Dec. 9, 2014 – The bank seeking to foreclose on owner-occupied, single family homes after a six-month redemption period was not required to publish a notice of foreclosure sale during the redemption period, a state appeals court has ruled.
Bank of America acquired the notes and mortgages on the homes of Todd and Jennifer Prissel, as well as Elizabeth Gerlach. After they defaulted on mortgage payments, Bank of America filed foreclosure actions and waived a right to deficiency judgments.
In both cases, the circuit court entered a judgment of foreclosure and ordered the properties to be sold at public auction any time after sixth months from the judgment.
After six months, the homeowners filed motions to vacate the foreclosure judgments, arguing that Bank of America did not publish required notices of foreclosure sale.
Under Wis. Stat. section 846.101(2), notice of the time and place of a foreclosure sale “shall” be given within the six-month redemption period. The homeowners argued the word “shall” clearly indicates notice of foreclosure sale is required during this period.
However, Bank of America argued that notice is not required, only permitted. The circuit courts denied the homeowners’ motions to vacate the foreclosure judgments.
On consolidated appeal in Bank of America v. Prissel, 2014AP642 (Dec. 9, 2014), a three-judge panel for the District III Court of Appeals affirmed, concluding the bank was not required to publish a notice of foreclosure sale during the redemption period.
Other foreclosure statutes clearly state that notice “may” be given during the redemption period, even if the word “may” is not used in section 846.101(2), the panel noted.
“The Borrowers do not suggest – and we cannot discern – any reason why the legislature would have decided to require notice during the redemption period for owner-occupied one- to four family residences with deficiency waivers, but not for any other type of property,” Judge Lisa Stark wrote for the three-judge panel.
The panel rejected the homeowners’ argument that by excluding the word “may” in section 846.101(2), the legislature purposely required notices in six-moth redemption cases to be treated differently than notices involving other redemption situations.
“The purpose of statutes providing for redemption periods is to delay foreclosure sales so that a defaulting borrower has an opportunity to redeem a foreclosed property before it is sold,” wrote Judge Stark, noting the consequences of requiring such notices.
She said requiring notices during the sixth-month redemption period could harm borrowers by expediting foreclosure sales shortly after the redemption period ends, which would “frustrate efforts to reach postjudgment compromises and would likely force borrowers out of their properties earlier than would otherwise be required.”