Foreclosure is a legal proceeding that is instigated by a mortgage lender when a borrower defaults on, or does not pay, a mortgage loan. Foreclosure terminates the rights of the borrower relating to the property secured by the mortgage loan. The Wisconsin foreclosure process involves one of two types of legal proceedings.
Mortgage lenders in Wisconsin may foreclose on deeds of trust or on mortgage deeds. A deed of trust is a condition of the loan in which the borrower agrees that the lender retains ownership of the property until the mortgage debt is fully paid. A mortgage deed lists the borrower as the legal property owner, but the property is listed as the security for the mortgage loan.
The foreclosure process in Wisconsin can be either judicial or non-judicial. The judicial foreclosure process begins with the lender filing a lawsuit against the borrower after the borrower defaults on the terms of the mortgage loan.
The non-judicial foreclosure process is based on a power of sale clause contained in the deed of trust. A power of sale clause allows the lender to initiate the foreclosure process by filing a complaint with the local court against the borrower after the borrower defaults. The court will then issue a decree of sale for the property.
If the court declares a judicial foreclosure, the property may not be sold at auction until one year from the judgment date unless the mortgage lender waives the right to a deficiency. If the lender waives deficiency rights, the property may be sold at auction in six months or in two months, if it is abandoned. In a non-judicial foreclosure, the timeline for the foreclosure process is outlined in the power of sale clause guidelines.
If the date, time, place and terms of a foreclosure sale are outlined in the power of sale clause of a deed of trust, Wisconsin law will enforce those guidelines. Otherwise, a non-judicial foreclosure requires that a notice be recorded with the county prior to the first published foreclosure notice. Notices must include the place and time of the foreclosure sale. Public foreclosure notices must be published in a newspaper once weekly for six consecutive weeks. The newspaper must be published in the county where the property to be foreclosed upon is located. The borrower must be served a notice of foreclosure using the same process as a civil lawsuit is served. If the borrower cannot be located, the notice must be posted conspicuously on the mortgaged property and served on any person occupying the premises.
A Wisconsin foreclosure sale must be held in accordance with the information listed in the foreclosure notice. Foreclosed properties sell to the highest bidder. The winning bidder receives a certificate of purchase for the property.
In Wisconsin, the original borrowers may redeem the property within one year of the foreclosure sale by paying the highest bid amount, plus interest. If the foreclosure sale was confirmed by a court order, the borrower does not have a right of redemption after the sale.