Amendment ASA1-AB729

LRBs0427/2

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2009 - 2010 LEGISLATURE

ASSEMBLY SUBSTITUTE AMENDMENT 1, TO 2009 ASSEMBLY BILL 729

April 15, 2010 - Offered by Representative Clark.

AB729-ASA1,1,4 An Act to amend 846.35 (1) (a) (intro.), 846.35 (1) (a) 1., 846.35 (1) (a) 2., 846.35 (1) (b) 2., 846.35 (2) (a) (intro.) and 846.35 (6); and to create 704.35 (1) (c), 846.015, 846.35 (1) (am) and 846.35 (2) (c) of the statutes; relating to: the foreclosure and sale of residential property.

The people of the state of Wisconsin, represented in senate and assembly, do enact as follows:

AB729-ASA1, s. 1 Section 1. 704.35 (1) (c) of the statutes is created to read:

AB729-ASA1,1,7 704.35 (1) (c) The rights and obligations of the tenant specified under s. 846.35 (2).

AB729-ASA1, s. 2 Section 2. 846.015 of the statutes is created to read:

AB729-ASA1,1,10 846.015 Additional mortgage foreclosure procedures for owner-occupied residential property. (1) Definitions. In this section:

AB729-ASA1,2,3 (a) "Government-sponsored enterprises" means the Federal National Mortgage Association, the Federal Home Loan Mortgage Corporation, and the Government National Mortgage Association.

AB729-ASA1,2,6 (b) "Mortgagee negotiator" means a mortgagee or mortgage servicer who has the authority to enter into negotiations regarding modifications to a mortgage loan involving owner-occupied residential property.

AB729-ASA1,2,9 (c) "Mortgage modification program" means the federal home affordable modification program established by the U.S. department of the treasury under 12 USC 5219.

AB729-ASA1,2,13 (d) "Mortgage modification program participant" means a financial institution or mortgage servicer that has executed an agreement with the Federal National Mortgage Association, in its capacity as financial agent for the United States, to be a participant in the mortgage modification program.

AB729-ASA1,2,14 (e) "Mortgage servicer" means the servicing agent of the mortgagee.

AB729-ASA1,2,17 (f) "Owner-occupied residential property" means a one-family to 4-family dwelling, which, at the time the mortgage loan was originated, was occupied or intended to be occupied, by the mortgagor as his or her place of residence.

AB729-ASA1,2,21 (2) Notification. Before commencing an action to foreclose on a mortgage loan involving owner-occupied residential property, a mortgage modification program participant shall provide to the mortgagor at his or her last-known address by certified mail a written notice that contains all of the following information:

AB729-ASA1,2,24 (a) That the mortgage loan is in default and a mortgage foreclosure action may be commenced, the reason that the mortgage loan is in default, and the action required of the mortgagor to cure the default.

AB729-ASA1,2,25 (b) The name, address, and telephone number of the mortgagee negotiator.

AB729-ASA1,3,4 (c) The names and addresses of adjustment service companies licensed under s. 218.02, and of independent nonprofit organizations approved by the federal department of housing and urban development, that offer credit counseling services to homeowners.

AB729-ASA1,3,7 (d) That the mortgagor may request to be considered under the mortgage modification program for a modification to the mortgage loan by contacting the mortgagee negotiator.

AB729-ASA1,3,12 (3) Affidavit. (a) In any mortgage foreclosure action involving owner-occupied residential property, the plaintiff shall file an affidavit with the court stating whether the mortgage loan is owned, securitized, or guaranteed by a government-sponsored enterprise and whether the mortgagee or mortgage servicer is a mortgage modification program participant.

AB729-ASA1,3,17 (b) If the affidavit in par. (a) states that the mortgage loan is owned, securitized, or guaranteed by a government-sponsored enterprise and that the mortgagee or mortgage servicer is a mortgage modification program participant, a copy of the affidavit shall be attached to the complaint given to the mortgagor and the affidavit shall include a statement showing one of the following:

AB729-ASA1,3,19 1. That the mortgage loan is not eligible for modification under the mortgage modification program.

AB729-ASA1,3,22 2. That the process required by the mortgage modification program has been properly completed without resulting in a modification of the mortgage loan and that the plaintiff has sent written notification of that result to the mortgagor.

AB729-ASA1,4,2 (4) Determination. (a) In all mortgage foreclosure actions involving owner-occupied residential property, the court shall not enter a judgment of foreclosure and sale until the court has received a copy of the affidavit as required under sub. (3) and made the determination required under par. (d).

AB729-ASA1,4,9 (b) If the court determines that the mortgage modification program is applicable to the mortgage loan but that the process to determine if a modification will be made under that program has not been completed, the court shall stay the foreclosure action until the program's requirements are completed. If the action is stayed, the plaintiff shall advise the court of the status of the action every 45 days. If the plaintiff fails to advise the court of the status of the action every 45 days, the court may dismiss the foreclosure action.

AB729-ASA1,4,12 (c) If the mortgage loan is modified under the mortgage modification program, and the mortgagor is complying with the terms of the modification, the plaintiff shall immediately notify the court and the court shall dismiss the foreclosure action.

AB729-ASA1,4,14 (d) If the court determines that the facts set forth in the affidavit under sub. (3) are not in dispute, the foreclosure action may continue.

AB729-ASA1,4,16 (e) This subsection does not preclude the plaintiff from voluntarily dismissing the foreclosure action.

AB729-ASA1,4,19 (5) Mortgage modification program participants. The department of financial institutions shall maintain a current list of mortgage modification program participants on the department's public Internet Web site.

AB729-ASA1,4,20 (6) Termination. This section does not apply after December 31, 2012.

AB729-ASA1, s. 3 Section 3. 846.35 (1) (a) (intro.) of the statutes, as created by 2009 Wisconsin Act 2, is amended to read:

AB729-ASA1,4,25 846.35 (1) (a) (intro.) If residential rental property is the subject of a foreclosure action, the plaintiff shall provide the following written notices at the following times to the tenants who are in possession of each rental unit when a notice is given:

AB729-ASA1, s. 4 Section 4. 846.35 (1) (a) 1. of the statutes, as created by 2009 Wisconsin Act 2, is amended to read:

AB729-ASA1,5,5 846.35 (1) (a) 1. No later than 5 30 days after the foreclosure action is filed, notice that the plaintiff has commenced a foreclosure action with respect to the rental property.

AB729-ASA1, s. 5 Section 5. 846.35 (1) (a) 2. of the statutes, as created by 2009 Wisconsin Act 2, is amended to read:

AB729-ASA1,5,11 846.35 (1) (a) 2. No later than 5 30 days after the judgment of foreclosure is entered, notice that the plaintiff has been granted a judgment of foreclosure with respect to the rental property and notice of the date on which the redemption period ends.

AB729-ASA1, s. 6 Section 6. 846.35 (1) (am) of the statutes is created to read:

AB729-ASA1,5,14 846.35 (1) (am) Each notice under par. (a) shall include a statement of the rights and obligations of the tenant specified under sub. (2).

AB729-ASA1, s. 7 Section 7. 846.35 (1) (b) 2. of the statutes, as created by 2009 Wisconsin Act 2, is amended to read:

AB729-ASA1,5,25 846.35 (1) (b) 2. By certified mail with return receipt requested supported by a certificate of mailing obtained from the U.S. post office from which the mailing was made, and, separately, by first class mail. Notice given under this subdivision is considered completed when it is mailed, unless the envelope enclosing the notice is returned unopened to the plaintiff both mailings are sent, postage pre-paid, to the tenant, or, if the tenant's name is unknown to the plaintiff, to the occupant, at each rental unit address. All notices mailed under this subdivision shall be mailed in envelopes upon which the plaintiff's, or the plaintiff's attorney's, return address appears, with a request to return to that address.

AB729-ASA1, s. 8 Section 8. 846.35 (2) (a) (intro.) of the statutes, as created by 2009 Wisconsin Act 2, is amended to read:

AB729-ASA1,6,5 846.35 (2) (a) (intro.) Notwithstanding ss. 708.02 and 710.10 (3) and ch. 704, all of the following apply to a tenant whose tenancy is terminated as a result of a foreclosure judgment and sale with respect to the rental property:

AB729-ASA1, s. 9 Section 9. 846.35 (2) (c) of the statutes is created to read:

AB729-ASA1,6,11 846.35 (2) (c) After the sale of the property is confirmed and during the period that the tenant retains possession under this subsection, the purchaser at the sale and the tenant shall have all of the rights and obligations of a landlord and tenant, respectively, under ch. 704 and under the tenant's lease, if any, with respect to each other and the property.

AB729-ASA1, s. 10 Section 10. 846.35 (6) of the statutes, as affected by 2009 Wisconsin Act 28, is amended to read:

AB729-ASA1,6,19 846.35 (6) Penalties. If a plaintiff fails to provide a notice under par. sub. (1) (a) in accordance with pars. sub. (1) (a), (am), and (b), or fails to comply with sub. (5), the court shall award the tenant to whom the notice should have been given or who should not have been named as a defendant $250 in damages, plus reasonable attorney fees. A tenant may not recover under this paragraph for more than one notice violation.

AB729-ASA1, s. 11 Section 11. Initial applicability.

AB729-ASA1,6,23 (1) The treatment of sections 704.35 (1) (c), 846.015 (1) to (4), and 846.35 (1) (a) (intro.), 1., and 2., (am), and (b) 2. and (2) (a) (intro.) of the statutes first applies to foreclosure actions commenced on the effective date of this subsection.