Ok, a Crash Course in Home Foreclosures

As the title says, I’m going to more or less explain the whole home foreclosure thing because it’s kind of relevant to the story that comes afterwards. It definitely makes a little bit more sense so you can follow where I go.

We all (should) know that a mortgage is basically a secured loan by way of the lien. The terms detailing the debt and repayment, maintenance, insurance, et cetera is the note. A lis pendens is basically a notice saying that the article on which it’s posted is involved in litigation; it’s basically so you don’t go buy a house/car and not know that it’s involved in some pending lawsuit. Now, deficiency, that’s what’s owed on the loan exceeding the amount that’s recovered by the sale of the property. I’m almost done with definitions now. The last two are acceleration and redemption. Acceleration is making the entirety of the loan, i.e., the principal, interest, fees, and what not, due immediately. Redemption is the right of the property owner to pay off the amount due or sell the property on their own.

There are several different types of foreclosures, but the one that pretty much everyone (that I know of) thinks of is a judicial foreclosure, wherein the court claims that the lender has an equitable right to foreclose on the property. But, we’ll start at the beginning.

1. There has to be a default; it could be anything from not making payments to not having the proper insurance.

2. The debtor, most of the time, is given notice of the default and the right to cure it.

3. The lender files a complaint in court, attempts to locate the individuals and gives them an article that lists the claims laid against them. If they can’t locate them to serve them the papers, they can place ads in local newspapers, send them via certified mail, post them on the property in a conspicuous location, or any number of other things. The lender also files, among other things, the lis pendens, affadavits saying that they notified the defendents, motions, and other technical things.

4. The debtor (ideally) responds within 20 days with their defenses.

From this point until the actual foreclosure hearing, the debtor has the right of reinstatement; they can force the lender to reinstate the loan by correcting the issue they defaulted on.

5. This is where the hearing happens; at the earliest, it’s 90 days after step 3. The court has already read the complaint, response, motions, proposed conclusions of law and judgment, and knows the facts. The judge, at this point, determines the judgment and redemption period. To note, if the plaintiff is seeking a deficiency judgment, the redemption period, per WI law, has to be set at 12 months. If they’re not, it can be set for 6 months, and if the property is abandoned, it could be lowered to 2 months. And, of course, if the defendant doesn’t show up, it’s more or less an assured default. And while they can be reopened after the fact, they rarely are.

The defendant(s) are now in the redemption period. Normally, before the judge okays the foreclosure, the lender accelerates the payments due so as to make sure that they get their money back from the property sale. But, the defendants can effectively live in the house rent free/payment free at this point.

6. Up to 6 weeks before the sale date (excluding farms over 20 acres), ads are put up advertising the fact that the property is up for auction.

7. The property is auctioned off.

8. And there is yet another hearing. This time it’s to determine if what was paid for it was fair value.

That’s it in a nutshell. Now the story.

My uncle and aunt, way back in March, had a foreclosure complaint filed against them in court. My uncle thought that it’d be a good time to see if he could get a modification made to his loan on the house. What he said happened and what happened are evidently 2 different things. I should also note that my uncle and aunt have/had a HELOC on their house, by the same bank that did their primary mortgage. But, anyways, he said that because my aunt isn’t working (which is true, she’s on disability, and she’s also a drug addict and drunkard whom only works 10 hours a week yet manages to fuck up her back while sitting on a chair or standing at a cash register..and one that continually keeps putting off surgery/diagnostics/medicine) he can’t afford the mortgage.

Some time in April a sheriff’s deputy stopped by my gramps’s house looking for my uncle. My gramps had no idea what it was about or anything like that, so he called up my uncle and he said that he’s fucking with the bank to get them to lower his payment. Alright, we don’t hear anything for a couple weeks so we assume it’s taken care of.

We thought wrong. Later on, in April yet, the bank filed affidavits saying that they couldn’t find my uncle or aunt, a copy of the certified letter receipt, and a copy of the notice in the local newspaper. Alright, well, it’s still not time for the hearing so in a couple months he could get everything taken care of. No. In June there’re more things being filed with the court. But, he now tells everyone that he got what he wanted and that his payments are half of what they were before.

Everyone keeps an eye out for the hearing date. If it’s dismissed it’ll certainly be dismissed before that date comes around. My aunt had another “back surgery” appointment (which was another shot) and my uncle had to drop something off in Green Bay. Everyone figured that they didn’t respond to the summons, so they maybe did have this taken care of. I mean, who would be so stupid to blow off responding to the summons, even if it’s to acknowledge something and to say that you were currently in negotiations with the bank, (which, incidentally, could have gotten them more time) and also blow off the hearing? They did. Their redemption period is set for 6 months and it was a default judgment.

In the days leading up to the hearing my gramps was asking if everything was current, were there any bills that they didn’t pay, was there anything at all that would cause the foreclosure suit? My uncle said no. And, the entire time, my aunt was calling up my gramps, bitching him out, and all the while complaining about the lack of money. Now, I know my gramps would have given them the 6 months or so that they weren’t paying. He’d have bitched about it, but he would have done it. There is no way in hell that he’s going to give them, and I’m guessing here, 150k to pay off the loans. And no bank will either. They filed bankruptcy several years back too.

Here’s the bad part. Every single time that my aunt called up my gramps complaining about a lack of money he’d tell her to get a full time job. My dad offered to get my uncle into a place that pays literally double (22k to 45k) what he makes. My aunt didn’t want him working there because, “there’re a bunch of fucking Mexicans working there”, and she thinks that she’s better than everyone. When some of those guys are making 30k less a year (and in the 6 figure range) than your house is worth, maybe it’s not the best idea to act that way.

I know that their problem is money management. I blame both of them for that, but more so for my aunt. She is a very status oriented person. The minute you are higher up the hierarchy than she, she doesn’t like you anymore. If you go to one of their parties, they generally have nothing but lower class people (and that’s in no way meant to be disrespectful, some of my best friends live in trailers) there. So, when they’re only making so much a year and barely above poverty levels, what do they do? Well, credit. And when that doesn’t work because they maxed them out they file bankruptcy (and there’s nothing wrong with that either, there are times when it’s genuinely the best option). What happened when they couldn’t get credit? They simply charged their daughter, whom turned 18 last year, rent. But when they could get credit, the good times were flowing again. That’s when they took out the HELOC. And I remember helping him out once and his application for an increase on his HELOC was denied. As an aside, most people would learn from what made them file bankruptcy. If you know that’s what did it, why would you do it again? Especially so soon and when you can’t file again for another couple years?

And, I’ll stop here. This is looking fairly long.

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