What is a wrongful foreclosure?

On Behalf of | Mar 12, 2019 | Uncategorized |

If you default on your mortgage payments and the bank decides to foreclose on your Wisconsin home, it must adhere to a strict set of rules and procedures throughout the duration of the process. If the lender does not abide by the law at any point throughout the proceedings, you may file for wrongful foreclosure, which is a civil cause of action that arises from accusations of foreclosure fraud.

According to SFGate, foreclosure fraud can happen at any point of the foreclosure process. However, some of the more common instances of foreclosure fraud involve consultants, lenders or attorneys signing off on inaccurate documents, forging signatures or wrongfully evicting homeowners.

Some states, such as Wisconsin, require courts to oversee the foreclosure process. To initiate this process, the bank or lender must submit a sworn affidavit to the court asserting that the homeowner (you) has defaulted on the existing loan agreement. The affidavit must be 100 percent truthful. To ensure it is such, the bank or lending institution must require its employees to review all documents to verify that you have, in fact, missed payments. The final affidavit must also confirm the exact outstanding balance.

Unfortunately, bank employees are often so inundated with documents that they blindly sign off on documents without going through the entire verification process. This can lead to the institution submitting a false affidavit, an action that can arise in wrongful foreclosure and that carries both civil and criminal penalties.

Forged signatures present another roadblock to proper foreclosure. Before a lender can file foreclosure documents and pleadings, Wisconsin courts require defendants to sign each document in person. If your lender submits documents you yourself did not actually sign, you not only have a wrongful foreclosure action against the lender but also, you may have a criminal case as well.

In addition to going through the proper court procedures, lenders must abide by other rules set forth by the state. One such rule is that banks cannot foreclose on the home of an active-duty U.S. military servicemember without first giving him or her nine months to correct the situation. Other rules involve lenders providing homeowners with ample notice, going through the judicial sale process and following through with proper eviction procedures. If the lender fails to perform any of its duties the law requires of it, the judge may deem the foreclosure wrongful and require parties to restart the process.

The content shared here is for informational purposes only. It should not be used as legal advice.