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Quick Fact

Under Wisconsin law, the foreclosure process typically begins after a borrower defaults on a loan and the lender issues any necessary notices of default. In most cases, this occurs when the borrower is late by 90 days or more in making scheduled mortgage or tax payments or fails to pay taxes.

Foreclosure Prevention: Action Steps
Preparing for job loss or other unexpected expenses

We all have monthly expenses that cannot be avoided or trimmed back. After health care, keeping your house should be your first priority.

  • To protect yourself and the investment in your home, experts urge you to begin saving. It is important to plan ahead and maintain a budget that accounts for all of your expenses and current income.
  • Review your finances and see where you can cut spending in order to make your mortgage payment. Look for optional expenses, such as cable TV, memberships and entertainment that you can eliminate. Delay payments on credit cards and other "unsecured" debt until you have paid your mortgage.
  • Even if your finances are tight, saving a small amount each week can create a buffer to help you hold onto your home in the event of a job loss or unexpected medical expense.
  • One rule of thumb: Keep three to six months’ worth of living expenses in an account that’s readily accessible. Taking this extra step can allow you to safely make it through several months, giving you time to make the necessary changes to get back on track.
Not being able to make a scheduled payment
  • Call the customer service number of your lender or loan servicer immediately to make alternate arrangements and avoid having a late payment recorded on your credit report.
  • Prioritize your spending. Are there areas where you can cut back, such as cable television, cell phone service or gym memberships? Can you find extra work to add income?
  • Contact your credit card companies to reduce or delay payments so you can pay your mortgage first.
Missing one or more mortgage payments
  • Take action right away. Your lender can offer options such as loan modifications or mortgage workouts that may result in a lower payment or reduced interest rate.
  • Open and respond to all mail from your lender. The notices you receive will offer advice on avoiding foreclosure. Later mail may include important notice of pending legal action.
  • Know your mortgage rights. Find your loan documents and read them so you know what your lender may do if you can't make your payments.
  • Prioritize your spending. After health care, keeping your house should be your first priority. Review your finances and see where you can cut spending in order to make your mortgage payment. Look for optional expenses, such as cable TV, memberships and entertainment that you can eliminate. Delay payments on credit cards and other "unsecured" debt until you have paid your mortgage.
  • Use your assets. Do you have assets such as a second car, jewelry or a whole life insurance policy that you can sell for cash to help reinstate your loan? Can anyone in your household get an extra job to bring in additional income?  Even if these efforts don't significantly increase your available cash or your income, they demonstrate to your lender that you are willing to make sacrifices to keep your home.
Talking with your mortgage lender
If your financial situation has recently changed, or you are finding it difficult to make ends meet, don’t wait to contact your lender. A simple phone call or e-mail can help avoid misunderstanding and open the door to the possibility of refinancing or other options such as forbearance that will allow you to navigate through the difficult times. If you do not know who your lender is, look at your monthly statement and call the number listed. They will work with you, as it is not in anyone’s best interest to go through foreclosure. Contrary to popular belief, your lender loses money if you are foreclosed on and they understand the strain it places on you and your family. If your lender has already contacted you, respond to all mail or other communications at once. It’s important to act before you fall further behind.
Determining whether your mortgage fits your financial situation

We have learned a great deal in the past few months about the things current and future homeowners should be aware of when securing a mortgage.

  • Make sure you are working with a reputable lender and that the kind of mortgage you are seeking fits with your family’s financial situation.
  • Avoid “interest only” loans. These loans only increase your payments over time, making it difficult to maintain payments in the long run.
Avoiding foreclosure scams
  • Watch out for questionable counseling companies who advertise that, for a minimal fee, they will hire a lawyer to defend the foreclosure in court or negotiate lender assistance on your behalf.
  • You should call a HUD-approved counseling organization, a local NeighborWorks® organization, or 1-888-995-HOPE before you pay or sign anything. Click here for counselors in your area.
  • The Federal Reserve Board has also developed '5 Tips for Avoiding Foreclosure Scams.'
Knowing when it may be time to sell

Although in some cases foreclosure may be unavoidable, members of the Wisconsin REALTORS® Association agree that it is never the best outcome for homeowners, lenders or communities.

Homes sold through the foreclosure process typically go for less than homes put on the market in a more conventional way. As a result, the foreclosure process may leave homeowners facing a deficiency payment to make up any difference remaining between the price the home sold for at auction and the original loan amount. 

In addition, foreclosures may lower the value of surrounding homes and affect an entire community.

Homeowners experiencing financial troubles may come out ahead by listing the home for sale as soon as possible, instead of waiting and sinking deeper into debt. The Wisconsin Housing and Economic Development Authority has identified a list of trained, experienced real estate agents who can help homeowners get a fair price in a reasonable amount of time. Click here to find an experienced REALTOR® in your area.
 

Budgeting advice for those going through a lay-off.

With Manager of the Consumer Credit Counseling Service of Greater Milwaukee Kathryn Crumpton.

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Budgeting advice.

With Wisconsin Bankers Association President & CEO Rose Oswald Poels

Available options.

With REALTOR®r Laurie Logan

Benefits of speaking with attorney.

With Wisconsin attorney David Sayas.

Spotting a foreclosure scam.

From Freddie Mac
 
The information contained herein is of a general nature and should not be considered as advice on a particular fact situation. Individuals should consult with their lender, legal counsel or financial counselor with specific questions or for current developments.