Realty Executives Elite

Verna's Archived Notes
September 2002 Archives
Verna's 2001 Archived Notes by the Month
Verna's 2000 Archived Notes by the Month
Verna's 1999 Archived Notes by the Month
Search this Site
Back to the Start Page
Verna's Notebook Archived Issues

GREETINGS FROM VERNA ACKER
REALTY EXECUTIVES Elite
414.534.7400
FOR YOUR INFORMATION:
Real Estate Information from Western Racine County; Waterford, WI 53185
Newsletter, September 13, 2002

TABLE OF CONTENTS:
Buyer Notification Service Revisited
Use-Value Assessment
Automated Underwriting - What is it and What can it do for you?

BUYER NOTIFICATION SERVICE REVISITED
We heard from many of you regarding the Buyer Notification Service that we are implementing. But, many did not respond. Remember: we will no longer be listing the properties that have come on the market recently. To receive that information, you must send us an e-mail requesting the service and spelling out the criteria that interests you. Be sure to include some detail, areas, and price range. ALSO, tell how whether you want to be notified within hours of a new listing, weekly, monthly, quarterly… Simple reply to this message and give me your information. We are hearing some excellent feed back from people who are already a part of the service. We look forward to hearing from you.

USE-VALUE ASSESSMENT
There have been recent changes in the Use-Value Assessment law on the state level. For a bit of clarification, I am copying a question with its answer from the Wisconsin Realtors® Association e-letter, “Designated Realtor® Hottips”, September 9, 2002:

Use-Value Assessment
Question:
A buyer is considering the purchase of a property. The condition report section D.1B states 'Land sold with the property has been valued under Wisconsin's Statute 70.32(2)(r) use value assessment”. The seller has checked that area YES. Buyer is questioning what this means? Where can they get more information?

Answer:
Under the use-value assessment method of assessing Wisconsin agricultural land for property tax purposes, farmland is assessed based upon its agricultural productivity rather than its potential for development or fair market value. In a use-value system, the use of the land is the most important factor in determining its assessed value.

Use-value applies only to land that is devoted primarily to agricultural use. The assessed value of the farmland is based on the income that could be generated if the land were rented for agricultural use.

Owners who change the use of agricultural land to a nonagricultural use, so that the property is no longer classified and valued as agricultural land, must pay a penalty. The penalty is equal to the difference between the property taxes that would have been levied on the land if the land had been assessed at full market value and the property taxes levied on the last for the past two years that the land was valued under the use-value assessment system. The local taxation district administers the penalty.

A seller has a duty to disclose if the property has been assessed under the use-value system. Wis. Stat. 74.48 (1)(b) required sellers of agricultural land that has been valued under the use-value assessment system to notify buyers that the land has been valued under the use-value assessment system. If a buyer changes the use of the land, the buyer may have to pay the penalty.

If the buyer intends to develop the farmland or otherwise change the use of the land being purchased, the buyer's offer to purchase should include an investigation contingency. The contingency should give the buyer ample time to confer with the local taxing authorities if the buyer wants to know what the amount of the penalty would be, and to obtain whatever other pertinent information that the buyer needs before proceeding with the purchase.
WEB SITES that offer more information:
www.wra.org/Resources/resource_pages/use_value_resources.htm
www.wra.org/Resources/resource_pages/use_value_resources.htm
www.wra.org/online_pubs/wr0902/wr0902.htm
www.wra.org/online_pubs/wr0902/wr0902.htm

AUTOMATED UNDERWRITING
What is it?
What can it do for you?

Lenders have a new tool to use to help homebuyers qualify for financing. This tool is called "Automated Underwriting" and it will help many prospective home buyers qualify for a purchase mortgage that they may not have qualified for in the past.

Automated Underwriting became possible with advancements made in the secondary market for the sale of fixed rate loans and the credit reporting industry. Freddie Mac and Fannie Mae have studied the repayment patterns and default history on millions of their mortgages over the last twenty years. By analyzing these payment and default patterns, Freddie and Fannie are able to reliably predict the repayment history of a new loan based on the credit profile of the borrower and the structure of the new loan. Credit reporting agencies have also quantified a person's credit history into a single number called a credit score.

An automated underwriting system, like Loan Prospector or Desktop Underwriter, uses computer software to combine the risk profiles and credit scores of a new loan request and provides a loan recommendation. Lenders download application information to the automated underwriting system, which analyzes the information and provides a loan answer in minutes. Not every loan type is eligible for automated underwriting but most fixed rate loans or secondary market ARM (Adjustable Rate Mortgage) loans are.

How can this process help you?
It will help the borrower get a preliminary loan answer faster than was ever possible before. While the borrower information is still subject to verification and confirmation, the buyer and seller have an early, preliminary answer on the loan request.

If the borrower's credit profile is good, they may qualify with a higher debt ratio and higher monthly payments than normally permitted. Many borrowers have been approved with debt ratios higher than the normal debt ratios of 33% housing and 38% all debt. This allows borrowers to carry more consumer debt and still qualify for a mortgage loan.

Lenders may also be able to require less documentation for the loan based on the Automated Underwriting answer. Reduced appraisal requirements and the use of “stated income” to qualify are two such examples.

Loans that may have been denied in the past due to debt ratios, debt levels, limited job history or difficult income verification may now get approved provided the borrower has an excellent credit risk profile and a good credit history.

Automated Underwriting is just one of the great pieces of technology that M&I Bank has available to help you sell more homes. Talk to Pam Lanting, your M&I Bank Mortgage Loan Specialist, for more information on how this system can help you and your clients.