Foreclosure. For many Wisconsin homeowners, foreclosure can be a scary word that you don’t want to talk about. Foreclosure in Wisconsin is also a situation that so many people don’t think will ever happen to them. However, as the recent state of the world has shown us, situations can change very quickly over unforeseen issues. You might be doing fine but, thanks to the financial markets falling or an economic shift, you find yourself unable to make mortgage payments. Then you’re desperately trying to keep up but, before you know it, your lender is reaching out to you to catch up on payments. Then you might find your Wisconsin home in pre-foreclosure and your options are running low. Then, if you can’t make any payments, you end up in foreclosure. Now, your lender is aggressively trying to find you and demanding payments you can’t make. And that’s how you could end up losing your house.
The good news is that there are steps you can take to prevent foreclosure from happening. Many of these steps even allow you to maintain control over what happens to your Wisconsin house. So whether you decide to apply for a loan modification, declare bankruptcy, go the legal route, or sell your house for cash, you can make the best decision for yourself. Let’s answer the question, “can you avoid foreclosure in WI?”
Avoiding Foreclosure In Wisconsin
Foreclosure Laws in Wisconsin
Before we discuss how to avoid foreclosure in Wisconsin, let’s be sure that we understand what foreclosure is and how foreclosure laws work. Foreclosure is when a borrower is either unable to or cannot pay their mortgage payments. After a short grace period, the lender or bank will then begin the foreclosure process, which can end with the repossession of the house or property. Foreclosure can also happen if the homeowner or borrower is unable to pay property taxes or their homeowners’ association fees.
During the foreclosure process, the lender can gain ownership of the property from the borrower and sell it in order to satisfy the outstanding among owed on the loan. The lender has the right to take back the house from a homeowner who doesn’t pay because a mortgage is a secured loan. That means the borrower has guaranteed repayment of the loan by providing collateral of some kind. In this case, it’s the house itself.
When it comes to a mortgage, the borrower pays money to repay the loan, usually in the form of monthly payments. However, if they are unable to make those payments, the house becomes collateral against the loan. When a borrower signs a mortgage agreement, you are agreeing to the knowledge that the lender can foreclose on the house if you aren’t able to continue payments on the loan. If you’ve ever heard of a bank or lender putting a lien on the title of the house, that’s what this means. Though, if the borrower pays off the entire mortgage loan, the title lien is removed.
Usually, this isn’t a concern for homeowners who take out a mortgage because they are able to make payments or sell their Wisconsin house before they get into foreclosure. This is also because lenders try to make sure the people they lend money to are in a good position to repay these loans. The lender verifies income, credit scores, and debt-to-income ratios. But that doesn’t account for the fact that situations can change and the economy can make sudden shifts that change someone’s ability to pay their mortgage. And then it only takes a few months of not being able to repay your loan for a homeowner to be in trouble and find themselves in foreclosure in Wisconsin.
Mortgage Loans in Wisconsin
There are some important things to know about mortgage loan rules in Wisconsin. Chief among them are the things that all mortgage loan originators are required to do in the state of Wisconsin.
First and foremost, a mortgage lender must complete a criminal background check, authorize a credit report, fulfill any state or federal education requirements, pass a national test on mortgage rules and regulations, complete a regulatory background check, and identify the mortgage banker they are employing when a loan is issued. Make sure that your mortgage loan originator is qualified and following these rules so that you are aware of your situation if and when you’re in foreclosure.
Missing Mortgage Payments
When a home mortgage’s payments are 60 days overdue, a lender will either stop accepting payments or will require the borrower to commit to a repayment deal. This is what begins the foreclosure process. It usually takes around six months for a homeowner to be served with foreclosure in these situations. The homeowner is served with a foreclosure notice. This is the effective moment when foreclosure begins.
It can take as few as 120 days for a mortgage lender to foreclose on a Wisconsin house and evict the homeowner. However, if the homeowner answers the complaint, that can delay the process.
State Foreclosure Laws in Wisconsin
U.S. laws require that a mortgage provider wait until your loan is over 120 days overdue before they can begin a foreclosure process. However, there are some situations where that is not the case. If the homeowner violates a due-on-sale clause or if the servicer is joining the foreclosure action of a superior or subordinate lienholder, it is possible in Wisconsin for your foreclosure to begin sooner.
In Wisconsin, a lender is required to file a lawsuit in court when they want to foreclose on a house. The lender will give you notice by serving you with a summons and complaint and you have 20 days to file an answer in the court where they filed the lawsuit. If you do not answer the court action in time, the lender can receive a default judgment from the court, which effectively gives them permission to hold a foreclosure sale. At that point, you could lose your Wisconsin house.
How to Avoid Foreclosure in Wisconsin
One way to avoid foreclosure in Wisconsin as a homeowner is to declare bankruptcy. This will cease any foreclosure process regardless of where it might be in the timeline. It also gives you more time to figure out what you want to do with your Wisconsin home. The lender can file a motion for relief during this stay, but that may or may not be granted. However, even if that does happen, it will provide some delay to sort out your plan.
Declaring bankruptcy can sound like a good idea but there are drawbacks and considerations you should be aware of. The biggest thing is that your credit score is going to take a nosedive. That’s going to make it very hard for you to get loans or credit cards in the future and it will be on your credit report for a long time. Also, you won’t be able to file for bankruptcy again for a long time, so it’s something you have to be very sure about using now. Remember too that bankruptcy still allows creditors to attempt alternative ways of collecting debt, such as wage garnishment, so you’re not entirely out of the woods either way.
An alternative is to work with your lender on a solution for both sides. You can apply for a loan modification or foreclosure avoidance process, which the lender may agree to. While this still means you have to make payments, it can slow the process down and help you avoid declaring bankruptcy or losing your Wisconsin house.
If you’re running out of time, you need cash, or you just would rather sell your Wisconsin house as soon as possible, one of the best options is to sell your house or property as-is to a real estate investor like Cream City Home Buyers. Even if it looks like foreclosure is close to happening, until the lender actually owns your Wisconsin house, Cream City Home Buyers can make you a cash offer and work with you to avoid foreclosure.
The best part of working with Cream City Home Buyers is that you don’t need to do anything to your property. We buy houses “as-is,” which means we buy houses in their exact condition no matter what. Even if there is physical damage or financial problems, we will buy your Wisconsin house. No need for you to make repairs, clean up, or do any marketing.
Just reach out to us with all the details about your house in foreclosure in Wisconsin and we’ll take it from there. We’ll assess the property and then make you a no-obligation offer. If you decide to accept the offer, we will pay you cash for your Wisconsin house. You also get to decide the timing of the closing, whether you want to do it ASAP or sort out some details first. Then, you get to walk away from the foreclosure process with cash in your pockets to start fresh.
As you can see, it’s possible to prevent foreclosure from happening in Wisconsin. You have options when it comes to what happens to your house and how you can move forward. If you do decide that you want to sell your house for cash to avoid foreclosure, consider contacting Cream City Home Buyers today to start the process. You could have cash for your Wisconsin house within days!