Attorney Deanne Koll explains the recent changes to foreclosure rules in Wisconsin.
Disclaimer: This video is designed to be educational and informative, but it is not legal advice. Collection law is constantly evolving and subject to change. Each situation is unique, and each case should be addressed to fit the unique situation.
In 2016, the Wisconsin Legislature passed a bill (later signed into law by Governor Walker) which changed the rules for foreclosure of real estate mortgages recorded after April 26, 2016. It’s worth knowing a little about these changes.
First, this new law reduced the redemption period applicable to a foreclosure action involving residential property from 12 months to 6 months if the deficiency is not waived, and from 6 months to 3 months if the deficiency is waived.
This essentially halved the previous redemption periods for residential foreclosures. However, this law also provides that if an owner is attempting, in good faith, to sell the residential property subject to a foreclosure, the court can increase these newly reduced redemption periods by 2 months.
Second, the law clarified who may petition the court in a foreclosure action to declare mortgaged property abandoned for purposes of reducing the redemption period.
The law clarifies that only the lender or the municipality may request this reduced redemption period, effectively stripping the right of a borrower to try and get the redemption period reduced to 5 weeks so that they can be rid of the property more quickly—usually done when a property was causing the borrower to pay fees or be cited for violations, etc.
Lastly, the law attempted to clarify the rules regarding when “zombie properties” had to be sold at sheriff’s sale. Lenders were foreclosing property, getting their judgment, but never having the property sold at sheriff’s sale, creating “zombie properties” that stood in limbo.
This caused major issues for borrowers (who were to be mowing the lawn, paying for city water bills, and so on, during this time) and municipalities (who are responsible for the special assessments and ordinance violations).
Prior to this law change, the court had ruled that lenders had to sell properties at sheriff’s sale after a reasonable time. This law changed the court’s decision and states that commercial property need not be sold, and residential property must be sold within 12 months.