LRB-1743/2
ARG&RPN:nwn:jf
2009 - 2010 LEGISLATURE
August 31, 2009 - Introduced by Representatives Hraychuck, Dexter, Mason,
Clark, Berceau, Molepske Jr., Bernard Schaber, Hixson, Zepnick, Richards
and Grigsby, cosponsored by Senators Kreitlow and Hansen. Referred to
Committee on Housing.
AB407,1,3
1An Act to amend 138.065 (1) (a); and
to create 138.065, 802.02 (1) (c) and 802.12
2(2) (am) of the statutes;
relating to: mortgage loan defaults and notification of
3alternative dispute resolution options.
Analysis by the Legislative Reference Bureau
Under current law, with exceptions, a mortgage banker is a person that
originates certain mortgage loans for itself or others, sells such mortgage loans to
others, or services such mortgage loans. Among the exceptions, a mortgage banker
generally does not include a financial institution.
Under this bill, if a borrower has failed to make full scheduled payments on a
residential first mortgage loan for two consecutive payment periods and the failure
to make these payments renders the borrower in default, a mortgage banker holding
or servicing the loan must provide the borrower with notice of the default within 45
days after the due date for the second payment period. The notice must inform the
borrower of any action required of the borrower to cure the default and of the names
and addresses of adjustment service companies licensed with the Department of
Financial Institutions that offer credit counseling services to homeowners.
Under this bill, if an action is brought in circuit court for the foreclosure of a
mortgage on real estate, the contents of the legal pleadings that make the claim for
foreclosure must include a statement that either party to the action may request that
the court order the parties to select an alternative method of settling the claim.
Current law allows a circuit court to order parties to an action to use an alternative
settlement method, such as binding arbitration, mediation, nonbinding arbitration,
or direct negotiations. Under the bill, if the court orders the parties to select an
alternative method to settle the claim and the court determines that a party is not
participating in good faith, the court must terminate the settlement alternative and
may order that party to pay the other party's costs, including attorney fees, incurred
while participating in the settlement alternative.
The people of the state of Wisconsin, represented in senate and assembly, do
enact as follows:
AB407, s. 1
1Section
1. 138.065 of the statutes is created to read:
AB407,2,2
2138.065 M
ortgage loan default notices.
(1) Definitions. In this section:
AB407,2,63
(a) "First mortgage loan" means a loan that is secured by a first lien real estate
4mortgage in a one-family to 4-family dwelling, including individual condominium
5units, in this state that the borrower uses, or intends to use, as his or her principal
6place of residence.
AB407,2,77
(b) "Mortgage banker" has the meaning given in s. 224.71 (3).
AB407,2,13
8(2) Default notice required. If a borrower has failed to make full scheduled
9payments on a first mortgage loan for 2 consecutive payment periods and the failure
10to make these payments renders the borrower in default under the terms of the first
11mortgage loan, a mortgage banker holding or servicing the first mortgage loan shall
12provide the borrower with notice of the default no later than 45 days after the due
13date for the 2nd payment period.
AB407,2,15
14(3) Content of notice. The notice required under sub. (2) shall inform the
15borrower of all of the following:
AB407,2,1816
(a) Any action required of the borrower to cure the default on the first mortgage
17loan, including any amount that must be paid to cure the default and bring the
18borrower current on the loan, and any date by which such action must be taken.
AB407,3,2
1(b) The names and addresses of adjustment service companies licensed under
2s. 218.02 that offer credit counseling services to homeowners.
AB407, s. 2
3Section
2. 138.065 (1) (a) of the statutes, as created by 2009 Wisconsin Act ....
4(this act), is amended to read:
AB407,3,95
138.065
(1) (a) "First mortgage loan" means a
residential mortgage loan
, as
6defined in s. 224.71 (14), that is secured by a first lien real estate mortgage
in a
7one-family to 4-family dwelling, including individual condominium units, in this
8state on a dwelling or residential real property that the borrower uses, or intends to
9use, as his or her principal place of residence.
AB407, s. 3
10Section
3. 802.02 (1) (c) of the statutes is created to read:
AB407,3,1611
802.02
(1) (c) If the claim for relief is for the foreclosure of a mortgage on real
12estate under ch. 846, a statement that either party may request that the court order
13the parties to select a settlement alternative under s. 802.12 as a means to attempt
14settlement of the claim, by submitting a request to the court and serving a copy of
15that request on the other party no later than 5 days before an answer is otherwise
16due.
AB407, s. 4
17Section
4. 802.12 (2) (am) of the statutes is created to read:
AB407,4,318
802.12
(2) (am) If the action includes a claim for relief for the foreclosure of a
19mortgage on real estate under ch. 846, a party to the action requests the court to order
20the parties to select a settlement alternative and serves that request on the other
21party no later than 5 days before an answer is otherwise due, and the court
22determines that the request is timely and the action or proceeding is an appropriate
23one in which to invoke a settlement alternative, the time periods for any responsive
24pleading are tolled until the selected settlement alternative is concluded. If, upon
25motion of either party, the court determines that a party is not participating in good
1faith with the settlement alternative, the court shall terminate the settlement
2alternative, and may require that party to pay the other party's costs, including
3attorney fees, incurred while participating in the settlement alternative.
AB407,4,65
(1) The creation of section 138.065 of the statutes first applies to loan defaults
6occurring on the effective date of this subsection.
AB407,4,87
(2) The treatment of sections 802.02 (1) (c) and 802.12 (2) (am) of the statutes
8first applies to actions commenced on the effective date of this subsection.
AB407, s. 6
9Section
6.
Effective dates. This act takes effect on the day after publication,
10except as follows:
AB407,4,1211
(1)
The amendment of section 138.065 (1) (a) of the statutes takes effect on
12January 1, 2010, or on the day after publication, whichever is later.
