Disclosure: This content is for educational purposes only and should not be construed as legal advice. If you are seeking legal advice please consult with an attorney.
Many homeowners who get overburdened by their mortgage payments face brutal foreclosure. It’s normal during such a difficult time to feel helpless with the looming dread of becoming homeless. But is there a way to stop foreclosure? The simple and accurate answer is “yes.” Depending on your situation, there may actually be more than one way to avoid foreclosure.
Before we discuss the available options to prevent foreclosure, it helps first to understand how the state of Wisconsin handles foreclosure.
The foreclosure process in Wisconsin
Under the federal loans and mortgage servicing laws, the mortgage lender or servicer must wait at least 120 days since the last defaulted payment to file a foreclosure. During that time, the borrower can apply for various loss mitigation or foreclosure avoidance options. If you don’t submit any applications within the 120-day grace period or disagree with the servicer, the lender can go ahead and file a foreclosure lawsuit under state law.
You can still apply for loss mitigation after the foreclosure process begins. If you submit a complete application 37 days before the foreclosure sale date, the lender must first consider the application before proceeding with the sale.
If the lender finds you ineligible for any foreclosure alternatives or you again fail to honor the loss mitigation agreements, the lender can initiate the foreclosure in a court of law. Provided you have any strong defenses against the foreclosure, you can submit them in the hearing, ideally with the help of a lawyer.
If the lender wins the lawsuit, you’re free to appeal during the redemption period between the judgment and the property sale date. The redemption period ranges between five weeks to a year, depending on various circumstances such as the mortgage signing data and deficiency judgment.
How to stop foreclosure in Wisconsin
Even with the bank pushing for foreclosure, there are still some ways you can retain your house, minimize the losses, or at least buy some extra time to figure things out.
In most cases, foreclosure is the lender’s last resort in trying to get their money back. Banks and other financial institutions are usually open to flexible compromises that save them the trouble of taking a house through foreclosure.
Foreclosure mediation is the process of working out solutions to stop foreclosure or avoid it altogether. You can negotiate with your bank in person or through a third-party mediator either before the foreclosure lawsuit or during the redemption period. Some of the alternative options to foreclosure include:
You can ask the bank to restructure your loan terms, for instance, by lowering the installments, temporarily suspending payments, or reducing the interest to make the loan repayment more affordable. A forbearance agreement allows you to renegotiate your loan terms before falling behind on payments, while a repayment plan helps you catch up with missed payments. It’s best to talk to your lender when you realize you might fail to make a payment.
If your loan due is close to the value of the house, the bank can agree to let you sell the house for less than you owe. In such an arrangement, the bank may waive the deficit. While a short sale will negatively impact your credit score, the impact is significantly less than a foreclosure. If you would like to explore a short sale contact Sell My House In Wisconsin to discuss how we can make the process easy for you.
Deed in lieu of foreclosure
Deed in lieu of foreclosure means relinquishing the property’s deed to the lender in exchange for relief from the mortgage debt and other associated obligations. Unlike foreclosure, which is publicly visible, deed in lieu of foreclosure is private, saving you some public notoriety. Plus, the lender may agree to lease the property to you for some time or at least until a buyer comes along.
Reinstating the mortgage
Discover ways to quickly come up with some cash. If you can find some cash before the sale, you can avoid foreclosure by clearing the missed payments along with any accumulated interest and fees. After that, the mortgage is reinstated, meaning you can continue making regular payments. This is probably the best-case scenario for avoiding foreclosure, but it’s not always an option for all homeowners.
Under certain circumstances, bankruptcy can stall or stop foreclosure. Bankruptcy is a whole other complicated and detailed legal topic when it comes to dealing with delinquent loans. All we can say is that depending on your bankruptcy proceedings and the state of bankruptcy, you can buy some time before foreclosure and maybe gain access to favorable loss mitigation options.
It’s actually easy to avoid foreclosure if you act early. Talk to your bank whenever your financial situation changes or you feel you can no longer make regular mortgage payments; speak up before the issue goes to court. But if it does, seek legal counsel on the matter and explore the various foreclosure help programs available to you. Depending on various social and financial factors such as employment and credit history, there may be several ways to stop a foreclosure.
Here are a few more things to consider when facing foreclosure:
- Respond promptly to notices and court sermons.
- Consider all means to avoid foreclosure.
- Hire an experienced real estate lawyer if necessary.
- Don’t take out your frustration on the property.
- Avoid foreclosure scams.
- Stop fighting for a home you can’t afford.
Is selling an option?
Yes. In some circumstances, you can sell the house instead of losing it in foreclosure. For instance, the moment you realize you can’t make payments, you can clear or transfer the mortgage by selling the house to a new owner and looking for a more affordable living arrangement.
It would save you a lot of financial and emotional distress if you sold a house instead of handing it over to the bank. Keep in mind that losing a home in a foreclosure lawsuit dramatically lowers your credit score and strips your financial bargaining power. And that’s not all — you may still owe the bank in deficit and fees after the foreclosure.
If you are looking for a quick and easy way out of a strenuous mortgage burden, we are here to help. In our line of work, we understand the pain, frustration, and the potential social and financial implications of going through foreclosure. That’s why we can provide you with options to stop foreclosure. At Sell My House in Wisconsin, we buy houses in their current condition. Plus, we make sure you don’t incur any fees or commission costs. If you are facing foreclosure or behind on payments time is of the essence so it is important that you take action now! Let’s talk about getting a fair quote for your house and cash in your pocket in as little as 15 days.