STARK, J.
¶ 1 These consolidated appeals arise from the circuit court's denial of two motions to vacate foreclosure judgments. The borrowers — Todd and Jennifer Prissel, and Elizabeth Gerlach
¶ 2 The underlying facts are undisputed. In September 2005, the Prissels executed a note and mortgage in favor of America's Wholesale Lender on a single-family residential property in Ellsworth, Wisconsin. In February 2007, Gerlach executed a note and mortgage in favor of First Magnus Financial Corporation on a single-family residential property in River Falls, Wisconsin. In both cases, the notes and mortgages were later assigned to other parties and, as the parties agree, ultimately to Bank of America.
¶ 3 The Borrowers defaulted. Bank of America then commenced foreclosure proceedings against the Borrowers in Pierce County Circuit Court. In each case, Bank of America waived its right to a deficiency judgment.
¶ 5 Bank of America did not publish notices of foreclosure sale during the Borrowers' six-month redemption periods. Thereafter, the Borrowers moved to vacate the foreclosure judgments under WIS. STAT. § 806.07(1)(h).
¶ 6 Pursuant to WIS. STAT. § 846.101(2), the Borrowers argued Bank of America was required to publish notices of foreclosure sale within their respective six-month redemption periods. Because Bank of America failed to do so, the Borrowers argued Bank of America could not hold valid foreclosure sales, and it therefore had no way to satisfy the foreclosure judgments. Bank of America responded that § 846.101(2) permitted, but did not require, publication of the notices within the Borrowers' redemption periods.
¶ 7 The circuit court denied the Borrowers' motions to vacate in nearly identical orders issued on December 19, 2013. The Borrowers subsequently appealed, and we granted Bank of America's motion to consolidate the appeals on July 31, 2014.
¶ 8 Whether to grant relief from judgment under WIS. STAT. § 806.07(1)(h) lies within the circuit court's discretion. Sukala v. Heritage Mut. Ins. Co., 2005 WI 83, ¶8, 282 Wis.2d 46, 698 N.W.2d 610. However, where a circuit court's exercise of discretion turns on a question of law, we review the court's decision independently. Olson v. Farrar, 2012 WI 3, ¶24, 338 Wis.2d 215, 809 N.W.2d 1. Here, the circuit court's decision was based on its interpretation of WIS. STAT. § 846.101(2), which presents a question of law for our independent review. See JP Morgan Chase Bank, NA v. Green, 2008 WI App 78, ¶11, 311 Wis.2d 715, 753 N.W.2d 536.
¶ 10 As discussed above, WIS. STAT. § 846.101(2) provides that, when a lender elects not to pursue a deficiency judgment, sale of the mortgaged premises "shall be made upon the expiration of 6 months from the date when [the foreclosure] judgment is entered."
¶ 11 In response, Bank of America observes that the word "shall" can be construed as directory if necessary to carry out the legislature's clear intent. See id. at 571, 263 N.W.2d 214. In particular, "[s]tatutes setting time limits on various activities have often been held to be directory despite the use of the mandatory `shall,' where such a construction is intended by the legislature." Id. Bank of America argues the legislature intended the word "shall" in the notice provision of WIS. STAT. § 846.101(2) to mean that a lender is permitted, but not required, to give notice of a foreclosure sale within the six-month redemption period.
¶ 12 We agree with Bank of America. Reading WIS. STAT. § 846.101(2) in context
¶ 13 Each of the foreclosure statutes further provides that, before a foreclosure sale is held, notice of the time and place of the sale "shall be given" as set forth in WIS. STAT. §§ 815.31 and 846.16. See WIS. STAT. §§ 846.10(2), 846.101(2), 846.102(1), 846.103(1) and (2). To ensure that a foreclosure sale can occur immediately upon the expiration of a redemption period, the foreclosure statutes allow publication of the required notice before the end of the redemption period. In particular, in cases involving owner-occupied one- to four-family residences for which the lender seeks a deficiency, commercial properties, and abandoned premises, the statutes specifically state that notice "may" be given during the redemption period:
¶ 14 Thus, for all types of property except owner-occupied one- to four-family residences for which the lender does not seek a deficiency, the foreclosure statutes
¶ 15 The Borrowers argue the use of "may" in the foreclosure statutes cited above suggests the legislature intended the word "shall" in the notice provision of WIS. STAT. § 846.101(2) to be mandatory. They cite Karow, 82 Wis.2d at 571, 263 N.W.2d 214, in which our supreme court stated, "When the words `shall' and `may' are used in the same section of a statute, one can infer that the legislature was aware of the different denotations and intended the words to have their precise meanings." However, despite this statement, the Karow court recognized that the word "shall" can still be construed as directory based on the application of four factors: (1) the omission of a prohibition or a penalty; (2) the consequences resulting from one construction or the other; (3) the nature of the statute, the evil to be remedied, and the general object sought to be accomplished by the legislature; and (4) whether the failure to act within the time limit works an injury or a wrong. Karow, 82 Wis.2d at 572, 263 N.W.2d 214; see also Warnecke v. Warnecke II, 2006 WI App 62, ¶12, 292 Wis.2d 438, 713 N.W.2d 109. Here, all four of these factors favor interpreting the word "shall" in the notice provision of WIS. STAT. § 846.101(2) as directory.
¶ 16 First, WIS. STAT. § 846.101(2) does not express a penalty for failing to publish a notice of foreclosure sale within the six-month redemption period or a prohibition against publishing a notice after the six-month period. "The legislature's failure to state the consequences of noncompliance with the established time limit lends support for construing the statute as directory." Karow, 82 Wis.2d at 571-72, 263 N.W.2d 214.
¶ 17 Second, we must consider the consequences resulting from construing the word "shall" in WIS. STAT. § 846.101(2) as either directory or mandatory. See Karow, 82 Wis.2d at 572, 263 N.W.2d 214. Interpreting § 846.101(2) to require publication
¶ 18 Third, interpreting the word "shall" in the notice provision of WIS. STAT. § 846.101(2) as mandatory, rather than directory, would be inconsistent with the nature of the statute, the evil to be remedied, and the general object sought to be accomplished by the legislature. See Karow, 82 Wis.2d at 572, 263 N.W.2d 214. The purpose of statutes providing for redemption periods is to delay foreclosure sales for a period of time so that a defaulting borrower has an opportunity to redeem a foreclosed property before it is sold. Section 846.101(2) shortens the normal, twelve-month redemption period for owner-occupied one- to four-family residences to six months in cases where the lender elects not to pursue a deficiency judgment. Construing § 846.101(2) to require publication of a notice of sale within the already shortened six-month redemption period would expedite the foreclosure process even further, in effect requiring the property to be sold shortly after expiration of the redemption period. As discussed above, in many cases this may not be in either the borrower's or the lender's interest.
¶ 19 The Borrowers cite Glover v. Marine Bank of Beaver Dam, 117 Wis.2d 684, 694-95, 345 N.W.2d 449 (1984), in which our supreme court held that the shortened redemption period in WIS. STAT. § 846.101(2) is intended to benefit both lenders and borrowers. The lender is benefitted because it "may be able to reduce the losses normally attendant to the twelve-month redemption period." Glover, 117 Wis.2d at 694-95, 345 N.W.2d 449. The borrower is benefitted because "at the end of this shortened period, the [borrower] is secure in the knowledge that he or she will not be responsible for any deficiency resulting from the sale." Id. at 695, 345 N.W.2d 449.
¶ 20 The Borrowers argue interpreting "shall" as directory "does not meet the twin benefits of [WIS. STAT.] § 846.101(2) identified by the court in Glover" because it would "allow unlimited time for the lender to begin posting and publishing a notice of sheriff's sale." We disagree. Even if a lender chooses not to hold a foreclosure sale immediately upon expiration of the redemption period, the benefit provided to the borrower by § 846.101(2) remains the same — the borrower will not be responsible for any deficiency when a sale ultimately occurs. Moreover, the borrower typically has the added benefit of being able to retain possession of the property between the end of the redemption period and the date of the eventual sale, and he or she also receives additional time to try to redeem the property or reach a loan modification agreement with the lender.
¶ 21 Fourth, we must consider whether a lender's failure to publish a notice of foreclosure sale within the six-month redemption period prescribed by WIS. STAT. § 846.101(2) works an injury or a wrong. See Karow, 82 Wis.2d at 572, 263 N.W.2d 214. For the same reasons discussed in the preceding paragraph, we conclude it does not. Delaying a foreclosure sale generally benefits a borrower by enabling the borrower to retain possession of his or her property longer and by providing additional time to work out a compromise with the lender. In contrast, requiring notices of sale to be published during the redemption period could harm borrowers by forcing lenders to hold foreclosure sales shortly after the redemption period expires, which would frustrate efforts to reach postjudgment compromises and would likely force borrowers out of their properties earlier than would otherwise be required.
¶ 22 The Borrowers concede they have not suffered any injury or wrong due to Bank of America's failure to publish notices of foreclosure sale within their redemption periods. However, they argue a lender's failure to timely publish a notice of sale could harm a hypothetical borrower by subjecting the borrower to additional property taxes and homeowner's insurance premiums before a foreclosure sale occurs. We are unpersuaded. The hypothetical borrower would be in no worse position due to the lender's delay in publishing a notice of foreclosure sale than he or she would have been if foreclosure proceedings had never been commenced, in which case the borrower would also have been required to pay property taxes and insurance premiums. Moreover, the borrower would have the benefit of continuing to reside in his or her home with significantly reduced expenses until a foreclosure sale occurs, and without the threat of being subject to a deficiency judgment.
¶ 23 Finally, our previous decisions in Deutsche Bank National Trust Co. v. Matson, No. 2012AP1981, unpublished slip op., 2013 WL 3884142 (WI App July 30, 2013), review denied, 2014 WI 14, ___ Wis.2d ___, 843 N.W.2d 707 (Matson I), and Arch Bay Holdings LLC — Series 2008B v. Matson, No. 2013AP744, unpublished slip op., 2014 WL 1011467 (WI App March 18, 2014) (Matson II), support our conclusion that the word "shall" in the notice provision of WIS. STAT. § 846.101(2) should be construed as directory, rather than mandatory.
¶ 24 Despite its use of the word "shall," we concluded WIS. STAT. § 846.103(2) merely "describe[d] a particular process should a sheriff's sale actually occur" and did not "mandate that [a] property be sold ... immediately upon the expiration of the three-month redemption period." Matson I, No. 2012AP1981, ¶¶ 16, 18; see also Matson II, No. 2013AP744, ¶ 18 (adopting Matson I's analysis). We noted a contrary interpretation would have adverse policy consequences because requiring a lender to hold a foreclosure sale "simply does not make sense in circumstances where it is in neither the lender's nor borrower's interest to do so: for instance, when there is a post-judgment loan modification between the lender and borrower, or when the borrower pays the debt shortly after the expiration of the redemption period." Matson I, No. 2012AP1981, ¶ 19. We also observed that requiring a foreclosure sale would "essentially put[] the borrower in control over the aggrieved lender's recovery," creating an incentive for a borrower to commit waste. Id.
¶ 25 Similar to WIS. STAT. § 846.103(2) — the statute analyzed in Matson I and Matson II — WIS. STAT. § 846.101(2) provides that a foreclosure sale "shall be made upon the expiration of 6 months from the date when [a foreclosure] judgment is entered." (Emphasis added.) Addressing similar language, Matson I and Matson II clearly stated that, with respect to commercial properties for which no deficiency is sought, a lender is not required to hold a foreclosure sale immediately upon expiration of the redemption period. We see no reason why the result should be different in cases involving owner-occupied one- to four-family residences for which no deficiency is sought. The concern we expressed in Matson I that holding a foreclosure sale soon after the redemption period may not be in either the lender's or the borrower's interest is equally applicable in cases involving owner-occupied properties. If a lender is not required to hold a foreclosure sale immediately upon expiration of the redemption period, it makes no sense a lender would be required to publish notice of a foreclosure sale during the redemption period.
¶ 26 The Borrowers rely on Bank of New York v. Carson, 2013 WI App 153, 352 Wis.2d 205, 841 N.W.2d 573, review granted, 2014 WI 50, 354 Wis.2d 860, 848 N.W.2d 857, which we decided after Matson I but before Matson II. In Carson, we interpreted WIS. STAT. § 846.102, which governs foreclosure proceedings involving abandoned premises. Section 846.102(1) states that, after entry of a foreclosure judgment, "sale of such mortgaged premises shall be made upon the expiration of 5 weeks from the date when such judgment is entered." (Emphasis added.) Based on the plain language of § 846.102(1), we concluded a circuit court has authority to order a lender to sell an abandoned property upon the expiration of the five-week redemption period. Carson, 352 Wis.2d 205, ¶ 13, 841 N.W.2d 573. We reasoned a contrary holding would "strip [owners of abandoned premises] of any remedies at law and allow lenders to leave properties in limbo for years." Id., ¶ 14. We also noted that requiring prompt sales of abandoned premises promoted the public's interest in preserving the condition and appearance of residential properties. Id. We did not analyze the Karow factors in determining that the word "shall" in § 846.102(1) was mandatory.
¶ 27 Carson is distinguishable because it addresses foreclosures of abandoned premises. The policy considerations supporting our holding in Carson are not equally applicable
¶ 28 For all the foregoing reasons, we conclude the statement in WIS. STAT. § 846.101(2) that notice of a foreclosure sale "shall" be given within six months after entry of a foreclosure judgment is directory, not mandatory. Accordingly, Bank of America was permitted, but not required, to publish notices of foreclosure sale during the Borrowers' redemption periods. Because publication of the notices during the Borrower's redemption periods was not required, the circuit court properly exercised its discretion by denying the Borrowers' motions to vacate the foreclosure judgments.
Orders affirmed.