The redemption period and notice of sale applicable to a foreclosure action involving noncommercial property and procedures regarding abandoned property in a foreclosure action

Under current law, the redemption period applicable to a one-family to four-family residence that is owner-occupied at the commencement of the action, a farm, a church, or a tax-exempt charitable organization (noncommercial property) is 12 months if the deficiency is not waived and six months if the deficiency is waived.

This bill reduces the redemption period applicable to a foreclosure action involving noncommercial property from 12 months to six months if the deficiency is not waived and from six months to three months if the deficiency is waived.

This bill also provides that, if a mortgagor is attempting in good faith to sell noncommercial mortgaged property and has entered into a listing contract with a licensed real estate broker to sell the mortgaged property, the court may increase the redemption period from six months to eight months if the deficiency is not waived and from three months to five months if the deficiency is waived.

Under current law, if a court finds that the mortgaged property is abandoned, the redemption period is reduced to five weeks. In Bank of New York Mellon v.

Carson , 2015 WI 15, 361 Wis. 2d 23, 859 N.W.2d 422, the Wisconsin Supreme Court held that the court had the authority, upon motion of the mortgagor, to determine whether the mortgaged property was abandoned and could require that the property be sold within a reasonable time after the five-week redemption period. This bill permits a court to declare a mortgaged property abandoned only upon motion of the plaintiff or the city, town, village, or county where the mortgaged property is located.

This bill also provides that, if mortgaged property is determined to be abandoned, one of the following applies:

1. If the mortgaged property is noncommercial property, the plaintiff must, within 12 months after judgment is entered, either sell the property and have the sale confirmed or release the mortgage lien and vacate the foreclosure judgment.

2. If the mortgaged property is real property other than noncommercial property, the plaintiff is not required to sell the property, but any sale of the property may take place after the expiration of the five-week redemption period.

Finally, this bill codifies the holding of the Wisconsin Court of Appeals in Bank of America, N.A. v. Prissel , 2015 WI App 10, 359 Wis. 2d 561, 859 N.W.2d 172, by clarifying that notice of foreclosure sale may, but is not required to, be given during the redemption period for a noncommercial property for which deficiency is waived.