The foreclosure and sale of residential property

The bill requires a mortgagee, when commencing a foreclosure action involving owner-occupied residential property, to file an affidavit with the court stating whether the mortgage loan is owned, securitized, or guaranteed by Fannie Mae, Freddie Mac, or Ginnie Mae and whether the mortgagee is a participant in the federal mortgage modification program. If the affidavit states that the mortgage loan is owned, securitized, or guaranteed by one of those federally-sponsored organizations and that the mortgagee is a participant in the federal mortgage modification program, the affidavit must also include a statement about the results of the modification program. The statement must show either that the mortgage modification process has been completed without resulting in a modification of the mortgage loan and that written notice of that result has been sent to the homeowner, or that the mortgage loan was not eligible for a modification under that program and the reason for that determination. Under the bill, a court may not enter a judgment for foreclosure involving owner-occupied residential property until the court has received a copy of the affidavit.

After the court receives the required affidavit, the bill requires the court to determine if the facts stated in the affidavit are correct. If the court determines that there is no dispute about the facts stated in the affidavit, the court may continue the foreclosure action. If the court determines that the mortgage loan is eligible for the federal mortgage modification program, but the process to determine if a modification is possible has not been completed, the bill requires the court to stay the foreclosure action under the program's requirements are completed. The bill requires the mortgagee to notify the court of the status of the process every 45 days or risk having the foreclosure action dismissed. If the mortgage loan is modified under the program, and the homeowner is complying with the terms of the modification, the bill requires the mortgagee to notify the court and the court to dismiss the foreclosure action.

Under current law, as created in 2009 Wisconsin Act 2 , if a residential rental property is the subject of a foreclosure action, the mortgagee is required to provide notice to the tenants that a foreclosure action has been commenced no later than five days after the action is filed, and that a judgment of foreclosure has been entered no later than five days after the entry of the judgment. This bill changes those time limits to 30 days. The bill also adds a requirement that the notice include a statement of the rights and obligations of the tenant under those situations. Current law, as created in 2009 Wisconsin Act 2 , requires these notices to be sent by certified mail and specifies that the notice is completed when mailed, while this bill adds that the notice must also be sent by first class mail and specifies that the notice is considered complete when both mailings are sent to the tenant or to the occupant of the rental unit if the tenant's name is unknown.

Under current law, as created in 2009 Wisconsin Act 2 , a tenant whose tenancy is terminated as the result of a mortgage foreclosure may remain in possession of the rental unit for up to two months. This bill provides that during this period of possession the purchaser at the foreclosure sale and the tenant have all the rights and obligations of a landlord and tenant, respectively, with respect to each other.