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If you are a homeowner with a mortgage, it is likely you have had or may have concerns in the future about the foreclosure process in Wisconsin. Sometimes people just get into a situation, like being laid off, where they simply cannot afford to make their house payments anymore. Or they have a severe illness or injury that renders them unable to keep up with the mortgage payments. The reasons people can go into foreclosure are numerous. Still, there is a great deal of confusion and uncertainty regarding what a borrower can do if they find themselves facing potential foreclosure. Read on to find out more about Wisconsin foreclosure and real estate law.
Wisconsin Foreclosure Law
In order to understand the foreclosure process in Wisconsin, you need to know a few basic things. First, a foreclosure proceeding in a Wisconsin court is known as a quasi-in rem proceeding. For those who do not speak legalese, that means the foreclosure court sits in equity, which means that the court, looking at the individual facts and circumstances, can do what the court thinks is fair in that particular situation. These proceedings are equity proceedings because the court does not want to just unilaterally take someone's home away. They want to provide chances for the borrower to fix the problem before they grant a foreclosure judgment.
Next, you have to understand that Wisconsin is a judicial foreclosure state, which means there must be, at minimum, notice, an opportunity for the borrower to respond, and a hearing held before a foreclosure is granted. Some states do not require a judicial foreclosure, and the process happens automatically, with little chance for the borrower to reach an agreement with the lender or try and argue their side of the matter before an impartial judge.
You must understand what the legal system means by the term "default." Usually, when a borrower defaults on the loan agreement, it is for non-payment, but when it comes to home loans, that can also mean failure to pay real estate tax or to purchase and maintain a certain amount of insurance on the property. Review your loan agreement carefully; the terms of the agreement should advise the borrower on what is considered default and how the borrower will be noticed. Be careful; many borrowers tend to "miss" whatever notice of default they receive, and then they scramble to catch up with the process unfolding.
You should also know that it may be possible to stop foreclosure. The first thing to do when you know you can't make your mortgage payment is to reach out to the mortgage service company and see if they can offer you a better rate or some type of deferral until your situation improves. If the foreclosure action has already been filed, some counties in Wisconsin do offer a mediation program that the borrower and lender can participate in (for a fee) to attempt to stop the foreclosure. From the perspective of the lender, it's easier to just get you back on track financially than to go to all the effort and expense of a foreclosure action and reseal of the property, not to mention they may have to deal with a deficiency action as well if deficiency is not waived. Deficiency is the difference between what the bank loaned you for the home and what the bank gets in the property's resale. Sometimes the home sells for less than what was loaned for it, which is a deficiency. Some lenders will hold you responsible for the deficiency, and some won't. Read your loan agreement carefully.
Wisconsin Redemption Period
If the foreclosure goes through, you could still get your home back. Wisconsin is one of the states that allows what is known as "redemption." The redemption period can vary between two months, six months, and 12 months, depending on the situation. If the borrower abandons their home, it is only two months, six months for your average residential property where the borrower remains in residence, and 12 months for properties 20 acres or more. Redemption is the period of time the borrower is allowed to get their home back before it is sold to cover the debt the borrower has not paid. The right of redemption is when the borrower is given time to work on getting the money necessary to keep the loan current and keep their house. That can mean taking out a second loan or possibly getting some type of refinancing through the original lender or through another lending company.
How Long Does a Wisconsin Foreclosure Take?
It depends on your loan terms and how hard you work to fight the foreclosure. The process can move very quickly without adding in the redemption period if the borrower does nothing. As you can see in the general timeline given below, once the loan is in default, the bank can move forward with the foreclosure process as long as it has adhered to the terms of the agreement you signed with them. Again, this is another example of why you should read any agreements you sign very carefully, and not agree to a home loan that will not guarantee you adequate notice and an opportunity to cure if you find yourself in default. Most reputable lenders will include this in the agreement, but the burden is on you to know what you agree to.
Once the complaint for foreclosure has been filed, you have 20 days to answer or 40 days if the bank has to serve you by publication (by publishing a notice in a local newspaper). If you answer, the matter will be set for a hearing, depending on the court's calendar. If you don't file an answer, the bank will get the default, and the redemption period will start to run. If you want to fight, you can get a default set aside, but it is difficult and costly. You should file a timely answer to avoid creating problems for yourself. It would be best if you consulted with an experienced Wisconsin real estate attorney or foreclosure defense attorney to assist with your matter.
Wisconsin Foreclosure General Timeline:
- Bank and borrower enter into a mortgage agreement.
- The borrower misses a payment or defaults in some other way
- Payment becomes at least 30 days overdue, and no negotiation between bank and borrower
- The borrower typically sends a notice of default, depending on the terms of the agreement.
- If the lender responds, they can still work with the lender, but otherwise the foreclosure process begins
- Bank files for foreclosure and serves foreclosure paperwork on the borrower
- The borrower has 20 days to file an answer and any counterclaims if personal service is made, and 40 days if service is made by publication
- If the borrower does not file an answer, the lender can ask the court for a default judgment
- The matter is set for a hearing
- If the borrower does not have a good argument for stopping the foreclosure or does not show up, the lender gets the foreclosure order
- The redemption period begins, six months if still owner occupied and Plaintiff waives the correct deficiency, 12 months if the property is over 20 acres. The plaintiff does not waive the right to deficiency for only two months if the borrower abandons the property.
- Sheriffs' sale with six weeks of the notice published in the newspaper
- Confirmation of sale hearing scheduled no less than five days after sale, confirmation hearing in court held 3 weeks afterward usually
- Borrowers must move out if they have not already
What If I Can't Fix The Problem During The Redemption Period?
Your options disappear if you can't get paid up during the redemption period. You will have to find new housing and possibly be on the hook for a deficiency from the foreclosure sale of the property. The best approach is to consult with an experienced Wisconsin foreclosure defense attorney as soon as you know there is a problem. Many people tend to freeze or take no action when they receive a notice of default, which is the worst possible thing you can do. Banks are companies, and typically companies want to stick with the original deal if they can because it is a known situation.
If you are facing a Wisconsin foreclosure or have received a notice of default and want to know your options, give O'Flaherty Law a call today. We have an experienced foreclosure defense team and would be happy to help you.
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