LRB-1999/2
ALL:all:all
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.
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