Chapter 846

846.40(8)(a)1. 1. The foreclosure purchaser verifies and can demonstrate that the foreclosed homeowner has a reasonable ability to pay for the subsequent conveyance of an interest back to the foreclosed homeowner. In the case of a lease with an option to purchase, payment ability also includes the reasonable ability to make the lease payments and purchase the property within the term of the option to purchase. There is a rebuttable presumption that a foreclosed homeowner is reasonably able to pay for the subsequent conveyance if the foreclosed homeowner’s payments for primary housing expenses and regular principal and interest payments on other personal debt, on a monthly basis, do not exceed 60 percent of the foreclosed homeowner’s monthly gross income. There is a rebuttable presumption that the foreclosure purchaser has not verified reasonable payment ability if the foreclosure purchaser has not obtained documents other than a statement by the foreclosed homeowner of assets, liabilities, and income.

846.40(8)(a)2. 2. The foreclosure purchaser and the foreclosed homeowner complete a closing for any foreclosure reconveyance in which the foreclosure purchaser obtains a deed or mortgage from a foreclosed homeowner.

846.40(8)(a)3. 3. The foreclosure purchaser obtains the written consent of the foreclosed homeowner to a grant by the foreclosure purchaser of any interest in the property during such times as the foreclosed homeowner maintains any interest in the property.

846.40(8)(b) (b) A foreclosure purchaser shall do either of the following:

846.40(8)(b)1. 1. Ensure that title to the subject dwelling has been reconveyed to the foreclosed homeowner.

846.40(8)(b)2. 2. Make a payment to the foreclosed homeowner such that the foreclosed homeowner has received consideration in an amount of at least 82 percent of the fair market value of the property within 150 days after either the eviction of, or voluntary relinquishment of possession of the dwelling by, the foreclosed homeowner. The foreclosure purchaser shall make a detailed accounting of the basis for the payment amount, or a detailed accounting of the reasons for failure to make a payment, including providing written documentation of expenses, within this 150-day period. The accounting shall be on a form prescribed by the attorney general, in consultation with the secretary of agriculture, trade and consumer protection. For purposes of this subdivision, all of the following apply:

846.40(8)(b)2.a. a. There is a rebuttable presumption that an appraisal by a person licensed or certified by an agency of the federal government or this state to appraise real estate constitutes the fair market value of the property.

846.40(8)(b)2.b. b. The time for determining the fair market value amount shall be specified in the foreclosure reconveyance contract as either at the time of the execution of the foreclosure reconveyance contract or at resale. If the contract states that the fair market value shall be determined at the time of resale, the fair market value shall be the resale price if it is sold within 120 days after the eviction of, or voluntary relinquishment of the property by, the foreclosed homeowner. If the contract states that the fair market value shall be determined at the time of resale, and the resale is not completed within 120 days after the eviction of, or voluntary relinquishment of the property by, the foreclosed homeowner, the fair market value shall be determined by an appraisal conducted during this 120-day period and payment, if required, shall be made to the foreclosed homeowner, but the fair market value shall be recalculated as the resale price on resale and an additional payment amount, if appropriate based on the resale price, shall be made to the foreclosed homeowner within 15 days after resale, and a detailed accounting of the basis for the payment amount, or a detailed accounting of the reasons for failure to make additional payment, shall be made within 15 days after resale, including providing written documentation of expenses. The accounting shall be on a form prescribed by the attorney general, in consultation with the secretary of agriculture, trade and consumer protection.

846.40(8)(b)2.c. c. “Consideration” means any payment or thing of value provided to the foreclosed homeowner, including unpaid rent or land contract payments owed by the foreclosed homeowner prior to the date of eviction or voluntary relinquishment of the property, reasonable costs paid to 3rd parties necessary to complete the foreclosure reconveyance transaction, payment of money to satisfy a debt or legal obligation of the foreclosed homeowner, the reasonable cost of repairs for damage to the dwelling caused by the foreclosed homeowner, or a penalty imposed by a court for the filing of a frivolous claim in an eviction action under sub. (9). “Consideration” does not include amounts imputed as a down payment or fee to the foreclosure purchaser, or a person acting in participation with the foreclosure purchaser, incident to a land contract, lease, or option to purchase entered into as part of the foreclosure reconveyance, except for reasonable costs paid to 3rd parties necessary to complete the foreclosure reconveyance.

846.40(8)(c) (c) A foreclosure purchaser may not enter into repurchase or lease terms as part of the subsequent conveyance that are unfair or commercially unreasonable, or engage in any other unfair conduct.

846.40(8)(d) (d) A foreclosure purchaser may not represent, directly or indirectly, any of the following:

846.40(8)(d)1. 1. That the foreclosure purchaser is acting as an advisor or consultant, or in any other manner represent that the foreclosure purchaser is acting on behalf of the foreclosed homeowner.

846.40(8)(d)2. 2. That the foreclosure purchaser has certification or licensure that the foreclosure purchaser does not have, or that the foreclosure purchaser is not a member of a licensed profession if that is untrue.

846.40(8)(d)3. 3. That the foreclosure purchaser is assisting the foreclosed homeowner to save the house, or a substantially similar phrase.

846.40(8)(d)4. 4. That the foreclosure purchaser is assisting the foreclosed homeowner in preventing a completed foreclosure if the result of the transaction is that the foreclosed homeowner will not complete a redemption of the property.

846.40(8)(e) (e) A foreclosure purchaser may not make any other statements, directly or by implication, or engage in any other conduct that is false, deceptive, or misleading, or that has the likelihood to cause confusion or misunderstanding, including statements regarding the value of the residence in foreclosure, the amount of proceeds the foreclosed homeowner will receive after a foreclosure sale, any contract term, or the foreclosed homeowner’s rights or obligations incident to or arising out of the foreclosure reconveyance.

846.40(8)(f) (f) Until the time during which the foreclosed homeowner may cancel the transaction has fully elapsed, a foreclosure purchaser may not do any of the following:

846.40(8)(f)1. 1. Accept from the foreclosed homeowner an execution of, or induce the foreclosed homeowner to execute, any instrument of conveyance of any interest in the residence in foreclosure.

846.40(8)(f)2. 2. Record or file with the register of deeds any document, including any instrument of conveyance, signed by the foreclosed homeowner.

846.40(8)(f)3. 3. Transfer or encumber or purport to transfer or encumber any interest in the residence in foreclosure to any 3rd party, provided no grant of any interest or encumbrance is defeated or affected as against a bona fide purchaser or encumbrance for value and without notice of a violation of this subdivision. Knowledge on the part of any such person or entity that the property was residential real property in foreclosure does not constitute notice of a violation of this subdivision. This subdivision does not abrogate any duty of inquiry that exists as to rights or interests of persons in possession of the residence in foreclosure.

846.40(8)(f)4. 4. Pay the foreclosed homeowner any consideration.

846.40(8)(g) (g) If a foreclosure purchaser extends credit to, or arranges for credit to be extended to, the foreclosed homeowner, the foreclosure purchaser or other person with whom the foreclosure purchaser has arranged for the extension of credit shall comply with all requirements specified in Regulation Z under the federal Truth in Lending Act, 12 CFR 226, that apply to a creditor, as defined in 12 CFR 226.2 (a) (17) (i), in a residential mortgage transaction, as defined in 12 CFR 226.2 (24), regardless of whether the foreclosure purchaser or other person extending credit actually meets the definition of a creditor under 12 CFR 226.2 (a) (17) (i).

846.40(9) (9) Stay of proceedings in eviction actions.

846.40(9)(a) (a) A court hearing an eviction action against a foreclosed homeowner shall stay the proceedings, without the imposition of a bond, if a defendant makes a prima facie showing of all of the following:

846.40(9)(a)1. 1. That any of the following applies to the defendant:

846.40(9)(a)1.a. a. The defendant has commenced an action concerning a foreclosure reconveyance with respect to the property that is the subject of the eviction action.

846.40(9)(a)1.b. b. The defendant asserts, in connection with a foreclosure reconveyance, any violation of this section or a claim or affirmative defense of fraud, false pretense, false promise, misrepresentation, misleading statement, or deceptive practice.

846.40(9)(a)2. 2. That the defendant owned the foreclosed residence.

846.40(9)(a)3. 3. That the defendant conveyed title to the foreclosed residence to a 3rd party upon a promise that the defendant would be allowed to occupy the foreclosed residence or other real property in which the foreclosure purchaser or a person acting in participation with the foreclosure purchaser has an interest and that the foreclosed residence or other real property would be the subject of a foreclosure reconveyance.

846.40(9)(a)4. 4. That since the conveyance to the 3rd party, the defendant has continuously occupied the foreclosed residence or other real property in which the foreclosure purchaser or a person acting in participation with the foreclosure purchaser has an interest.

846.40(9)(b) (b) For purposes of par. (a), notarized affidavits are acceptable means of proof for meeting the defendant’s burden of proof. A defendant may request, and upon a showing of good cause the court may grant, up to an additional 2 weeks to produce evidence to make the prima facie showing required under par. (a).

846.40(9)(c) (c) The stay under this subsection shall remain in effect for 90 days if the defendant has not yet commenced and does not commence, within 90 days from the issuance of the stay, an action in connection with a foreclosure reconveyance transaction. If the defendant has commenced, or commences within 90 days from the issuance of the stay, an action in connection with a foreclosure reconveyance transaction, the stay shall remain in effect until the court hearing the action related to the foreclosure reconveyance renders a final decision in the matter.

846.40(10) (10) Enforcement.

846.40(10)(a) (a) A violation of this section shall be considered a fraud.

846.40(10)(b) (b) A foreclosed homeowner against whom a violation of this section is committed may bring an action for damages.

846.40(10)(c) (c) A court may order punitive damages under s. 895.043 for a violation of this section.

846.40(10)(d) (d)

846.40(10)(d)1. 1. A foreclosure purchaser who violates this section by engaging in any practice that would operate as a fraud or deceit upon a foreclosed homeowner may be fined not more than $50,000 or imprisoned for not more than one year in the county jail or both.

846.40(10)(d)2. 2. In the absence of additional misconduct, a failure of the parties to complete a foreclosure reconveyance transaction shall not subject a foreclosure purchaser to the criminal penalties under subd. 1.

846.40 History History: 2009 a. 2.

846.45 846.45 Regulation of foreclosure consultants.

846.45(1) (1) Definitions. In this section, unless the context requires otherwise:

846.45(1)(a) (a) “Contract” means an agreement, or any term in an agreement, between a foreclosure consultant and a foreclosed homeowner for the rendition of any service.

846.45(1)(b) (b) “Foreclosed homeowner” has the meaning given in s. 846.40 (1) (b).

846.45(1)(c) (c)

846.45(1)(c)1. 1. Except as provided in subd. 2., “foreclosure consultant” means a person who, directly or indirectly, makes a solicitation, representation, or offer to a foreclosed homeowner to perform for compensation, or who for compensation performs, any service that the person in any manner represents will in any manner do any of the following:

846.45(1)(c)1.a. a. Stop or postpone the foreclosure sale.

846.45(1)(c)1.b. b. Obtain any forbearance from a beneficiary or mortgagee.

846.45(1)(c)1.c. c. Obtain a waiver of an acceleration clause contained in a promissory note or contract secured by a mortgage on the residence in foreclosure or contained in the mortgage.

846.45(1)(c)1.d. d. Assist the foreclosed homeowner to obtain a loan or advance of funds.

846.45(1)(c)1.e. e. Avoid or ameliorate the impairment of the foreclosed homeowner’s credit resulting from the recording of a lis pendens or the conduct of a foreclosure sale.

846.45(1)(c)1.f. f. Save the residence in foreclosure from foreclosure.

846.45(1)(c)2. 2. “Foreclosure consultant” does not include any of the following:

846.45(1)(c)2.a. a. A person licensed to practice law in this state when the person renders service in the course of his or her practice as an attorney at law.

846.45(1)(c)2.b. b. A person licensed as a real estate broker or salesperson under ch. 452 when the person engages in acts for which licensure under that chapter is required, unless the person is engaged in offering services designed to, or purportedly designed to, enable the foreclosed homeowner to retain possession of the residence in foreclosure.

846.45(1)(c)2.c. c. A person certified or licensed to practice as a certified public accountant under ch. 442 when the person is acting in any capacity for which the person is certified or licensed under that chapter.

846.45(1)(c)2.d. d. A person, or the person’s authorized agent, acting under the express authority or written approval of the department of housing and urban development or other department or agency of the United States or this state to provide services.

846.45(1)(c)2.e. e. A person who holds or is owed an obligation secured by a lien on any residence in foreclosure when the person performs services in connection with this obligation or lien if the obligation or lien did not arise as the result of or as part of a proposed foreclosure reconveyance.

846.45(1)(c)2.f. f. A person or entity doing business under any law of this state, or of the United States, relating to a financial institution, as defined in s. 214.01 (1) (jn), to a lender licensed under s. 138.09, to an insurance company, or to a mortgagee that is a federal department of housing and urban development approved mortgagee; a subsidiary or affiliate of any of these persons or entities; or an agent or employee of any of these persons or entities while engaged in the business of these persons or entities.

846.45(1)(c)2.g. g. A person registered under s. 224.72 as a mortgage banker, loan originator, or mortgage broker, when acting under the authority of that registration.

846.45(1)(c)2.h. h. A judgment creditor of the foreclosed homeowner, to the extent that the judgment creditor’s claim accrued prior to the recording of the lis pendens in the foreclosure action.

846.45(1)(c)2.i. i. A foreclosure purchaser.

846.45(1)(c)2.j. j. An adjustment service company licensed under s. 218.02, but only when engaged in business unrelated to real estate.

846.45(1)(d) (d) “Foreclosure purchaser” has the meaning given in s. 846.40 (1) (c).

846.45(1)(e) (e) “Foreclosure reconveyance” has the meaning given in s. 846.40 (1) (d).

846.45(1)(f) (f) “Person” means any individual, partnership, corporation, limited liability company, association, or other group, however organized.

846.45(1)(g) (g) “Residence in foreclosure” has the meaning given in s. 846.40 (1) (h).

846.45(1)(h) (h) “Service” includes any of the following:

846.45(1)(h)1. 1. Debt, budget, or financial counseling of any type.

846.45(1)(h)2. 2. Receiving money for the purpose of distributing it to creditors in payment or partial payment of any obligation secured by a lien on a residence in foreclosure.

846.45(1)(h)3. 3. Contacting creditors on behalf of a foreclosed homeowner.

846.45(1)(h)4. 4. Arranging or attempting to arrange for a delay or postponement of the time of sale of the residence in foreclosure.

846.45(1)(h)5. 5. Advising the filing of any document, or assisting in any manner in the preparation of any document for filing, with a bankruptcy court.

846.45(1)(h)6. 6. Giving any advice, explanation, or instruction to a foreclosed homeowner that in any manner relates to curing a default in or reinstating an obligation secured by a lien on the residence in foreclosure, the full satisfaction of that obligation, or the postponement or avoidance of a sale of a residence in foreclosure, under a power of sale contained in any mortgage.

846.45(2) (2) Cancellation of foreclosure consultant contract.

846.45(2)(a) (a) In addition to any other right under law to rescind a contract, a foreclosed homeowner has the right to cancel a contract until midnight of the 3rd business day after the day on which the foreclosed homeowner signs a contract that complies with sub. (3).

846.45(2)(b) (b)

846.45(2)(b)1. 1. Cancellation occurs when the foreclosed homeowner delivers, personally or by certified mail, written notice of cancellation to the foreclosure consultant at the foreclosure consultant’s address specified in the contract.

846.45(2)(b)2. 2. If notice of cancellation is given by certified mail, cancellation is effective when the notice is deposited in the U.S. mail, properly addressed with postage prepaid. If notice of cancellation is personally delivered, the foreclosure consultant must give the foreclosed homeowner a receipt. Cancellation, if personally delivered, is effective when the foreclosed homeowner hands the notice to the foreclosure consultant.

846.45(2)(c) (c) Notice of cancellation given by the foreclosed homeowner need not take the particular form provided with the contract under sub. (3) (e). However expressed, notice is effective if it indicates the intention of the foreclosed homeowner not to be bound by the contract.

846.45(3) (3) Contract.

846.45(3)(a) (a) Every contract must be in writing and must fully disclose the exact nature of the foreclosure consultant’s services and the total amount and terms of compensation.

846.45(3)(b) (b) The following notice, printed in not less than 14-point boldface type and completed with the name of the foreclosure consultant, must be printed immediately above the statement required by par. (c):

NOTICE REQUIRED BY WISCONSIN LAW

.... (name of foreclosure consultant) or anyone working for him or her CANNOT do any of the following:

846.45(3)(b)1. 1. Take any money from you or ask you for money until .... (name of foreclosure consultant) has completely finished doing everything he or she said he or she would do.

846.45(3)(b)2. 2. Ask you to sign or have you sign any lien, mortgage, or deed.

846.45(3)(c) (c) The contract must be written both in English and in the same language as principally used by the foreclosure consultant to describe his or her services or to negotiate the contract if other than English, must be dated and signed by the foreclosed homeowner, and must contain in immediate proximity to the space reserved for the foreclosed homeowner’s signature, in not less than 10-point boldface type, the following statement: “You, the owner, may cancel this transaction at any time prior to midnight of the 3rd business day after the date of this transaction. See the attached notice of cancellation form for an explanation of this right.”

846.45(3)(d) (d) The notice of cancellation form under par. (e) must contain, and the contract must contain on the first page, in a type size that is no smaller than that generally used in the body of the document, both of the following: