Chapter 428

428.206   Recommending default.

428.207   Prepayment.

428.208   Disclosure to customers.

428.209   Exclusive state regulation authority.

428.2095   Property exempt from debt collection.

428.210   Administration and penalties.

428.211   Exemption for depository institutions.

subch. I of ch. 428 SUBCHAPTER I

FIRST LIEN REAL ESTATE LOANS

428.101 428.101 Applicability. This subchapter applies to:

428.101(1) (1) Loans made on or after April 6, 1980 and prior to November 1, 1981, by a creditor other than a savings and loan association to a customer and which are secured by a first lien real estate mortgage or equivalent security interest if the amount financed is $25,000 or less.

428.101(2) (2) Loans made prior to April 6, 1980, by a creditor other than a savings and loan association and loans made before November 1, 1981, by a savings and loan association to a customer and which are secured by a first lien real estate mortgage or equivalent security interest if the annual percentage rate does not exceed 12 percent per year and the amount financed is $25,000 or less.

428.101(3) (3) Loans made on or after November 1, 1981, by a creditor to a customer and which are secured by a first lien real estate mortgage or equivalent security interest if the amount financed is $25,000 or less.

428.101 History History: 1973 c. 18; 1979 c. 110 s. 60 (13); 1979 c. 168; 1981 c. 45; 2003 a. 257; 2005 a. 215.

428.101 Annotation A second mortgage constitutes an equivalent security interest under this section when held by a savings and loan association that holds the first mortgage and there are no intervening liens. 63 Atty. Gen. 557.

428.102 428.102 Definitions. In this subchapter:

428.102(1) (1) “Amount financed” means that term as defined in the federal consumer credit protection act, as defined in s. 421.301 (19).

428.102(2) (2) “Creditor” means a person who regularly engages in, arranges for or procures from 3rd persons, loans within the scope of this subchapter.

428.102(3) (3) “Customer” means a person other than an organization who seeks or acquires credit financing secured by a first lien real estate mortgage, or equivalent security interest, for personal, family, household or agricultural purposes.

428.102(4) (4) “Loan” means the creation of debt by the creditor’s payment of or agreement to pay money to the customer or to a 3rd party for the account of the customer, or a forbearance by a lender of a debt arising from a loan.

428.102(5) (5) “Organization” means organization as defined in s. 421.301 (28).

428.102(6) (6) “Person” means person as defined in s. 421.301 (31).

428.102 History History: 1973 c. 18, 232; 2003 a. 257.

428.102 Annotation A sale of a time-share on credit constituted a loan within the meaning of ch. 428 although the seller did not advance funds to the buyer. The seller’s forbearance of the balance of the purchase price at the time of closing comes within the sub. (4) definition of a loan. Ott v. Peppertree Resort Villas, Inc., 2006 WI App 77, 292 Wis. 2d 173, 716 N.W.2d 127, 04-1226.

428.103 428.103 Limitations.

428.103(1) (1) The following limitations shall apply to all loans subject to this subchapter:

428.103(1)(a) (a) No delinquency charge may be collected on an installment which is paid in full on or before the 10th day after its scheduled due date even though an earlier maturing installment may not have been paid in full. For purposes of this section payments are applied first to current installments and then to delinquent installments.

428.103(1)(b) (b) Any cosigner, other than the spouse of the customer, shall be given a notice substantially the same as that required by s. 422.305, and the cosigner shall be entitled to a copy of any document evidencing the obligation to pay the debt.

428.103(1)(c) (c) With respect to debt collection:

428.103(1)(c)1. 1. No creditor shall engage in conduct of the type prohibited by s. 427.104 (1) (a) to (L).

428.103(1)(c)2. 2. The exemptions specified in s. 425.106 (1) (a) and (b), with respect to earnings and personal clothing and furnishings except as to fixtures, shall apply.

428.103(1)(d) (d) No creditor may take a security interest in the household goods or furnishings, other than fixtures, of a customer.

428.103(1)(e) (e) The creditor shall not contract for or charge its attorney fees to the customer except as follows:

428.103(1)(e)1. 1. Reasonable fees for opinions of title.

428.103(1)(e)2. 2. In foreclosure cases, 5 percent of the amount adjudged due the creditor; or if the dispute is settled prior to judgment, a reasonable fee based on the time, nature and extent of the work involved, but not to exceed 2-1/2 percent of the unpaid principal balance of the loan.

428.103(2) (2) A person who commits a violation of this section is liable to the customer in an amount equal to the greater of:

428.103(2)(a) (a) Twice the amount of the interest to be charged on the transaction, except that the liability under this subsection shall not be less than $100 nor greater than $1,000; or

428.103(2)(b) (b) The actual damages, including any incidental and consequential damages, sustained by the customer by reason of the violation.

428.103 History History: 1973 c. 18; Sup. Ct. Order, 67 Wis. 2d 585, 767 (1975); 1983 a. 92; 1991 a. 316; 1993 a. 80, 490; 2003 a. 257.

428.104 428.104 Receipts, accounting.

428.104(1) (1) Any time a payment is made in cash, or any other time the method of payment does not itself provide evidence of payment, the creditor shall furnish the customer, without request, a written receipt, evidencing such payment. The customer shall be entitled upon request, free of charge, to an annual statement of account showing receipts and disbursements. Subject to s. 708.15, upon payment in full of the customer’s obligation, the creditor shall release any mortgage by either recording the necessary instrument and forwarding the same to the customer, or by forwarding a satisfaction of such debt to the purchaser of the real property subject to such satisfied mortgage, or the creditor of such purchaser.

428.104(2) (2) A person who commits a violation of this section is liable to the customer in an amount equal to:

428.104(2)(a) (a) Twenty-five dollars; and

428.104(2)(b) (b) The actual damages, including any incidental and consequential damages, sustained by the customer by reason of the violation.

428.104 History History: 1973 c. 18; 2013 a. 66.

428.105 428.105 Pleadings. A complaint by a creditor to enforce a cause of action shall set forth specifically the facts constituting the alleged default of the customer, the amount to which the creditor is allegedly entitled and a summary of the figures necessary for computation of such amount, and shall be accompanied by an accurate copy of the writing evidencing the transaction.

428.105 History History: 1973 c. 18.

428.105 Annotation The requirements that a creditor attach an accurate copy of the writing evidencing a transaction with the complaint is a pleading requirement. The appropriate remedy for a creditor’s failure to comply with this procedural requirement is dismissal of the creditor’s action. Beal v. Wyndham Vacation Resorts, Inc. 956 F. Supp. 2d 962 (2013).

428.106 428.106 Remedies.

428.106(1) (1) Violations of this subchapter may be enforced by a customer subject to this section and ss. 425.308 to 425.311.

428.106(2) (2) With respect to a loan subject to this subchapter, if the court as a matter of law finds that any aspect of the transaction, any conduct directed against the customer, by the creditor, or any result of the transaction is unconscionable, the court shall, in addition to the remedies and penalties set forth in this subchapter, and a penalty not to exceed that specified in s. 428.103 (2), refuse to enforce the unconscionable aspect of the transaction or so limit the application of any unconscionable aspect or conduct to avoid any unconscionable result.

428.106(3) (3) Notwithstanding other provisions of this subchapter, a customer shall not be entitled to recover the specific penalties provided in ss. 428.103 (2) (a) and 428.104 (2) (a) if the person violating this subchapter shows by a preponderance of the evidence that the violation was not intentional and resulted from a bona fide error notwithstanding the maintenance of procedures reasonably adapted to avoid such error.

428.106(4) (4) Any action brought by a customer to enforce rights under sub. (1) shall be commenced within one year after the date of the last violation of this subchapter, 2 years after consummation of the agreement or one year after the last payment, whichever is later. But in no event shall an action be commenced more than 6 years after the date of the last violation.

428.106(5) (5) The administrator specified in s. 426.103, solely through the department of justice, may on behalf of any customer institute an action to enforce this subchapter and to recover the damages and penalties provided for this subchapter. In such action the administrator may obtain an order restraining by temporary or permanent injunctions any violation of this subchapter. This subsection shall not be construed to incorporate or grant to the administrator with respect to the enforcement of this subchapter, any of the provisions of ch. 426.

428.106 History History: 1973 c. 18; 1991 a. 316; 2003 a. 257.

subch. II of ch. 428 SUBCHAPTER II

RESPONSIBLE HIGH COST MORTGAGE LENDING

Subch. II of ch. 428 Cross-reference Cross-reference: See also ch. DFI-Bkg 46, Wis. adm. code.

428.202 428.202 Definitions. In this subchapter:

428.202(1) (1) “Bridge loan” means a loan with a maturity of less than 18 months which requires only payments of interest until the time that the unpaid balance is due.

428.202(1m) (1m) “Business day” has the meaning that is specified under 12 CFR 226.2 (a) (6) for purposes of 12 CFR 226.31.

428.202(2) (2) “Covered loan” means a consumer credit mortgage loan transaction other than an open-end credit plan or reverse mortgage in which all of the following apply:

428.202(2)(a) (a) The customer is a natural person.

428.202(2)(b) (b) The debt is incurred by the customer primarily for personal, family, or household purposes.

428.202(2)(c) (c) The loan is secured by a mortgage on, or an equivalent security interest in, residential real property, and the residential real property is or will be occupied by the customer as the customer’s principal dwelling.

428.202(2)(d) (d) The terms of the loan provide any of the following:

428.202(2)(d)1. 1. That the loan transaction, at the time that the loan is consummated, is considered a mortgage under 15 USC 1602 (bb) and regulations adopted thereunder, including 12 CFR 226.32.

428.202(2)(d)2. 2. That total points and fees payable by the customer at or before the loan closing exceed 6 percent of the total loan amount. For purposes of this subdivision, “total points and fees” does not include reasonable fees paid to affiliates or nonaffiliates of the lender for bona fide services listed in 12 CFR 226.4 (c) (7).

428.202(3) (3) “Customer” means an individual to whom a covered loan is offered or made. “Customer” does not include a surety, guarantor, cosigner, or endorser.

428.202(4) (4) “Department” means the department of financial institutions.

428.202(5) (5) “Lender” means any person who originates a covered loan and to whom the covered loan is initially payable, except that “lender” does not include an assignee of a covered loan or any person who, for at least 12 consecutive months, has failed to originate any covered loans.

428.202(5m) (5m) “Licensed lender” means a person licensed under s. 138.09.

428.202(6m) (6m) “Local governmental unit” has the meaning given in s. 16.97 (7).

428.202(7) (7) “Mortgage banker” has the meaning given in s. 224.71 (3).

428.202(8) (8) “Mortgage broker” has the meaning given in s. 224.71 (4).

428.202(9) (9) “Mortgage loan originator” has the meaning given in s. 224.71 (6).

428.202(10) (10) “Servicer” has the meaning given in 12 USC 2605 (i) (2).

428.202 History History: 2003 a. 257; 2009 a. 2; 2023 a. 258.

428.203 428.203 Prohibitions on and requirements of lenders and assignees.

428.203(1) (1) Balloon payments. Except as otherwise provided in this subsection, no lender may make a covered loan to a customer that requires, or that permits the lender to require, a payment that is more than twice as large as the average of all earlier scheduled payments. This subsection does not apply to a loan under which the payment schedule is adjusted to account for seasonal or irregular income of the customer or to a bridge loan with a maturity of less than one year that the customer obtains for the purpose of facilitating the acquisition or construction of a dwelling as the customer’s principal dwelling.

428.203(2) (2) Call provision. No lender may make a covered loan to a customer that permits the lender or an assignee of the loan to demand payment of the outstanding balance before the original maturity date, except that a covered loan may permit a lender or assignee to so demand as a result of any of the following:

428.203(2)(a) (a) The customer’s failure to make payments required under the loan.

428.203(2)(b) (b) A provision in the loan agreement permitting the lender or assignee to make such a demand after the sale of real property that is pledged as security for the loan.

428.203(2)(c) (c) Fraud or material misrepresentation by the customer in connection with the loan.

428.203(2)(d) (d) Any act or omission by the customer that adversely affects the lender’s or assignee’s security for the loan or any right of the lender or assignee in such security.

428.203(3) (3) Negative amortization. No lender may make a covered loan to a customer with a payment schedule that causes the principal balance to increase, except that this subsection does not prohibit such a payment schedule as a result of a temporary forbearance or loan restructuring consented to by the customer.

428.203(4) (4) Increased interest rate. No lender may make a covered loan to a customer that imposes or permits the lender or an assignee of the loan to impose an increase in the interest rate as a result of the customer’s default.

428.203(5) (5) Advance payments. No lender may make a covered loan to a customer that includes a payment schedule that consolidates more than 2 scheduled payments and pays them in advance out of the proceeds of the loan.