A Wisconsin lender forecloses on a residential property and obtains a judgment of foreclosure. The property sells at sheriff's sale for $180,000, but the outstanding loan balance plus fees totals $210,000. The lender wants to pursue the borrower for the remaining $30,000. Under Wisconsin law, what is this legal action called, and is it permitted?
Correct Answer
D) A deficiency judgment; it is permitted in Wisconsin under certain conditions
In Wisconsin, a deficiency judgment is the legal action where a lender seeks to recover the difference between the foreclosure sale proceeds and the total amount owed. Under Wisconsin Statutes Chapter 846, deficiency judgments are permitted in Wisconsin. However, if the lender waives the right to a deficiency judgment, the redemption period is shortened significantly (potentially to as few as 5 weeks for abandoned properties or when deficiency is waived).
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Related Topics & Key Terms
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Related Concepts
In the context of foreclosure, a deed transfers ownership of the foreclosed property to the new owner, typically the buyer at a foreclosure sale.
Discount points are upfront fees paid to a lender at closing to reduce (buy down) the interest rate on a mortgage loan. One point equals 1% of the loan amount and typically reduces the rate by approximately 0.25%.
An FHA loan is a mortgage insured by the Federal Housing Administration that allows lower down payments and credit scores than conventional loans. It is designed to help first-time homebuyers and borrowers with limited resources.
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