Page 1

GOV. WALKER VS. THE UNIONS The political war is far from over.

THE DRL IS NOW THE DSPS With the 2011-13 budget comes a slew of changes.

August 2011 $5.00

Why home loans are

hard to get Five local pros explain and offer advice as to how REALTORS速 can help out in the lending process.

>> Page 6


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table of contents


2011 |


27, no. 11

12 6 features

9 articles


Why Home Loans Are Hard to Get



Consumer Financial Protection Bureau: the New Cop on the Consumer Protection Beat


Five Wisconsin lenders explain the current challenges and obstacles with home loans affecting REALTORS® today.

The new CFPB holds significant power to enforce several federal consumer protection laws that play a large role in the real estate industry.


What’s Happening at the DRL – Correction: the DSPS


The changing of the DRL to the DSPS is only one of the many changes that will impact REALTORS® with the passing of the DRL’s 2011-13 budget.


Scott Walker vs. the Unions

Republican Gov. Scott Walker’s three-stage political war is likely to persist through the November 2012 elections.

wisconsin real estate magazine



august 2011


Legal Hotline: Taming the Financial Gorilla

With a focus on lending, this hotline addresses questions and answers on loan commitments, condo financing and more.

Sales Tip: Polishing Your Skill Set

A reminder of the little but important details in your day-to-day activities, like canceling appointments in a timely manner or informing agents if you are running late.

New Legislation Seeks Greater Certainty in DNR Permitting Process

A profile of current limitations in the DNR permitting process and details of the new bill designed to revise and improve the process.

Looking to the East

An overview of Washington’s regulatory changes on lending and taxing – and how federalization will impact your real estate transaction.



inside the wra

with bill malkasian

Top News Stories in and Around the Industry vice president of the Metropolitan Milwaukee Fair counties. The organization’s research found that the United Way Honors the Stark Family Housing Council, laments, “It’s been a long time number of people in those markets paying too much for Service toWisconsin Real Estate Magazine focuses his month’s And, I’m sure that I’m not the only one


coming.” The Pewaukee-based commission has

for their rental housing will double from around

on real estate lending regulations and how they wants to thank John for his valuable not conducted a comprehensive review of who housing 70,000 currently to a whopping 140,000 by 2010. impact REALTORS®patterns and tremendous service this year - if you and consumers when attempting since the 1970s. Some say a partial solution would be for the U.S. would personally like to thank him, email him to complete a mortgage application. Universal government to reverse course on housing policy and Receives frustration with the entire Wisconsin financial application andMillions closing toatEase substantially increase funding for rental assistance, Community Foreclosure Crisis process is a major complaint from members who are challenged particularly helppolitical for working families. United Way of Dane County Later in the magazine’s section, Mike Business Journal (WI) (09/30/08) to keep up with all the new Milwaukee federal regulations coming out of Theo writes a corresponding article on the “new United Washington, Way of Dane County D.C. The state of Wisconsin is due to receive nearly $39 NAR Releases FHA Toolkit normal” of federal regulationsFree impacting real estate recognized the Stark Family with million in federal funds to stabilize neighborhoods Association (10/30/08) transactions Wisconsin in every REALTORS® state, including Wisconsin. This Bottom line: homeSociety loan lendingand standards tightened, and it’s the 2008 Tocqueville stave off have a spate of abandoned homes. According Award for outstanding service the Dane County apparent federalization of the real estate transaction muchtomore difficult today than it was a few years ago to obtain NAR and the WRA are eager to help you has meet the to HUD and Gov. Jim Doyle, the funds are separate Billcommunity Malkasian and United Way. The Tocqueville Society impacted of our members practice. We a mortgage. challengesinoftheir the business troubled economy. from approximately $9.2 million the government is all current WRA President Award celebrates and acknowledges people or Our other article on that political impactingthat yourcan business know youissues need resources help you awarding the city of Milwaukee, where the foreclosure This the magazine to give you an in-depth look families, such as the Starks, whoissue haveofmade a major attempts is written who describes the them DNR permitting rate is currently 9.9 percent. HUD is awarding the by Tom closeLarson, transactions, and you need at little or no impact on the quality of lifeatinmortgage Dane County through lending here in Wisconsin through the eyesStabilization of five funds via its Neighborhood Program, process and cost. its current along with a FHA series of NAR hasproblems just released an all-new Toolkit their exceptional service WRA and commitment to the member lenders who share experiences undertheir which almost $4 with billionoutside is being allocated to recommendations to make it more efficient. As stated in online for FREE to help you get clients the financing community. writer Marcie Geffner. The lending article to bring local and state attempts governments for theitredevelopment previous issues this in publication, a lot of environment. policy issues Itare theyofneed a credit-strapped is home closer to Wisconsin on “Why Home Loans Are Hard houses. to Get.” of abandoned and foreclosed being addressed at the the most DNR, comprehensive and the WRA istoolkits at the NAR tablehas on one of City Housing Authority Receives Marcie will walk with our team of experts from their perspective most, if not all, thatproduced, affect land ever anduse. it’s available to all REALTORS® 100-Unit Grant on what challenges they as Sites: for like Personal lendersNot face Just on topics tiered Milwaukee Journal Sentinel (09/25/08) Pabst, Georgia right now by visiting the link below. They also have Connections Wrapping up this month’s edition of regulatory and legal news, pricing, income documentation, disclosures andAnymore more. I think you launched a new page called “NAR Helps You Navigate The city of Milwaukee’s will housing authority due Minneapolis-St. Business Journal (09/29/08)we Grayson, bring you our well-read legal section each month. This find the articleisinteresting and hopefullyPaul insightful. the Current Economy” where you can find dozens of Katharine to receive $6.7 million in federal Hope VI money month we talk to you about the new Department of Safety and great products and resources, like the FHA Toolkit, to build 100 new housing Let’s units.move The 100 units will that you’ll want to get on your radar: ® to something St. Paul, Minn.-based REALTOR Teresa Boardman Professional Services (DSPS), formerly called the Department of be constructed in a 2.5-mile area and will include for free or at a steep discount. Visit www.Realtor. WRA’s 100th Annual Convention, September at the says Flickr, Facebook13-15, and other social networking Regulation and Licensing. It’s important to read as the former 29 public housing and Kalahari affordable ® rental units; org/NARHelpsYou for links to these great programs Resort and Convention Center in the Wisconsin Dells. sites make it easy to meet people whoreal might estate board is now an Examining Board with new duties nine affordable housing units for income-eligible and products. eventually become clients. While many professionals Whether you’re looking for sales tips, ideas or new technologies, and responsibilities that will impact your business. The second families; and 62 moderately priced, open-market are using these sitesIntoaddition make business contacts there’s something at Convention for everyone. to article in thisHome section is about the Strong, new Federal Consumer condominiums. HUD Secretary Steven C. Preston Loans Going Albeit a and companies use them to conduct background workshops, comments, “Milwaukee’s informational housing authority has exhibits, and CE courses, you’ll have Financial Protection Bureau that just became legal on July 21, checks or recruit newand workers, many simply want Bit Tighter, in Area fun, too! Convention kicks off with a mojito party, you’ll also demonstrated it has the leadership to lead and 2011, locatedWisconsin in Washington, D.C. Its impact on the real estate to bowling, connect with people who and havethe similar interests. State Journal (10/17/08) Balousek, Marv a chance to enjoy karaoke, a round of golf, revitalize neighborhoodsgetand transform lives. transaction and lending will dominate your business for years According to Boardman, “The hard sell is dead. It Kalahri Resort Theme Park. Don’t forget to register early Cities like Milwaukee change and®grow andIndoor need to crisis, property to come. articlesthe willongoing impactnational your realcredit estate license and doesn’t work door-to-door, and it doesn’t work on BothDespite revitalize housing to maketosure aren’t priced early registration cut-off ends August savemany money: another professionals say mortgage money remains available transaction process if you are in the real estate business. social networks.” On Flickr, Boardman connected out.” Milwaukee is one of 22.a half-dozen housing throughout southern Wisconsin to home buyers with a fellow photographer who eventually used her authorities nationwide to receive new Hope VI Finally, Marcus Wally explains salesmanager tip how of with solid this Ron month’s Steinhofer, services to purchase a home. WRA is proud to bring you a new event to Convention this year grants. you can improve and &polish skillregional set by home providing Marshall Ilsleyyour Bank’s lending called RE BarCamp - we are really excited about RE BarCamp. great customer service, focusing onplenty the Golden Rule for andhome Foreclosures Push Rents Higher, group, states, “There’s of money Housing Study Delay Frustrates Participants pick out tech topics they’d like to discuss and then courtesy. take amore lookdifficult at our CE Squeezing Low Income Families practicing common loans out there. ItAlso, is slightly to qualify Advocates split up into smaller groups for in-depth discussions. BarCampOlson, Dan Minnesota Public Radio (MN) (09/21/08) course offerings in this issue so you too can continue than two or three years ago, but if you have a good Milwaukee Journal Sentinel (10/07/08) Williams, Scott has no set agenda or schedule for the day; the conversations skill set. score, a good job and a down payment, money Twin Cities, a wave ofto polish home yourcredit Two years after promising the Milwaukee metro at BarCamp are very organic In andMinnesota’s are dependent upon the level foreclosures has pushed more people into the rental is available.” Steinhofer adds that banks still are area’s first major housingofstudy in three decades, Lastly, I want to encourage you to visit www.wra. participation by those attending. It’s new - it’s innovative. apartment sector. The result is an intensifying making loans via such programs as Fannie Mae the Southeastern Wisconsin Regional org/convention to check out all of the details for Register for RE Planning BarCamp on demand Facebook at on Minneapolis and St. Paul’s rental housing and Freddie Mac. Furthermore, credit standards Commission (SEWRPC) is REBarcampWI. still struggling to get the our upcoming September 13-15 Convention. stock, so much so that the vacancy rate is very low remain about the same as they were six months ago, effort launched. Proponents hope the study will Be sure not to miss the early bird registration and rents are on the rise. This, in turn, means lowserve as a catalyst for improving affordable housing it’s also time to change the leadership meaning that qualified home buyers can get loans Speaking of Convention, discount income working families face higher monthly rents on August 22. opportunities throughoutofthe But issue if they have the proper income verification. On the thecity’s WRA.suburbs. This month’s features WRA Chairman John though their income hovers at unchanging commissioners have yet to assemble an column. advisoryJohn even downside, have been less willing to make I look forward to seeing banks you there, Horning’s final served us well in 2011, and it has levels. Since 2005, the Twin Cities apartment committee to oversee the research or set a specific loans with higher loan-to-value ratios. In addition, truly been a pleasure workingvacancy with him. Johndipped has been on the to closer to rate has from 7 percent timetable for conducting the survey. Phil Evenson, conventional financing without a down payment has executive committee for five years with Average us, and on behalfrents of theover that same 4 percent. monthly the commission’s executive director, said other issues indeed disappeared. However, 100 percent financing staff in Madison, we thank John for his time and commitment to time span are up more than $25, rising to more keep getting in the way. The delays have frustrated is still available with Veterans Administration and the WRA. I encourage you to read his article this month where he than $850. The St. Paul-based Wilder Foundation housing advocates the most. Bethany Sanchez, Rural Development home loans. recently reviewed income several Twin BillCities gives a snapshot of the WRA’s accomplishments thisdata pastforyear.


wisconsin real estate magazine


august 2011

Real Estate

Wisconsin Real Estate Magazine™ is published by the WISCONSIN REALTORS® ASSOCIATION. Trademark issued pursuant to Wisconsin state statute; federal trademark is pending.

notes from the wra

John Horning, Chairman Robert Keefe, Chairman-Elect

Wisconsin RE BarCamp to be Held at 2011 WRA Convention

Renny Diedrich, Treasurer

RE BarCamps are daylong events that take place all over the country. RE BarCamp is often described as an “informal gathering of like-minded people.” Others refer to it as an “unconference.”

William E. Malkasian, cae, President



At RE BarCamp, we gather to discuss how technology and social media can benefit our real estate business. With no set agenda or schedule for the day, the sessions are determined the day of by the attendees that come to the event, ensuring that conversations at RE BarCamp are around attendees’ topics of interest. Also, RE BarCamps draw many innovative real estate professionals and the potential networking alone makes this day rewarding. In addition, sessions are sometimes great or even outstanding - and sessions are sometimes not so great. The success of the day is up to the attendees and their active participation.

Editorial Staff:

William E. Malkasian Publisher

Robert Uhrina Managing Editor

With our secured sponsorships, RE BarCamp is free to you. The culture of RE BarCamp is centered around a “vendor pitch-free zone,” and this is expressed to event sponsors prior to accepting sponsorship commitment. This culture is key to facilitating great discussions among attendees uninterested in listening to sponsor sales pitches in the midst of the day’s content.

Lauren Bizorik Editor

Joe Leschisin

If you are new to RE BarCamp, a half-hour orientation is included in the event to introduce you to the experience.

Senior Designer

Visit for complete information or register on Facebook at

Wisconsin Real Estate Magazine, USPS 597-850, ISSN 1548-0526, 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 53704-7337.

WRA Member Benefits As a member of the Wisconsin REALTORS® Association, you have member benefits available to you. The WRA carefully selects programs that offer valuable health, life, dental, and errors and omissions insurance. Additional benefits include phone service plans, a delivery plan for packages and envelopes, and website design.

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.

Health, Dental & Life Insurance Plans Through REGIT, Inc., specifically designed with REALTORS® in mind.


Contact Us:

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Our Member Benefits have you covered.

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Advertising of third party products and services herein does not imply endorsement by the WRA unless specifically stated. Furthermore, the WRA does not endorse, approve, or otherwise warrant the accuracy or legality of any information or content contained in advertisements. Any questions regarding advertising policies should be directed toward the editor.

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august 2011


Chairman’s Corner

John P. Horning


e are only a few weeks away from the 2011 WRA State Convention. Not only is our convention an opportunity for quality education, valuable networking, and a little bit of fun - it also means a changing of the guard at the WRA. It has been my pleasure to serve as your chairman this past year. And, what a year it has been! We have seen many accomplishments and we overcame a few challenges. I also need to express my appreciation to several people for their support and commitment to our association this year. Last September, the market was suffering a severe post-tax-credit slump but gradually improved to the point that we had 5,600 closings across the state in June. We made it through one of the toughest markets in a generation. I commend the WRA for keeping a balanced budget to still offer programs and services to help our members through these times. The year was busy on the political front. Last September, we announced the WRA’s endorsement of Scott Walker for Governor based on his favorable position on real estate issues. It was a busy election season, and on November 2, most of the candidates we supported were elected to office.

REEB with more autonomy to approve thank all those involved on committees educational curriculum and state of the WRA - this association could not operate without you. approved forms. We also saw reform at the Department of Natural Resources, which is now working proactively with property owners and businesses to obtain their desired permits. We are also excited for past WRA Chairman Terry Hilgenberg who has been appointed to serve on the board of the DNR. Early in the Supreme Court election, the WRA announced support of Supreme Court Justice David Prosser, who has a history of defending property owners rights and voting favorably on real estate issues. As you know, it was a close election. When the election was over, Justice Prosser stopped by to thank the REALTORS® for their support. In April, we had a successful REALTOR® and Government Day with 600 people joining us in Madison to meet with our legislators. Keynote speakers were Gov. Walker and U.S. Congressman Paul Ryan. It was a powerful day.

wisconsin real estate magazine


We are blessed with one of the best association teams in the country. I’ve been told many times about what a fantastic group we have with such wellrespected leaders as Bill Malkasian and Mike Theo. I can tell you that research and support provided by the staff make the Chairman’s responsibilities much more manageable. Most importantly, I need to thank my wife Paula and our children for encouraging me to take on this role and spend more time traveling. And, to my brother Joe and the phenomenal team at Shorewest REALTORS® who covered my business when needed.

Other successes this year include the launch of the new www.wra. org, updated Offer to Purchase form, Packer Radio sponsorship, and a new e-signature program just launched to all In closing, I want to thank all of you members. We are one of the only states for your support and commitment. Whether you participated in an event, to offer this service to our members. responded to our calls to action, or On a national level, we continue to contributed to RPAC, you have made work with NAR to defend the Mortgage a positive difference in the real estate Interest Deduction, maintain FHA loan industry in Wisconsin. limits, seek extension of the national flood insurance program, eliminate the Thank you again for the opportunity to 20 percent downpayment requirement serve you. I’ve made many friendships of the QRM legislation, and promote that will last a lifetime. This has been a sensible reform of Fannie and Freddie. tremendous experience for which I will It is a critical agenda that can be always be grateful. successful with your response to the My Best Regards, calls to action and by contacting your legislators.

In January, we hit the ground running. Because healthcare is important to REALTORS®, we worked with Gov. Walker on his first bill to make Health Savings Accounts tax-deductible. In appreciation, we were invited to be part of the bill signing. We then moved on to tackling the Farmland Conversion Penalty. With your response to the call to action, we removed this obstacle that hindered farmers and developers. Another successful initiative was changing the Real Estate Board to a Real Estate Examining Board (REEB), adding greater real estate licensee This could not be accomplished without representation, and providing the our committed REALTORS®. I want to


I would also like to express my gratitude to our Board of Directors and Executive Team that analyze, debate, and make the decisions that guide the WRA. It has been a privilege to work with this talented group of leaders. We have an outstanding team with Rob Keefe, Renny Diedrich, and Steve Lane. Rob’s leadership skills and experience will greatly benefit the WRA as he serves as Chairman for 2011-2012.

august 2011

John P. Horning

news monthly wisconsin housing report

June Home Sales Below Last Year’s Pace By David E. Clark, Economist, C3 Statistical Solutions


View all housing statistics at

% Change



% Change

-12.0% -16.0% -7.0%

61,248 23,979 $130,000

74,450 28,955 $140,000

-17.7% -17.2% -7.1%




New Listings Closed Sales Median Sales Prices

10,531 5,531 $150,500

11,967 6,583 $140,000


Median Price JUNE-2011 JUNE-2010 % Change

Existing Home Sales JUNE-2011 JUNE-2010

% Change

Southeast South Central West Northeast Central North

$169,000 $166,000 $134,500 $122,500 $113,450 $102,900

1,963 1,145 611 930 328 543

-11.8% -22.8% -17.5% -16.4% -19.0% -10.2%

$155,000 $170,000 $139,000 $129,900 $116,000 $132,000


s expected, the sale of existing homes in Wisconsin for June was below last year’s pace, a consequence of artificially high sales a year ago due to the federal tax credit program, according to data released by the Wisconsin REALTORS® Association (WRA). Home sales in June were 16 percent lower than that same month last year, and the median sales price was down 7 percent to $140,000.

June sales volume below 2010 levels, the reductions varied. The smallest declines were seen in the north and southeast regions, which fell between 10.2 percent and 11.8 percent. In four of the last six months, the north region has recorded the best performance in the state. “This is an indication that the second-home market is showing definite signs of life,” said Horning. Three other regions (the northeast, west and central) had sales fall between 16.4 percent and 19 percent over the period, and existing home sales dropped 22.8 percent in the south central region.

“Actually these figures were a bit better than expected,” said John Horning, Chairman of the WRA Board of Directors, noting the initial deadline set for the 2010 program required a signed contract by the end of April and a closing by the end of June. “The reality is that it’s tough to compare these two months because so many buyers last year were scrambling to get their closings done by June 30,” Horning said. “It will still be a couple of months before the distortions from the federal tax program work their way out of the data,” he said. But the REALTORS® were encouraged to see the June pace of sales better than that seen in May, where sales dropped nearly 23 percent, according to Horning.

Median prices of existing homes in Wisconsin fell 7 percent between June 2010 and June 2011. Prices dropped by modest margins over the period in four regions in the state, falling between 2.2 percent and 3.2 percent in the central, south central and west regions, and dropped 5.7 percent in the northeast region. The southeast region saw its median prices fall 8.3 percent, with the biggest decline seen in the north region where prices fell 22 percent. “The big median price reduction in the north is another indication of the growing market for second homes in the state,” said WRA President Bill Malkasian. “Vacation homes

While all regions of the state experienced wisconsin real estate magazine

-8.3% -2.4% -3.2% -5.7% -2.2% -22.0%


august 2011

2,225 1,484 741 1,113 405 605

are frequently on the lower end of the price range which drives the overall median prices down,” he said. The REALTORS® said the improving employment outlook for Wisconsin should help the housing market. “With nearly 25 thousand jobs added this year alone, and almost 49 thousand since employment bottomed out in December of 2009, the state is moving in the right direction,” said Malkasian. Wisconsin’s unemployment rate stood at 7.4 percent in May, which is well below the national rate of 9.2 percent. “Assuming these trends in the job market continue, we should see housing demand start to pick up, but for now, it’s still a buyer’s market,” he said. The Wisconsin REALTORS® Housing Affordability Index, which measures the percent of the median priced home that a buyer with the statewide median family income can buy, stood at 220 in June. With mortgage rates in the 4.5 percent range, and lower median prices, this is up from last year. “There remain excellent opportunities in Wisconsin for buyers in all price ranges,” said Malkasian. For more information, contact David E. Clark, Economist, C3 Statistical Solutions Office phone: (414) 803-6537


Why home loans are hard to get Five local pros explain and offer advice as to how REALTORS® can help out in the lending process. By Marcie Geffner


isconsinites’ median credit scores are among the highest in the United States. Yet that tendency toward good credit hasn’t shielded Wisconsin home buyers from the current climate in which mortgage lenders have tightened their guidelines, raising the bar for buyers who need financing. The biggest hurdle is what Stephen LaDue, a senior loan officer with Prime Lending, a PlainsCapital company, in Brookfield, describes as “ever-changing minimum credit score requirements.” The challenge is twofold: lenders across the board have raised minimum scores required to obtain a loan while many borrowers have experienced a myriad of economic setbacks that LaDue says have caused “ripple effects throughout their credit.” The most common setback is unemployment, followed by such issues as a short sale, foreclosure or bankruptcy. Some borrowers simply don’t understand the degree to which these incidents can harm their credit, adds Julie Flor, a district mortgage manager at M&I, a part of BMO Financial, in Chippewa Falls. The culture of good credit and diminished social stigma associated with financial problems might explain why some borrowers mistakenly believe they can get a new home loan within months after a foreclosure or bankruptcy.

Tiered pricing bites downpayment savings A related issue is so-called tiered pricing structures, which trigger higher costs on conventional loans that lenders can sell to Fannie Mae and Freddie Mac, explains Kenneth Dickson, senior vice president of Johnson Bank in Madison. Tiered pricing isn’t about lower credit scores, Dickson says, but rather, is a strategy by which the two government-run secondary mortgage market companies earn fatter fees to strengthen their capitalization. “What used to be a good credit score will increase the cost to a home buyer by as much as $3,000 to get the same loan today that three years ago wouldn’t have had any additional cost,” he says. “It’s not necessarily a case where credit has deteriorated; it’s that the standard has increased.” Yet another hurdle for buyers is the downpayment, says Laura Stanfield, a mortgage loan officer at Waterstone Mortgage in Madison, a subsidiary of Watersthone Bank. The U.S. Department


wisconsin real estate magazine


august 2011

of Veterans Affairs and the U.S. Department of Agriculture Rural Development agency still offer zero-downpayment mortgages, but those government-backed programs are limited in their reach and are the exception, Stanfield explains. That means most buyers have to come up with at least a few percentage points of the sale price to qualify for financing, a considerable challenge for those who don’t have savings or gift funds. Tiered pricing adds another twist to the downpayment dilemma, Dickson says, since higher loan fees mean even those buyers who’ve saved or received a gift still have less cash for the downpayment and closing costs. “The people who are creditworthy have to pay so darn much money to get a mortgage,” he says, “that they choose not to buy or they can’t buy because they don’t have enough money for both closing costs and downpayment.” Documentation is yet another challenge. First-time buyers tend to be aware of this issue, but repeat borrowers are likely to be caught off guard and dismayed at the amount of paperwork, says Jim Pope, a senior mortgage consultant at WinTrust Mortgage Corp. in Madison. Documentation of gift funds, credit dings and the like might be routine, but income documentation can be more difficult. One example Pope cites is year-end bonuses, which can’t be counted toward the buyer’s debt-to-income ratio unless the employer confirms the earnings are likely to continue, a stipulation employers generally are loath to make.

Income documentation trips self-employed Buyers who are self-employed and aggressive about their federal income tax deductions face a unique challenge, having traded greater home-purchasing power for a lower tax bite, Flor explains. “These buyers,” she says, “need a couple of years of positive income before they can buy a house.” Some buyers, Flor adds, are so unaware of income guidelines that they quit their job just before or soon after they apply for a loan, making it much harder for them to qualify. Home repairs might not seem like a major issue in a buyer’s financing, but Pope points out that lenders take a keen interest

in property condition reports or disclosures referenced in purchase contracts. If a contract notes that a buyer is in possession of such a report, the lender will scrutinize it and likely demand that repairs be made prior to loan approval. “It begins to open a bag of worms of stuff the lender will ask about,” he warns. Condominiums, in particular, “are getting a tough rap right now,” Pope also says. Some properties aren’t approved by the Federal Housing Administration (FHA); others have substandard fidelity bond coverage, inadequate reserves for major repairs or too many owners who haven’t paid their association dues, among other woes any of which might mean no financing for prospective buyers.

How REALTORS® can help These challenges don’t always have easy solutions, and REALTORS®

wisconsin real estate magazine


august 2011

may be understandably reluctant to involve themselves in the mortgage process. Still, there are ways REALTORS® can head off foreseeable problems before they happen, loan pros suggest. A good option for buyers who are short of cash might be a home buyer downpayment assistance program, Stanfield explains. The Wisconsin Housing and Economic Development Authority, for one, offers first-time buyers a 10-year, $3,000 loan toward their downpayment and closing costs, and allows buyers who meet the program’s income restrictions and credit guidelines to make a downpayment of just 3 percent. Other programs are offered by various city and county agencies and nonprofit organizations. Stanfield advises REALTORS® to educate themselves about these programs and know when they might work for a buyer. While some loans sail smoothly through the process, a seven-day financing contingency and 30-day close are just not realistic for


Panel of Experts Ken Dickson Ken Dickson is the Senior Vice President at Johnson Bank in Madison. Dickson was a full-time REALTOR® in California from 1981-1983, and has been a banker and mortgage lender since 1984.

Laura Stanfield and more condo projects have too many delinquencies in association dues. That might prevent anybody from getting financing, and when that happens, you can hear the values dropping.”

situations. Consequently, Flor advises, it’s best not to write those terms into a contract. Instead, she says, REALTORS® should try to “set the right expectations upfront.”

A question of comps

Cows stop conventional financing

Since appraisals are often sticking points, REALTORS® are also advised to be aware of comparable-home sales that could support a higher valuation, but might not turn up in an appraiser’s search of the multiple-listing service (MLS) or public records, LaDue suggests. Appraisers “can’t necessarily find every sale,” he says, while the REALTOR® might have access to additional data that could be helpful.

Cows, crops or other signs of farming are another example of a situation that needs to be fully disclosed upfront in the loan process because the property might not be eligible for conventional or FHA financing, Pope explains. “‘Tillable’ is a dirty word to Fannie and Freddie,” he says, “If they see ‘tillable,’ they assume it’s a farm, it’s a whole different set of circumstances for foreclosure, and the property just doesn’t qualify for their financing.”

Pope takes that advice to the next level, suggesting that REALTORS® should demand a field review if a lender claims a loan can’t go forward due to a lack of comparables for an appraisal.

All that said, the first line of defense is to always make sure buyers are prequalified or preapproved for a mortgage before they begin shopping for a home, Dickson advises. A preapproval helps to ensure that the buyer’s credit score, self-employment income or other issues won’t derail the process after he or she has an accepted purchase offer in hand. Preapproval also offers greater clarity as to how much the buyer can qualify to borrow.

“I want them to challenge a lender who tells them there are no comps,” he says. “That’s not an excuse not to make a loan these days.” Pope also says REALTORS® should research condominium issues and round up necessary documents before prospective condo buyers apply for financing. The paperwork typically might include a condominium questionnaire, a copy of the association’s budget and information about reserves, among other items. The goal, he says, is to not “waste everybody’s time” if conventional or FHA financing isn’t an option for that property.

“REALTORS® shouldn’t be carting people around,” Dickson says, “until they’re prequalified by a local lender.”

LaDue concurs, saying REALTORS® should direct buyers away from problematic condos.

Marcie Geffner is a Los Angeles-based freelance reporter, writer and blogger who specializes in real estate, mortgage and personal finance.

“Because of the economy,” he says, “more


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Laura Stanfield is a Senior Mortgage Loan Originator with Waterstone Mortgage, a wholly owned subsidiary of Waterstone Bank. She has been in mortgage lending for 15 years and is Chair of the Education Committee for the Home Buyer’s Round Table of Dane County.

Julie Flor Julie Flor works as the District Mortgage Manager at M&I Bank, a part of BMO Financial Group, in Chippawa Falls. Flor was the RANWW 2009 Affiliate of the Year and is particularly interested in jumbo mortgages and credit repair.

Jim Pope Jim Pope works at Wintrust Mortage in Madison. Pope has worked more than 20 years in banking and lending and has closed over $1.3 billion in mortgage loans. Pope has been recognized in Mortgage Originator’s Top 200 Originators list on multiple occasions.

Steve LaDue Steve LaDue works as a Senior Loan Officer at Prime Lending - a Plains Capital Company in the greater Milwaukee area. LaDue has worked in finance and mortgage since the 1980s and appeared multiple times as a “talking head” on CNBC’s “The Call” to discuss mortgage banking economics.


Consumer Financial Protection Bureau:

The New Cop on the Consumer Protection Beat Effective July 21, 2011, the Consumer Financial Protection Bureau (CFPB) is open for business. This new federal agency born from the Dodd-Frank Wall Street Reform and Consumer Protection Act wields substantial power to enforce various federal consumer protection laws. This centralized authority offers the opportunity for more efficient and effective responses to consumer complaints and the ability to impose tough enforcement action against offending mortgage and credit providers. As an independent bureau within the Federal Reserve System, the CFPB will work to promote fairness and transparency with regard to mortgages, credit cards, and other consumer financial products and services.

Will the CFPB regulate REALTORS®? The CFPB primarily regulates banks, lenders, mortgage brokers, mortgage servicers, financial advisors, appraisers and credit counselors. The bureau will regulate the extension of credit, mortgage loans, appraisals, real estate closing and escrow services, and other related financial activities. It has the authority to examine, issue new rules, and file enforcement actions against banks and credit unions with assets of over $10 billion and all mortgage-related businesses (lenders, servicers, mortgage brokers, and foreclosure scam operators,) as well as payday lenders and student lenders, and other large non-bank financial companies such as debt collectors and consumer reporting agencies. The National Association of REALTORS® secured an exemption for real estate professionals performing traditional real estate activities, except to the extent they are governed by existing laws such as the Real Estate Settlement Procedures Act (RESPA) and the Truth in Lending Act (TILA) that now are within the bureau’s purview. In other words, REALTORS® should not assume they have a free ride, and should conform to applicable law as always! Accountants, attorneys and title companies are also outside of the CFPB’s main line of fire, but nobody should consider themselves totally in the clear.

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Will the CFPB serve as a consumer resource? The CFPB is charged with providing timely and understandable information to consumers through its new Office of Financial Literacy, eliminating deceptive practices, protecting against discrimination, eliminating outdated regulations and last, but surely not least, enforcing consumer protection laws. As such, it will become a primary resource for the REALTORS®’ clients and customers experiencing difficulties with their lenders or other credit providers. The bureau plans to watch for major violations of mortgage

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disclosure laws and other violations that could cause consumers to unwittingly sign up for risky loans. The CFPB also will establish a national consumer complaint hotline so consumers will have a single toll-free number to report problems with financial products and services.

What enforcement powers does the CFPB have? The CFPB’s substantial arsenal of potential penalties and remedies should not be taken lightly. The bureau can force rescission, demand refunds, require restitution, impose


damages, seek injunctive relief, require compensation for unjust enrichment, and impose civil penalties up to $5,000 per day for negligent offenses, $25,000 per day for a reckless violation, and up to $1 million for knowing or flagrant violations. It is anticipated that the CFPB will have an immediate, vigorous and public enforcement presence.

What are some of the federal laws the bureau will enforce? With many agencies sharing responsibility, it’s hard to know who is responsible for what, and easy for emerging problems that haven’t historically fallen under anyone’s purview to fall through the cracks. The CFPB consolidates and strengthens consumer protection responsibilities currently handled by the Office of the Comptroller of the Currency, Office of Thrift Supervision, Federal Deposit Insurance Corporation (FDIC), Federal Reserve, National Credit Union Administration, the Department of Housing and Urban Development (HUD) and the Federal Trade Commission (FTC). The one centralized office is accountable for 18 major federal consumer protection laws inherited from various federal agencies. Major laws within the province of the CFPB include: Truth in Lending Act (TILA): Provides uniform credit term disclosures for consumers, including the amount financed, the amount of the monthly payment, the total number of monthly payments and the Annual Percentage Rate or APR. TILA sets limitations on home equity loans, regulates credit advertising and establishes rescission rights when there is a security interest in a principal dwelling within three days of consummation. From the Federal Reserve Board (Regulation Z). Real Estate Settlement Procedures Act (RESPA): Regulates closing costs and settlement procedures, requires that consumers receive various disclosures and outlaws kickbacks that increase the cost of settlement services. Provides consumers with helpful information about the cost of the mortgage settlement and protects them from unnecessarily high settlement charges caused by abusive practices. From HUD. Secure and Fair Enforcement Mortgage Licensing Act (SAFE Act): Sets minimum


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standards for the licensing and registration of state-licensed mortgage loan originators, and requires establishment of a nationwide mortgage licensing system and registry for the residential mortgage industry. From HUD. Interstate Land Sales Full Disclosure Act: Protects consumers from fraud and abuse in the sale or lease of land. Requires land developers to register subdivisions of 100 or more non-exempt lots, and provides purchasers with a Property Report disclosure document containing relevant information about the subdivision before the signing of the sales contract. From HUD. Equal Credit Opportunity Act (ECOA): Prohibits credit discrimination by banks, small loan and finance companies, retail and department stores, credit card companies and credit unions on the basis of race, color, religion, national origin, sex, marital status, age or receipt of public assistance. From the FTC. Fair Credit Reporting Act (FCRA): Designed to improve the confidentiality and accuracy of credit reports, FCRA regulates the collection, dissemination and use of consumer information, including consumer credit report information. From the FTC. Gramm-Leach-Bliley (GLB): Requires financial institutions that offer consumers financial products like loans, financial accounts or investment advice or insurance to explain their information-sharing practices and safeguard sensitive data. From the FTC. Fair Debt Collection Practices Act (FDCPA): Regulates the conduct of collection agencies and other debt collectors seeking to collect legitimate debts, and provides protections and remedies for debtors. From the FTC. Home Ownership and Equity Protection Act (HOEPA): Requires disclosures about consumer credit terms and costs, and addresses certain deceptive and unfair practices in home equity lending. Establishes requirements for certain loans with high rates and/or high fees. From the Federal Reserve Board (Regulation Z). Home Mortgage Disclosure Act (HMDA): Requires lending institutions to report public loan data that can be used to determine whether financial institutions are serving

the housing needs of their communities, properly distribute publicsector investments, and identify possible discriminatory lending patterns. From the Federal Financial Institutions Examination Council. Electronic Funds Transfer Act (EFTA): Specifies protections for consumers sending or receiving funds electronically to and from the consumer’s bank account, and limits consumer liability for unauthorized transfers to $50, provided the bank is notified promptly. From the Federal Reserve’s Regulation B. In addition, the CFPB will implement and enforce new Dodd-Frank mortgage protections which will: •

Require mortgage lenders to determine that a borrower has the ability to repay by verifying income and making sure borrowers can afford loans after teaser rates expire and payments rise.

Prohibit prepayment penalties, which can make it expensive to refinance for high cost loans and adjustable-rate mortgages.

Prohibit paying bonuses to mortgage brokers and loan officers who steer borrowers into higher-cost loans than they otherwise qualify for.

What other tasks will the CFPB perform?

August 8-9, 2011

Two-Day CRS210 Course

Already under way is the Dodd-Frank directive to combine the three-page Good Faith Estimate and the two-page Truth in Lending statement into a single, easy-to-read document. Different designs are available for comment on the CFPB website at www.

Building Exceptional Customer Service Referral Business (Recently Revised)

The CFPB will also take over the rule-making on the Qualified Residential Mortgage (QRM). The QRM sets standards so as to avoid the risk of being considered predatory. As currently proposed in the rule, a 20 percent down payment requirement would be mandatory. Fixing the U.S. mortgage servicing industry, amid countless accusations of inept home-foreclosure practices, will be another CFPB top priority. Recently, mortgage servicers have been alleged to have charged homeowners inaccurate fees, lost paperwork and improperly foreclosed on homeowners. The CFPB has also entered into a partnership with the Offices of the Judge Advocate Generals to assist in better protecting U.S. servicemembers and their families from unlawful acts and practices. They will establish a single point of contact within the CFPB’s Enforcement Division that will allow members of JAG Corps to share information on consumer complaints from servicemembers and military families.

What a strange picture, right?

Visit the CFPB website at and read some of the real-life stories illustrating other upcoming reforms.

Whether you’re a tech novice or tech guru, picture this: a room filled with technology-crazed real estate professionals attending a conference with no agenda, no outlines, no booked instructors and just a big whiteboard.

Debbi Conrad is Senior Attorney and Director of Legal Affairs for the WRA.

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What’s Happening at the DRL – Correction: the DSPS


great deal of change is occurring at the former Department of Regulation and Licensing (DRL) with the passing of the 2011-13 state budget. A few changes include: The Real Estate Board is now the Real Estate Examining Board; the DRL is now the Department of Safety and Professional Services (DSPS), and a portion of the Department of Commerce staff and responsibilities are now under the purview of the DSPS. All of these affect you as a licensee on some level or another. Let’s take a look at these changes.

In the final stages of the rulemaking process:

Real Estate Board to Real Estate Examining Board

Wis. Admin. § RL 15 Broker’s Obligation to Furnish and Maintain Records: Addressing a variety of issues, foremost electronic record retention.

Wis. Admin. § RL 16 Approved Forms: While likely to be revised in a myriad of ways, one specific revision relates to the use of addenda.

First, the board became an Examining Board; more easily stated REB to REEB. Prior to the budget, while the REB would assist the secretary in policymaking, discipline of licensees, and would advise the secretary on real estate forms (better known as the “WB forms”) and rules; the secretary had the final authority on forms, education and promulgation of rules affecting real estate. Like other examining boards, the REEB will now grant real estate licenses, review complaints and enforce disciplinary actions against licensees, enter into reciprocal agreements with other states, and promulgate rules. In addition, the REEB will approve real estate forms (better known as the WB forms), establish education curriculum and requirements for both prelicense and continuing education, and appoint members to the Real Estate Curriculum Examinations Council and the Real Estate Contractual Advisory Committee - both of which are advisory to the REEB. In its capacity as an examining board, the REEB may take some time to find its rhythm, and when it does, change will find its way to you. Below is a brief overview to give you a little insight as to what’s on REEB’s short-term plate. Wisconsin Administrative Rules The REEB’s main objective of administrative rule revisions is modernization. The intent of the modernization is to have rules that better serve the real estate industry and continue to protect the public while having value in real-world application.


By cori lamont

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Wis. Admin. § RL 24 Conduct and Ethical Practices of Real Estate Licensees; proposed effective date January 1, 2012.

Wis. Admin. § RL 25.02(2) Broker’s Pre-license Program: increasing the broker pre-license education hours to 72; proposed effective date July 1, 2012.

Items on the REEB’s to-do list include:

Wis. Admin. § RL 18 Trust Accounts: One known repair is to remove a conflicting statement about disbursement of earnest money. Forms Update In the final stages of the form creation process: •

WB-12 Farm Offer to Purchase WB-15 Commercial Offer to Purchase

On the Real Estate Contractual Advisory Committee and REEB’s immediate to-do list: •

WB-24 Option to Purchase

WB-37 Exclusive Listing Contract for Lease of Real Property

Reciprocity with Other States The modification of Illinois license categories requires evaluation of the reciprocal agreement between Wisconsin and Illinois. Currently, licensees from each respective state must pass the other state’s license exam. However, applicants are exempt from the other’s pre-license education requirements when applying for a license. After May 1, 2011, Illinois license applicants were no longer able to obtain a salesperson license. As of today, the only two main license categories in Illinois are managing broker and broker. Arguably,

under the Illinois new license structure, Wisconsin licensees are at a significant disadvantage: clearly, the disparity needs to be rectified between the two states. The WRA is carefully tracking how these changes affect Wisconsin’s reciprocity with Illinois, and will keep you informed as those changes come.

Other Real-Estate-Specific Items Affected at the DSPS by the 2011-13 Budget Other budget items that directly affect real estate and the DSPS are a by-product of the reorganization of the Department of Commerce and DRL. The following are three main items that were modified in the budget and are housed at DSPS. IBRETA Interest Wis. Stat. § 452.13(2)(a) requires real estate brokers holding client funds to establish an interest-bearing common trust account, or more commonly called IBRETA. Historically, the Department of Administration was the beneficial wisconsin real estate magazine


owner of the interest accruing on these accounts, and overtime, the Department of Commerce became the beneficial owner, and the 2011-13 budget once again makes the Department of Administration the beneficial owner of the interest accruing on IBRETA accounts. Wis. Stat. § 452.13(2)(d) now reads, “The Department of Administration is the beneficial owner. The interest accruing to the interest-bearing common trust account, minus any service charges or fees.” Storage Tank Regulation As stated previously, a part of the Department of Commerce was merged with the DSPS. Specifically combining with DSPS, the Department of Commerce Divisions of Safety and Buildings and Environment and Regulatory Services also brought along regulation of storage tanks. Underground Storage Tank (UST) and Aboveground Storage Tank (AST) regulation and registration will occur under the authority of the DSPS. august 2011

No More CE Test-out Due to lack of participants and significant cost-savings for the DSPS, the budget repealed Wis. Stat. § 452.12(5)(c)2, or better known as the “continuing education testout.” Previously, real estate licensees had the ability until June 30 of the even year of the biennium to take an examination on the subjects required for continuing education. Any broker or salesperson that passed this examination would therefore be exempt from CE for that biennium. Thus repealing § 452.12(5)(c)2 means CE test-out is no longer an available option for real estate licensees to achieve CE credit. The WRA will continue to keep you informed of the activities at DSPS and of the REEB, and how pending changes may affect your real estate license and practice. The newly created DSPS website is located at

Cori Lamont is Director of Brokerage Regulation and Licensing for the WRA.



best of the legal hotline

with tracy rucka

Taming the Financial Gorilla

Overcoming Money Problems

The following questions and answers have been asked about the financing contingency, appraisal contingency, the offer not contingent on financing and funding condominium transactions.

Delivery of Loan Commitment Are loan commitments legitimate if they are not signed by the buyer? Lines 238 to 241 of the revised 2011 WB-11 Residential Offer to Purchase state in part: “Buyer and Seller agree that delivery of a copy of any written loan commitment to Seller (even if subject to conditions) shall satisfy Buyer’s financing contingency if, after review of the loan commitment, Buyer has directed, in writing, delivery of the loan commitment. Buyer’s written direction shall accompany the loan commitment.” If the buyer does not deliver the written authorization along with the loan commitment, the buyer has breached the agreement that the parties made when they signed the offer. The parties have agreed that the buyer’s written direction is required, so the delivery of a loan commitment alone does not satisfy what the contract says and does not fulfill this requirement. This provision has been included in the


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offer to ensure that the buyer really saw the loan commitment and really directed that it be delivered to satisfy the contingency and bind the buyer to the contract. Note that these provisions apply to all the 2011 updated offers. For further discussion of the financing contingency provisions, see the February Legal Update, “2011 WB11 Residential Offer to Purchase” at

Proof of Funds-Cash Offers The broker wrote an offer for a buyer that was nearly full-price and had no contingencies. Broker considered this a “cash offer.” The buyer has no problem getting the money for the closing, however, the seller terminated the offer saying buyer didn’t give proof of funds. In the updated WB offers, if the buyer writes an offer that is not contingent on financing, the verification of funds obligation is automatically included. The provision is designed to provide safeguards for the seller in cases where there is no financing contingency; the seller may, but is not required to, terminate the offer if the buyer does not provide the required evidence. In the 2011 offers, the third-party providing evidence of funds is asked to

provide “reasonable written verification” that the buyer presently has sufficient funds to close. As the remaining offers are updated, the intention is to have continuity across the forms. “IF THIS OFFER IS NOT CONTINGENT ON FINANCING: Within 7 days of acceptance, a financial institution or third party in control of Buyer’s funds shall provide Seller with reasonable written verification that Buyer has, at the time of verification, sufficient funds to close. If such written verification is not provided, Seller has the right to terminate this Offer by delivering written notice to Buyer. Buyer may or may not obtain mortgage financing but does not need the protection of a financing contingency. Seller agrees to allow Buyer’s appraiser access to the Property for purposes of an appraisal. Buyer understands and agrees that this Offer is not subject to the appraisal meeting any particular value, unless this Offer is subject to an appraisal contingency, nor does the right of access for an appraisal constitute a financing contingency.”

No Loan Commitment If the buyer exceeds the contingency date for financing and they were denied the loan, does the seller have the right to keep the earnest money because it is past the deadline? According to the WB-11 Residential Offer to Purchase, if the buyer does not make timely delivery of a loan commitment, the seller may terminate the offer if the seller delivers a written notice of termination to the buyer prior to the seller’s actual receipt of a copy of the buyer’s written loan commitment. The fact that the primary buyer does not deliver the loan commitment in a timely manner does not automatically terminate the offer. It is the seller’s choice to either terminate the offer or allow the buyer time to obtain a loan commitment and complete the transaction. If the buyer did not provide rejection letters in a timely manner and does not purchase the property, the seller may wish to review the default provisions of the offer. The buyer may initiate a Cancellation Agreement and Mutual Release for the seller’s consideration, but the seller may choose whether or not the seller will agree and sign the CAMR. The parties should be advised to consult with legal counsel if they have any questions regarding their legal rights.

Appraisal Contingency In the offer there is an appraisal contingency for 40 days. The appraisal came in low, and if the appraisal contingency was not satisfied, can the buyer ask for a reduction of purchase price? Also, when can the buyer terminate the offer? The buyers have choices once they receive the appraisal. If the report indicates a value less than the purchase price, the buyer and the seller may try to renegotiate by using an amendment. If they are unable to reach an agreement, per the 2011 WB-11 offer provision, the buyer may deliver a copy of the appraisal report and a notice

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of termination to the seller by the deadline at line 267. This will mean that the contingency is not satisfied and that the buyer is terminating the offer. “This Offer is contingent upon the Buyer or Buyer’s lender having the Property appraised at Buyer’s expense by a Wisconsin licensed or certified independent appraiser who issues an appraisal report dated subsequent to the date of this Offer indicating an appraised value for the Property equal to or greater than the agreed upon purchase price. This contingency shall be deemed satisfied unless Buyer, within __ days of acceptance, delivers to Seller a copy of the appraisal report which indicates that the appraised value is not equal to or greater than the agreed upon purchase price accompanied by a written notice of termination. CAUTION: An appraisal ordered by Buyer’s lender may not be received until shortly before closing. Consider whether deadlines provide adequate time for performance.”


Condo Financing The seller owns a unit in a condominium. The buyer was not able to get financing because the condo did not meet the new FHA condominium rules. The listing broker attended a meeting of the condominium association where they refused to update the condominium documents. What can be done to help the seller? The Housing and Economic Recovery Act of 2008 allows the FHA to implement rules to insure mortgages on individual condominium units. The rules, which were implemented in December of 2009, have been recently updated and went into effect July 1, 2011. If the condominium does not meet the FHA eligibility requirements, buyers will need to find alternate sources of financing. Examples include cash transactions, finding local lenders willing to hold the mortgage, or seller financing. For more NAR information regarding this development, visit www.

Pre-Approval Can a seller direct the listing agent to identify the financial institutions the buyer must use for financing and not accept an offer if a different financial institution will be used? Can a seller make that a requirement in a counter-offer? Is the listing agent “steering” if the seller does that? With respect to sellers requiring buyers to work with particular lenders, sellers may require buyers to submit pre-approval letters from particular lenders with their offer to purchase. Some lenders may exercise more due diligence than others resulting in fewer problems later in the transaction. Licensees may share their experience with various lenders with the parties. However, similar to recommending other third-party service providers, such as inspectors or contractors, the best practice to minimize potential liability for licensees would be to compile a list for the seller. The seller may then offer a list of reputable lenders to the buyer and let the buyer choose. For further discussion, review pages 10-14 of the May 2004 Legal Update, “Avoiding Liability When Signing and Making Referrals,” at, and pages 7-9 of the May 2007 Legal Update, “Referrals to Service Providers,” at www.wra. org/LU0705. Whether sellers can require buyers to finance their purchase with a specific lender is not as easily answered as the preapproval requirement. A seller could assert such a requirement, but it is possible the buyers could make a legal argument that this requirement is unenforceable. In addition, if the buyers had good funds from a different lender at closing, they could argue that this breach (assuming for argument’s sake it is a breach) is not material. In short, it may be difficult to ultimately enforce such a requirement. If the sellers still want to include this requirement in the contract, the best practice would be to provide a list of lenders as described above. Tracy Rucka is Director of Professional Standards and Practices for the WRA.


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september 13-15


September 13

Kalahari® Resorts & Convention Center Wisconsin Dells


8:30 a.m. - 4:30 p.m.

ABR Elective - Real Estate Marketing Reboot

8:30 a.m. - 4:30 p.m.

CRS Elective -Positioning Properties to Compete in the Market (Staging)

8:30 a.m. - 12 p.m.

Real Estate CE – Elective C – Other Approved Forms

10 a.m. - 4 p.m.

Golf at Wild Rock Golf Club

12:30 - 4 p.m.

Real Estate BarCamp

1 - 4:30 p.m.

Real Estate CE – Elective D - Financing


Join us for the WRA’s 100th Annual Convention. With more than 1,200 attendees, the annual convention assembles top-name speakers from around the country to discuss important topics about the industry.

4 - 6 p.m.

Exhibits Open

8:30 p.m. - 1 a.m.

Icebreaker Party “Club Mojito: Where the Future’s So Bight”

WRA 2011 CONVENTION wednesday 7:30 - 9 a.m. September 14

Convention is the perfect place to network with colleagues, get recharged about your business, complete Continuing Education courses or choose from more than 40 workshops across three days. Whether you are looking for new ideas, marketing tips, sales strategies or a primer on new technology, there’s something for everyone.

RPAC Breakfast

8 a.m. - 5 p.m.

Exhibits Open

8:30 a.m. - 4:30 p.m.

CRS Elective - Real Estate Social Marketing Strategies

8:30 a.m. - 12 p.m.

Real Estate CE – Course 1 - Listing Contracts

9:30 - 11:30 a.m.

Opening Session - The Five Best Decisions the Beatles Ever Made

11:30 a.m. - 4 p.m.

WRA AE Lunch & Meeting

11:30 a.m. - 1 p.m.

WRA Past Chairman’s Lunch

1 - 4:30 p.m.

Real Estate CE – Course 2 Offer to Purchase

1 - 4 p.m.

Expanded Broker Track - Ten New Rules to Teach Old Dogs

1 - 4 p.m.

Expanded Sales Track - Leveraging Technology for Sales Success

1 - 2:30 p.m.

Workshops - Session 1



For more information, please visit

September 15

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august 2011

Workshops - Session 2

5 - 6 p.m.

Women’s Council of REALTORS® Statewide Meet and Greet

7 - 9 p.m.

Chairman’s Installation Dinner

8 p.m. - 12 a.m.

The After Party: Kalahari® Resort Indoor Theme Park

7:30 a.m. - 8:45 a.m.

Rotary Service Club Meeting

8 a.m. - 2:45 p.m.

Exhibits Open

8:30 a.m. - 12 p.m.

Real Estate CE Course 3 – New Developments

8:30 a.m. - 4:30 p.m.

Appraisal CE - Conventional, HUD/FHA and USDA Rural Appraisals

8:45 - 10 a.m.

General Session: Take the Stairs - Rory Vaden

9 a.m. - 12.p.m.

Expanded Broker Track - Management to Leadership in Five Steps

10:30 - 11:45 a.m.

Workshops - Session 1

11:45 a.m. - 1 p.m.

CRS Lunch & Silent Auction

1 - 4:30 p.m.

Real Estate CE - Course 4 Business Ethics

1:15 - 4:15 p.m.

Expanded Broker Track - Creating Momentum in Your Firm

Expanded Sales Track - How Many Who’s are in Your Whoville?

1:15 - 2:30 p.m.

Workshops - Session 2

2:45 - 4 p.m.

Workshops - Session 3



Appraisal CE - Conventional, HUD/FHA and USDA Rural Appraisals: UAD Standards Update And Home Inspection From an Appraiser’s Perspective

September 15, 2011 Kalahari® Resorts, Wisconsin Dells

Conventional, HUD/FHA and USDA Rural appraisals all require proficiency in home inspection. However, HUD/FHA and USDA Rural appraisals require a more in-depth examination of the subject property. With the new federal requirements outlined in the Uniform Appraisal Dataset (UAD), the ability to examine a property to rate the quality and condition based on new UAD guidelines is critical to providing a professional appraisal and avoiding mistakes or lawsuits. In addition to simply understanding the differences among conventional, HUD/FHA and USDA Rural appraisals, this seminar, through the use of on-site photos, will not only give you the ability to identify the physical components found during an appraisal inspection, but you will gain knowledge necessary to identify component defects that might affect the subject’s value or pose health or safety risks. Approved for Wisconsin Appraiser and Assessor CE and Michigan Appraiser CE. Submitted for Minnesota Appraiser CE. www.wra/conventionAppCE

Real Estate Marketing Reboot - ABR® Elective September 13, 2011

Uniform Appraisal Dataset (UAD) Program Course August 17, 2011 - WICPA, 235 North Executive Drive - Brookfield August 25, 2011- REALTORS Association of Northeast WI - Appleton ®

For appraisals with an effective date (date of inspection) on or after September 1, 2011, the appraisal report must be completed in compliance with the UAD for conventional mortgage loans sold to Fannie Mae or Freddie Mac. These include all appraisals completed on forms: •

Uniform Residential Appraisal Report (1004 and 70)

Individual Condo Unit Appraisal Report (1073 and 465)

Exterior-Only Inspection Individual Condo Unit Report (1075 and 466)

Exterior-Only Inspection Residential Report (2055)

Wisconsin Dells Do you think the marketing strategies you used during the real estate boom still work today? Think again. It’s time to reconsider how you market yourself - it’s time for a real estate marketing REBOOT. In this one-day course, you will revisit marketing fundamentals, branding, relationship marketing with an emphasis on electronic tools, social media, blogs, Twitter, podcasts, really simple syndication (RSS) feeds, search engine optimization (SEO) and among other technologies. Practical tips and examples of agents leveraging these tools in the field make this course a must for all real estate professionals.

Real Estate Social Marketing Strategies for Success Both Online and Offline - CRS Elective September 14, 2011 •

Develop a social marketing plan to turn fans and followers into real estate transactions.

Positioning Properties to Compete in the Market (Staging) - CRS Elective September 13, 2011

Harness the power of thought leadership.

Turn social networking into a major profit center through Facebook, YouTube, LinkedIn and Twitter.

Staging is receiving national attention as an established trend in real estate. Now is the time to develop the knowledge and skills to integrate staging into your business. This course is an in-depth study of the staging process designed to integrate staging and pricing and develop strategic marketing skills. Created by Martha Webb, author and producer of “Dress Your House for Success,” this course will help you take control of the staging movement. Building new skills to offer sellers a proven method of optimizing price and minimizing market time will add value to your services.

wisconsin real estate magazine

This course will teach you how to:

ABR® Course September 26-27, 2011

Wisconsin Dells


Wisconsin Dells


august 2011

Northwoods Association - Woodruff Are you focused on working directly with buyerclients? If so, this is a course for you. You’ll learn how to represent buyer-clients with the same level of service sellers enjoy as well as ideas and methods for building your buyer representation business. Complete two of the three days required for the ABR® designation and fulfill nine hours of 2011-2012 Continuing Education (Courses 1, 2 and 4; no QET credit) with one course. Take advantage of the REBAC special discount of $30 off the registration fee!

Course Schedule

Visit for full schedule. Sales & Marketing Management Date Course

August 8-9, 2011

* Plus cost of books. ** Early registration applies two weeks prior to the September 26-27, 2011 start of the course. *** Wisconsin CRS members receive a $20 discount.

CRS 210

***295 (Thru 8/7) ***315 (After 8/7)

2-Day ABR Designation Course *260 (Thru 9/12) *270 (Thru 9/25) *Deduct $30 from registration fee due to Special Offering by REBAC.

Conference and Conventions Date Event


*290 (After 9/25)

Thru 8/22 After 8/22


Early registration applies two weeks prior to September 13-15, 2011 WRA Annual Convention Wisconsin Dells the start of the course

September 13, 2011 September 13, 2011 September 14, 2011 September 13-14, 2011 September 13-14, 2011

ABR Elective: Real Estate Marketing Reboot CRS Elective: Positioning Properties to Compete in the Market CRS Elective: Real Estate Social Marketing Strategies for Success both Online and Offline Both CRS Electives includes convention ABR and one CRS Elective includes convention

Real Estate Continuing Education



2009-2010 real estate continuing education is still The available through On Demand, DVD and Self-Study Booklets: Course 1 – Listing Contracts Course 2 – Offer to Purchase Course 3 – New Developments Course 4 – Buyer Agency Agreements Elective A – Risk Reduction Elective B – 1031 Exchanges and Exchange Opportunities Elective C – Condominiums Elective D – Landlord/Tenant and Property Management Elective E – Financing

August 10, 2011 2011-12 Courses 2 & 1 Madison 800-279-1972 August 11, 2011 2011-12 Courses 4 & 3 Brookfield 800-279-1972 August 18, 2011 2011-12 Courses 4 & 3 Madison 800-279-1972 August 18, 2011 2011-12 Electives B & A Brookfield 800-279-1972 August 24, 2011 2011-12 Electives B & A Madison 800-279-1972 *September 13, 2011 2011-12 Electives C & D Wisconsin Dells *September 14, 2011 2011-12 Courses 1 & 2 Wisconsin Dells *September 15, 2011 2011-12 Courses 3 & 4 Wisconsin Dells *Register for full convention – attend all 6 courses (4 free with reduced fee for 2 courses)

$195 $195

$205 $205

$225 $225











Price $27 member; $35 non-member $27 m; $35 nm $27 m; $35 nm $27 m; $35 nm $27 m; $35 nm Convention fee Convention fee Convention fee

2011-12 Electives: Elective A – Short Sales & Foreclosures Elective B – Environmental Matters Elective C – Other Approved Forms Elective D – Financing

Appraisal Continuing Education Date Course Location August 17, 2011 Uniform Appraisal Dataset (UAD) Program Course Brookfield August 25, 2011 Uniform Appraisal Dataset (UAD) Program Course Appleton September 15, 2011 HUD/FHA & USDA Rural Appraisal Standards Wisconsin Dells Approved for Wisconsin Appraiser and Assessor CE. Submitted for Michigan and Minnesota Appraiser CE. Check out the Appraisal CE modules available by DVD and online. Pre-License * Plus books Available online!

Date Course Location Member Oct. 3-6; 10-13, 2011 Oct. 31-Nov. 3, 2011

Sales Pre-License Course Madison Broker Pre-License Course Madison

$325* $260*

Non-Member $325* $280*

QuickStart sales training program

wisconsin real estate magazine


august 2011


FacingChange FACING CHANGE WRA 2011 Convention

Registrant One INFORMATION:

 Check here if you are an Association Executive Name___________________________________________ Firm Name __________________________________________ Address_ ________________________________________ City_______________________ State_ _____ Zip____________ Phone (W) ( )___________________________________ (H) ( ) __________________________________________ WRA 2011 E-mail Address_____________________________________ WRA member # _______________________________________

September 13-15, 2011

Kalahari Resort® & Convention Center


*TWO-FER Convention Special: Register one WRA member for one full convention pass at regular price and register a second WRA member at a special introductory price. (see details at Your second guest must be a member of the WRA who has NEVER attended the Fall Convention or has NOT attended in the past five years. Limit one discounted registration per order. Register using this form or by visiting After you have registered, you will receive a promotion code. Give this promotion code to a WRA member and tell that member to visit the website to register and take advantage of the discounted pricing.

Two-FER: 2nd WRA Member INFORMATION: Name___________________________________________ Firm Name___________________________________________ Address_ ________________________________________ City ______________________ State _____ Zip _____________ Phone (W) ( )___________________________________ (H) ( ) ___________________________________________ E-mail Address_____________________________________ WRA member # ________________________________________ Member Thru 8-1 Thru 8-22 After 8-22  1-Day Pass ( Tues/Wed/Thurs ) circle one $ 84 $ 94 $ 104  Full Convention Pass $ 114 $ 124 $ 134  TWO-FER: 2nd WRA Member* $ 54 $ 64 $ 74  Unlicensed Spouse/Sig. Other $ 35 $ 35 $ 35 Name of Spouse or Significant Other:____________________________________________. Non-Member

 1-Day Pass ( Tues/Wed/Thurs ) circle one  Full Convention Pass Real Estate Continuing Education

Thru 8-1 $ 114 $ 154

Thru 8-1

Thru 8-22 After 8-22 $ 124 $ 164

$ 134 $ 174

Thru 8-22 After 8-22

ATD $ 124 $ 154 $ 94 $ 55

Appraisal Course - 9/15/2011 WRA Appraisal Section Member  Class Only  Class w/ Convention

Kalahari Resort and Convention Center 1305 Kalahari Dr. | Wisconsin Dells, WI Phone: (877) 253-5466 or (608) 254-5466 Room Rates Standard Room: Jacuzzi Suite: Royal African Queen Suite: Release Date: August 13, 2011

$99 $149 $179

Included in Registration Fee: • Icebreaker Party – 9/13 • Real Estate Continuing Education – Four of Six courses included in Full Convention Pass - MUST register in advance first come, first served!

ATD $ 154 $ 194

• Access to Indoor Theme Park following Chairman’s Dinner - 9/14


CE - Attend All 6 (4 FREE – You pay for 2) $15 per $20 per $25 per $45 per (You may select up to FOUR courses for free included in a Full Convention Pass; each additional course pricing above.  Elective C – Other Approved Forms - 8:30 – 12:00 (9/13)  Course 1 – Listing Contracts – 8:30 – 12:00 (9/14)  Elective D – Financing – 1:00 – 4:30 (9/13)  Course 2 – Offer to Purchase – 1:00 – 4:30 (9/14)  Course 3 – New Developments – 8:30 – 12:00 (9/15)  Course 4 – Business Ethics – 1:00 – 4:30 (9/15) Designation Classes  ABR Elective - Real Estate Marketing Reboot (9/13)  CRS Elective - Positioning Properties (9/13)  CRS Elective - Real Estate Social Marketing (9/14)  Both CRS Electives (9/13 & 9/14) w/convention  ABR & CRS Electives (9/13 & 9/14) w/convention

Hotel information:

Event Fee – Per Person: Golf (9/13)���������������������������������������������������������������������������������$98 Wild Rock Golf Club - Wisconsin Dells  Member One  Member Two Real Estate Bar Camp (9/13 @ 12:30p.m.)��������������������������� FREE  Member One  Member Two

Thru 8-1 $ 185 $ 185 $ 185 $ 330 $ 330

Thru 8-22 $ 195 $ 195 $ 195 $340 $ 340

After 8-22 $ 205 $ 205 $ 205 $ 350 $ 350

ATD $ 225 $ 225 $ 225 $ 370 $ 370

Two-Fer Pricing

Thru 8-1

Thru 8-22

After 8-22


Two-Fer Pricing

$ 134 $ 144

$ 144 $ 154

$ 154 $ 164

$ 174 $ 184

CRS Luncheon (9/15)����������������������������������������������������������������$20  Member One  Member Two

 2nd WRA Member* .....$ 90

WRA REALTOR Member  Class Only  Class w/ Convention

 Special Services: Check here if you require special needs to attend. Attach written description of needs.

$ 144 $ 154

$ 154 $ 164

$ 164 $ 174

$ 184 $ 194

 2nd WRA Member* .....$ 100

Non-Member  Class Only  Class w/ Convention

$ 154 $ 164

$ 164 $ 174

$ 174 $ 184

$ 194 $ 204

Cancellation Policy: The WRA reserves the right to cancel courses if not filled. Cancellations must be made in writing prior to September 13, 2011 and will be refunded, minus a $25 administration fee. Registrations cannot be transferred from person to person.

Chairman of the Board’s Dinner (9/14)���������������������������������$49  Member One  Member Two  2nd WRA Member* .....$ 276  2nd WRA Member* .....$ 276


After Party Bowling Tournament (9/14)������������������������������ FREE Sign up on site! 8:00 - 9:00 pm 9:00 - 10:00 pm 10:00 - 11:00 pm

Payment Register by Mail: Wisconsin Realtors® Association 4801 Forest Run Road, Suite 201 Madison, WI 53704-7337

Register by Phone: (800) 279-1972 | (608) 241-2047 Register by Fax: (608) 241-5168

Total amount $__________________  Enclosed is my check made payable to the WRA  Charge my VISA / MasterCard (circle one) Card Number����������������������������������������������Exp. Date___________


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Technology Tips & Tools for the Real Estate Professional

Real Estate Search on Your Phone

If you own a smartphone, you probably have a home search app on it. Today, most real estate clients do as well. Using your GPS, you can find all homes for sale or rent within a few miles radius. The top three home search apps include, Zillow and Trulia.

Zillow has a home and mortgage app, which gives you instant answers about homes and mortgages as you go. See data and info on all U.S. homes – not just homes for sale.

What are the most popular features? has apps for iPhone, Android, Windows 7 and iPad. They recently added these features: •

Area Highlighter

Nearby Homes for Sale widget

Street View integration

Area Scout (new!) helps you find nearby open houses in your range with price pins displayed on the map

The ability to create and save voice-entered private notes for promising listings and send them to your family, friends and agent

Trulia also has an apps for all smartphones and for iPad: •

Use GPS to cruise around the neighborhood and check out nearby open houses

Move the interactive map to explore new neighborhoods

Shake your phone to reload property results or to start a new search

Which app will you use?

It’s New! It’s Google+ You know how much I love Google offerings – and I have another one to share with you: Google+. It’s the new and upcoming social networking place to be. But… you have to wait for an invite, as the site is slowly releasing the users during Beta phase. If you don’t have a Google account yet, set up one here so you are ready. Similar to Facebook, Google+ allows you to connect with people and put them into ‘circles’ that you create to share status updates and comment together. Google+ also has Sparks (special interest feeds), Hangouts (gatherings of friends), and Huddles (group chat). Circles on Google+ are like Facebook lists. If you have connections in a circle, you have the opportunity to share your statuses with a select circle of people, or the public. You can get creative with circles, or you can just stick with the basics.

Some ideas for circle categories include: •

Real Estate

Local connections

Friends I’ve shared a meal with

Friends I would invite over



School Friends

Some people claim that Google+ is the new Facebook, so when you have the opportunity to join, jump on board! It’s important to at least try these social networking sites for a few weeks before making your judgment call. I’ve been able to connect with quite a few of my “locals,” and I have already met a few more on Google+.

Monitoring Your Reputation Online Here are a few tools to help you out: Blog search engine Technorati tracks buzz in the blogosphere by indexing the body of blog posts as they are published. You can subscribe to Technorati searches for your name, your community or your company, and you can receive them as email or in your feed reader. You may also want to try MonitorThis, which gathers data from over 25 different sources.

wisconsin real estate magazine


august 2011


Realtor® sales tip

Polishing Your Skill Set


ll markets require REALTORS® to be selfmotivated, determined and persistent. But the current market puts us to the test – one many of us have never experienced before.

By marcus wally

These days I find myself constantly analyzing the way I approach situations to make sure I am doing all I can: that I am offering all prospects exceptional customer service and embracing new methods to keep my overhead expenses down while constantly pushing my brand message to as many as possible. The Internet and my yard sign are my best friends. Tough times can make us want to quit or take short cuts, but we cannot afford to go that route. In fact, it’s during these difficult times that we must go the extra mile, even when that takes everything we’ve got. Today I work harder and longer than ever before, but I am closing at least one property a week ... not big numbers like years ago, but closing. Last week, I heard about some of my peers not returning phone calls and agents not responding to e-mail inquiries. It blows my mind to think that while I am doing everything I can to survive in this challenging world, not everyone


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sees it that way. And, this is happening everywhere. A friend of mine recently went to a restaurant where he had a reservation for 10. Two people were late, and the restaurant refused to seat the eight already there until the entire party arrived. You know the answer to this story: the eight walked out. How much longer will that restaurant be in business? The current market is unlike any in which I have ever practiced. When I started out 20 years ago, the Florida market was just coming out of tough times, and I had to be completely focused just to make it. And today, 20 years later, I must have that same total-focus mentality to create the success that I demand. My sales tip this month centers around the Golden Rule: doing things the way we would want them done, and treating others like we would want to be treated. My first piece of advice relates to offering feedback. Many agents have become sloppy when it comes to this critical part of our job. We all know how important it is to receive feedback on our own listings. Providing feedback is the courteous thing to do and helps the seller strategize and perhaps re-evaluate the asking price. Why, then, are

“Tough times can make us want to quit or take short cuts, but we cannot afford to go that route.” so many agents neglecting this important step? Recently, I called and called – almost begging – to get the agent to call me back with feedback. And even though I had honored this agent’s request to get her into the occupied home on a moment’s notice, she still would not call me back.

Polishing your skill set is a constant balancing act to remain vibrant, competitive and successful. Most professionals have coaches who help them stay polished. For those of us who don’t, we must read, take education classes and stay positive.

Agents will spend hours on Facebook and Twitter but won’t send a short e-mail message or respond to our requests so that we can get back to our sellers. This is frustrating.

A friend recently explained to me that the plus (+) symbol is made with two minus (-) symbols. All negative things can be shaped positively by our thinking, so never let your positive spirit die.

Also, there are those peers who don’t leave a business card after a showing to alert the homeowners of their visit. Leaving a card is more than just good manners - it helps create a paper trail. Most sellers look for the card after a showing to know whether or not the agent made it to the property. I have known sellers who came home and immediately left if they didn’t see a business card, assuming the agent was just running late. The same common courtesy should be extended when showing a property. When we make a showing appointment, we must honor it even when our clients change their minds. Remember, we are in charge - not the customers. We cannot allow the customers to wag our tail - we do the wagging. When you set an appointment to show a property, the owner takes great care in preparing the home for the showing. When an agent drives up and allows the customer to refuse to go in, it is not acceptable. This type of unprofessionalism reflects badly on our industry as a whole.

Marcus A. Wally, MBA, is an active Florida REALTOR® in St. Augustine, Florida. Marcus is the founder and broker of New World Realty, which also manages coaching and facilitation of education classes around the world. Marcus earned his MBA from the University of North Florida in Jacksonville. He can be reached at (904) 669-1081 or by e-mail at

When I arrive at a property for a showing, I immediately turn off the ignition. If my clients try to tell me they don’t like the look of the home and don’t want to go inside, I open my car door and get out. With a smile, I say, “I made the appointment and the sellers prepared the home. Let’s go in and take a look. You can go in and out as fast as you want to, but let’s go in as a courtesy.” At this point, they always follow me up to the front door. I am doing two important things in this situation: first, I am setting the tone that I am in charge - not them, and I am also showing that I operate with manners. Hopefully they will show the same respect to me if they need to make a change to one of our appointments. This method works wonders … try it. Finally, when you run late – and we all do at some time – call and let the people involved know what’s going on. It only takes a minute, and we all have cell phones these days. When showing properties to customers, remember these manners: •

Please cancel appointments in a timely manner, if possible.

Please leave a business card to let the owners know you have been inside.

Please inform the listing agent if you are going to be more than five minutes late.

Please give feedback willingly.

wisconsin real estate magazine


august 2011



Scott Walker vs. the Unions

By joe murray

Republican Gov. Scott Walker has a political war on his hands. When he introduced his budget repair bill on February 11, which significantly restricted public employee collective bargaining for 175,000 Wisconsin employees, the unions began their relentless pushback, and it’s likely going to persist through the November 2012 elections.


alker’s political war is playing out in three stages: the first stage is already finished (state Supreme Court race); the second stage is currently under way (nine state Senate recall elections); and the third stage will likely unfold next year as the anti-Walker and union activists force the governor into a recall election of his own. Let’s take a look at all three stages.

State Supreme Court Race The record-setting vote totaling 1.5 million in the April 5sState Supreme Court race was generated, in large part, by the highly partisan fight over public employee collective bargaining. Democrats and unions framed the Supreme Court race between Attorney JoAnne Kloppenburg and Justice David Prosser as a potential rejection of Republican Gov. Scott Walker, his controversial collective bargaining restrictions, as well as his significant state spending cuts to bring the state’s finances into balance. In short, the state Supreme Court race became a proxy fight between the unions and Walker, with Kloppenburg portrayed as the antiWalker candidate, and Prosser the GOP rubber stamp with the “Prosser Equals Walker” theme. Prosser won the race, but not by much. Round one went to Gov. Walker.

State Senate Recalls The second phase of this war involves nine state Senate recall elections. The goal for the unions is to flip control of the state Senate from Republican to Democratic control. Republicans control the Senate 19-14, so Democrats need a net shift of three seats to regain the upper chamber they lost in November 2010. Three Democrats and six Republicans are facing recall elections in July primaries and August general elections. If Democrats succeed in taking control of the state Senate, Gov. Walker’s agenda will have to change. With both houses of the Wisconsin Legislature now


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controlled by the GOP, Walker has been able to pass virtually all his policy agenda with some modifications. A split legislature, with one house controlled by Democrats and the other house Republicans, would force Walker to compromise or face the possibility of getting very little accomplished. Democrats would simply shut down the passing of any legislation they disagreed with. Round two will be finished by mid-August when voters go to the polls to decide the fate of Republicans on August 9, and Democrats on August 16. If Republicans hold the Senate, Walker wins round two. If Democrats flip the chamber, round two goes to the Unions.

Likely Walker Recall Election The third phase of the war between Gov. Walker and the unions is the likely prospect of Walker’s own recall election in 2012. National and state unions, along with the State Democratic Party, have made very clear that they intend to organize a recall election to remove the governor from office next year. And the first requirement for a recall is gathering enough signatures to trigger an election. The number of valid signatures needed to force a recall is about 540,000 valid signatures statewide. Some experts see this as a monumental task while others believe a highly-motivated group of paid and volunteer activists could gather the signatures in the 60day period with relative ease. Signature gathering was far more difficult in the age before the internet, but the electronic revolution has changed this process in a dramatic way. Both Democrat and Republican signature collectors, all combined, were able to gather 188,756 signatures to qualify nine State Senators for recall this summer. In the 32nd Senate District (Kapanke) and the 18th Senate District (Hopper), recall committees turned in the required signatures weeks before the 60-day deadline. In Ohio, opponents of Gov. John Kashich’s push to strip public employees of collective bargaining rights needed only 231,000 valid signatures to force a statewide referendum that could override the

legislation. Organizers turned in 1.3 million - nearly six times the required number - to force a November vote on overturning the state’s new law. The collective bargaining changes in Wisconsin directly affected 175,000 public employees when they went into effect in July. But the total number of union households in Wisconsin is much higher (one estimate is 425,772), and many of these union members, even those who were not impacted by the new law, could easily be motivated to help gather the required signatures for a Walker recall election next year. The intensity of the union effort to recall Gov. Walker is broad and already under way. “United Wisconsin,” a statewide organization with the singular mission of recalling Walker from the governor’s chair, had 190,608 pledges from individuals to sign the recall petition as of July 5 and assist with future signature gathering. Gov. Walker will have to wait for the Senate recalls to finish before all the attention turns back his way. By the middle of August, the political spotlight will shift his direction for round three. Joe Murray is Director of Political and Governmental Affairs for the WRA.

wisconsin real estate magazine


august 2011


New Legislation Seeks Greater Certainty in DNR Permitting Process

O By tom Larson

ver the years, property owners have complained about the permitting process related to real estate development activities near navigable waterways. Most of these complaints, however, have not focused on the environmental standards that must be met in order to receive a permit. Rather, property owners seem most frustrated by the decision-making process itself, which they claim is plagued by, among other things, indefinite timelines and unlimited requests for additional information. In response, Representative Jim Steineke (R – Vandenbroek) and Senator Frank Lasee (R – DePere) have introduced legislation (Assembly Bill 177/Senate Bill 133) that seeks to add greater certainty and predictability for Wisconsin’s homeowners and landowners when applying for permits related to activities near navigable waterways.

In addition, individual permits may be required for common use and property maintenance activities, such as placing or grandfathering larger piers, or installing riprap to prevent erosion. Currently, Chapter 30 contains various deadlines designed to make the permitting process more predictable, equitable and efficient. However, certain deficiencies in the law have prevented this from happening, such as: •

No limits on completeness determinations. While Chapter 30 requires the DNR review and application within 30 days after the DNR determines the application complete, the law does not establish any timelines for determining completeness. Accordingly, a permit applicant may have to wait several months to receive a determination as to whether the application is complete. Furthermore, in determining whether the application is complete, the DNR can make an unlimited number of requests for additional information from the permit applicant. In addition to causing indefinite delays, the unlimited number of requests for additional information can result in added costs that may have been unknown to permit applicants at the time they submitted the application.

No consequences for failing to meet statutory timelines. Currently, if the DNR fails to meet one

The Problem Chapter 30 of the Wisconsin Statutes regulates various activities important to homeowners and other landowners located near navigable waterways by requiring them to obtain individual permits. Some of these activities relate to new development such as:


Grading permits for land disturbances of more than 10,000 square feet.

Dredging related to any navigable waterway, including drainage ditches.

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august 2011

Other activities that disturb land in lowlying areas or wetlands.

of the permit processing deadlines, no consequences exist. As a result, the permit applicant cannot be certain that the processing deadlines will be met. Without appropriate consequences, the permit processing deadlines cannot be enforced, and, thus, are meaningless. •

The burden of proof in some contested case hearings is misplaced. Under current law, a member of the public may challenge a decision made by the DNR to grant a permit. When a member of the public challenges such a decision, a hearing is held before an administrative law judge to determine whether the DNR acted properly in granting the permit. However, in cases dealing with wetland permits and other de novo proceedings, the permit applicant has the burden to prove that the DNR acted properly in granting the decision. Given that the permit applicant already presented the necessary information in order for the DNR to grant a favorable decision, placing the burden of proof on the permit applicant a second time to prove that the application is worthy of a favorable decision is a form of double jeopardy and is unfair to the permit applicant.

The Proposed Solution AB 177/SB 133 seeks to make the permitting process more equitable and predictable for homeowners and landowners by addressing the problems discussed above in the following manner: •

Allows the DNR to request additional information from the permit applicant only one time after the application has been submitted. AB 177/SB 133 attempts to expedite the permitting process by limiting the number of requests for additional information. This will require the DNR to provide wisconsin real estate magazine


august 2011

the permit applicant with more specificity regarding what information is necessary to process the permit. •

Allows presumptive approval of the permit if the DNR cannot find a reason to deny the permit within the specified timelines. To ensure greater compliance with the current permit processing deadlines, AB 177/SB 133 specifies that the permit or contract shall be considered approved if the DNR cannot find a reason to reject the permit or contract within the specified timeframes. Despite claims to the contrary, the bill does not require the DNR to approve the permit application within the specified timeframes, but merely requires the DNR to make a determination.

Places the burden of proof on the person who challenges the DNR decision. AB 177/SB 133 attempts to make all challenges to DNR decisions consistent by placing the burden of proof on the person who challenges the decision. Currently, the burden of proof is on the person who challenges the decision in all cases EXCEPT wetland permits and de novo proceedings. The bill would make the burden of proof requirement consistent for all DNR decisions.

The Wisconsin REALTORS® Association supports this legislation and will be working with the legislature and the governor’s office to get the bill enacted into law during this legislative session. If you have questions about this legislation, please feel free to contact Tom Larson ( at (608) 240-8254. Tom Larson is Chief Lobbyist and Director of Legal and Public Affairs for the WRA.


Looking to the East

Washington Regulations Are Federalizing Real Estate Transactions


dramatically negative impacts to real estate and the overall economy.

he Great Recession has caused much economic pain and led, rightly or wrongly, to many regulatory changes emanating from Washington, D.C. While these regulatory changes have impacted nearly every industry, no economic sector has been so directly and dramatically affected as real estate. While this may not be a surprise, it is eye-opening to see the unprecedented amount of regulatory discussions and activities in Washington that will significantly alter the real estate business forever. Whatever the final disposition is for many of these issues, one trend is for sure: the past several and next several years will witness the federalization of the real estate transaction. That is, federal housing, lending and taxing policies will dictate and dominate the rules by which all real estate in America is transferred; and for better or worse, these new housing, lending and taxing rules will determine the very nature of the real estate industry and national economy for decades, if not forever.

Tax Reform and MID The tax-writing committees in both houses of Congress continue to hold hearings on major tax reform proposals, including whether lower personal and corporate income tax rates should be pursued by eliminating existing deductions, which include changing or eliminating the mortgage interest deduction (MID). The President’s federal debt commission called for eliminating the MID for all second homes, lowering the cap on qualifying mortgages from $1 million to $500,000, and converting the deduction to a 12 percent tax credit. This proposal is both ill-timed and ill-advised, and would adversely impact home values and place a significant drag on economic recovery.

Consider the following issues pending in Washington:

The Debt Ceiling Debate Congress and the Obama administration are engaged in an epic battle over raising the $14.3 trillion national debt limit – a debate that could include a mix of spending cuts and tax increases totaling $4 trillion over 10 years. That’s real money with real macro and micro economic consequences that will directly impact real estate markets.

FHA/GSE Loan Limits The current loan limits for FHA and the Government Sponsored Enterprises (Fannie and Freddie) are due to expire October 1st. If that happens, the loan limits will drop, lessening the availability of mortgage credit to hundreds of thousands of responsible, creditworthy families nationwide. In fact, 42 states would see an average decline in loan limits of more than $68,000, eliminating housing opportunities for many American families.

Qualified Residential Mortgages (QRM) Washington regulators, working under the new Dodd-Frank Wall Street Reform and Consumer Protection Act, are proposing to require borrowers to make a 20 percent down payment on any home loan to be considered a “qualified residential mortgage.” Anything less would be considered risky and banks would thus charge higher interest rates. If adopted, this change could price many creditworthy borrowers out of the housing market – with


wisconsin real estate magazine

Secure and Fair Enforcement Mortgage Licensing Act of 2008 (SAFE Act), which requires states to establish loan originator licensing requirements to meet minimum federal standards. NAR is asking HUD to exempt all or certain seller financing from the licensing requirements and to clarify that payments of commissions by a lender for the sale of a lender owned property (REO) do not require the real estate agent to be licensed as mortgage loan originators. Other major issues include: •

Federal Trade Commission assistance relief services (MARS) regulations (REALTOR® disclosure requirements in short sales).

Covered bonds (could increase liquidity and safety in commercial and multifamily markets).

Credit union lending (increase the cap on member business lending for wellcapitalized credit unions).

Privacy and data security (impact of numerous related bills on how such regulations will impact REALTORS® and real estate practices).

Health reform implementation (small business and independent contractor issues regarding the implementation of exchanges, grandfathered plans, and essential minimum benefits provisions of the new federal healthcare law).

GSE Reform After the takeover of Fannie Mae and Freddie Mac, Congress and the Obama administration are now contemplating major reforms, including merging these giant mortgage companies and/or permanently eliminating or privatizing them. A fully private system is not viable or sustainable, and such a system would severely restrict mortgage capital, raise the cost for qualified and creditworthy homebuyers, and place taxpayers at greater risks, as “too-big-to-fail” government-backed financial institutions dominate the market.

SAFE Act HUD has submitted final rules under the


august 2011

By Michael theo

As our industry struggles to find the bottom of this market and plot its resurrection, the outcome of these and other public policy issues will directly impact your business and your future. As the federal government seeks greater involvement in the real estate transaction, REALTORS® must respond by seeking greater involvement in the legislative, administrative and political processes that will determine the final outcome of these important issues. Michael Theo is Senior Vice President of Legal and Public Affairs for the WRA.



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August 2011 - Wisconsin Real Estate Magazine  

Why Home Loans Are Hard to Get

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