In most states, including Wisconsin, if a foreclosure sale results in a deficiency, the lender may get a "deficiency judgment" against you for the deficiency amount. But Wisconsin law limits the amount of the deficiency if the property’s fair market value is more than the foreclosure sale price.
And, state law gives the lender an incentive to waive the deficiency: If the lender chooses to forgo a deficiency judgment, the redemption period before the sale is shorter.
If you default on your mortgage loan, the lender can go through a specific legal process called "foreclosure" to sell your home to repay the outstanding debt. After the lender fulfills all of the legal requirements for foreclosure, the final step is the foreclosure sale, where the home is sold to a new owner at a public auction.
The foreclosing lender submits the first bid at the sale, which is a “credit bid.” With a credit bid, the lender gets a credit in the amount of the borrower's debt. The lender can bid up to the total amount of the debt, including foreclosure fees and costs, or it might bid less. Most of the time, the lender makes the highest bid at the sale and becomes the new owner of the property because no one else bids. If the lender buys the property at the sale and gets title to the home, the property is considered "real estate owned" (REO).
Lenders regularly bid less than the total amount of a borrower’s mortgage debt at foreclosure sales, resulting in a deficiency. The lender can then seek a personal judgment against the borrower to recover the deficiency. Again, this kind of money judgment is called a “deficiency judgment.
If the sale price is equal to, or more than, the mortgage debt amount, you’re off the hook because no deficiency exists—even if the lender can’t resell the property for the same amount after the foreclosure sale. In fact, if the sale results in excess proceeds, you might be entitled to that extra money following the foreclosure auction.
To find the Wisconsin statutes covering foreclosures and deficiency judgments, go to the State Legislature’s webpage. Select “Law and Legislation” and then "Statutes Table of Contents." The statutes governing foreclosures can be found in Chapter 846.
Foreclosures in Wisconsin are judicial, which means the lender must foreclose through the state court system. A judicial foreclosure begins when the lender files a lawsuit asking a court for an order allowing a foreclosure sale. The lender gives notice of the suit by serving the borrower and any other defendants in the action a summons and complaint.
In Wisconsin, the lender may obtain a deficiency judgment as part of the foreclosure if it demands one in its complaint. (Wis. Stat. § 846.04).
Under Wisconsin law, again, a lender can get a deficiency judgment in the judicial foreclosure. But the court won’t presume that the home sold for its fair value at the foreclosure sale, and the court may not confirm the sale or render a judgment for deficiency until it’s satisfied that the property’s fair value has been credited on the mortgage debt. (Wis. Stat. § 846.16).
So, if the foreclosure sale price is less than the property’s fair market value, the deficiency amount is limited to the difference between the borrower’s mortgage debt and the home’s fair market value.
In Wisconsin, the foreclosure sale happens after a redemption period. During the redemption period, the borrower has the right to stop the foreclosure by paying the full amount of the foreclosure judgment, plus interest and costs (Wis. Stat. § 846.13).
But if the lender waives its right to a deficiency judgment, the redemption period is shortened. Because of the availability of a shortened period, lenders often choose not to seek deficiency judgments against borrowers in Wisconsin.
The following redemption period information applies to owner-occupied, one- to four-family homes on 20 acres or less.
Redemption period for mortgages executed before April 27, 2016. The foreclosure sale can’t occur until 12 months after the court enters a judgment to foreclose. (Wis. Stat. § 846.10).
If the lender waives its right to a deficiency judgment, the redemption period is shortened from 12 months to six months. The lender can waive the deficiency judgment and shorten the redemption period only if the borrower agrees in writing when signing the mortgage. Most Wisconsin mortgages contain a paragraph in which the borrower agrees to a shortened redemption period if the lender waives the deficiency judgment. (Wis. Stat. § 846.101).
Redemption period for mortgages executed on and after April 27, 2016. The foreclosure sale can’t take place until six months after the court enters a judgment to foreclose (Wis. Stat. § 846.10). The borrower may ask the court to extend the redemption period to eight months, but only if the borrower is attempting in good faith to sell the mortgaged premises and has entered into a listing agreement with a licensed real estate broker.
If the lender waives its right to a deficiency judgment, the redemption period is shortened to three months. (Again, the lender can waive the deficiency judgment and shorten the redemption period only if the borrower agrees in writing when signing the mortgage. Most Wisconsin mortgages contain a paragraph in which the borrower agrees to a shortened redemption period if the lender waives the deficiency judgment.) The borrower may ask the court to extend the redemption period to five months, but only if the borrower is attempting in good faith to sell the mortgaged premises and has entered into a listing agreement with a licensed real estate broker. (Wis. Stat. § 846.101).
Abandoned homes have a five-week redemption period. Regardless of whether a deficiency is sought, the redemption period is five weeks if you abandon (permanently move out of) the home. (Wis. Stat. § 846.102).
Even if your lender has the right under state law to go after you for a deficiency judgment, it might decide not to do so—especially if you don’t have many assets to satisfy the judgment. The lender might decide it isn’t worth the expense and effort of getting a deficiency judgment.
Also, even if the lender decides not to sue you for a deficiency judgment, it could later sell the debt to a debt buyer who might file a lawsuit against you for the deficiency later on.
Generally, when a senior lienholder forecloses, any junior liens (like second mortgages and HELOCs, among others) are also foreclosed, and those junior lienholders lose their security interest in the real estate. In this situation, junior lienholders are sometimes called "sold-out junior lienholders." But that doesn't mean that you don't still owe money to junior lienholders.
Suppose a junior lienholder is sold out in this manner, and the foreclosure sale proceeds weren't sufficient to pay what you owe to that junior lienholder. In that case, the junior lienholder can sue you personally on the loan’s promissory note.
So, if the equity in your home doesn’t cover second and third mortgages, for example, you might face lawsuits from those lenders to collect the balance of those loans.
If you lose your home to foreclosure and the court orders you to pay a deficiency judgment, you might be able to use bankruptcy to eliminate the debt. Or you might have a defense to the deficiency.
Get tips on what to do (and what not to do) if you're facing a foreclosure in Foreclosure Do's and Don'ts.
Learn about Last-Minute Strategies to Stop Foreclosure.
Find out if foreclosures are on the rise.
If you have questions about Wisconsin’s foreclosure process or want to learn about potential defenses to a foreclosure and possibly fight the foreclosure in court, consider talking to a foreclosure attorney.
It's also a good idea to talk to a HUD-approved housing counselor if you want to learn about different loss mitigation options. You can use the Consumer Financial Protection Bureau's Find a Counselor tool to get a list of HUD-approved housing counseling agencies in your area. You can also call the Homeownership Preservation Foundation (HOPE) Hotline, which is open 24 hours a day, seven days a week, at 888-995-HOPE (4673).
]]>Also, most people who take out a loan to buy a residential property in Wisconsin sign a promissory note and mortgage. These documents give homeowners some contractual rights along with federal and state legal protections.
So, don’t get caught off guard if you're a Wisconsin homeowner behind in mortgage payments. Learn about each step in a Wisconsin foreclosure, from missing your first payment to a foreclosure sale. Once you understand the process, you can make the most of your situation and, hopefully, work out a way to save your home or at least get through the process with as little anxiety as possible.
In a Wisconsin foreclosure, you’ll most likely get the right to:
The period after you fall behind in payments, but before a foreclosure officially starts, is generally called the "preforeclosure" stage. (Sometimes, people refer to the period before a foreclosure sale happens as "preforeclosure," too.)
During this time, the servicer can charge you various fees, including late and inspection fees, and, in most cases, must let you know how to avoid foreclosure, and send you a breach letter (a preforeclosure notice).
Under federal law, the servicer usually can’t officially begin a foreclosure until you're more than 120 days past due on payments, subject to a few exceptions. (12 C.F.R. § 1024.41). This 120-day period provides most homeowners ample opportunity to submit a loss mitigation application to the servicer.
If you default on your mortgage payments for your home in Wisconsin, the foreclosure will be judicial.
A judicial foreclosure begins when the lender files a lawsuit asking a court for an order allowing a foreclosure sale. The lender gives notice of the suit by serving you a summons and complaint. Most people get 20 days to file an answer to the complaint.
You might receive notice about foreclosure mediation along with the summons and complaint. Wisconsin’s Department of Justice and Attorney General have established a Wisconsin Foreclosure Mediation Network and foreclosure mediation is available in participating counties.
Also, several counties in Wisconsin have their own mediation programs. For many of these programs, the lender must attach a notice about mediation to the complaint and an application to participate.
If you don’t respond to the suit, the lender will ask the court for, and probably receive, a default judgment, allowing it to hold a foreclosure sale.
But if you choose to defend the foreclosure lawsuit, the case will go through the litigation process. The lender might then ask the court to grant summary judgment. A summary judgment motion asks that the court grant judgment in favor of the lender because there’s no dispute about the critical aspects of the case. If the court grants summary judgment for the lender or you lose at trial, the judge will enter a judgment and order your home sold at auction.
A notice of the sale must be published in a newspaper once a week for three weeks. The notice must also be advertised in a public place and posted on the county website, if the county has one, at least three weeks before the foreclosure sale date. (Wis. Stat. § 815.31).
At the sale, the lender usually makes a credit bid. The lender can bid up to the total amount owed, including fees and costs, or it may bid less. In some states, including Wisconsin, when the lender is the high bidder at the sale but bids less than the total debt, it can get a deficiency judgment against the borrower. If the lender is the highest bidder, the property becomes “Real Estate Owned” (REO).
But if a bidder, say a third party, is the highest bidder and offers more than you owe, and the sale results in excess proceeds—that is, money over and above what’s needed to pay off all the liens on your property—you're entitled to that surplus money.
You can stay in the home through the redemption period (see below) up until the court confirms the foreclosure sale. The order confirming the sale might also include a writ of assistance, which is an order from the court directing the sheriff to remove you (the foreclosed homeowner) from the property.
Some ways to stop a foreclosure include reinstating the loan, redeeming the property before the sale, or filing for bankruptcy. Of course, if you can work out a loss mitigation option, like a loan modification, that will also stop a foreclosure.
Or you might be able to work out a short sale or deed in lieu of foreclosure and avoid a foreclosure. But you'll have to give up your home.
Wisconsin law gives you the right to reinstate the loan before the judgment. The court will then dismiss the foreclosure. You may also reinstate after the judgment (before the sale), which will stay (postpone) the foreclosure, but if you default on payments again, the foreclosure will go ahead. (Wis. Stat. § 846.05).
In some states, homeowners who lose their home to a foreclosure get a specific amount of time, called a “redemption period,” after a foreclosure to repurchase the property from the person or entity that bought the home at the sale. In Wisconsin, however, the redemption period happens before the sale. (Wis. Stat. Ann. § 846.13).
In Wisconsin, the redemption period is the time between the judgment and the foreclosure sale. During the redemption period, you may pay off the total debt, including the principal balance, plus certain additional costs and interest, to stop the foreclosure.
Wisconsin’s redemption period law is complicated and, 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. Talk to a foreclosure lawyer if you need specific information about Wisconsin’s redemption period law.
If you're facing a foreclosure, filing for bankruptcy might help. If a foreclosure sale is scheduled to occur in the next day or so, the best way to stop the sale immediately is by filing for bankruptcy. Once you file for bankruptcy, something called an "automatic stay" goes into effect. The stay functions as an injunction prohibiting the lender from foreclosing on your home or trying to collect its debt, at least temporarily.
In many cases, filing for Chapter 7 bankruptcy can delay the foreclosure by a matter of months. Or, if you want to save your home, filing for Chapter 13 bankruptcy might be the answer. To find out the options available, speak with a local bankruptcy attorney.
In a foreclosure, the borrower’s total mortgage debt sometimes exceeds the foreclosure sale price. The difference between the total debt and the sale price is called a “deficiency.” For example, say the total debt owed is $400,000, but the home sells for $350,000 at the foreclosure sale. The deficiency is $50,000.
In some states, the lender can seek a personal judgment against the debtor to recover the deficiency. Generally, once the lender gets a deficiency judgment, the lender may collect this amount—in our example, $50,000—from the borrower.
Deficiency judgments are allowed under Wisconsin law if the lender requests the judgment in the complaint. (Wis. Stat. § 846.04). However, lenders often waive the right to the deficiency to reduce the length of the redemption period. (Wis. Stat. § 846.101).
The Servicemembers Civil Relief Act provides legal protections to military personnel in danger of foreclosure.
For more information on federal mortgage servicing laws, as well as foreclosure relief options, go to the Consumer Financial Protection Bureau (CFPB) website.
If you have questions about Wisconsin’s foreclosure process or want to learn about potential defenses to a foreclosure and possibly fight the foreclosure in court, consider talking to a foreclosure attorney. It’s also a good idea to talk to a HUD-approved housing counselor about different loss mitigation options.
]]>But you usually get at least two years to pay off the delinquent amounts and "redeem" the property before the county can get ownership of your home.
People who own real property have to pay property taxes. The government uses the money that these taxes generate to pay for schools, public services, libraries, roads, parks, and the like. Typically, the tax amount is based on a property’s assessed value.
If you have a mortgage on your home, the loan servicer might collect money from you as part of the monthly mortgage payment to later pay the property taxes. The servicer pays the taxes on the homeowner's behalf through an escrow account. But if the taxes aren't collected and paid through this kind of account, the homeowner must pay them directly.
When homeowners don’t pay their property taxes, the overdue amount becomes a lien on the property. A lien effectively makes the property act as collateral for the debt. All states have laws that allow the local government to sell a home through a tax sale process (or get title to the property in another way) to collect delinquent taxes.
Again, when you don't pay your property taxes, the past-due amount becomes a lien on your home. Each state has a different tax sale process to collect delinquent taxes.
In some places, the taxing authority sells the home if the homeowner doesn't pay off the debt. But the purchaser might not get the deed to the property right away. Sometimes, a redemption period must expire before the buyer receives the deed.
In Wisconsin, the county gets a tax certificate if you don’t pay your taxes. After the redemption period expires (see below), the county can then get the deed to your home by:
After the county gets ownership of your property, it will sell the home to a new owner. (Wis. Stat. § 75.35.)
Wisconsin is generally considered a tax deed state.
In other places, the taxing authority sells the tax lien, and the purchaser must foreclose or use different procedures to get a deed to the property.
Wisconsin doesn’t sell tax liens.
And in some other places, a tax foreclosure process is used. Or the taxing authority simply executes its lien by taking title to the home. As noted earlier, the county could use a foreclosure process to a deed to your property.
On September 1 of each year, the county treasurer issues the tax certificate, which includes all parcels with unpaid taxes as of the close of business on August 31. (Wis. Stat. § 74.57). The county treasurer will mail you (the homeowner) a notice within 90 days after issuing the tax certificate. (Wis. Stat. § 74.59).
After the county issues a tax certificate, if you don’t pay off the delinquent amounts during the redemption period (see below), the county can get title to your home using one of the following processes. (Wis. Stat. § 74.57).
The county can apply to the county clerk for a tax deed after giving you notice. The county clerk will then issue a deed to the county, and the county will record the deed. (Wis. Stat. §§ 75.12, 75.14).
The county may instead choose to foreclose the tax certificate using the same process as a mortgage foreclosure. (Wis. Stat. § 75.19).
The Wisconsin statutes also provide an “in rem” statutory procedure for foreclosing a tax certificate. In this process, the county files a petition with the court, along with a list of all tax-delinquent properties being foreclosed.
Like with a mortgage foreclosure, you (the owner) will receive notice of the action, and you may file an answer if you choose to do so. The county must also publish notice in a newspaper as part of the process. If the county proves its case, the court will issue a judgment of foreclosure, and you'll lose ownership of the home. (Wis. Stat. § 75.521).
Most people in Wisconsin get two years to pay the delinquent taxes, penalties, interest, and other costs before the county can start the process to get title to the property. (Wis. Stat. § 74.57). (Paying off the tax debt is called “redeeming” the home.)
In some circumstances, however, the redemption period is limited to one year. For example, if the county incurred expenses bringing the property to an erosion-free condition, the redemption period is one year.
The redemption period usually starts when the county treasurer issues the tax certificate. (Wis. Stat. § 74.57.)
But the start date for the redemption period is delayed in a few situations. For example, if the treasurer doesn’t mail a notice about the certificate to you, the start of the redemption period is deferred. In that scenario, the redemption period begins on the mailing date. (Wis. Stat. § 74.59.)
The amount you’ll have to pay to redeem the home depends on the process the county uses to get title to your property.
How much it costs to redeem if the county records a tax deed. If the county uses a tax deed process, you must pay the amount of the unpaid taxes plus the interest, penalties, and any other charges authorized by law. (Wis. Stat. § 75.01.)
How much it costs to redeem if the county forecloses using the same process that a mortgage lender would use to foreclose. If the county uses the mortgage foreclosure process, you must pay the amount of the tax certificate plus costs allowed by the court. (Wis. Stat. § 75.19.)
How much it costs to redeem if the county forecloses using an "in rem" foreclosure process. If the county uses the “in rem” foreclosure process, you must pay the amount listed in the foreclosure petition plus interest, foreclosure costs, and publication costs. (Wis. Stat. § 75.521.)
When your right to redeem terminates also depends on which process the county uses to get the deed to your home.
How long you get to redeem if the county records a tax deed. You can redeem at any time before the recording of the deed. (Wis. Stat. § 75.01.)
How long you get to redeem if the county forecloses using the same process that a mortgage lender would use to foreclose. If the county forecloses the tax certificate as it would a mortgage, then you can redeem before the foreclosure sale. (Wis. Stat. § 75.19.)
How long you get to redeem if the county forecloses using an "in rem" foreclosure process. If the county files an "in rem" petition with the court to foreclose, it must publish notice in a newspaper as part of the process. You get at least eight weeks after the first publication to redeem. (Wis. Stat. § 75.521.)
After the county gets ownership of your property, it will sell the home to a new owner. (Wis. Stat. § 75.35.)
You can purchase the home from the county if you have enough money available. (Wis. Stat. § 75.35.)
But repurchasing the property will probably be a lot more expensive than simply paying the past-due amounts during the redemption period because you’ll most likely have to pay the home’s fair market value or more. You might also have to compete with other buyers.
If you're having trouble paying your property taxes, you might be able to reduce your tax bill or get extra time to pay. If you’re about to lose your home because of delinquent property taxes and have questions (or need help redeeming your property), consider talking to a foreclosure, tax, or real estate lawyer.
]]>In early 2021, President Joe Biden signed the American Rescue Plan Act into law. This law created a Homeowner Assistance Fund, a federal program, to give around $10 billion to the states to help households that are behind on their mortgages and other housing expenses due to COVID-19.
Homeowners in Wisconsin who've experienced a financial hardship can apply for some of the approximately $92 million allocated to the state—up to $40,000 per household—from the Wisconsin Help for Homeowners program. This program uses federal money to help homeowners make mortgage payments and pay other home-related costs.
Again, the Wisconsin Help for Homeowners program offers up to $40,000 per household. This money can be used to cover overdue housing bills, like mortgage payments, such as reinstatement costs, insurance, property taxes, utilities and home energy costs, homeowners’ association and condominium fees, lot fees, and perhaps more.
To qualify for relief from this program, you must have suffered a financial hardship (a material reduction in income or an increase in living expenses) after January 21, 2020, due to a qualified financial hardship, such as being affected by COVID-19. Other eligible hardships include:
Your hardship must have created or increased your risk of mortgage delinquency, mortgage default, foreclosure, loss of utilities or home energy services, or displacement from your home. You don’t have to have caught COVID-19 to qualify.
In addition, you have to meet some other guidelines:
You might also have to meet other eligibility requirements.
Assistance below $10,000 is structured as a grant that you don't have to repay. Amounts over $10,000 are structured as a one-year, non-interest bearing, non-amortizing forgivable loan. You have to repay the loan if you sell, refinance, or transfer ownership of the home within one year. But if no resale, transfer, or refinance occurs within one year and you remain in the home, the loan is fully forgiven.
Payments go directly to the loan servicer or other approved entity, not to homeowners.
To apply for help from this program, go to the Wisconsin Help for Homeowners website and click on “Apply Today.” You'll have to register and use Neighborly software (an online program) to apply for assistance. You'll also probably need to provide some documentation with your application, like proof of your income and tax returns.
If you think you might qualify, it’s best to apply as soon as possible.
If you get an unsolicited offer by phone, in the U.S. mail, through email, or by text message offering mortgage relief or foreclosure rescue services, be wary. Scammers sometimes target homeowners in financial distress.
The Wisconsin Help for Homeowners program is free. If anyone asks you to pay a fee to get housing counseling or to receive foreclosure prevention services from this program, it's a scam.
If you have questions or need help with your application, call 855-246-6394 or speak to your regional program contact and read the program’s FAQs.
You may also get help from a HUD-approved housing counselor who will assist you at no cost. To find a counselor near you, go to HUD's website or call 800-569-4287.
Even if a foreclosure has started, you might still have time to get assistance from the Wisconsin Help for Homeowners program. Also, you might have time to work out an alternative to foreclosure with your loan servicer.
If you have questions about the foreclosure process in Wisconsin or want to learn about potential defenses to a foreclosure, consider talking to a foreclosure lawyer.
]]>Wisconsin law, though, doesn’t provide a redemption period after a foreclosure sale. Instead, the redemption period happens before the sale. The length of the redemption period varies depending on a number of factors, like whether the lender is seeking a deficiency judgment or whether the borrower abandoned the home.
In Wisconsin, you can’t get your house back after a foreclosure is over by redeeming it. However, under Wisconsin law, you get a specific amount of time before the sale during which you can stop the foreclosure by paying off the total amount of your mortgage debt. This period of time is called the "redemption period."
Wisconsin foreclosures are judicial, which means the foreclosing lender has to file a lawsuit in court to foreclose. After the lender gets a judgment from the court, the redemption period begins. (Wis. Stat. Ann. § 846.13). Once the redemption period expires, the sale takes place, and the court confirms it. Unlike in some other states, Wisconsin doesn’t give foreclosed borrowers a right of redemption after the sale.
In Wisconsin, the length of the redemption period depends on the circumstances:
If the lender waives its right to a deficiency judgment, the redemption period is shortened. Because of the shortened period, lenders often choose not to go after borrowers for deficiency judgments.
Mortgages executed before April 27, 2016. The redemption period is generally 12 months after the court enters a judgment to foreclose. (Wis. Stat. § 846.10). But if the lender waives its right to a deficiency judgment, the redemption period is reduced to six months. (The lender can waive the deficiency judgment and shorten the redemption period only if the borrower agrees in writing when signing the mortgage. Most Wisconsin mortgages contain a paragraph in which the borrower agrees to a shortened redemption period if the lender waives the deficiency judgment.) (Wis. Stat. § 846.101).
Mortgages executed on and after April 27, 2016. The redemption period is generally six months after the court enters a judgment to foreclose. The borrower may ask the court to extend the redemption period to eight months, but only if attempting in good faith to sell the mortgaged premises and has entered into a listing agreement with a licensed real estate broker. (Wis. Stat. § 846.10).
If the lender waives its right to a deficiency judgment, the redemption period is reduced to three months. (Again, the lender can waive the deficiency judgment and shorten the redemption period only if the borrower agrees in writing when signing the mortgage. Most Wisconsin mortgages contain a paragraph in which the borrower agrees to a shortened redemption period if the lender waives the deficiency judgment.) The borrower may ask the court to extend the redemption period to five months, but only if attempting in good faith to sell the mortgaged premises and has entered into a listing agreement with a licensed real estate broker. (Wis. Stat. § 846.101).
The redemption period is six months, but if the lender waives the deficiency judgment, the redemption period is three months. (Wis. Stat. § 846.103).
Regardless of whether a deficiency is sought, if you abandon (permanently move out of) the home, the redemption period is five weeks. (Wis. Stat. § 846.102).
To redeem the home, you must pay the court clerk or the foreclosing lender:
You have up until the court confirms the sale to pay the redemption amount. (Security State Bank v. Sechen, 2005 WI App 253, 288 Wis.2d 168, 707 N.W.2d 576).
Keep in mind that there are other ways, besides redeeming the home, to stop a foreclosure. You might potentially be able to refinance the loan, pay off the past-due amounts to reinstate (catch up on) the loan, get a mortgage modification, or sell the house and pay off the amount due.
If you need more information about Wisconsin foreclosure procedures, potential defenses to a foreclosure, or about how long the redemption period will be in your foreclosure, consider talking to a local attorney. If you want information about foreclosure avoidance options, consider talking to a HUD-approved housing counselor.
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