How Foreclosure Works – The Foreclosure Freight Train
When homeowner efforts to refi¬nance, work out a loan modifica¬tion or otherwise avert a foreclosure fail, the lender will file a foreclosure action. Foreclosure is the legal pro¬cess whereby a mortgage lender can take title to the properties of owners in serious default on their mortgages. The lender may take title to the property at the sheriff’s sale and, in most instances, resell the home. If the property is worth less than the total amount owed on the mortgage loan, a deficiency judgment may be pursued against the homeowner. Foreclosure should be avoided at all costs.
A foreclosure under Wis. Stat. Chapter 846 generally takes four to 18 months. Once commenced, foreclosure is like a freight train, always moving forward in a slow and steady progression.
When a property owner has not made any mortgage payments for approxi¬mately 90 days, the attorneys will pre¬pare a summons and complaint that is served upon the owner and all other lien holders. After the homeowner answers the foreclosure complaint, or after the 20 days if no answer is filed, the attorneys will schedule a court appearance. If any defenses are not sufficient to prevent continua¬tion of the foreclosure, the lender’s attorneys will ask the court for a judg¬ment specifying the total amount due on the mortgage loan and ask for a sheriff’s sale and perhaps a deficien¬cy judgment. A deficiency judgment holds the borrower responsible for any amounts still owed to the lender after the proceeds of the sheriff’s sale have been applied to the debt. The foreclosure judgment also specifies the length of the borrower’s redemp¬tion period, that is, the amount of time the homeowner has to pay the entire mortgage debt and thus pre¬vent the sheriff’s sale. For a residen¬tial property, the redemption period generally will be 12 months if the lender seeks a deficiency judgment, six months if no deficiency judgment is pursued and two months if the property is abandoned. At the end of the redemption period, the property is sold at a sheriff’s sale to the highest bidder, typically the mortgage holder.
Here are some helpful resources to avoid the Foreclosure Freight Train
• Learn about Foreclosure Avoidance at the Wisconsin Foreclosure Assistance Resource Center:
• Call the lender. Contact information for various mortgage loan servicers is available on the Making Home Affordable Web site at http://makinghomeaffordable.gov/con¬tact_servicer.html and on the HOPE NOW Web site at www.hopenow.com.
• Speak with a counselor, preferably a U.S. Department of Housing and Urban Development-approved
Visit Wisconsin Foreclosure Resource at www.wisconsinforeclosureresource.com
HUD at www.hud.gov/offices/hsg/sfh/hcc/hcs.cfm?webListAction=search&searchstate=WI, or call 800-569-4287 (or TDD 800-877-8339) for a listing of HUD-approved housing counseling agen¬cies in Wisconsin.