Legal Question in Real Estate Law in Wisconsin

Typically, lenders will pursue both parties regardless of divorce, misfortune, or location, whenever any sort of a loan goes into default. The only bright spot is that for WI residential real estate first mortgage loans, foreclosures generally seek only title to the property rather than personal judgment against the borrowers. This is known as an "in rem" action, against "the thing" only, rather than against the people. Since the borrower's names are on the title, they must be named in the lawsuit, but the pleading details will usually waive judgment against them personally, and rather only foreclosure of the property. This eventually leads to title transfer following judicial approval of the resulting sheriff's sale, some six months later, one judgment in favor of the bank has been obtained. Unfortunately, the same is not typically true of second mortgage loans. These generally exceed the value of the property (in today's depressed market conditions) by 100% of the loan balance, meaning that they are essentially unsecured loans. Lawsuits resulting from defaults on second or subsequent mortgages therefore nearly always seek personal judgment against all borrowers, which will eventually give the lender the right to garnishee wages, seize bank accounts and other assets, and require financial disclosures for discovery of assets to seize. You therefore should immediately consult with a bankruptcy lawyer if you are facing any type of foreclosure, in order to discover exactly what is at stake and what can be done to prevent it. A chapter 7 bankruptcy usually will fully discharge all personal obligations on any second mortgage, while a chapter 13 can stop a foreclosure all allow reinstatement of the loan in a first mortgage foreclosure, assuming that you can now afford to resume payments and catch up arrearages over five years. My comments here are not legal advice, nor do they create an attorney client relationship between us; rather they are only for public educational purposes on this website. You are; however, always welcome to contact my office in Racine to discuss any additional questions which you may have.