If you're a Wisconsin homeowner, you won’t immediately lose your home to a foreclosure after falling behind on a mortgage payment or two. Federal law generally gives homeowners 120 days to research foreclosure avoidance options before the bank can start the process. After this period expires, however, the foreclosure usually 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.
When Will a Wisconsin Foreclosure Start?
Under federal mortgage servicing laws, the servicer typically must wait until the mortgage obligation is more than 120 days overdue before starting a foreclosure. This waiting period gives the borrower time to apply for loss mitigation, like a modification.
Applying for a Foreclosure Alternative in Wisconsin
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).
If you don't apply for a loss mitigation option before foreclosure begins, you may apply after the process starts. If you submit a complete application more than 37 days before the foreclosure sale date, the bank can't 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.
How the Wisconsin Foreclosure Procedure Works
Wisconsin foreclosures go through a judicial process.
How a Wisconsin Foreclosure Starts
The bank initiates the foreclosure by filing a lawsuit in court and serving you with a summons and complaint.
What Happens During the Foreclosure Process in Wisconsin
If you don’t respond to the suit, then the bank will ask for, and probably get, a default judgment. If you decide to file a response (called an "answer"), you’ll need to admit the allegations in the complaint that you know are true, deny those allegations that you think are incorrect, or say you don’t have sufficient information to admit or deny (and therefore you deny) certain allegations. You shouldn't admit to any of the bank's allegations or statements unless you're sure they're correct. You’ll also need to raise any defenses, affirmative defenses, and counterclaims you have.
If your answer raises potentially legitimate defenses to the foreclosure, then a trial will likely take place. The bank must put on evidence to the court’s satisfaction to win the case. But if your answer was insufficient—say the main facts of the case aren’t in dispute, any defenses you’ve raised lack merit, or you didn’t show that the bank or servicer violated the law—the bank will probably file a motion asking the court to grant summary judgment. Even if your answer does raise valid issues, the bank might still try for summary judgment. It’s best to hire an attorney to help you if you want to file an answer to the suit so that you can avoid summary judgment.
Notice of the Foreclosure Sale in Wisconsin
If the bank wins, a notice of the foreclosure sale must be published in a newspaper for three weeks. The notice also has to be posted in a public place and posted on the county website (if there is one) at least three weeks before the sale.
Foreclosure Mediation Might Be Available in a Wisconsin Foreclosure
In foreclosure mediation, you and the servicer try to come up with an alternative to foreclosure that benefits both you and the bank. You might be able to work out a loan modification, repayment plan, or forbearance agreement and stay in the home, or give up the property in a short sale, or deed in lieu of foreclosure.
How to Sign Up for Mediation in a Wisconsin Foreclosure
The Wisconsin Foreclosure Mediation Network offers foreclosure mediation in participating areas. Also, some counties in Wisconsin offer their own mediation programs. Typically, the bank attaches a notice of availability of mediation and an application for mediation to the complaint for foreclosure.
How to Reinstate Your Mortgage in Wisconsin and Stop Foreclosure
A borrower who fails to make the mortgage payments “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. Then, the court will dismiss the foreclosure lawsuit. The law also permits reinstatement after judgment (and before the sale). But if the borrower defaults on the mortgage again, the foreclosure can continue.
Does Wisconsin Have a Foreclosure Redemption Period?
In Wisconsin, you can pay off the total mortgage debt, plus costs, to 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. Wisconsin law doesn't provide a right of redemption after the sale.
Not only is Wisconsin’s redemption law complicated, but it also changed significantly on April 27, 2016. Depending on the circumstances, like whether the bank is seeking a deficiency judgment and when you signed the mortgage, the redemption period will be between five weeks and one year.
Does Wisconsin Allow Deficiency Judgments?
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. But the bank might waive the right to any deficiency because doing so shortens the redemption period.
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.
How to Find Wisconsin's Foreclosure Laws
You’ll locate the majority of Wisconsin’s foreclosure laws in the Wisconsin Statutes, sections 846.01 through 846.25. Statutes change, so checking them is always a good idea. How courts and agencies interpret and apply the law can also change. And some rules can even vary within a state. These are just some of the reasons to consult with an attorney if you’re facing a foreclosure.