In reviewing a lender's mortgage form in our capacity as Wisconsin local counsel, one of the most frequent revisions we suggest making is to insert language to provide the lender, in its capacity as mortgagee, the opportunity to shorten the mortgagor's redemption period in order to reclaim the mortgaged property more quickly. The following summary explains the concept that needs to be added to a mortgage securing Wisconsin real property in order to ensure the mortgagee has the option to reduce the normal redemption period by one-half.
All foreclosures of real property in Wisconsin must be done through a statutorily derived judicial process that provides mortgagors with a time period following the lender's receipt of a default judgment to redeem the property and, thereby, avoid a foreclosure sale. Section 846.103(1) of the Wisconsin Statutes generally prohibits any foreclosure sale of commercial real property until six months after the date the lender secures a default judgment. If, however, the mortgagee expressly waives its right to any deficiency judgment in its pleadings, section 846.103(2) of the Wisconsin Statutes allows the mortgagee an opportunity to shorten that redemption period from six months to three months provided that the mortgagor had expressly agreed to permit the mortgagee to shorten the redemption when the mortgage was executed.1
Unless an out-of-state lender is aware of the availability of this shortened redemption period, it is likely that it will not insert the advance mortgagor consent language into its mortgage document needed for a mortgagee to elect to use this shortened redemption period option in the event of a subsequent default by the mortgagee. When called upon to serve as the lender's Wisconsin counsel, however, we are happy to work with lenders and their counsel to ensure that this mortgage consent language is added to the Wisconsin mortgage form to preserve as many options as possible for the lender in the event of a subsequent default by its mortgagee.