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Recourse on second mortgages and HELOCs in Wisconsin

Madison, WI |

I have heard that Wisconsin is technically a recourse state for mortgage defaults, but that the rules are so onerous that banks generally do not pursue strategic defaulters for the deficiency when a foreclosed home sells for less than what was owed. Does that include homes with either or both a second mortgage and a home equity line of credit (HELOC)?

Attorney Answers 1


The plaintiff bank filing a foreclosure may elect to waive their claim for deficiency in exchange for getting a reduced redemption period (six months instead of twelve) between entry of the foreclosure judgment and sheriff sale in certain circumstances (normally owner-occupied property of four units or less). They do this the vast majority of the time. However, the other lien holders are NOT bound by the plaintiff's deficiency waiver, and may pursue their unpaid claims after foreclosure, or instead of foreclosing may pursue judgment and other collection options (e.g. wage garnishment).

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