138.052(5)(am)2.a.a. On January 1, 1994, and annually thereafter, the division of banking for banks, the division of savings and loan for savings and loan associations and savings banks and the office of credit unions for credit unions shall determine the interest rate that is the average of the interest rates paid, rounded to the nearest one-hundredth of a percent, on regular passbook deposit accounts by institutions under the division's or office's jurisdiction at the close of the last quarterly reporting period that ended at least 30 days before the determination is made.
138.052(5)(am)2.b.
b. The office of credit unions shall report the rate calculated to the division of savings and loan within 5 days after the date on which the determination is made. The division of savings and loan shall calculate the average, rounded to the nearest one-hundredth of a percent, of the 3 rates and report that interest rate to the revisor of statutes within 5 days after the date on which the determination is made.
138.052(5)(am)2.c.
c. The revisor of statutes shall publish the average rate in the next publication of the Wisconsin administrative register. The published interest rate shall take effect on the first day of the first month following its publication and shall be the interest rate used to calculate interest on escrow accounts that are subject to this subdivision until the next year's interest rate is published under this
subd. 2. c.
138.052(5)(am)3.
3. The interest rate published under
subd. 2. c. also applies to loans originated after January 31, 1983, and before January 1, 1994, if an interest rate is not specified in the loan agreement.
138.052(5)(b)
(b) The parties may agree to waive payment of all or part of the interest required under
par. (a) or
(am) if more than 75% of the lender's interest in the loan is sold to a 3rd party who is not a person related to the lender and the escrow funds are held by the 3rd party.
138.052(5m)(a)(a) In this subsection, "escrow agent" means a person who receives escrow payments on behalf of itself or another person.
138.052(5m)(b)1.1. Except as provided in
par. (e), if an escrow is required to assure the payment of property taxes, a bank, credit union, savings bank, savings and loan association or mortgage banker which originates a loan on or after July 1, 1988, shall, before the loan closing, provide the borrower with a written notice clearly stating that the borrower may require the escrow agent to make payments in any manner specified in
subd. 3. from the amount escrowed to pay property taxes and the responsibilities of the borrower and escrow agent as provided in
subds. 4. and
5.
138.052(5m)(b)2.
2. Except as provided in
par. (e), if an escrow is required to assure the payment of property taxes for a loan originated before July 1, 1988, the escrow agent shall send, by November 15, 1988, written notice to the borrower clearly stating that the borrower may require the escrow agent to make payments in any manner specified in
subd. 3. from the amount escrowed to pay property taxes and the responsibilities of the borrower and escrow agent as provided in
subds. 4. and
5.
138.052(5m)(b)3.
3. Except as provided in
par. (e), a borrower may require an escrow agent who receives escrow payments to assure the payment of the borrower's property taxes to do any of the following, if the borrower notifies the escrow agent as provided in
subd. 4. and if the borrower is current in his or her loan payments:
138.052(5m)(b)3.a.
a. Except as provided in
subd. 3m., by December 20, send to the borrower a check in the amount of the funds held in escrow for the payment of property taxes, made payable to the borrower and the town, city or village treasurer authorized to collect the tax.
138.052(5m)(b)3.b.
b. Pay the property taxes by December 31, if the escrow agent has received a tax statement for that property by December 20.
138.052(5m)(b)3m.
3m. In its sole discretion, an escrow agent may send a check under
subd. 3. a. that is made payable only to the borrower.
138.052(5m)(b)4.
4. To require the escrow agent to make payments in any of the manners specified in
subd. 3., the borrower shall send, by November 1, written notice to the escrow agent specifying the manner, from the 3 choices under
subd. 3., that the borrower wants the escrow agent to make payments. Except as provided in
subd. 5. b., once notified, the escrow agent shall annually make payments in that manner unless the borrower is not current in his or her loan payments or unless otherwise notified in writing by the borrower by November 1.
138.052(5m)(b)5.a.a. If the borrower chooses to receive payments as provided in
subd. 3. a. or receives payment under
subd. 3m., the borrower shall annually, by March 31, send to the person to whom the borrower makes his or her loan payments a copy of the receipt for paid property taxes.
138.052(5m)(b)5.b.
b. If the borrower fails to comply with
subd. 5. a., the borrower loses the option of receiving payments that year in the manner specified in
subd. 3. a. During the next year, the borrower may again receive payments under
subd. 3. a. if the borrower renotifies the escrow agent by sending written notice to the escrow agent by November 1 of the next year and if the borrower is current in his or her loan payments.
138.052(5m)(b)6.
6. If the borrower sends the check received under
subd. 3. a. to the town, city or village treasurer after the county has assumed responsibility for collecting property taxes, the town, city or village treasurer shall accept the check and pay over to the county treasurer the amount of the check. If the amount of the check sent by the borrower to the town, city or village treasurer exceeds the amount of property taxes owed by the borrower, the town, city or village treasurer shall refund the excess amount to the borrower and, if the county has assumed responsibility for collecting property taxes, pay over to the county treasurer the remaining amount of the check.
138.052(5m)(c)
(c) A borrower may establish an escrow account required for the payment of taxes and insurance in a financial institution, as defined in
s. 710.05 (1) (c), of the borrower's choice if the escrow agent fails to comply with
par. (b) 3., unless the lender or person to whom the loan is sold or released demonstrates that the financial institution is incapable of servicing the escrow account.
138.052(5m)(d)
(d) If a borrower establishes an escrow account under
par. (c), the borrower shall annually, by March 31, send to the person to whom the borrower makes his or her loan payments verification of the amounts which the borrower deposited in the escrow account during the previous 12 months and copies of receipts for taxes and insurance paid during the previous 12 months.
138.052(5m)(e)
(e) Paragraphs (b) to
(d) do not apply to an escrow required in connection with a loan to assure the payment of property taxes, whether the loan is originated before, on or after May 3, 1988, if it is the practice of the escrow agent to, by December 20, pay to the borrower the amount held in escrow for the payment of property taxes or to send the borrower a check in the amount of the funds held in escrow for the payment of property taxes, made payable to the borrower and the treasurer authorized to collect the tax. If the escrow agent in any year chooses not to make the payment by December 20 for any reason other than because the borrower is not current in his or her loan payments, the escrow agent shall send, by October 15 of that year, written notice to the borrower clearly stating that the borrower may require the escrow agent to make payments in any manner specified in
par. (b) 3. from the amount escrowed to pay property taxes and the responsibilities of the borrower and escrow agent as provided in
par. (b) 4. and
5.
138.052(6)
(6) The parties may agree to imposition of a late payment charge not exceeding 5% of the unpaid amount of any instalment not paid on or before the 15th day after its due date. For purposes of this subsection, payments are applied first to current instalments and then to delinquent instalments. A delinquency charge may be imposed only once on any instalment.
138.052(7)
(7) Interest imposed on the amount due after acceleration or maturity of a loan may not exceed the contract rate.
138.052(7e)
(7e) A bank, credit union, savings bank, savings and loan association, mortgage banker or any other lender which receives an application for a loan after November 1, 1988, shall do all of the following:
138.052(7e)(a)
(a) If an application receives adverse action, provide a written statement of the reasons for the action when the action is communicated to the applicant, except that delivery of a notice of adverse action conforming to the requirements of
15 USC 1601 to
1693r and the regulations adopted under that law satisfies the requirements of this paragraph.
138.052(7e)(b)
(b) Before accepting an application or fee in connection with a loan, deliver to the potential loan applicant a written disclosure which clearly states all of the following:
138.052(7e)(b)1.
1. Whether an application fee or other charge paid by an applicant in connection with a loan application is refundable in whole or in part if the application is denied or the loan is not closed.
138.052(7e)(b)2.
2. Whether the terms of the agreement to make the loan, including but not limited to the interest rate and any fees charged in connection with the loan, are fixed through the date of the loan closing.
138.052(7e)(b)3.
3. If the lender may change the terms of the agreement to make the loan if the loan is not closed on or before the date agreed upon, the specific terms which the lender may change.
138.052(7m)(a)(a) A lender shall notify the borrower as provided in
par. (b) if on or after May 3, 1988, the payment, collection or other loan or escrow services related to the loan are sold or released.
138.052(7m)(b)
(b) The notice required under
par. (a) shall be in writing and shall include the name, address and telephone number of the party to whom servicing of the loan is sold or released. The lender shall deliver the notice to the borrower by mail or personal service within 15 working days after servicing of the loan is sold or released.
138.052(7s)
(7s) A person who receives loan or escrow payments on behalf of itself or another person shall do all of the following:
138.052(7s)(a)
(a) Respond to a borrower's inquiry within 15 days after receiving the inquiry.
138.052(7s)(b)
(b) Consider that a loan payment by check, or other negotiable or transferable instrument, is made on the date on which the check or instrument is physically received, except that the person may charge back an uncollected loan payment.
138.052(8)
(8) This section does not apply to a loan insured, or committed to be insured, or secured by mortgage or trust deed insured by the U.S. secretary of housing and urban development, insured, guaranteed or committed to be insured or guaranteed under
38 USC 1801 to
1827 or insured or committed to be insured under
7 USC 1921 to
1995.
138.052(9)
(9) Chapters 421 to
428 do not apply to the refinancing, modification, extension, renewal or assumption of a loan which had an original principal balance in excess of $25,000 if the unpaid principal balance of the loan has been reduced to $25,000 or less.
138.052(10)
(10) This section does not apply to any of the following:
138.052(10)(a)
(a) A loan to a corporation or a limited liability company.
138.052(10)(b)
(b) A loan that is primarily for a business purpose or for an agricultural purpose, as defined in
s. 421.301 (4).
138.052(11)
(11) The contract rate is not subject to rate limitations imposed under this chapter or
s. 218.01 or
422.201.
138.052(12)(a)(a) Any lender violating
sub. (2) (b),
(5),
(5m) (b) 1.,
(6),
(7),
(7e),
(7m) or
(7s), or an escrow agent, as defined in
sub. (5m) (a), violating
sub. (5m) (b) 2., is liable to the borrower for $500 plus actual damages, costs and reasonable attorney fees.
138.052(12)(b)
(b) Paragraph (a) does not apply to an unintentional mistake corrected by the lender on demand.
138.052 Annotation
Discussion of federal law preemption of section as applied to federally chartered savings institutions regulated by federal home loan bank board. Wisconsin League of Financial Inst. v. Galecki, 707 F Supp. 401 (W.D. Wis. 1989).
138.053
138.053
Regulation of interest adjustment provisions. 138.053(1)(1)
Required contract provisions. No contract between a borrower and a lender secured by a first lien real estate mortgage on, or an equivalent security interest in, an owner-occupied residential property containing not more than 4 dwelling units may authorize the lender to increase the borrower's contractual rate of interest unless the contract provides that:
138.053(1)(a)
(a) No increase may occur until 3 years after the date of the contract;
138.053(1)(b)
(b) No increase may occur unless the borrower is given at least 4 months' written notice of the lender's intent to increase the rate of interest, during which notice period the borrower may repay his or her obligation without penalty;
138.053(1)(c)
(c) The amount of the initial interest rate increase may not exceed $1 per $100 for one year computed upon the declining principal balance;
138.053(1)(d)
(d) The amount of any subsequent interest rate increase may not exceed $1 per $200 for one year computed upon the declining principal balance;
138.053(1)(e)
(e) The interest rate may not be increased more than one time in any 12-month period; and
138.053(1)(f)
(f) The loan may be prepaid without penalty at any time at which the interest rate in effect exceeds the originally stated interest rate by more than $2 per $100 for one year computed upon the declining principal balance.
138.053(2)
(2) Disclosures required. No lender may make a loan secured by a first lien real estate mortgage on, or an equivalent security interest in, an owner-occupied residential property containing not more than 4 dwelling units providing for prospective changes in the rate of interest unless it has clearly and conspicuously disclosed to the borrower in writing:
138.053(2)(a)
(a) That the interest rate is prospectively subject to change;
138.053(2)(b)
(b) That notice of any interest adjustment must be given 4 months prior to any increase; and
138.053(2)(c)
(c) Any prepayment rights of the borrower upon receiving notice of such change.
138.053(3)
(3) Notice of interest adjustment. Notices provided under
sub. (2) shall be mailed to the borrower at his or her last-known post-office address and shall clearly and concisely disclose:
138.053(3)(a)
(a) The effective date of the interest rate increase;
138.053(3)(b)
(b) The increased interest rate and the extent to which the increased rate will exceed the interest rate in effect immediately before the increase;
138.053(3)(c)
(c) The amount of the borrower's contractual monthly principal and interest payment before and after the effective date of the increase;
138.053(3)(d)
(d) Any right of the borrower to voluntarily increase his or her contractual principal and interest payment;
138.053(3)(e)
(e) Whether as a result of the increase a lump sum payment may be necessary at the end of the loan term;
138.053(3)(f)
(f) Whether an additional number of monthly payments may be required; and
138.053(3)(g)
(g) The borrower's right to prepay within 4 months without a prepayment charge.
138.053(4)(a)(a) This section does not apply to variable rate contracts, nor to loans or forbearances to corporations or limited liability companies.
138.053(4)(b)
(b) This section applies only to transactions initially entered into on or after June 12, 1976 and before November 1, 1981.
138.053 Annotation
"Due on sale" provision of note and mortgage was enforceable. Mutual Fed. S. & L. Asso. v. Wisconsin Wire Wks. 71 W (2d) 531, 239 NW (2d) 20.
138.055
138.055
Variable rate contracts. 138.055(1)
(1)
Required contract provisions. No contract between a borrower and a lender secured by a first lien real estate mortgage on, or an equivalent security interest in, an owner-occupied residential property containing not more than 4 dwelling units may contain a variable interest rate clause unless the contract provides that:
138.055(1)(a)
(a) When an increase in the interest rate is permitted by a movement upward of a prescribed index, a decrease in the interest rate is also required by a downward movement of the prescribed index subject to
pars. (b) to
(f);
138.055(1)(b)
(b) The rate of interest shall not change more than once during any 6-month period;
138.055(1)(c)
(c) Any singular change in the interest rate shall not exceed the rate of $1 per $200 for one year computed upon the declining principal balance and the total variance in such rate shall at no time exceed a rate equal to $2.50 per $100 for one year computed on the declining principal balance greater or lesser than the rate originally in effect;
138.055(1)(d)
(d) Decreases required by the downward movement of the prescribed index shall be mandatory. Increases permitted by the upward movement of the prescribed index shall be optional with the lender. Changes in the interest rate shall only be made when the prescribed index changes a minimum of one-tenth of one percent;
138.055(1)(e)
(e) The fact that a lender may not have invoked an increase, in whole or in part, shall not be deemed a waiver of the lender's right to invoke an increase at any time thereafter within the limits imposed by this section;
138.055(1)(f)
(f) The rate shall not change during the first semiannual period of the loan; and
138.055(1)(g)
(g) The borrower may prepay the loan in whole or in part within 90 days of notification of any increase in the rate of interest without a prepayment charge.
138.055(2)
(2) Disclosures required. No lender may make a loan secured by a first lien real estate mortgage on, or an equivalent security interest in, an owner-occupied residential property containing not more than 4 dwelling units containing a variable interest rate provision unless it has clearly and conspicuously disclosed to the borrower in writing prior to execution of the loan documents:
138.055(2)(a)
(a) That the loan contract contains a variable interest rate;
138.055(2)(b)
(b) The index used in applying any variable interest rate changes contemplated in the note and its current base; and
138.055(2)(c)
(c) Any prepayment rights of the borrower upon receiving notice of any such change.
138.055(3)
(3) Notice of interest adjustment. When a change in the interest rate is required or permitted by a movement in the prescribed index, the lender shall give notice to the borrower by mail, addressed to the borrower's last-known post-office address, not less than 30 days prior to any change in interest rate, which notice shall clearly and concisely disclose:
138.055(3)(a)
(a) The effective date of the interest rate change;
