Wisconsin has a homeownership rate of about 67% - not the best in the country but certainly not the worst either. Their ranked 19th in the nation. This is a state that has seen ups and downs with the market and is working to put programs in place to help citizens of the Badger State to purchase property. In some cases, buyers are looking for special financing options that might allow for a faster process and less paperwork than a standard mortgage loan. Big banks can take a long time to funding a mortgage and sometimes, the buyer is in a hurry to renovate or just wants to borrow without having to go through the standard process. Hard money loans can offer Wisconsin borrowers another way. This option does require the homeowner to use real estate they own or their home as collateral but it is a viable option for many that would rather get their loan funded fast and without so much paperwork.
Wisconsin Foreclosure Laws
Foreclosures in Wisconsin are managed by the courts. A mortgage company or lender that decides to foreclose on a property must file a law suit and a court must issue a final judgment of foreclosure in order to take the property. There are clear steps in place to assure that a borrower is properly notified and that they have a chance to respond. But, if a final judgment of foreclosure is issued in Wisconsin, then the property is usually sold as part of a public noticed sale. A sheriff or judge within the county where the property is located will conduct the sale.
Property Redemption after Foreclosure Sale
In some states, borrowers have a standard period of time where it is possible to get their property back after a foreclosure sale has taken place. In Wisconsin, most borrowers have no rights of redemption after the sale is final. In some cases, if the lender purchases the home at the foreclosure sale and if the sale price was lower than the total amount owed, including principal, interest, fees and costs, it is possible for the borrower to get a special right of redemption within 30 days of the foreclosure sales, according state statute. (See 735 Ill. Comp. Stat. 5/15-1604(a)). Legal representation is highly encouraged as there is no guarantee that the property will be returned to the borrower, even with these circumstances in place.
In cases where a foreclosure property is sold in Wisconsin, but it does not bring in enough money to cover the debt, a borrower will be held responsible for any additional monies owed with what is called a deficiency judgment. If a borrower is assigned a deficiency judgment, they will have to make additional payments to the lender to take care of that remaining debt.
Deed in Lieu of Foreclosure
A Deed in Lieu of Foreclosure is one option that Wisconsin property owners have to remedy a defaulted loan. They do not keep the property, but they can avoid a foreclosure judgment. This is an agreement between the borrower and the lender that turns the property over to the lender and eliminates the potential of a deficiency judgment as well. If both parties agree, then the borrower simply gives the property deed to the lender, terminating the borrower’s ownership in the property. If the lender accepts the deed, they cannot try to get a deficiency judgment against the borrower for additional monies owed.
Another option in Wisconsin is a consent foreclosure. It is just another type of agreement between a borrower and lender that the state will acknowledge and honor. With this option, the court enters a judgment satisfying the mortgage by giving the lender absolute title to the property so that they can sell it themselves, instead of allowing the courts to sell it. The borrower has no rights of redemption after this type of foreclosure judgment and after the judgment has been rendered, the lender cannot file for a deficiency judgment. Borrowers in a consent foreclosure agreement are protected from owing additional monies on that loan.
Common Law Strict Foreclosure
The state of Wisconsin requires mortgage foreclosures to be handled through the courts, according to a prescribed process. This is referred to as ajudicial foreclosure. Any lien holder (not just a mortgage holder) has the right to force a judicial sheriff's sale.
Protections for Military Personnel
Wisconsin law provides protections to members of the national guard or state defense force who are ordered into state active duty for 30 days or more. Wis. Stat. § 321.62(1)(b).Among other protections, the lender cannot foreclose during or within 90 days after the service member's period of state active duty, unless a court ordered the foreclosure before the beginning of the service member's period of state active duty, and approves the foreclosure after it occurs. Wis. Stat. § 321.62(12).
This protection applies to mortgages taken out prior to active duty. (Keep in mind there is also a federal law, the Service Members Civil Relief Act, which provides protections to military service members who are facing foreclosure.)
High Risk Mortgage Protections
Before a lender or bank can file a foreclosure action on a high risk home loan, they must send a notice that informs the borrower of their right to cure the default within 30 days. In addition, a borrower can raise violations of the high risk home loan law - including the prohibition of prepayment penalties and negative amortization - as a defense in a foreclosure action. In these cases, it is important to have experienced legal counsel in order to get the best outcome in your specific situation.
Do You Have a Mortgage or a Deed of Trust?
Wisconsin allows both. The differences between a mortgage and a deed of trust affects homeowners only when foreclosure becomes an issue. The primary difference is that a mortgage foreclosure must go through the courts. A Deed of Trust does not. However, because Wisconsin is a judiciary state, all foreclosure proceedings must go through the courts so the difference here is small. However, it is important to note that some lenders prefer Deed of Trust agreements vs a mortgage because foreclosure is often faster and easier from their side of the process. If you are unsure about which one you have, look at your loan documents, contact your mortgage servicer or go to your local land records office to find out. In Wisconsin, foreclosure will have to go through the courts, regardless of which type of loan agreement you have in place.
Additional State Laws
The maximum legal interest rate on a personal loan in Wisconsin is 5%. However, consumers often unknowingly agree to waive the limit and pay higher rates by clicking "I agree" online or by signing a contract that outlines a higher interest rate than is outlined by the law. While most states, including Wisconsin, have usury laws on the books that are meant to prevent unfair interest rates, most courts will defer to contract law over these simple statutes. That means that in Wisconsin, if you agree to a contract that has a higher interest rate, or additional points or fees to be paid, you are accepting that rate regardless of the state's current usury law. It is not illegal to charge a borrower fees, points or higher interest rates, if they agree to the terms of the contract in writing.
Wisconsin is a homestead state. This means that property owners can file their primary residence as a homestead and will enjoy some protections designed for homeowners to keep them from losing their house or property as a result of economic hardship. In most cases, this will keep their home off limits to creditors. However, there are four situations that are NOT protected, where a borrower can lose their property as a result of unpaid debt. In Wisconsin, those circumstances include:
- Under the Wisconsin exemption system, homeowners may exempt up to $75,000 of their home or other property covered by the homestead exemption.
- Property surrounding the dwelling is also exempt and must be no less than 0.25 acres and no more than 40 acres.
- Wisconsin changed its law in 2009 and now if you and your spouse are filing a joint bankruptcy, you can double the homestead exemption and protect up to $150,000 of value in your home.
- The homestead exemption also protects rental income, if you rent out a portion of your homestead, such as a room, in-law suite, or part of a duplex (Schwanz v. Teper, 66 Wis.2d 157 (1974), 223 N.W.2d 896).
- Additionally, if you sell your home and intend to purchase another home with the proceeds of the sale, you may use the exemption to protect that money for up to two years after the sale.
- In Wisconsin, you may also use the homestead exemption to protect your residential lease or stock in a housing co-op.
Lender Licensing Requirements
In Wisconsin, anyone engaged in the business of brokering, funding, originating, servicing or purchasing residential mortgage loans or residential real estate in the state, is required by law to hold a Residential Mortgage License issued by the state. With the passage of Act 360 however, bona fide nonprofit organizations, as defined in s. 224.71(1br), Stats, may be exempt from obtaining a Wisconsin mortgage banker and/or mortgage broker license. Consult a legal representative for further information.