I’ll begin the series with what I see as the most important issue facing Wisconsin families: foreclosure.

Topic: Foreclosure

Our Wausau office receives the following question at least once every other week:

Question: We already know we aren’t keeping the house and we can’t afford to make any more payments toward the mortgage. How much time will we have to stay in the house until we get kicked out?

Before lawyers can answer that question, it is always a good idea to explain exactly where you are in the process.

Foreclosure Process (Ultra Short Version)

1. Breach Letter. A certified letter will arrive warning you of their intent to foreclose and they will invite you to pay to get current, “or else.” (The “else” follows)
2. Summons and Complaint. Handled like any other civil case. Always file an Answer and have an experienced attorney look for all possible defenses to your case. RESPA, TILA, HOEPA and other consumer protection laws can help, especially if your mortgage originated in the era of ‘fast and loose’ lending.
3. Judgment. Failure to file an answer, or a successful defense, may result in a judgment for the mortgagor.
4. Publication. There is a time period established by statute that requires publication of the foreclosure sale.
5. Sale. This is your last chance to find funds to buy the house. It is rare, but some folks have been able to save their home at the foreclosure sale.
6. Confirmation. Once the sale is complete, the judge reviews the paperwork to see if all the statutes were followed concerning the foreclosure, publication, notice and sale.
7. Deed. The deed is transferred to the highest bidder at the sale (which is the bank in a vast majority of cases.)
8. Eviction. Once the deed is transferred, the successful bidder now has the option of evicting anyone who remains in the home.

I hope you can see that the foreclosure process does not happen overnight. The stories you may hear of couples living in foreclosed homes for over a year, are likely true. After all, some banks may have trouble selling the homes they repurchased in foreclosure and would rather have folks in the house keeping the pipes warm and tending the property.

Timing Depends on Facts

Real Estate Foreclosure is governed by Chapter 846 of the Wisconsin Statutes. The statutes specify how much time must elapse before certain actions can be taken during foreclosure. For residential property, the timing of the foreclosure depends on one of the following three fact categories:

1) House is abandoned. (Two month redemption period)
2) House is occupied and the lender does not seek to sue the homeowner for money during the foreclosure (Six month redemption period)
3) House is occupied and the lender wants to sue the homeowner for money during the foreclosure (One year redemption period)

The redemption period is the time from judgment (Step 3, above) to sale (Step 5, above.) The law encourages lenders who wish to have a quick return of the property, to forgo suing the homeowner for money damages (deficiency.) The law also encourages folks who are faced with a foreclosure not to abandon the house.

The Sale, Confirmation and Eviction

Once sold, the Sheriff has up to 10 days to report the sale, and the foreclosure attorneys must schedule a hearing with the court to confirm the sale, and must allow at least 5 days of notice to all parties in interest prior to said hearing. Don’t forget that an eviction action is a separate proceeding with it’s own time line. The fastest evictions are in the range of two to three weeks, if all the hearings, notices and service fall in place.

Commencement of the Case Depends on Contract

The commencement of the case is governed by the actual terms of the mortgage and note, and when followed, certain consumer protection statutes. Most contracts allow a cure period before a lawsuit may be commenced, and the time line from the drafting of a complaint to getting a summary judgment can vary by jurisdiction and lender practice. Filing an answer can slow down the process for several months, especially if there are merits and the case is tried. However, using an answer as a mere delay tactic can incur further costs and fees under some circumstances if the lender is willing to pursue them.

But don’t forget: ALWAYS FILE AN ANSWER TO A FORECLOSURE COMPLAINT.

Conclusion

Thus a conservative answer to how long you have until they take the house in foreclosure, is:

Answer: It depends on whether you file an answer, which redemption period applies, and how aggressively the lender pursues the property.

For most Wisconsin residents who are living in the home, and who will not be sued for money damages, the answer is at least seven months or more from the time you are sued.

If you take nothing else of value from this article, take this: you probably have more time than you think. Don’t fall victim to foreclosure rescue scams. The Wisconsin State Library has a wonderful resource page to help answer basic questions, including an article on how to answer your foreclosure complaint.

Gaining the advice of an attorney is critical, and you should always know your options before making a decision on how to handle the foreclosure, especially when you think you don’t have any options left. We charge a flat minimal fee for all consultations concerning foreclosure lawsuits. Call us today at 715-842-2500 to schedule a consultation.

My assessment after reading the entirety of H.R. 627: a step in the right direction to placate the growing ranks of consumers who desperately need relief from the outrageous usury practices of the credit card industry, but nowhere near as effective as advertised.

The term “Little People” is a term of art, and used affectionately. I have no idea how tall credit card users are these days, but I count anybody outside the immediate payouts of TARP funds to be ‘little’ in comparison. They’re my people: the people I work for, and grew up with.

The Good

1. Increased disclosures to consumers concerning credit card terms
2. Elimination of double-cycle billing
3. Measures to counter over-the-limit fees
4. Credit card bills would be paid on the same day each month
5. Restrictions on increasing charges and rates for newly issued cards
6. Requiring AnnualCreditReport.com to be advertised through credit report providers*
7. Restrictions on ‘ninja fees’ for gift cards
8. FTC will oversee efficiency of how credit cards are closed for estates

The Eh

1. Companies can lower interest rates for consumers using review process established by credit card companies

Concern: Effective 15 months from Obama’s signature, and we haven’t seen details of review process that will be established by credit card companies and approved by Board

2. Those under 21 need a cosigner or must assert eligibility through application

Concern: no measures proposed to double check accuracy of application

3. Colleges should restrict access to credit cards on campuses

Concern: no teeth. They should get rid of the bowl system, too.

4. Studies authorized to assess PIN security, cross-marketing of credit cards and security for small business accounts

Concern: Fluff. So glad we need Congress to pass laws to look into things.

5. Congress will look into shifting credit card fees at point of sale (interchange fees)

Concern: Congress effectively tabled the issue. Learn about it here.

6. The ability of the consumer to afford a credit card will be considered

Concern: This could mean less cards issued – and more depsperate measures taken by consumers to qualify for them.

The Ugly

1. Penalties for credit card companies aren’t severe enough if they violate the Act ($500-$5,000 per violation in some cases)
2. Effective date of Bill on most measures won’t occur for another 9 months
3. The practice of usury at the high interest rates consumers suffer from for rates and penalties, will continue

And The Interesting

1. Stored Values of credit cards and purchasing information will be regulated, in part to help us fight terrorism (allegedly)
2. I can conceal a loaded weapon in national parks like GW said I could when he left office

*I like this one. I’ll ask my clients if they know where to get a free credit report and a good percentage respond “FreeCreditReport.com” (which isn’t free.)

The Consumerist has put together some bullet points highlighting the key provisions of the proposed legislation.

Creditcardreform.org has invested in a toll free number where you can call your senator to urge the passing of the bill.

We’ve all seen or heard the TV and radio ads from debt negotiating programs that claim they have “secrets that the credit card companies don’t want you to know about.”

What follows is an excerpt from the FTC’s informational:

Enjoy, BL

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Debt Negotiation Programs

Debt negotiation differs greatly from credit counseling and DMPs. It can be very risky, and have a long term negative impact on your credit report and, in turn, your ability to get credit. That’s why many states have laws regulating debt negotiation companies and the services they offer. Contact your state Attorney General for more information.

The Claims

Debt negotiation firms may claim they’re nonprofit. They also may claim that they can arrange for your unsecured debt — typically credit card debt — to be paid off for anywhere from 10 to 50 percent of the balance owed. For example, if you owe $10,000 on a credit card, a debt negotiation firm may claim it can arrange for you to pay it off with a lesser amount, say $4,000.

The firms often pitch their services as an alternative to bankruptcy. They may claim that using their services will have little or no negative impact on your ability to get credit in the future, or that any negative information can be removed from your credit report when you complete their debt negotiation program. The firms usually tell you to stop making payments to your creditors, and instead, send payments to the debt negotiation company. The firm may promise to hold your funds in a special account and pay your creditors on your behalf.

What’s more, most debt negotiation companies charge consumers substantial fees for their services, including a fee to establish the account with the debt negotiator, a monthly service fee, and a final fee of a percentage of the money you’ve supposedly saved.

The Truth

Just because a debt negotiation company describes itself as a “nonprofit” organization, there’s no guarantee that the services they offer are legitimate. There also is no guarantee that a creditor will accept partial payment of a legitimate debt. In fact, if you stop making payments on a credit card, late fees and interest usually are added to the debt each month. If you exceed your credit limit, additional fees and charges also can be added. This can cause your original debt to double or triple. What’s more, most debt negotiation companies charge consumers substantial fees for their services, including a fee to establish the account with the debt negotiator, a monthly service fee, and a final fee of a percentage of the money you’ve supposedly saved.

While creditors have no obligation to agree to negotiate the amount a consumer owes, they have a legal obligation to provide accurate information to the credit reporting agencies, including your failure to make monthly payments. That can result in a negative entry on your credit report. And in certain situations, creditors may have the right to sue you to recover the money you owe. In some instances, when creditors win a lawsuit, they have the right to garnish your wages or put a lien on your home. Finally, the Internal Revenue Service may consider any amount of forgiven debt to be taxable income.

Damage Control

Turning to a business that offers help in solving debt problems may seem like a reasonable solution when your bills become unmanageable. But before you do business with any company, check it out with your state Attorney General, local consumer protection agency, and the Better Business Bureau. They can tell you if any consumer complaints are on file about the firm you’re considering doing business with. Ask your state Attorney General if the company is required to be licensed to work in your state and, if so, whether it is.

Some businesses that offer to help you with your debt problems may charge high fees and fail to follow through on the services they sell. Others may misrepresent the terms of a debt consolidation loan, failing to explain certain costs or mention that you’re signing over your home as collateral. Businesses advertising voluntary debt reorganization plans may not explain that the plan is a bankruptcy filing, tell you everything that’s involved, or help you through what can be a long and complex process.

If you’re thinking about getting help to stabilize your financial situation, do some homework first. Find out what services a business provides and what it costs, and don’t rely on verbal promises. Get everything in writing, and read your contracts carefully.

In addition, some companies guarantee you a loan if you pay a fee in advance. The fee may range from $100 to several hundred dollars. Resist the temptation to follow up on these advance-fee loan guarantees. They may be illegal. It is true that many legitimate creditors offer extensions of credit through telemarketing and require an application or appraisal fee in advance. But legitimate creditors never guarantee that the consumer will get the loan — or even represent that a loan is likely. Under the federal Telemarketing Sales Rule, a seller or tele-marketer who guarantees or represents a high likelihood of your getting a loan or some other extension of credit may not ask for or accept payment until you’ve received the loan.

You should be cautious of claims from so-called credit repair clinics. Many companies appeal to consumers with poor credit histories, promising to clean up credit reports for a fee. But you already have the right to have any inaccurate information in your file corrected. And a credit repair clinic cannot have accurate information removed from your credit report, despite their promises. You also should know that federal and some state laws prohibit these companies from charging you for their services until the services are fully performed. Only time and a conscientious effort to repay your debts will improve your credit report.

If you’re thinking about getting help to stabilize your financial situation, do some homework first. Find out what services a business provides and what it costs, and don’t rely on verbal promises. Get everything in writing, and read your contracts carefully.