How much do you really know about the laws that affect your life? Not as much as you think, no matter what you learned from that guy down the street whose brother-in-law once knew a lawyer back in Los Angeles who was really on the ball...
Let's see how much you really know about foreclosures. Here's five quick questions designed to see what you know about how easily (or not) your bank can put you on the street:
1. True or false: If I make all my payments on time, my lender can't foreclose on me.
Answer: False. Your note and mortgage can impose a variety of duties on you, ranging from paying taxes or homeowner's insurance (if you pay those outside of the mortgage) to preserving the property to not allowing other liens to be placed on the property. Some notes and mortgages may allow a lender to declare a default if you file bankruptcy or are insolvent. The note and mortgage you got when you bought your house are long, but it's better to read them anyway and know what you can or can't do.
2. If I miss a payment, it'll take how long before a lender can force me to leave my house?
A. 30 days.
B. 6 months.
C. 12 months.
D. All of the above.
E. None of the above.
F. Trick question! It varies!
The answer, of course, is F. If you miss a payment, in almost every case, a lender must first declare a default, and then accelerate the loan -- meaning the lender has to tell you "You missed a payment, that's a breach, now you owe us all the money at once." That can take any number of lengths of time; some lenders are quick to do that, and some are slow.
After the default/acceleration, a lender (in Wisconsin) must file a foreclosure action and serve you with the papers. You'll get 20 days from whenever your served just to file an answer to the lawsuit; after that, a court would have to enter a judgment of foreclosure, which starts the redemption period. That redemption period is the time from when a judgment of foreclosure is given to the lender until the lender can sell your house at a sheriff's sale. It can be 3, or 6, or 12 months long depending on the circumstances.
After the redemption period runs, the house can be sold at an advertised sheriff's sale, and the sale must then be confirmed by the judge after a hearing. It's only after that that the lender (or new buyer) owns your house, and if you don't leave then, they'll get a court order kicking you out.
3. True Or False: I'm a renter, so I don't have to worry if my property's foreclosed.
False. You may not have to worry too much, because there's a federal law that protects most renters from immediate effects of foreclosure. Under that law, the person who buys your house at a sheriff's sale must honor the terms of a bona fide lease (those terms are pretty strict) and let you finish out the lease, but they don't have to let you keep living there. And if
you're living under a month-to-month or oral tenancy, the new buyer may be able to get you out in pretty short order.In Wisconsin, too, tenants are entitled to notice of the foreclosure proceedings, and under Wisconsin law, a tenant whose tenancy is terminated by foreclosure can legally withhold rent. Plus, if you as a tenant don't get notice as required by law, you can sue the forecloser and get $250 plus your attorney's fees.
4. The only people entitled to a jury trial in a foreclosure action are:
A. The lender.
B. The borrower.
C. Everyone.
D. Nobody.
Answer: Probably D, although it's not always that clear. Foreclosures are "equitable" actions, meaning the rules can be subject to court decisions on what's fair. Equitable actions as a general rule do not get a jury trial, in Wisconsin. But under some circumstances, either party might be able to assert a right to a jury trial if a case involves other claims, such as breach of the contract or counterclaims for violations of the law. However, the point might be moot because most foreclosure cases are decided by summary judgment, a motion that allows the Court to rule without a trial, because in many foreclosure cases, the facts aren't really in dispute.
5. If the lender tries to serve me with the lawsuit, and I don't answer the door, the lender will have to:
A. Dismiss the case and deal with me directly.
B. Mail me the paperwork.
C. Make an appointment with me to drop off the papers.
D. Try again the next day or thereafter.
Answer: B, and a little bit of D, with some provisos. Many people think that not being home to get the papers means they can't be sued; even more people think that if they refuse to take the papers they're being served, they can't be sued. Both are wrong, and badly so.
A lawsuit has to be served, but service doesn't mean you have to actually take the papers in your hand. They can be left in your presence, for one thing, so a process server who can't get you to take the papers can drop them on your porch.
If a process server (or sheriff) tries to serve you and can't, they have to try due diligence to actually serve you. That usually means making a couple of stops at your house, or trying to find out where you might be. It doesn't take all that much effort, generally. After they've used that due diligence and they still can't serve you, they have other options, including leaving the papers at your house with a family member who's 14 or older, or any competent adult living there (family member or not.) And, the lender can publish a summons and complaint -- running an ad in the legal sections of the paper to serve you and (sometimes) mailing you a copy of the paperwork.
There are benefits to not being served, at times, so I'm not issuing a blanket statement that you should always just arrange to get the papers. Instead, you just need to be aware that not taking the papers doesn't mean things go away; it just means you might lose and never know it because you were served via an alternate method and never realized it.
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