Wisconsin is primarily a “lien” theory state; this means that the instrument of security for the underlying loan is the mortgage lien. The mortgage ensures that the property itself acts as security for the loan and in this instance the judicial foreclosure has to take place. Deficiency judgments and rights of redemption are allowed.
A lender is required to go to court to seek and order for foreclosure in a case whereby the borrower has defaulted on their loan obligation. When the court has issued final judgment the property is sold on auction to the highest bidder. If there is no bidder at the auction the property will become under the ownership of the lender and is taken into their inventory of REO’s.
Foreclosure complaints in Wisconsin are filed in the Circuit court by means of a Lis Pendens. This is a document of recordal which serves as public notice that a foreclosure on a particular property is pending. Because this is a court action the length of time it takes to finalize a foreclosure varies. Interestingly Wisconsin has one of the longest times of all the other states when it comes to finalizing foreclosure and an uncontested case can take 365 days, an entire year. In the case of a contested case, this is much longer.
The foreclosure process is much faster if the lender waives their right to a deficiency judgment. No sale is allowed in less than 12 months if this right is not waived, so it appears as though Wisconsin is the one state which errs on the side of the borrower. Notice of the Sheriffs sale has to be published in a general circulation newspaper for 6 weeks prior to sale and at least three public places, three weeks before the sale.