Wisconsin homeowners won’t immediately lose their home to a foreclosure after falling behind on a mortgage payment. Federal law generally 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 generally 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.
The Foreclosure Waiting Period
Under federal mortgage servicing laws, the servicer usually 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 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).
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. (Learn more about the federal law that provides time for borrowers to seek loss mitigation in When Will Foreclosure Start?)
Wisconsin Foreclosure Procedure
The foreclosure process begins when the bank files a complaint (a lawsuit) in court asking for permission to sell the home to pay off the loan. To fight the suit, you must file a response in court 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.
Foreclosure Mediation Might Be Available
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.
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.
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. 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.
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. 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. To learn more, see Nolo's article Can You Get Your Home Back After a Wisconsin Foreclosure? and consider consulting 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?
