after the meeting.
Division of Enforcement Practices
Recently there have been a number
of calls to the Legal Hotline indicating concerns about the practices of
CE For New Licensees
The WRA and the REB have requested
that the DRL repeal the rule that exempts new licensees from the requirement to complete continuing education
requirements in the biennium that the
person receives an original real estate
broker or sales license. When the rule
was drafted a dozen years ago, the
two curricula overlapped significantly.
However, the REB has determined that
the prelicense and continuing education curricula are no longer repetitious,
and therefore the rule can no longer be
justified. The DRL has not acted on the
REB’s motion to date, but we expect an
update from the secretary at the REB’s
May meeting.
Improving Agency Disclosure:
The WRA drafted a legislative proposal
to have the DRL develop a plain English agency disclosure with the DRL’s
Forms Council. The DRL did not support the bill so the WRA License Law
Committee has directed the WRA staff
to develop the disclosure internally. At
this point the DRL has not indicated an
interest in participating, but given the
consumer protection issues involved,
the WRA will continue to invite DRL
participation.
Legal Matters
The USA Patriot Act: How It Affects Real Estate.
BY TOM CULLEN
I
n response to the terrorist attacks
on September 11, 2001, the United
States Congress enacted the USA
PATRIOT Act. The thrust of the legislation is to “deter and punish terrorist
acts in the United States and around the
world [and] to enhance law enforcement
investigatory tools.” For the most part,
the act does not affect the real estate
industry. It does, however, contain
some anti-money laundering provisions
affecting financial institutions, and it
prohibits real estate professionals from
engaging in any transaction involving
blocked property or providing brokerage services to terrorists or terrorist
organizations.
insurance companies, escrow closing
companies, real estate closing companies,
and even individuals involved in the
closings process may also be included.
Arguably, this could include real estate
brokers, salespersons, appraisers and
attorneys. Currently, the United States
Treasury has “temporarily exempted”
many non-traditional financial institutions
from the act’s requirements. This includes
real estate professionals who, at this time,
do not need to implement an anti-money
laundering program. It is anticipated that
the Treasury Department will issue final
rules that will further define “financial
institutions” for purposes of the act’s
compliance sometime in 2004.
Financial Institutions
Money Laundering/Customer
Identification Programs
The USA PATRIOT Act has increased the
level of the federal government’s scrutiny
of financial transactions in an effort to
isolate and block the financial dealings of
terrorists. In a general sense, every business has a duty to be vigilant in ensuring
that they are not dealing with terrorists.
Financial institutions, however, are
required to screen their customers to see if
they are linked to any restricted entities or
terrorist organizations and implement an
anti-money laundering program.
The act’s broad definition of financial
institution includes not only traditional
financial institutions such as banks, savings associations and credit unions, but
also such entities as money services,
precious metal dealers, travel agencies
and insurance companies. A financial
institution is also defined as “persons
engaged in real estate closing and settlements.” As a result, entities such as title
All entities that are considered a financial
institution must establish an anti-money
laundering program that includes: (1)
the development of customer identification program (CIP) policies, procedures
and controls, (2) the designation of a
compliance officer, (3) an ongoing training
program, and (4) an independent audit
system. The CIP program must collect
identifying information about a customer
who opens an account, verify the customer’s identification, maintain records to
verify customer’s identity and determine
whether the customer appears on any list
of suspected terrorists or terrorist organizations. Thus, financial institutions may
ask a real estate professional’s customer
or client for personal information, such as
a social security number, driver’s license
or other identification verification documents.
USA Patriot Act cont. on p. 11
9
Legal Matters
and his or her spouse who have not owned a home during
the three previous years. In addition, eligible homebuyers
must have an income not in excess of 80 percent of the area’s
median income.
ADDI will be administered as a part of HUD’s HOME
Investment Partnerships Program. Interested buyers need to
contact the local HOME Program agency and request an application. A list of the HOME Program agencies in Wisconsin can be found at: www.wra.org/homeprogramagencies.
Debbi Conrad
MORTGAGE
mat ters
BY DEBBI CONRAD
The Department of Financial Institutions has issued two
industry alerts regarding the practices of Wisconsin mortgage brokers and mortgage bankers, one with regard to
homeowner’s insurance policy limits and one regarding
mortgage brokers and bankers who are finding loans for
customers without executing the required written consumer
contract. Anyone observing this conduct may wish to contact the Department of Financial Institutions at (608)261-7578
or www.wdfi.org/fi/mortbank.
Insurance Policy Limits
F
Mortgage brokers and mortgage bankers have reportedly
been asking insurance agents to raise the homeowner’s
policy limit so that it equals the amount of the mortgage
loan, mistakenly believing that the loan will not be approved
unless the value of the homeowners policy is greater than or
equal to the loan amount. These requests are not appropriate
or justified.
American Dream Downpayment Program
For instance, the Fannie Mae loan requirements are that a
first lien home mortgage include insurance coverage in an
amount equal to the smaller of the insurable value of the
improvements or the principal balance of the loan (provided
that this amount is at least 80% of the insurable value of the
improvements).
inding a suitable mortgage is a crucial component
in a successful real estate transaction. The following article highlights the benefits of a new federal
program, alerts members to questionable mortgage broker practices, and summarizes future mortgage-related
regulations on the horizon.
HUD will begin implementation of the American Dream
Downpayment Initiative (ADDI) program beginning on
April 29, 2004.
The American Dream Program offers up to either $10,000 or
six percent of the purchase price, whichever is greater, for
downpayment, closing costs and rehabilitation assistance.
Rehabilitation assistance may be used for the remediation of lead-based paint and other home health hazards.
ADDI assistance is available to first-time homebuyers who
purchase a single-family home, one- to four family housing,
a condominium unit, a cooperative unit or manufactured
housing. A first-time homebuyer is defined as an individual
10
Mortgage Brokers and Bankers
In addition, the Office of the Commissioner of Insurance
has stated that an insurance agent may not legally raise
the policy value in an arbitrary manner so that it will equal
the amount of a homeowner’s pending mortgage loan. For
additional information, see www.wdfi.org/fi/mortbank/
IndustryAlertHomeownersInsurance.htm.
Legal Matters
Mortgage Broker Contracts
Some mortgage brokers and mortgage bankers apparently have
been performing brokering activities and finding loans for customers without having a signed written agreement with the prospective
borrower or using agreements that do not contain the elements
required by Chapter DFI-Bkg 43 of the Wisconsin Administrative
Code http://www.wra.org/Chapterdfi-Bkg43. Required elements
include the term of the contract, the services to be performed, the
amount of the fee paid by the borrower, what must be accomplished to earn the fee, and under what circumstances the fee will
be refunded.
Failing to provide a written agreement that meets the Chapter
DFI-Bkg 43 requirements may result in revocation of the mortgage
broker’s or mortgage banker’s certificate of registration (license).
For information about mortgage broker contract requirements, see
http://www.wdfi.org/fi/mortbank/IndustryAlertMortgageBroke
rContract.htm.
On the Horizon
Predatory Lending Bill Signed into Law
Governor Doyle signed Assembly Bill 792 into law. This law
increases restrictions on lenders who target homeowners and
prospective homebuyers with high-cost home loans and charge
excessive fees that strip away equity. The new law will, among
other things, require a lender to consider a borrower’s ability to
repay the high cost loan, not merely the equity in a home; limit
prepayment penalties to within the first 36 months of the loan; and
prohibit balloon payments, the financing of single premium credit
insurance, the refinancing of zero interest loans and loan flipping.
The Department of Financial Institutions will be authorized to
investigate and penalize lenders who violate the law. The law will
go into effect on February 1, 2005.
FTC Free Credit Report Regulations
The Federal Trade Commission (FTC) is developing rules to implement free annual credit reports required by the Fair and Accurate
Credit Transactions Act (FACTA) enacted on Dec. 4, 2003. FACTA
requires that the nationwide consumer reporting agencies (CRAs)
provide consumers with a free copy of their credit report, upon
request, once every 12 months. The FTC’s proposed rules provide
for a centralized source that consumers would contact via the
internet, a toll-free telephone number, or by mail in order to request
free credit reports. Implementation would follow a regional roll-out
over nine months, and Midwestern states, including Wisconsin,
would become eligible for free credit reports on March 1, 2005. For
additional information, see http://www.ftc.gov/opa/2004/03/
facta.htm.
...USA Patriot Act cont. from p. 9
Office of Foreign Asset Control (OFAC)
In addition to the anti-money laundering
program component, the USA PATRIOT act
prohibits transactions with certain entities.
Before completing a transaction, financial
institutions must comply with specific due
diligence procedures. They must check a list of
known or suspected terrorists maintained by
the federal government and report suspicious
transactions and cash transfers in excess of
$10,000. The official list of terrorists is found at
www.treas.gov/ofac under the section heading
“Specially Designated Nationals (SDN) and
Blocked Persons.” The list is nearly 300 pages
long. When it appears that a customer is on the
SDN list, the financial institution should contact
OFAC’s Compliance Hotline at 1-800-540-6322
for further guidance.
Real estate professionals also are prohibited from
engaging in transactions with parties identified
on the SDN list. This is particularly important for
professionals whose practice involves transactions with foreigners or foreign properties. It
is also recommended that commercial property
managers periodically check the SDN list to ensure that current and prospective tenants are not
on the list. These provisions are enforced through
substantial fines and potential prison terms. All
real estate professionals should be aware of their
obligation to comply with OFAC regulations and
of the significant civil and criminal penalties that
may be imposed when entities do not comply.
For further information about the USA
PATRIOT Act, go to the United States
Department of Justice Web site at http://
www.lifeandliberty.gov/.
11
e-mail
newsletters
BOOST YOUR BUSINESS IN 2004
BY STAN SMITH & ROB UHRINA
E
-mail newsletters can be a great tool for boosting
your business. As many of us are aware, Web sites
alone can not turn 100 percent of our visitors into
clients. In fact, just the opposite is true. The majority of
prospects looking for homes leave Web sites without
making any type of connection with the real estate agent,
giving someone else the opportunity to step in.
One way to improve your online connection or “stickiness”
with prospects is to publish an e-mail newsletter that people
can sign up for on your Web site. This exciting new direct
response medium offers numerous advantages. First, they
are inexpensive; and second, they can reach a large audience quickly. Not only do email newsletters build trust
and credibility as with traditional newsletters, but you can
guarantee they will quickly become one of the most popular
emails your prospects receive as they begin shopping for a
new home. So what can you do to get started? Below, are
four recommended strategies for developing your own e-mail
newsletter.
1. Be Visible – You are only as popular as your last email. The
agent who stays in front of the prospect has a better chance
of securing the contract or listing. Make it a goal to regularly
stay in contact with your prospects and you will be at the top
of their minds. Top Internet real estate agents deliver e-mail
newsletters at least once a month. If you are just starting out,
try a monthly newsletter, and then gradually increase your
frequency.
2. Be Relevant – “One thing that I learned from Dad is to try
to understand the mind of everyone around you – Michael
Corleone – Godfather II.” All prospects have one thing in
mind – they care about their immediate interests. The seller
cares about the value of their home, while the buyer cares
about how much their “dream home” costs. Talk to them
about what they care about and tailor your content accordingly. Take a moment to write down topics that interest your
prospects. These topics will become the “editorial” calendar
for your e-mail newsletter. Keep your “ears open” and be the
trusted source on what is important.
12
Five things to avoid in e-newsletters
Too much content
Outdated information
Overuse of medium
Too many effects and animation
Lack of customer focus
3. Be Personal – It is said that the most popular name in the
world is your own. While that may sound a little cynical, it is
actually true. If someone shouts your name – your head turns
and your attention is focused on the caller. Use this principle
to your advantage. Whenever possible, use the first name of
your prospect in your e-mail.
4. Content is King – There are four principles here. Keep
your message brief and focused; make sure the reader can
scan your message quickly; make sure your newsletter is
informative, convenient and timely; and last but not least, do
not over do it on HTML effects. Readers love white space and
a well-organized newsletter that is not dominated with glitz
and flashy effects that compete with the message you are
trying to convey.
Now you’re ready to begin developing your own e-mail
newsletter. Use these four strategies to get yourself on the
way to success in the world of online marketing. While there
are many ways to get started, your online presence above and
beyond your Web site will be sure to enhance your business
in 2004.
About the Author: Stan Smith is the Author of Master Realtor Internet
Secrets Revealed! a comprehensive guide that teaches real estate professionals how to build and market lead-generating Real Estate Web sites.
Click here for more information on this ground-breaking online success
guide - written exclusively for real estate professionals. Check it out at http:
//www.RealtorInternetTips.com
Rob Uhrina is the Vice President of Marketing and Communications for the
Wisconsin REALTORS® Association.
H T ML
vs.
TE XT BASED
e-mail
marketing
The results of a recent survey of business professionals performed by SubscriberMail showed that
when people preferred HTML e-mail marketing messages and newsletters, they preferred them
because...
28% HTML email newsletters can accomplish a more effective layout
24% Color can be used in the e-mail newsletter
21% Images can be included in the email newsletter
20% Ads can be more effective in HTML e-mail than text e-mail.
BY JORDAN AYAN
W
hile HTML e-mails (e-mail created to look and
function like Web pages) offer the advantages
of images, color and links, many e-mail users
still prefer to receive simple text e-mails when given a
choice.
necessarily better. Decide what the single most important
part of your message is and design all the other elements
around it. Ask someone to review your e-mail and tell
you which part of the e-mail grabs their attention first - if
it is not the most important part, go back and try again.
The results of a recent survey performed by SubscriberMail
clearly show that the benefits of HTML e-mails are in how
layout, color, and images can affect the reader’s ability to
process and enjoy the content. In contrast, people who prefer
text-based e-mail did not want to be distracted with too
much chaotic layout, color and images or worse yet - missing
graphics or broken links.
b. Don’t forget about mobile readers. Even if someone
has picked HTML because they normally read their e-mail
at their desk, they may also periodically read it on a
mobile device. The problem is that you won’t know when
they do. If you have the resources, see what your HTML
e-mail looks like when viewed on a mobile device like a
Blackberry or a Palm.
So what does this mean? Why doesn’t everyone prefer
HTML e-mail marketing?
c. Test, Test, Test. Sadly, HTML is not yet a truly universal format. Your layout may look perfect on your own machine, but less than perfect on others. At the very least, get
a few free e-mail accounts set up and test your campaign
before sending it. A recent study showed that almost half
of the e-mail messages sent out, do not display properly
because they had missing graphics or broken code.
There are two possibilities here. One possibility is that overall, HTML e-mails are done so poorly that the use of color,
layout and image actually obscures readability, driving more
people to pick the text format. A second possibility is that
some people just absorb information differently than others,
so even if HTML e-mails were optimized, they would still
pick text. Either way, there are a few lessons to be learned
here.
1. Give your readers a choice of HTML e-mail or text
In a recent survey performed by SubscriberMail, business
professionals were split almost down the middle in their
choice of HTML vs. text-based e-mails. This means there is
no obvious winner between the two formats, so your best
bet is to create two versions of your e-mail and allow the
recipient to specify which one he or she wants. Good e-mail
marketing software programs (such as SubscriberMail) allow
you to do this. However, if you can’t present people with a
choice, send your message in a multi-part format.
2. If you are doing HTML e-mails...
a. Think simple. It is human nature to try to do more.
More color, more images, or more layout blocks is not
3. In your text e-mails... You can make text look good.
The more people you have who choose text e-mails, the more
time you should spend on your text version. While your
layout options are limited, you can use interesting spacing
and characters to create the illusion of a more sophisticated
layout.
The bottom line is that you CAN take the best of each format
and merge them into your email marketing. Remember it’s
all about your audience. Think of them as you create your
email marketing messages - keep things simple and clear.
Before you send an email message, ask someone what they
think, and don’t forget to test, test, test.
Jordan Ayan is CEO AND Founder of SubscriberMail, LLC one of the
nations leading email marketing solution providers. SubscriberMail
provides any REALTOR® with tools to develop, deliver and track professionally looking html e-mail newsletters and promotions.
13
Education & Products
QuickStart.
The Quickest Way to Get Your New Recruits On Track.
Course Contents Include:
Prospecting – working with FSBO, expired listings and farms
Advertising – technology tools, creating a business plan and time management
Developing People Skills – listing presentations and overcoming seller objections
Working with Buyers – buyer agency and procuring cause
Closing Techniques and much more!
Upcoming Prelicense Courses
QuickStart Modules 3 & 4 will be offered May 19-20, 2004 and Modules 1 & 2 will
be offered on June 9-10, 2004 at the WRA in Madison. Upon completion of the four
modules, agents can take a GRI Course 1 Equivalency Exam. The fee is only $240,
however, the WRA offers a new Member Discount of $40 , so the cost of this course
is only $200. This is a fantastic price for the four days of instruction your new
agents will experience.
14
SALES
BROKER
To obtain a real estate license in the
state of Wisconsin, you must first
complete 72 hours of approved education
courses such as our sales and licensing course.
Second, you must pass a state-administered
exam. The WRA is offering an eight-day accelerated 72-hour sales program July 12-15 and 19-22,
2004 and September 13-16 and 20-23, 2004 at the
WRA in Madison. This program is also available
through a video self-study or a self-study Internet version. Brokers can purchase a $50 discount
coupon for only $10, which entitles your new
recruit to a $50 discount on the registration fee.
If you are interested in obtaining your broker’s
license, you must complete 36 hours of education.
Areas of study include: fair housing, real estate practice, approved forms, trust accounts, and more. This
course will be offered on July 26-29, 2004 in Madison
and on September 20-23, 2004 in Milwaukee. This
program is also available through a video self-study
version or a self-study Internet program. Completion
of this education, passing the exam and applying for
the broker license fulfills the 2003-2004 real estate CE
requirements.
prelicense
prelicense
Prerequisite: Completion of Sales Prelicense education and
passing sales exam.
Do you REALLY Know
Real Estate?
Become an Appraiser!
An appraisal prelicense course will be offered Aug. 23-26; Aug.
30-Sept. 2; Sept. 13-16, 2004 in Madison. This 90-Hour course will
provide the education required to become a licensed appraiser in
the state of Wisconsin. Licensed appraisers may appraise one- to
four-unit residences having a transaction value of less than $1
million and commercial properties with a transaction value of up to
$250,000. Required education includes at least 90 hours of approved
education including at least 15 hours of Professional Standards
and Ethics (USPAP) instruction and at least 20 hours of instruction
regarding the income approach as used in commercial appraisals.
In addition, candidates for licensure must have at least 500 hours
(will be increasing to 2,000), including not more than 25 percent
commercial appraisal experience. All claimed experience must be in
writing and on file, and you must pass the state examination.
Need another
CRS course
to complete
your CRS
designation?
CRS 210, “Building an Exceptional
Customer Service Referral
Business,” will be offered by the
WRA and the Wisconsin CRS
Chapter on August 16-17, 2004 at
the WRA in Madison. This course is
designed to be highly interactive in
order to help refocus the student’s
business plan to a customer service
centered, repeat and referral
business. The information provided
will help identify the expectations
of the “new consumer,” the “new
behaviors” necessary to meet those
expectations, and specific systems
to make the agent’s business more
productive, more profitable and
more enjoyable. Focus areas of the
program include:
• Attracting a higher caliber client
• Meeting the expectations of the
“new consumer”
• Dialogues and strategies for
building a referral database
• Delivery systems to generate a
successful referral business
Registration includes a morning
networking sessions with coffee and
rolls.
15
See
Page 17
to register
Continuing Education
Sales & Marketing
Management
Prelicense
Education
Calendar
16
Nonmembers pay an additional fee for all courses.
# Fee for all four modules.
* Must be postmarked or received by WRA 14 days prior to
start of class
** Fee until day of class – additional fee charged at the door.
Date
Course
Time
Location
Regular Reg.**
July 12-15, 19-22 2004
72-Hour Sales
8:00 am - 5:00 pm
Madison
$325 (plus books)
July 26-29, 2004
36-Hour Broker
8:00 am - 5:00 pm
Madison
$255 (plus books)
July 26-29, 2004
36-Hour Broker
8:00 am - 5:00 pm
Madison
$255 (plus books)
September 13-16; 20-23, 2004
72-Hour Sales
8:00 am - 5:00 pm
Madison
$325 (plus books)
September 20-23, 2004
36-Hour Broker
8:00 am - 5:00 pm
Milwaukee
$255 (plus books)
Aug. 23 - Sept. 16, 2004
Appraisal Prelicense
8:30 am – 4:30 pm
Madison
$895 (plus books)
Date
Course
Location
Early Reg.*
Regular Reg.**
May 19-20, 2004
Quickstart Module 3 & 4
Madison
$240 #
$240 #
June 9-10, 2004
Madison
$240 #
$240 #
July 8-9, 2004
Madison
$240 #
$240 #
August 4-5, 2004
Madison
$240 #
$240 #
August 11-12, 2004
Buyer Agency (ABR)
Madison
$260
$270
August 13, 2004
ABR Elective (Innovative Marketing) Madison
$125
$135
August 16-17, 2004
CRS 210
$275
$285
Madison
Date
Course
Time
Location
Registration
Member** Non-Member**
May 10, 2004
2003-2004 CE3 (video)
9:00 am – 12:30 pm
Manitowoc
920-553-6227
May 11, 2004
2003-2004 CE4A (video)
9:00 am – 12:30 pm
Manitowoc
920-553-6227
Call for information
May 11, 2004
2003-2004 CE 1 & 2
8:30 am – 4:30 pm
Appleton
920-739-9108
May 13, 2004
2003-2004 CE 3 & 4A
8:30 am – 4:30 pm
Green Bay
920-739-9108
May 13, 2004
2003-2004 CE4A & 3
9:00 am – 5:00 pm
Brookfield
800-279-1972
May 13, 2004
2003-2004 CE 1 & 2
8:30 am – 4:30 p.m.
Saukville
262-338-8114 or
$24/course
$32/course
262-375-4730
May 13, 2004
2003-2004 CE4B (video)
9:00 am – 12:30 pm
Janesville
608-755-4854
May 18, 2004
2003-2004 CE4B (video)
9:00 am – 12:30 pm
Manitowoc
920-553-6227
May 20, 2004
2003-2004 CE 3 & 4A
8:30 am – 4:30 pm
Saukville
262-338-8114 or
262-375-4730
May 25, 2004
2003-2004 CE 3 & 4A
8:30 am – 4:30 pm
Appleton
920-739-9108
May 26, 2004
2003-2004 CE 4A & 3
9:00 am – 5:00 pm
Madison
800-279-1972
$24/course
$32/course
June 10, 2004
2003-2004 CE 1 & 2
9:00 am – 5:00 pm
Brookfield
800-279-1972
$24/course
$32/course
June 16, 2004
2003-2004 CE 1 & 2
9:00 am – 5:00 pm
Madison
800-279-1972
24/course
$32/course
June 16, 2004
2003-2004 CE4B (video)
9:00 am – 12:30 pm
Janesville
608-755-4854
July 7, 2003
2003-2004 CE 3 & 4A
9:00 am – 5:00 pm
Madison
800-279-1972
July 14, 2004
2003-2004 CE4B(video)
1:30 pm – 5:00 pm
Janesville
608-755-4854
July 15, 2004
2003-2004 CE 3 & 4A
9:00 am – 5:00 pm
Brookfield
800-279-1972
$24/course
$32/course
August 12, 2004 2003-2004 CE 2 & 1
9:00 am – 5:00 pm
Brookfield
800-279-1972
$24/course
$32/course
August 18, 2004 2003-2004 CE2 & 1
9:00 am – 5:00 pm
Madison
800 279-1972
$24/course
$32/course
August 24, 2004 2003-2004 CE4B(video)
1:30 pm – 5:00 pm
Janesville
608-755-4854
$24/course
$32/course
The WRA Has
Buyer Agency
Opportunities!
Register for your 2-day Buyer Agency Course today!
Become a leader in the real estate buyer
representation market today! Start your Accredited
Buyer Representative (ABR) designation by
attending a class on August 11-12, 2004. This is
one of the WRA’s hottest classes…because Buyer
Agency is becoming the way more Wisconsin
homebuyers want to do business. This two-day
course covers agency, service delivery, marketing
and promotion, and negotiation and risk
management. Call and register today. This course
fulfills Course 4 of your 2003-2004 continuing
education requirement. Course will be taught by
Mel Check
Education Registration Form
CONTACT INFORMATION
Name ________________________________________________
Firm name ___________________________________________
Address_______________________________________________
City ______________________ State _______ Zip ___________
Phone (W)______________________ (H)____________________
e-mail address_________________________________________
SS# or WRA member # _________________________________
DATES AND FEES - Fill in information for course attending
Course _______________________________________________
Location ______________________________________________
Date _________________________________________________
PAYMENT
Total $________
Buyer Agency Elective Courses
 Enclosed is my check made payable to the WRA
On August 13, 2004, we will offer “Innovative
Marketing Techniques for the Buyer’s
Representative! It will be held at the WRA and will
be taught by Barb McGill. This one-day program
also meets the ABR® elective course requirement.
You will learn to create novel marketing
approaches for our personal “brand” that grab
homebuyers’ attention. Develop market awareness
and vision for your real estate practice that helps
you define differentiating marketing opportunities.
Topics include:
 Charge my VISA/MasterCard (circle one)
• Marketing to Build Relationships
Attracting New Un-Referred prospects
• Image Building & Branding
• Marketing Ideas & Philosophy
• Building a Trophy Database
Stand out as an ABR - join over 40,000 members
who are succeeding as Accredited Buyer
Representatives. Get accredited as an ABR and
move ahead with specialized courses.
Card number_________________________ Exp. date ________
Register by Mail:
WISCONSIN REALTORS® ASSOCIATION
4801 Forest Run Road, Suite 201
Register by Phone: (800) 279-1972 or (608) 241-2047
Register by Fax: (608) 241-5168
Online Registration: www.wra.org
CANCELLATION POLICY: The WRA reserves the right to cancel
a course if not filled. Cancellations must be made in writing
prior to the start of the course and will be refunded, minus a
$25 administrative fee. Registrations cannot be transferred from
person to person.
17
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OUT?
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YOUR AD COULD BE HERE.
For more information or to place
an ad call 800-279-1972.
262-662-1676
or TOLL-FREE 866-662-1676
CALL
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In the
Spotlight
Roger Rushman, GRI, CRB, ABRM
WRA Board Member
Roger Rushman has been in the real estate industry for 21 years. He is currently a member of the WRA
Executive Committee, GMAR Director, and Executive Vice President of First Weber Group, REALTORS®.
WREM: How did you get into the real
estate business?
Roger Rushman: I grew up around the
real estate business. My father started
in real estate with Cliff Robedeaux in
the early seventies. I spent some time
in California promoting motivational
speakers mostly to REALTORS®. After
the owner of the company I worked for
passed away, I returned to Wisconsin
and started a career in the restaurant
business. After several years of working the long, demanding hours that the
restaurant business requires, I thought,
if I am going to work this hard, I might
as well do it for myself. So in 1983, at
the age of 28, I started my career in real
estate.
WREM: What qualities do you think
make a successful REALTOR®?
RR: First and foremost - passion. If you
aren’t passionate about what you do,
your customers and clients will sense
that. To be successful, you have to eat,
sleep and breathe real estate. Coupled
with that, you also have to know how
to-and be willing to-maintain balance between your business life and
your family life. A sense of humor
is another trait that I see in the most
successful agents.
the level of service they give to their
customers and clients.
WREM: What tips would you give to a
REALTOR® who is just starting out?
I believe we will also see continued
regulations on consumer privacy matters, as well as the development issues
we are facing throughout the state.
RR: Success breeds success. I think the
most important thing a new REALTOR® can do to insure their success is
to surround themselves with positive,
successful people. This includes supportive and knowledgeable management and successful agents who are
willing to mentor, give advice, and
share their success stories with newer
agents.
WREM: What changes do you see
happening in the real estate industry
during 2004?
RR: I think we will continue to see
changes taking place to the traditional transaction model in terms of the
consumer’s ability to access information prior to establishing a relationship
with an agent. However, I feel that
it is essential for us (the brokers) to
keep our agents at the center of the
transaction. This will require that we
keep up with emerging technologies,
real estate legislation, and other trends
that affect the level of service we give
to the agents, which will, in turn, affect
WREM: Where do you see your own
business in the next several years?
RR: Expansion and growth! Our future
partnerships with strong, local companies will continue to brand the First
Weber Group name across Wisconsin.
WREM: As a member of the board,
how do you see the WRA’s role in
the Wisconsin real estate industry
developing in the future?
RR: Home ownership is a vital link
to the strength of our economy. The
WRA’s key role should continue to
be as an advocate of homeowners, as
well as REALTORS®. The “Quality of
Life” campaign we started last year is
an excellent example of the efforts the
WRA is making to fulfill that role.
19
Public Policy
BY MICHAEL THEO
Should Our Constitution Force
Spending and Taxing Limits?
A legislative clash of epic proportions is
building in Wisconsin as the Legislature nears
an almost certain battle over a state constitutional amendment to force spending and/or
taxing limits on state and local governments.
This “mother” of all debates is expected
within the next two months.
At issue is a concept dubbed “TABOR,” the Taxpayers Bill of
Rights. TABOR proposes to place permanent spending and
taxing limits in the state constitution on both state and local
governments. The exact form of these limits are currently being
debated (hotly debated) in the Capitol. The limits will most
likely cap government spending at either the rate of inflation
(like CPI), or the growth in personal income over the previous
year. The goal is to bring Wisconsin’s taxes in line with the
taxpayers’ ability to pay. (Wisconsin consistently ranks near
the top nationally in government spending but near the middle
in personal income.)
Wisconsin is actually late coming to this debate. According
to an analysis by the respected Wisconsin Taxpayers Alliance
(WTA), the majority of states have some form of spending
controls. Twenty-seven states currently impose some variation
of revenue or spending controls, either by statute or in their
constitutions (14 constitutionally and 13 statutorily). Twentythree states, including Wisconsin, have no formal spending
restrictions, according to the WTA. Of the states with limits,
17 passed these limits before 1990. Sixteen of these states limit
spending, eight states limit revenues and three states impose
spending and revenue limits. One state, Iowa, specifies only
that appropriations must be set at a percentage below estimated revenues.
But even among TABOR supporters in Wisconsin, (generally
legislative Republicans, conservatives and business groups),
the details of this proposal are proving difficult to construct. To
begin with, for legislators and other elected officials to admit
TABOR is needed, is to admit they can’t control their own
spending habits. Some legislators think voters should enforce
proper spending levels through the ballot box, throwing
out those elected officials who spend too much. But TABOR
supporters say that politicians are like addicts when it comes to
spending, and a “constitutional intervention” is needed to stop
20
the tax-and-spend cycle of Wisconsin government at all levels.
This debate is vitally important to REALTORS® and the
homeowners and property owners we represent. Wisconsin’s
quality of life is defined both by government spending and
services (including schools, roads, economic infrastructure, a
clean environment, municipal services, etc.), as well as levels of
taxes (including property, income and business taxes). Striking
the proper balance between government services and taxes is
the key to Wisconsin’s future quality of life. This is why the
WRA is devoting a substantial amount of human and financial
resources into the TABOR debate.
As this issue unfolds, it’s important for REALTORS® to understand the key issues of this debate. Listed below are some of
the most important issues being debated in the Capitol as we
speak.
1. Constitutional specificity. If we’re going to limit spending
and/or taxes, what should be included in the constitution
and what should be left to statutes?
2. Promoting growth. Should spending and taxing limits promote new construction and community growth to increase
property tax revenues or discourage such growth to limit
municipal costs?
3. Referendum override. Should voters be allowed to exceed
spending and taxing limits by local referenda or should
elected officials be able to do so by a super-majority vote?
4. Application of controls. Should limits apply to spending,
taxing or both?
5. Application to schools. Should K-12 school spending be
limited by these new limits, remain subject to the revenue
caps and contract limits or be exempt altogether?
6. Measurements for limits. Should spending and/or taxing
limits use personal income, inflation (CPI) or some combination as a measure? Should population, pupil and/or
value in new construction be used as growth factors?
7. Application of spending limits. Should spending limits be
applied just to general purpose revenue spending (i.e.: tax
Spending, cont. on p. 26
Public Policy
L EGISLATURE S USPENDS TRANS 233
BY TOM LARSON
On January 28, 2004, the Wisconsin
Legislature’s Joint Committee for Reviewing Administrative Rules (JCRAR)
voted to suspend major sections of Trans
233, an administrative rule regulating
land divisions that abut state highways.
The suspension will stay in effect until
May of 2006 unless JCRAR lifts the
suspension or legislation is signed into
law, making the suspensions permanent. The suspension
directly affects owners of property adjacent to state highways
who want to sell or develop their property in the future.
In addition to expanding WisDOT’s authority, the changes in
1999 also prohibited property owners from placing any permanent improvements in the setback area that would make
the property more valuable, including sidewalks, driveways,
parking lots and septic systems. By prohibiting all improvements in the setback area, Trans 233 effectively condemned
property along both sides of approximately 12,000 miles of
state highways without compensating the property owners.
According to WisDOT testimony at a legislative hearing,
Wisconsin is the only Midwestern state to regulate highway
setbacks.
Since it was revised in 1999, Trans 233 has been the subject of
considerable controversy because of its negative impacts on
economic development and property owners. In fact, Trans
233 has been regarded as one of the biggest regulatory barriers to job growth and economic development in Wisconsin.
By suspending significant portions of the rule, JCRAR effectively returned Trans 233 back to its pre-1999 status. As a
result of this suspension, Trans 233 no longer:
Background
Since 1956, Wisconsin law has required subdivision plats to
comply with the Wisconsin Department of Transportation’s
(WisDOT) rules relating to safe entry to and exit from state
highways. These rules, now known as Trans 233, remained
unchanged until 1999.
In 1999, WisDOT significantly revised Trans 233 to expand
WisDOT’s authority over all forms of land divisions including
subdivision plats, county plats, condominium plats, certified
survey maps, plats of survey and any other form of land division. In addition, the changes authorized WisDOT to review
land divisions separated from a state highway by unplatted
land if both pieces of land were owned by the same entity.
As a result of these changes, the number of land divisions
reviewed by WisDOT each year under Trans 233 increased
from 150 reviews prior to 1999 to approximately 1,900 reviews
after 1999. The additional reviews have resulted in long delays
for property owners seeking to divide their property.
JCRAR Suspension
• Applies to all land divisions. The rule applies only to
“subdivisions” (defined as “a division of a parcel into five
or more lots 1 1⁄2 acres or less within a five-year period”).
• Applies to land separated from the state highway by other
unplatted land owned by the same entity. Trans 233 now
applies only to land directly touching a state highway.
• Prohibits all improvements and structures within the
setback area. Only buildings are now prohibited in the
highway setback area.
Despite the suspension, WisDOT may still protect public
safety by controlling access to and from our state highways
through separate rule. Furthermore, local communities may
continue to regulate the division of land through their land
use controls. While only temporary, the suspension to major
sections of Trans 233 will make the rule more equitable for
property owners and remove some of the state’s regulatory
barriers to economic development. Hopefully, a more permanent solution eventually will be put into place.
For more information, please contact Tom Larson
([email protected]) at (608) 240-8254.
21
Public Policy
New Faces in January
BY JOE MURRAY
With twelve open Assembly Districts
and counting, there will be plenty of new
faces in the legislature’s “lower house”
next January. As this magazine goes to
print, seven Assembly Democrats and
five Assembly Republicans have either
decided to retire or seek another office
this year. With the possibility of more
retirement announcements, the Assembly freshman class of
2005 will be one of the largest in recent memory.
A closer look at the 12 open Assembly seats would indicate
that only three are likely to be competitive this fall:
• Four of the seven Assembly Democrat seats are Democratic
locks at 60 percent performance or better: Johnny Morris
(80 percent Dem); Shirley Krug (63 percent Dem); Wayne
Wood (60 percent Dem); Mark Miller (68 percent Dem).
• Another Democratic seat, Tom Hebl’s, is almost as safe at 59
percent Democrat.
• Two Democratic seats are competitive: Larry Balow’s (54
percent Dem); Greg Huber’s (52 percent Dem).
• Three of the five open Republican seats are locks at 60
percent or better: Steve Foti (64 percent GOP); Luther Olsen
(61 percent GOP); Bonnie Ladwig (60 percent GOP).
• The two remaining GOP seats may be very difficult for
Republicans to hold: Mike Powers (57 percent Dem);
DuWayne Johnsrud (53 percent Dem).
Why are only three of the 12 seats will be competitive? If
Assembly Democrats recruit a steller candidate to run in the
open Powers seat, this should be a relatively easy pick-up for
Democrats based on voting patterns of past elections.
That leaves three seats truly competitive: the Eau Claire based
68th (54 percent Dem); the Wausau based 85th (52 percent
Dem); and the Crawford-Vernon County based 96th (53
percent Dem). Two competitive seats are held by Democrats
(Balow, Huber) and one Republican (Johnsrud).
Here’s a quick rundown on the open Assembly seats at this
time:
State Assembly Districts
Assembly District 11: This Milwaukee seat is being vacated by
12-year incumbent Johnny Morris (D-Milwaukee) who plans
to run for the state Senate seat vacated by state Senator Gwen
22
Moore. The district is overwhelmingly Democratic at 80% and
will likely draw a multi-candidate primary on the Democratic
side.
Assembly District 12: Veteran Democratic incumbent Shirley
Krug is leaving this seat after 20 years in the Assembly. Krug,
who once served as Assembly Democratic leader, is leaving
this seat to run for the Milwaukee-based 4th congressional seat.
The 12th District is a 63% Democratic seat.
Assembly District 38: First elected to the State Assembly
in 1982, long-time Republican leader Steve “Mickey” Foti
(R-Oconomowoc) is retiring. Foti currently serves as the Assembly Majority Leader. Several candidates have stated their
intention to run for this 64% Republican, Waukesha-Dodge
County seat.
Assembly District 41: State Representative Luther Olsen
(R- Berlin) is leaving this 61% GOP Assembly seat to run for
the State Senate seat vacated by Bob Welch. This Green LakeWaushara County seat is expected to draw a multi-candidate
primary on the Republican side.
Assembly District 44: Long-time incumbent Wayne Wood
(D-Janesville) is retiring. Wood, one of the most thoughtful and
bipartisan voices in the Legislature, represented his Janesville
constitutes for 28 years in the lower house. The 44th District is
60% Democratic, so a multi-candidate primary is expected on
the Democratic side.
Assembly District 46: State Representative Tom Hebl (D-Sun
Prairie) is leaving this Dane County Assembly seat to run for
the Madison-based 16th State Senate seat. Although Republicans have their eye on this district, Democrats are very likely to
hold this safe, 59 percent Democratic seat.
New Faces, continued on p. 28 …
news.wra.org
Feingold, continued from p. 3 …
competitive advantage over local REALTORS®,
and I look forward to working with the WRA to
fight efforts that undermine the role the REALTOR® plays in the local marketplace.
There have been many other issues on which
I have been delighted to work with the WRA.
Among the most important is one that, unfortunately, seems to recur every few years - the
effort to eliminate the home mortgage interest
deduction as part of various tax “reform”
proposals. While I strongly support reforming
our tax code, I have consistently opposed the
effort to eliminate the home mortgage interest
deduction. I know how important it was to me
to be able to purchase my own home, and home
ownership’s impact on the economy has never
been more clear. There is no doubt that it was
the housing sector that helped soften the recent
economic downturn. Without this critical tax
provision, that downturn might have been much
worse. Eliminating it as part of a tax reform
package makes no sense.
REALTORS®
The WRA and individual
were
also among those who urged me to support
needed funding for flood map modernization,
which is critical for community planning and
emergency response purposes to ensure safer
and more flood resistant communities. I was
pleased to join with a number of my colleagues
last year in pushing for that funding – that successful effort was key to getting the president to
include it in his budget this year.
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Public Policy
…Spending, cont. from p. 20
generated revenues), or should federal,
program and fee-generated revenues
also be included?
8. Application to bonding and related
debt service. Should bonding and the
revenue needed to pay back bonds be
included in the limits? If so, what will
this mean for Wisconsin’s bond rating
(i.e.: the interest rates on those bonds)?
9. Budget reserve or stabilization fund.
Should TABOR include a requirement
for a state budget stabilization and/or
emergency funds and procedures for
expending those funds?
10. Treatment of excess revenues. When
revenues exceed expenditures, should
those funds be used for future spending, used to retire debt, or used as a tax
refund to taxpayers?
11. Unfunded state and federal mandates.
Should TABOR prohibit mandates from
the state or federal government on local
governments?
12. Generally Accepted Accounting Principles (GAAP). Should TABOR require
the phasing in of GAAP principals so
there can never be future spending/
revenue imbalances?
TABOR will likely be the most important
public policy debate in Wisconsin political
history. It could impact all future local and
state government spending, from good
investments or bad “pork.” As this debate
intensifies, watch for future articles and
“Calls To Action”. Stay informed. If you
have questions, comments, suggestions,
please don’t hesitate to tell us. Contact
Michael Theo ([email protected]), Joe
Murray, ([email protected]) or Tom Larson
([email protected]).
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… New Faces, cont. from p. 22
Assembly District 48: State Representative Mark Miller (DMonona) is giving up this Madison-Monona-based Assembly
seat to run for the Madison-based 16th Senate District. Miller
will face his colleague Tom Hebl in a highly competitive
Democratic primary that may well draw others into the race
before nomination papers are filed July 13. Miller’s Assembly
District is a 68% Democratic seat.
Assembly District 63: State Representative Bonnie Ladwig
(R-Mt. Pleasant) surprised colleagues with her announcement
to retire after serving 12 years in the Assembly. Ladwig, a
former assistant majority leader, was an active member of the
Assembly leadership team for many years. The 63rd District
is a 60 percent Republican district.
Assembly District 68: A surprise announcement to retire came
from State Representative Larry Balow (D-Eau Claire). Balow,
first elected to the Assembly in 1998, represents a marginal
54% Democratic seat. Balow survived several close elections,
and both Democrats and Republicans will target this seat in
the November elections. A primary is expected on both sides
this fall.
Assembly District 80: After 10 years in the Assembly majority, State Representative Mike Powers (R-Albany) has decided
to retire this year. Prior to the 2002 redistricting process,
Powers represented a “swing seat” in the Assembly. The
28
Public Policy
2002 redistricting process moved this district from a competitive seat to a 57 percent Democratic seat. A multi-candidate
primary is expected on the Democratic side.
Assembly District 85: This Wausau-based Assembly seat is
open due to the election of Democratic State Representative
Greg Huber to the Marathon County Circuit Court. Huber
represented his Wausau constituents for 15 years in the lower
house. The 85th District is a marginal 52 percent Democratic
seat, meaning both Democrats and Republicans will wage an
intense campaign in this district leading up to the November
election.
Assembly District 96: After 20 years in the Assembly,
Republican state Representative DuWayne Johnsurd (Town
of Eastman) is retiring. Johnsrud’s announcement was a
surprise to most in his caucus. Johnsurd said he was leaving
because he didn’t appreciate the more partisan atmosphere
in the Capitol over the last few years. The 96th District is a
marginal 53 percent Democratic seat and both sides are likely
to draw multi-candidate primaries.
Confused yet? The electoral puzzle, while confusing and
interrelated, is important for REALTORS® because the issues
the next legislature will be deciding would directly impact
you and your business. Stay tuned and stay informed.
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Legal - Wisconsin REALTORS® Association

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