Your rights during a foreclosure in Wisconsin
Wisconsin requires foreclosures on mortgages to be conducted judicially through the courts. Depending on whether or not a borrower invokes his or her rights, the process can take as little as four months, or it can take more than a year. The actual process to foreclose on a residential mortgage in Wisconsin is fairly straightforward. It’s detailed in Chapter 846 of the Wisconsin Statutes.
Getting the foreclosure started
To give borrowers sufficient time to try to avoid foreclosure, federal law requires a lender to wait for 120 days after a mortgage becomes delinquent before a lender can file for foreclosure. Once the foreclosure complaint is filed and the summons is served, the borrower has 20 days to file an answer or otherwise plead to the complaint. Affirmative defenses to the lawsuit might also be pled. These might include claims under the Fair Debt Collection Practices Act, the Truth in Lending Act, the Real Estate Settlement Procedures Act, or any other federal and state laws.
Defendants in Wisconsin have the right to apply for foreclosure mediation. A notice of that right along with how to request mediation should be attached to the complaint and served with it. Alternatives to foreclosure that might be discussed in mediation can include a loan modification, a forbearance agreement, a short sale, or even a deed in lieu of foreclosure.
Reinstating the mortgage
At any time prior to entry of a judgment for foreclosure, the borrower has the right to reinstate the mortgage by paying all arrearages, penalties, court costs and the lender’s legal fees. The lender must accept the full amount to reinstate the mortgage so long as it’s tendered in a timely manner. If the borrower falls into arrears again in the future, the foreclosure process starts again.
A registered lis pendens operates as notice to the world that the property subject to the foreclosure suit is in litigation. Once a lis pendens is registered, the lender must wait 20 days before it can seek its judgment for foreclosure.
The foreclosure judgment
Wisconsin civil procedure allows a lender to bring its motion for a judgment of foreclosure in any one of three ways:
- A motion for default judgment for failure to answer or otherwise plead
- Summary judgment if defendant has answered, and there is no genuine issue of material fact
- A trial verdict in favor of the lender
The right to redeem the property
After a judgment for foreclosure has been entered, the borrower still has the right to redeem the property. Redemption is entirely different than reinstatement. Redemption can only occur within a specified time period. As per Wisconsin Assembly Bill 720, if a property isn’t commercial, the borrower has six months from the date of judgment of foreclosure to redeem the property if the lender is seeking a deficiency judgment against the borrower. If the lender waives its right to a deficiency judgment, the redemption period is shortened to three months. Most lenders waive a deficiency. To redeem a property, the judgment amount must be paid in full with statutory interest. Should the borrower enter into a good faith listing agreement to sell the property through a real estate broker, courts are allowed to grant short extensions of the redemption period.
The sheriff’s sale
The sheriff’s sale to the highest bidder can be held after expiration of the redemption period. The lender must comply with strict notice provisions. If the former homeowner hasn’t left the premises after the sheriff’s sale, an eviction can be scheduled. After removal by eviction, the former homeowner becomes a trespasser on the property.