LRB-0981/2
KSH&JJL:skg:ch
1995 - 1996 LEGISLATURE
November 9, 1995 - Introduced by Senators Rude, Jauch, Schultz, Drzewiecki,
Panzer, Cowles, A. Lasee and Buettner, cosponsored by Representatives
Albers, Meyer, Brandemuehl, Huebsch, Wasserman, Dobyns, Hanson,
Goetsch, Hahn, Schneiders, Baldus, Turner, Foti, Seratti, Olsen, Huber
and Grothman. Referred to Committee on Education and Financial
Institutions.
SB417,1,2
1An Act to create 708.10 of the statutes;
relating to: loan funds availability at
2real estate closings.
Analysis by the Legislative Reference Bureau
This bill establishes requirements for the delivery of loan funds at certain loan
closings secured by a mortgage on real property. Under the bill, a lender may not
permit or require a borrower to complete a loan settlement unless the lender
unconditionally delivers qualified loan funds to the borrower in a transaction
immediately upon completion of the loan settlement. If a settlement agent is to
deliver qualified loan funds to the borrower in a transaction, a lender may not permit
or require a borrower to complete a loan settlement unless the lender unconditionally
delivers qualified loan funds to the settlement agent before or immediately on
completion of the loan settlement. The bill defines qualified loan funds as a wire
transfer, a cashier's check, a negotiable check on which the lender or an affiliate of
the lender is the payer, or the transfer of loan funds into an account maintained by
the lender or an affiliate of the lender in favor of the settlement agent or the borrower.
The people of the state of Wisconsin, represented in senate and assembly, do
enact as follows:
SB417, s. 1
3Section
1. 708.10 of the statutes is created to read:
SB417,1,4
4708.10 Loan funds at closings. (1) Definitions. In this section:
SB417,1,65
(a) "Affiliate" means, with respect to any lender, any person that controls, is
6controlled by, or is under common control with, the lender.
SB417,2,2
1(b) "Borrower" means a person who borrows money from a lender to finance a
2transaction under a loan that is secured by a real estate mortgage.
SB417,2,53
(c) "Lender" means all lenders identified under s. 706.11 (1), loan solicitors, as
4defined under s. 440.71 (2), and savings and loan associations organized under ch.
5215.
SB417,2,116
(d) "Loan settlement" means the execution by the borrower of a promissory
7note, mortgage and any other documents that are required by the lender to be signed
8as a condition to the granting of a loan to the borrower and the delivery of the
9proceeds of the loan to the borrower or, in the case of a loan subject to a right of
10recision under
15 USC 1635, the expiration of the borrower's right to recision under
1115 USC 1635.
SB417,2,1212
(e) "Qualified loan funds" means any of the following:
SB417,2,1313
1. Wire transfer.
SB417,2,1414
2. Cashier's check.
SB417,2,1615
3. A check that is negotiable, as defined in s. 403.104 (1), and on which the
16lender or an affiliate of the lender is the payer.
SB417,2,1817
4. Transfer of the loan funds by the lender into an account maintained by the
18lender or an affiliate of the lender in favor of the settlement agent or borrower.
SB417,2,2119
(f) "Settlement agent" means a person retained by the lender who provides
20services that benefit the lender and borrower in a transaction and who receives and
21disburses money in connection with the transaction.
SB417,2,2422
(g) "Transaction" means a transaction under s. 706.01 (1) and includes a
23refinancing of an existing indebtedness that is secured by a mortgage on real
24property.
SB417,3,3
1(h) "Wire transfer" means the electronic funds transfer system of the federal
2reserve banks. When funds are transferred by wire transfer, delivery of the funds
3is complete when a transaction number has been assigned to the wire transfer.
SB417,3,7
4(2) Loan fund dispersal. (a) A lender may not permit or require a borrower
5to complete a loan settlement unless the lender unconditionally delivers qualified
6loan funds to the borrower in a transaction immediately upon completion of the loan
7settlement.
SB417,3,118
(b) If a settlement agent is to deliver qualified loan funds to the borrower in a
9transaction, a lender may not permit or require a borrower to complete a loan
10settlement unless the lender unconditionally delivers qualified loan funds to the
11settlement agent before or immediately on completion of the loan settlement.
SB417,3,14
13(1) This act first applies to transactions entered into on the effective date of this
14subsection.
SB417,3,17
16(1)
This act takes effect on the first day of the 3rd month beginning after
17publication.
