BELOIT — City Officials are concerned about a new bill which would change foreclosure laws in Wisconsin.
Rep. Terry Katsma, R-Oostburg, introduced Assembly Bill 720 earlier this month. The bill would change regulations for the process of foreclosing homes, reducing the redemption period for a homeowner to pay the mortgage on a residential property from one year to six months, and from six months to three months on an abandoned property. Currently, lenders must sell an abandoned foreclosed property after a five-week period, deemed a "redemption period," during which time the homeowner could pay the mortgage. In addition it limits who can petition a court for a declaring a mortgaged property abandoned.
Currently the process of a foreclosure can take up to 18 months, according to a Wisconsin Bankers Association timeline.
"Our concern is that foreclosure processes that aren't completed in a timely fashion," said City Manager Lori Curtis Luther. "(It) leave us with abandoned properties that have a high potential of lowering property values for neighboring properties."
Luther said the City of Beloit has the same concerns as Milwaukee, whose Mayor Tom Barrett has spoken out against the bill, claiming it would drag the process of foreclosures out even longer, thereby damaging the city's efforts to recover from a foreclosure crisis.
However, the Wisconsin Bankers Association supports the bill.
"We think this legislation will benefit municipalities, neighborhoods and homeowners by speeding up the foreclosure processes in situations that have exhausted all remedies for abandoned properties. The bill retains the municipalities’ ability to go to court to declare a property abandoned," said Mike Semmann, executive vice president and chief operations officer for Wisconsin Bankers Association.
Semmann said the bill gives courts an option, which is something they've never had before.
"The bill will help create clarity so the determination is by the court on whether or not the home can be sold. It gives the court options, where the current law allows for no options,” he said. “Statewide we’re really back to pre-recession levels on foreclosure. This is a piece of forward thinking legislation.”
Still, Luther has concerns on the bill.
"We’re trying to avoid “zombie” houses," she said. "We don’t want these vacant abandoned properties where the lender starts a foreclosure but doesn’t actually close it."