Milwaukee, WI

Foreclosures are in the news on a near-weekly business in Milwaukee. Lenders are foreclosing on mortgages at a record rate, due in no small part to the adjustable rate mortgages that were ubiquitous a few years ago. So many foreclosures means a glut of properties available at foreclosure sales, something which can be very tempting for investors or others just hoping to make a buck in the real estate market. Today’s Milwaukee Journal Sentinel featured a primer on foreclosures aimed at helping purchasers at sheriff’s sales make informed decisions when purchasing foreclosed properties.

The problem? The Journal Sentinel got nearly everything wrong.

A bank foreclosure can occur when mortgage payments are unpaid for six months in an owner-occupied home, or unpaid for three months for a rental property.

Not true. The bank can foreclose for a number of reasons, including missed payments or a failure to pay real estate taxes. There is no requirement that a lender wait for six missed payments before commencing a foreclosure action. However, after the entry of judgment in a foreclosure action, the owner has six months to refinance, sell the property, or work out a deal with their lender before the property can be sold at sheriff’s sale. That period is shortened to three months on non-owner occupied properties, such as rental properties.

At the sale, buyers must have 10% of the sale price - cashier’s check or cash - and proof that they can get a mortgage before their bids are accepted.

That’s just not true. There simply is no requirement that a buyer show proof they can get a mortgage.

Within a week or two of the sale, a judge must approve the sale before it becomes final. At any point before the judge approves the sale, the owner can stop the sale by paying the missed mortgage payments and costs.

Again, not true. The owner can redeem the property before the court approves the sale by paying the total amount of the mortgage - including costs of the foreclosure action. There is no requirement that a lender simply accept the missed mortgaged payments and costs, and many lenders won’t accept missed payments after a default.

Making money by purchasing foreclosed properties is a tempting prospect. In light of that, the Milwaukee Journal Sentinel’s article full of misinformation is downright irresponsible. The errors are so glaring, so fundamental, that I expect corrections to be published shortly.

Foreclosure, mortgage

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Foreclosure, mortgage