Summary: Under Wis. Stat. § 846.101(2), the phrase “shall be given,” as it pertains to notice of a foreclosure sale during the six-month redemption period, is directory and not mandatory.

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Bank of America, N.A. v. Prissel, 2015 WI App 10, 359 Wis. 2d 561, 859 N.W.2d 172 (Wis.App. 2014).

Facts: The Prissels and Gerlach (‘Borrowers’) executed a note and mortgage on their respective properties with their respective lenders. The notes and mortgages were eventually transferred to Bank of America (‘Bank’), which filed for foreclosure after the Borrowers defaulted. The Bank waived its right to a deficiency judgment, and the circuit court subsequently entered a foreclosure judgment against the Borrowers in separate cases. Because the Bank waived its right to a deficiency judgment, the Borrowers' statutory redemption periods were shortened from 12 months to six months.

The Bank did not publish notices of foreclosure sale during the Borrowers' six-month redemption periods. Thereafter, the Borrowers moved to vacate the foreclosure judgments. The Borrowers' motions were based on Wis. Stat. § 846.101, which set forth the procedure for foreclosing a mortgage on an owner-occupied one- to four-family residence when the lender elected not to pursue a deficiency judgment. In short, the Borrowers argued that the statute strictly required the Bank to file a notice of foreclosure sale within the six month time period, or the sale was void.

The circuit court disagreed, and denied the Borrowers' motions. The Borrowers’ appealed.

Holding: Affirmed. On appeal, the court held that reading Wis. Stat. § 846.101(2) in context with other sections of Wis. Stat. ch. 846, the statutory language stating notice of a foreclosure sale “shall be given” within the six-month redemption period was directory, not mandatory. The court found that for all types of property, except owner-occupied one- to four-family residences for which the lender did not seek a deficiency, the foreclosure statutes explicitly provided that notice within the redemption period was permitted, not required. The court noted that the word “shall” in the statute could be construed as directory based on the application of four factors: (1) the omission of a prohibition or a penalty; (2) the consequences resulting from one construction or the other; (3) the nature of the statute, the evil to be remedied, and the general object sought to be accomplished by the legislature; and (4) whether the failure to act within the time limit worked an injury or a wrong.

First, Wis. Stat. § 846.101(2) did not express a penalty for, or a prohibition against, failing to publish a notice of foreclosure sale within the redemption period. Second, interpreting § 846.101(2) to require publication of a notice of sale within the redemption period would conflict with the statutory approach expressly adopted for all other foreclosure types. Third, interpreting the word “shall” in the notice provision of Wis. Stat. § 846.101(2) as mandatory, rather than directory, would be inconsistent with the nature of the statute, the evil to be remedied, and the general object sought to be accomplished by the legislature. Fourth, delaying a foreclosure sale was deemed to generally benefit a borrower by enabling them to retain possession of their property longer, and by providing additional time to compromise with the lender. In contrast, requiring notices of sale to be published during the redemption period could harm borrowers by forcing lenders to hold foreclosure sales shortly after the redemption period.