Wisconsin homeowners won’t immediately lose their home to a foreclosure after falling behind on a mortgage payment. Federal law gives homeowners 120 days to research foreclosure avoidance options before the bank can start the process of taking a house. After this period expires, the foreclosure can proceed under state law. In this article, you’ll learn about foreclosure in Wisconsin, as well as homeowner rights that might help you stay in your home.
(Learn the basics in Foreclosure and Your Home: Understanding the Process, Your Rights, and Your Options.)
The Foreclosure Waiting Period
A bank can auction a property if a borrower falls behind on the payment and use the proceeds to pay off the mortgage. This process is known as foreclosure. Some state laws give a lender the right to foreclose quickly, to the detriment of homeowners who aren’t able to recover fast enough from a financial setback.
Under current federal law, the mortgage servicer (the company that collects the payment) must allow 120 days to pass before starting a foreclosure under the state law governing the property. This waiting period gives the borrower time to apply for loss mitigation (a foreclosure alternative), such as a mortgage modification. After the homeowner submits a complete application, the foreclosure can’t begin until:
- the bank finds the borrower ineligible for a loss mitigation option (and the appeal period expires)
- the homeowner rejects the servicer’s offer of loss mitigation, or
- the borrower fails to perform under the loss mitigation agreement (for example, by not making the payments).
A homeowner can still apply for loss mitigation after the foreclosure starts. If the borrower submits the application more than 37 days before the foreclosure sale date, the bank cannot ask the court for a judgment or order of sale—or conduct a foreclosure sale—until it reviews the application, and one of the three events listed above occurs.
(Learn more about the federal law that provides time for borrowers to seek loss mitigation in Delaying Foreclosure: The Dodd-Frank Act 120-Day Rule.)
Wisconsin Foreclosure Procedure
The foreclosure process starts when the bank files a lawsuit in court asking for permission to sell the home. To fight the suit, you must respond to the lawsuit within a short amount of time. If you fail to do so, the bank will get a default judgment, and the court will order your home sold at a foreclosure sale. By contrast, filing an answer will move the action into the litigation process. The case will conclude when the court reviews the evidence and determines whether the foreclosure sale should proceed. If the bank wins, a notice of the foreclosure sale must be published in a newspaper, posted in a public place, and posted on the county website (if there is one) for three weeks before the sale.
Catching Up on the Loan by Reinstating the Mortgage
A borrower who fails to make a mortgage payment “defaults” or breaks the mortgage contract. Some states allow a borrower to catch up on the defaulted loan and “reinstate” it.
Under Wisconsin’s reinstatement law, a homeowner can reinstate at any time before judgment. If done, the court will dismiss the foreclosure lawsuit. The law also permits reinstatement after judgment (and before the sale). However, if the borrower defaults on the mortgage again, the foreclosure can continue.
Buying Back a Home During a Redemption Period
In Wisconsin, you can buy back (redeem) the home during the period that falls after the judgment and before the foreclosure sale. After the redemption period passes, the foreclosure sale can take place. There is no right of redemption after the sale.
Not only is Wisconsin’s redemption law complicated, but it also changed significantly on April 27, 2016. To find out the period that applies in your case, you’ll want to confer with a foreclosure attorney.
Owing Money After the Sale: The Deficiency Judgment
Sometimes the foreclosure sale doesn’t bring in enough money to pay back the mortgage loan. In such a case, the remaining amount is known as a “deficiency.” In Wisconsin, the bank can collect that sum by asking the court for a deficiency judgment as part of the foreclosure lawsuit.
If the court gives the bank a deficiency judgment against you, it might be possible to discharge it (wipe it out) in a Chapter 7 bankruptcy. To find out, consult with a bankruptcy attorney.
Where to Read Wisconsin's Foreclosure Laws
You’ll locate the majority of Wisconsin’s foreclosure laws in the Wisconsin Statutes (sections 846.01 through 846.25).
Questions for Your Attorney
- How long will the foreclosure process take after the bank files a complaint with the court?
- Is there a way to stop the foreclosure if the bank denies my application for a loan modification?
- Would it make sense for me to file for bankruptcy?