These consequences change depending on the state. In Wisconsin, the lender, or the representative for the owner of the loan, is obligated to initialize a foreclosing event at some point.
In this and many other states, a lawsuit needs to be filed to make the process happen. Throughout the process, there are state and federal laws designed to protect those involved. Creditor rights are also assured.
What Exactly is a Mortgage?
In the state of Wisconsin, you can apply for a loan to purchase residential real estate. In order to get the ball rolling, you’ll have to sign a couple documents:
Promissory Note: a document showcasing your intent to repay the loan at the agreed-to terms.
Mortgage: a document providing the lending entity a security interest related to the property. In the event you fail to repay the loan, the mortgage empowers the lender to auction off the property as a foreclosing to recoup its losses.
What if You Don’t Make a Mortgage Payment in Wisconsin?
When a payment is missed in this state, the creditor is typically permitted to apply a late fee at the end of the grace period. This period lasts ten to fifteen days on average. The promissory note and your billing statements for the month should divulge the exact nature of the timing.
While the servicer is awaiting its due payment, you can expect them to contact you via phone and mail, inquiring about your progress. More often than not, federal laws over mortgage servicing dictate that the creditor must at least try to reach out to you to discuss alternatives; this is known as “loss mitigation”.
This mitigation must occur before 36 days have passed since every missed payment. The servicer must inform you of possibilities of loss mitigation upon their availability, and must also provide assistance in the form of personnel for assistance, all within 45 days.
It should be noted that there are a few exceptions to some of these requirements. For example, if you declare bankruptcy or that you do not wish to be contacted by the creditor due to the Fair Debt Collection Practice Act.
What is a Breach Letter?
Wisconsinite mortgages often contain a provision which necessitates a breach letter to be sent by the lender in the case of a failed payment. This letter is a notice that the loan has been defaulted. If this development is not rectified, the lender may label the loan as “due”, accelerating the process.
At What Point Does the Foreclosing Begin?
According to federal law, the servicer is usually required to wait until the loan is more than 120 days overdue before the event can officially begin. in some situations, such as when a due-on-sale clause is violated or when a servicer joins a foreclosing by a subordinate or superior holder of a lien, the process can happen more quickly.
If the borrower clears the debt in time, including paying associated fees and interest, their ownership of the property is considered “reinstated”.
Wisconsin Laws for Foreclosing on Properties
As discussed, this state’s lenders are obligated to file a lawsuit in order to begin foreclosing on a property. Notice of the suit must be provided via a complaint and a summons for the debtor. You’ll most likely have 20 days to file a response with the court.
This response is very important. If you don’t make sure to file it, the lender might be issued a default judgement by the court, enabling the lender to hold the auction. If you satisfy the demand for an official response, the litigation phase can start. The lender will be granted the opportunity to request grant summary judgement, which means a request is made for a judgement in favor of the lender due to the fact that the important aspects of the case are not being disputed.
Engaging in Foreclosing Mediation
During mediation, both the borrower and the lender work to prevent foreclosing on a home. Mediation is available as a service in participating counties by the Wisconsin Foreclosure Mediation Network, an organization established by the state Department of Justice and the state Attorney General.
Other counties have similar, separate programs. In many of them, the lender needs to send a notice concerning mediation in addition to their complaint. Legal consultation at this stage is recommended.
In the event that the court issues summary judgement for the lender, or if the borrower is unsuccessful at trial, the property will be order sold in an auction. When that happens, an advertisement for the sale must be published in a public area and on the county website (assuming there is one) three weeks or longer before the date of the sale.
The highest bidder will own the property. The lender is compensated until the borrower’s debt is cleared.
It becomes clear upon involvement in foreclosing on a property that creditor rights and the laws governing such processes are complicating and can change rapidly and significantly. Fair debt collection is complicated but not impossible. Consulting attorneys with specialized knowledge of the moving parts of the written law on the matter can only improve your chances of a favorable outcome.