2009 - 2010 LEGISLATURE
February 17, 2009 - Introduced by
Joint Committee on Finance, by request of
Governor James E. Doyle. Referred to Joint Committee on Finance.
SB62,1,2
1An Act relating to: state finances and appropriations and making diverse other
2changes in the statutes.
Analysis by the Legislative Reference Bureau
Commerce and Economic Development
Economic Development
Under current law, the Department of Commerce (Commerce) may designate
a portion of the state as a development zone, a development opportunity zone, an
enterprise development zone, an agricultural development zone, an enterprise zone,
an airport development zone, or a technology zone. Commerce may also certify
persons who agree to undertake certain eligible activities in one of the designated
zones. Eligible activities include job creation, environmental remediation, and
capital investment. Persons who obtain certification are eligible for tax benefits.
This bill consolidates the development zones, enterprise development zones,
agricultural development zones, technology zones, and airport development zones
(five development zone programs) into a program that provides tax benefits to
persons who enter into a contract with Commerce to undertake eligible activities
anywhere in the state. Eligible activities under the bill include all of the following:
1. Projects that result in the creation and maintenance of jobs paying wages
and providing benefits at a level approved by Commerce.
2. Projects that involve a significant investment of capital in new equipment,
machinery, real property, or depreciable personal property.
3. Projects that involve significant investments in the training or reeducation
of employees for the purpose of improving the productivity or competitiveness of the
business of the person.
4. Projects that will result in the location or retention of a person's corporate
headquarters in Wisconsin or that will result in the retention of employees if the
person's corporate headquarters are located in Wisconsin.
Commerce may allocate tax benefits under the consolidated program up to the
total amount remaining to be allocated under the five development zone programs
on the effective date of this bill. Tax benefits are allocated under the bill only after
the person has verified to Commerce that the person has met the performance
obligations established under the contract.
The value of tax benefits for which a person is eligible under the new tax credit
program depends on the number of jobs created, the amount of the capital
investment made, the amount of training or reeducation provided to employees, or
the number of jobs retained by having corporate headquarters located in Wisconsin.
Under the bill, Commerce may award additional tax benefits to a person that
conducts eligible activities in an economically distressed area or if the eligible
activities benefit members of a targeted group. The bill requires Commerce to
develop a methodology for designating an area as an economically distressed area.
The bill defines targeted groups to include persons who reside in an area designated
by the federal government as an economic revitalization area, persons who are
eligible for child care assistance, persons who are food stamp recipients, or persons
who are economically disadvantaged.
The bill requires the Legislative Audit Bureau, by no later than July 1, 2014,
to prepare a financial and program evaluation audit of the consolidated economic
development tax benefit program created by the bill.
Under current law, the Wisconsin Health and Educational Facilities Authority
(WHEFA) may issue bonds to finance certain projects of health or educational
institutions, to refinance outstanding debt of health or educational institutions, and
to finance a purchase of the state's right to receive any of the payments under the
Attorneys General Master Tobacco Settlement Agreement of November 23, 1998.
Projects of health or educational institutions that may be financed include, among
others, the acquisition of a hospital, the construction or operation of an ambulatory
surgery center or home health agency, and the construction, remodeling, furnishing,
or equipping of a health or educational facility or related structure.
This bill authorizes WHEFA to issue bonds to finance any project undertaken
by a research institution for a research facility, or to refinance outstanding debt of
a research institution. A research institution is defined in the bill as an entity that
provides or operates a research facility. A research facility is defined in the bill as
a building, institution, place, or agency of a nonprofit entity that is or will be used
in whole or in part for the advancement of scientific, medical, or technological
knowledge and that does not have a specific commercial objective. Project activities
for which WHEFA may issue bonds include construction, acquisition, remodeling,
furnishing, and equipping of research facilities, related structures, and structures
or items that are useful for the operation of research facilities.
This bill provides a total of $2,630,000 in grant moneys to certain organizations
in the building trades to provide job training and retraining programs, including
training in green building and the installation of alternative energy systems. The
following organizations receive funds under this bill: 1) the Wisconsin Regional
Training Partnership/Building Industry Group Skilled Trades Employment
Program; 2) Painters and Allied Trades, District Council 7; 3) Wisconsin State
Council of Carpenters; 4) Wisconsin Pipe Trades Association, Local 75; 5) Wisconsin
Laborers' District Council; 6) Wisconsin Operating Engineers; and 7) International
Brotherhood of Electrical Workers. As a condition of receiving the grant moneys,
each organization must enter into a contract with Commerce that specifies
permissible uses of the grant moneys and requires the organization to comply with
reporting and accountability measures.
Business organizations and financial institutions
The federal Secure and Fair Enforcement for Mortgage Licensing Act of 2008
(SAFE Act) establishes certain nationwide standards for mortgage loan originators.
If a state does not meet a certain level of compliance with the federal standards
established under the SAFE Act, the federal Department of Housing and Urban
Development must undertake the licensing and registration of mortgage loan
originators operating within that state. One required component under the SAFE
Act is that states must license and register mortgage loan originators through the
Nationwide Mortgage Licensing System and Registry (NMLSR).
This bill makes numerous changes, both substantive and stylistic, in the
statutes relating to the regulation of mortgage loan originators, mortgage brokers,
and mortgage bankers (mortgage regulatory provisions). The bill requires the
division of banking (division) in the Department of Financial Institutions (DFI) to
participate in NMLSR and authorizes the division to process and maintain mortgage
loan originator licenses through, and register mortgage loan originators with,
NMLSR.
The bill modifies various definitions applicable to all mortgage regulatory
provisions, thereby changing the scope of regulation. Under the bill, a "residential
mortgage loan" is any loan primarily for personal, family, or household use that is
secured by a lien or mortgage, or equivalent security interest, on a dwelling or
residential real property located in this state. With certain exceptions, a "mortgage
loan originator" under the bill is an individual who, for compensation or gain, takes
a residential mortgage loan application or offers or negotiates terms of a residential
mortgage loan. However, certain persons are exempt from all mortgage regulatory
provisions, including a mortgage loan originator who is an employee of a depository
institution or its regulated subsidiary and who is registered with NMLSR. A
"depository institution" is a federally chartered or state-chartered bank, savings
association, or credit union. The bill essentially maintains the current law
definitions of "mortgage banker" and "mortgage broker," but eliminates the
exceptions under current law to these definitions and replaces them with new
exceptions. Among the exceptions under the bill to the definitions of "mortgage
banker" and "mortgage broker" are depository institutions and regulated
subsidiaries of depository institutions.
The bill includes a number of changes to current law with respect to the
regulation of mortgage loan originators, including the following:
1. The bill requires that the division's licensing of mortgage loan originators be
processed through NMLSR and that all mortgage loan originator licensees be
registered with NMLSR.
2. The bill requires each applicant for a mortgage loan originator license to
furnish to NMLSR specified information concerning the applicant's identity,
including the applicant's fingerprints, personal history, and authorization for credit
and criminal history checks.
3. The bill specifies certain disqualifying factors preventing the issuance of a
mortgage loan originator license, including that the applicant has had a mortgage
loan originator license revoked or has been convicted of a felony within a specified
period. As derived from the SAFE Act, an applicant may be issued a mortgage loan
originator license only if the applicant has demonstrated financial responsibility,
character, and general fitness such as to command the confidence of the community
and to warrant a determination that the mortgage loan originator will operate
honestly, fairly, and efficiently under applicable law.
4. The bill modifies current law requirements related to professional education
and testing for mortgage loan originators. The bill modifies education and testing
requirements, requires each education course to be reviewed and approved by
NMLSR, and requires each test to be developed by NMLSR and administered by a
test provider approved by NMLSR.
5. The bill requires each mortgage loan originator to be covered by a surety
bond in an amount, as determined by the division, reflecting the dollar amount of
residential mortgage loans originated by the mortgage loan originator.
6. The bill requires each mortgage loan originator to submit to NMLSR an
annual report of condition.
7. Under the bill, each mortgage loan originator must be issued a unique
number or other identifier (unique identifier). The bill requires any person
originating a residential mortgage loan to place the person's unique identifier on all
residential mortgage loan application forms, solicitations, and advertisements.
8. The bill contains provisions relating to confidentiality of information
provided by the division to NMLSR, but allows NMLSR to provide public access to
information relating to the employment history of, and publicly adjudicated
disciplinary and enforcement actions against, mortgage loan originators. The
division must regularly report to NMLSR violations and enforcement actions
involving mortgage loan originators.
The bill also includes some changes to current law relating to the regulation of
mortgage bankers and mortgage brokers, including requiring mortgage bankers and
mortgage brokers to annually submit call reports to NMLSR and to maintain surety
bonds in the amount of $300,000 and $120,000, respectively, and a minimum net
worth of $250,000 and $100,000, respectively.
The bill creates a number of violations, and modifies certain current-law
violations, relating to prohibited acts and practices of mortgage bankers, mortgage
brokers, mortgage loan originators, and officers and directors of corporate mortgage
bankers and mortgage brokers, including the following:
1. The bill modifies and expands current law provisions to prohibit materially
false or deceptive statements or representations or knowing omissions of material
facts.
2. The bill prohibits mortgage bankers and mortgage brokers from paying
commissions to unassociated or unlicensed mortgage loan originators.
3. The bill prohibits mortgage bankers and mortgage brokers from conducting
business at an unlicensed office.
4. The bill prohibits the impeding of an investigation or examination or the
denial of access to or destruction of books, records, or other information that the
division is authorized to obtain.
5. The bill prohibits contracts with borrowers that provide in substance that
the mortgage banker, mortgage broker, or mortgage loan originator may earn a fee
through "best efforts" to obtain a residential mortgage loan even if no loan is actually
obtained for the borrower.
6. The bill prohibits the solicitation or advertisement of interest rates, points,
or other financing terms unless the terms are actually available at the time of the
solicitation or advertisement.
7. The bill prohibits assisting, aiding, or abetting any person in unlawfully
conducting mortgage-related business without a valid license.
8. The bill prohibits withholding payments or making payments, threats, or
promises for the purpose of influencing a person's independent judgment in
connection with a residential mortgage loan or withholding payments or making
payments, threats, or promises to a property appraiser for the purpose of influencing
the appraiser's independent judgment with respect to the value of the property.
9. The bill prohibits requiring a borrower to obtain property insurance coverage
in an amount exceeding the replacement cost of improvements on the property.
The bill increases the penalty for violations from a maximum of $2,000 to a
maximum of $25,000. This increase applies both to civil forfeitures imposed by the
division as administrative assessments and to criminal fines imposed by a court. The
bill does not change any term of incarceration for a violation. The bill expands the
number of violations for which these penalties are applicable. Under current law,
these penalties apply only to specified violations. Under the bill, these penalties may
be applied to any violation of a mortgage regulatory provision or of any rule
promulgated by the division under a mortgage regulatory provision. The bill allows
the division to order restitution in connection with a violation in the same manner
in which the division may impose an administrative assessment for the violation.
The bill expands the number of violations for which a civil cause of action may be
brought to correspond to the expansion of violations for which penalties are
applicable. The bill increases the maximum limit for recovery of certain damages in
civil actions from $2,000 to $25,000.
Housing
Under current law, Commerce awards grants and loans to low income persons
or families to defray housing costs and to community based organizations to provide
housing opportunities to low income persons and families. The grants and loans are
funded by general purpose revenue.
This bill directs Commerce to make a one-time grant of not more than $200,000
to the Tenant Resource Center in Madison, from the appropriation that funds the
grants and loans described above, to provide foreclosure education and assistance to
tenants. The bill increases the appropriation for fiscal year 2008-09 by $200,000.
courts and procedure
Under current law, if the owner of real property that is subject to a mortgage
defaults in making payments, the mortgagee, which is usually a financial
institution, may commence a foreclosure action. If the mortgagee prevails and
obtains a foreclosure judgment, the property owner (mortgagor) may redeem the
property before a sheriff's sale by paying the amount of the judgment to the clerk of
court. If the mortgagor does not redeem the property, it will be sold at a sheriff's sale
after six months to one year, depending on the type of property and whether the
mortgagor will owe a deficiency, which is the amount by which the judgment exceeds
the amount obtained at the sale.
This bill addresses foreclosure reconveyances. A foreclosure reconveyance is
defined as a transaction under which the mortgagor transfers title to residential real
property in foreclosure to a third party, called a foreclosure purchaser in the bill. The
foreclosure purchaser redeems the property and subsequently conveys, or promises
to subsequently convey, to the mortgagor (foreclosed homeowner) an interest in the
property that allows the foreclosed homeowner to remain in possession of the
property, such as an interest in a land contract, a purchase agreement, an option to
purchase, or a lease.
Under the bill, if a foreclosure purchaser enters into a foreclosure
reconveyance, it must be by a written contract. The bill specifies the information that
the contract must contain and requires that duplicate copies of a completed notice
of cancellation be attached to the contract. The foreclosed homeowner may cancel
the foreclosure reconveyance contract by delivering personally or by certified mail
a signed and dated notice of cancellation to the foreclosure purchaser within five
business days after the foreclosed homeowner signs the contract. The bill prohibits
any waiver of any of the foreclosure reconveyance provisions, except for the five-day
right to cancel the contract if the property is to be sold at sheriff's sale within those
five days and the foreclosed homeowner waives his or her right to cancel in a
handwritten statement.
The bill contains various prohibitions and requirements that apply generally
to foreclosure purchasers, including:
1. Prohibiting a foreclosure purchaser from entering into a foreclosure
reconveyance unless, among other things, the foreclosure purchaser verifies that the
foreclosed homeowner has the ability to pay for the subsequent conveyance of the
interest back to the foreclosed homeowner.
2. Requiring a foreclosure purchaser either to ensure that title to the dwelling
has been reconveyed to the foreclosed homeowner or to pay to the foreclosed
homeowner consideration of at least 82 percent of the fair market value of the
property within 150 days of either the eviction from the property of, or the voluntary
relinquishment of possession of the property by, the foreclosed homeowner. If the
foreclosure purchaser pays the foreclosed homeowner, the foreclosure purchaser
must provide a detailed accounting of the basis for the payment amount on a form
prescribed by the attorney general, in consultation with the secretary of agriculture,
trade and consumer protection.
3. Prohibiting a foreclosure purchaser from entering into repurchase or lease
terms, as part of the subsequent conveyance, that are unfair or commercially
unreasonable and from engaging in any other unfair conduct.
4. Prohibiting a foreclosure purchaser from acting as an advisor or consultant
or in any other manner representing that the foreclosure purchaser is acting on
behalf of the foreclosed homeowner.
5. Prohibiting a foreclosure purchaser from taking certain actions, such as
accepting from the foreclosed homeowner any instrument of conveyance of any
interest in the residence in foreclosure or transferring any interest in the residence
to a third party, before the time for the foreclosed homeowner to cancel the
transaction has fully elapsed.
The bill specifies penalties that apply if a foreclosure purchaser violates any of
the provisions, authorizes a court to order punitive damages for a violation, and
specifies that a violation shall be considered a fraud and that a foreclosed homeowner
may bring an action for damages. The bill also provides that a court must grant a
90-day stay in an eviction action if the property was the subject of a foreclosure
reconveyance and the defendant was the owner of the property, has continuously
occupied the property since it was conveyed to a third party, and has either
commenced an action concerning the foreclosure reconveyance or asserts fraud or
other deceptive practices in connection with the foreclosure reconveyance.
The bill also addresses foreclosure consultants. With numerous specified
exceptions, a foreclosure consultant is defined as a person who offers to a foreclosed
homeowner to perform for compensation any of various services that will assist the
foreclosed homeowner with the loan default or foreclosure, such as stopping the
foreclosure sale, assisting the foreclosed homeowner to obtain a loan, or saving the
property from foreclosure.
The bill provides that any agreement (contract) between a foreclosure
consultant and a foreclosed homeowner for the rendition of services must be in
writing, and that a foreclosed homeowner who enters into a contract for services with
a foreclosure consultant has the right to cancel the contract without penalty within
three days by delivering, personally or by certified mail, a notice of cancellation to
the foreclosure consultant. The bill specifies the information that the contract must
contain and requires that duplicate copies of a notice of cancellation be attached to
the contract.
The bill sets out actions by a foreclosure consultant that are violations and
provides that the Department of Agriculture, Trade and Consumer Protection
(DATCP) may investigate violations of the requirements under the bill and may
commence an action to restrain a violation or to recover a forfeiture for a violation.
The Department of Justice is required to furnish legal services to DATCP. The bill
also provides that any person suffering pecuniary loss because of a violation of the
requirements under the bill may commence an action against the violator.
Under current law, if property that is subject to a mortgage is leased after the
lien of the mortgage attaches, the lease is subject to termination if the interest of the
mortgagor terminates. Thus, the lease of a tenant to property that is subject to a
mortgage terminates and the tenant may be evicted, if the landlord loses the
property in a foreclosure action.
This bill requires the plaintiff in a foreclosure action against residential rental
property to provide the tenants of the property with notice that a foreclosure action
has been filed, notice that the plaintiff has been granted judgment, along with notice
of the date on which the redemption period ends, and notice of the date and time of
the hearing to confirm the sale of the property. The bill also requires a landlord to
notify any prospective tenant in writing that a foreclosure action has been
commenced and, if judgment has been entered, the date on which the redemption
period ends. In addition, the bill provides that a tenant may retain possession of the
rental unit for up to two months after the end of the month in which the sale of the
property is confirmed, and may withhold rent in the amount of the security deposit
for the last period during which the tenant actually retains possession of the rental
unit.
Under current law, the director of state courts has established a consolidated
electronic system that contains information about cases filed in the circuit courts in
the state, including both civil cases and criminal cases. This system, known as the
Consolidated Court Automation Programs (CCAP), contains a variety of information
about circuit court cases. The information regarding case data contained on the
CCAP system is available in the court's Internet Web site called the Wisconsin
Circuit Court Access (WCCA). This bill prohibits the placing of any information on
a civil action concerning the removal of a tenant from a residential rental property
in the WCCA Internet Web site if that removal was the result of a mortgage
foreclosure of the residential rental property.
Education
This bill directs the Wisconsin Technical College System Board to award to
technical college district boards at least $1,000,000 annually in training program
grants for training in advanced manufacturing skills, with priority given to welding.
Health and human services
Hospital assessment and Medical Assistance
Under current law, the state assesses hospitals a total of $1,500,000 each year.
The amount each hospital pays is allocated in proportion to the hospital's gross
private pay revenues. The hospital assessment revenue is used to support the
Medical Assistance (MA) Program, long-term care programs, and community-based
mental health services.
This bill increases the amount of the hospital assessment to $275,445,110 for
state fiscal year (SFY) 2008-09. The bill provides that the amount of the assessment
in future years shall be established in the biennial budget act. The bill charges the
total assessment amount against eligible hospitals in proportion to their gross
patient revenues. Under the bill, all hospitals in the state other than critical access
hospitals, institutions for mental diseases, and certain psychiatric hospitals that are
not a satellite of an acute care hospital from the assessment are eligible hospitals.
The bill provides that a specified portion of the assessment revenue shall be
used to pay hospitals for services provided under MA and transfers the remaining
amount of assessment revenue to the MA trust fund. Under the bill, the amount
allocated to hospitals for MA services in SFY 2008-09, including both the state and
federal share under MA, is the amount of the hospital assessment revenue divided
by 57.75 percent, which is $476,961,200. In SFY 2008-09, $79,604,800 in
assessment revenue is transferred to the MA trust fund. Of the amount transferred
to the MA trust fund, 0.5 percent ($398,000) is appropriated to the Department of
Health Services (DHS) for the administrative costs associated with the hospital
assessment and the other $79,206,800 is appropriated for MA. For SFY 2008-09, the
bill also appropriates general purpose revenue in the amount of $750,000 for
supplemental payments to certain rural hospitals in counties that border another
state. Finally, in SFY 2008-09, the bill reduces the amount of general purpose
revenues appropriated for MA by $78,456,800.
Beginning in SFY 2009-10, the amount of payments to hospitals for MA
services from hospital assessment revenue plus the federal share of MA is equal to
the amount of the total assessment revenue divided by 61.68 percent. The remainder
of the hospital assessment revenue is transferred to the MA trust fund. One-half of
one percent of the transferred amount is appropriated to DHS for administrative
costs associated with the hospital assessment. Also beginning in SFY 2009-10, the
bill requires DHS to pay the University of Wisconsin Hospitals and Clinics
$3,000,000 annually from the MA trust fund for the costs of providing
uncompensated care.
The bill provides that DHS shall spend the portion of the hospital assessment
revenue that is allocated to pay for hospital services under MA on the following:
increased reimbursement for eligible hospitals that are reimbursed on a
fee-for-service basis; payments to health maintenance organizations (HMOs) that
the HMOs must use to increase reimbursement to eligible hospitals; an increase of
$2,744,000 in supplemental payments to certain rural hospitals; $8,000,000 in
supplemental payments to hospitals that satisfy criteria established by the
American College of Surgeons for classification as a Level I adult trauma center; and
supplemental payments to hospitals based on performance, under a methodology
developed by DHS.
The bill provides that if the federal government does not pay the federal share
under MA for any payment made with hospital assessment revenue, DHS must
refund to hospitals the amount of the hospital assessment revenue used to make the
payment. DHS must make refunds to hospitals in proportion to the percent of the
assessment that the hospitals paid. In addition, DHS must recoup any payments
that are made with hospital assessment revenue and for which the federal
government does not pay the federal share under MA.
In addition to the decrease in general purpose revenue appropriated for MA in
association with the hospital assessment, the bill increases the amount of general
purpose revenue appropriated for MA for SFY 2008-09 by $50,000,000.
Under current law, a hospital must be approved by DHS to operate in this state.
Upon approval, DHS issues a hospital a certificate of approval. This bill provides
that DHS must issue a single hospital certificate of approval for the University of
Wisconsin Hospitals and Clinics Authority (UWHCA) that applies to all of UWHCA's
inpatient and outpatient facilities that satisfy DHS's requirements for a hospital and
for which UWHCA requests approval. The bill also provides that all facilities listed
on the hospital certificate of approval for UWHCA are a hospital for purposes of
reimbursement under MA.
Public assistance
Under current law, $365,197,900 in federal block grant aids is appropriated to
the Department of Children and Families (DCF) in fiscal year 2008-09 for aids to
individuals and organizations. Of that amount, $355,352,000 is allocated for child
care services for persons participating in the Wisconsin Works (W-2) program. This
bill increases that appropriation by $47,175,000 and that allocation by $20,384,400.
The bill also increases allocations for fiscal year 2008-09 of federal child care
development funds and federal moneys received under the Temporary Assistance for
Needy Families block grant program for emergency assistance and child care
administration.
Under current law, $121,021,700 in general purpose revenue is appropriated
to DCF in fiscal year 2008-09 for administration and benefits payment under the
W-2 program and other Temporary Assistance to Needy Families programs. This
bill decreases that appropriation by $22,529,000.