Attorney at Debt Advisors Law Offices
Practice Areas: Chapter 7 Bankruptcy, Chapter 13 Bankruptcy, Stop Foreclosure
For most Wisconsin families, paying off a mortgage or completing a bankruptcy plan should close a difficult chapter for good. But in recent years, many homeowners have discovered an unsettling problem: wrongful foreclosures and so-called “zombie mortgages.” These issues often arise because of errors in mortgage servicing, sloppy paperwork, or outdated lender records. The results can be devastating, even when a borrower has already done everything right.
This article explains what wrongful foreclosure means in Wisconsin, how zombie mortgages resurface, and what legal protections exist for homeowners.
A wrongful foreclosure occurs when a lender files a foreclosure case without proper legal grounds. This can happen for several reasons: incorrect paperwork, missed loan modifications, or a foreclosure filed after a mortgage has already been satisfied.
In Wisconsin, foreclosure law is governed by Wis. Stat. Chapter 846. The law requires lenders to strictly follow notice and filing procedures. If mistakes occur, homeowners may have the right to challenge the foreclosure in court.
Common examples of wrongful foreclosure include lenders failing to credit payments, starting foreclosure after a homeowner completed a Chapter 13 repayment plan, or pursuing action despite the mortgage being discharged in bankruptcy.
“Wisconsin law (Wis. Stat. § 846.10) requires lenders to strictly follow foreclosure procedures. Errors in documentation can give homeowners legal grounds to challenge a foreclosure.”
The term “zombie mortgage” describes an old debt that comes back to life, even when a borrower thought it was resolved. Sometimes these are mortgages that should have been discharged in bankruptcy. In other cases, the loans were already paid off, but the lender failed to record the release properly.
This problem first drew national attention after the 2008 housing crisis, when news outlets like Reuters documented widespread robo-signing and recordkeeping errors. Unfortunately, these mistakes haven’t disappeared.
Even in 2025, complaints about wrongful foreclosure remain common. According to the Consumer Financial Protection Bureau, mortgage servicing errors continue to be one of the top consumer complaints filed nationwide. Zombie mortgages are especially harmful because they can appear years after a family has moved out or completed payments, making it difficult to dispute the claim.
When a wrongful foreclosure notice lands in the mailbox, the impact is more than financial. Borrowers often face damaged credit scores, threats of losing property, and the stress of defending themselves against a lender’s mistake.
Wrongful foreclosure can also:
Federal laws such as the Fair Debt Collection Practices Act (FDCPA) and the Truth in Lending Act (TILA) provide some protections. However, navigating these laws can be complex without legal support.
“The Consumer Financial Protection Bureau reported continued complaints about mortgage servicing errors, including wrongful foreclosures, even a decade after the 2008 housing crisis.”
Homeowners facing a foreclosure notice should act quickly to review their rights and protect themselves. Start by checking payment records, mortgage statements, and any bankruptcy discharge paperwork. If errors are found, disputes can be filed under the Real Estate Settlement Procedures Act (RESPA), which requires servicers to investigate complaints.
Working with a Wisconsin bankruptcy lawyer can help you understand whether bankruptcy protections may be an option. In many cases, filing Chapter 13 in Wisconsin allows borrowers to pause foreclosure proceedings, catch up on payments, or challenge wrongful filings while keeping their homes.
Even so, outcomes depend on each person’s circumstances, and legal advice is essential before taking any action.
Wisconsin foreclosure law grants homeowners the right to due process before losing property. If a foreclosure notice is filed in error, borrowers can challenge it in court. In some cases, they may be able to recover damages for wrongful filings.
Potential remedies include:
These options depend on individual circumstances. That’s why understanding both state law and federal protections is critical before taking action.
|
Cause of Error |
Example |
Potential Impact on Homeowner |
| Robosigning | Mass-signed affidavits without review | Foreclosure filed without valid documentation |
| Servicing Transfer Errors | Loan sold to another servicer | Payments not credited correctly → wrongful default |
| Post-Bankruptcy Mistakes | Mortgage already discharged | Foreclosure action filed despite discharge |
| Title/Paperwork Errors | Old mortgages not properly released | “Zombie” foreclosure resurfaces years later |
It happens when a lender tries to foreclose without legal grounds, often due to paperwork mistakes, improper servicing, or ignoring a bankruptcy discharge.
Zombie mortgages are old debts that resurface due to errors in recordkeeping or mortgage servicing, leading to foreclosure actions long after the debt should have ended.
Filing bankruptcy may pause foreclosure proceedings, providing time to dispute wrongful filings and protect your home under Chapter 7 or Chapter 13.
Warning signs include receiving notices despite being current on payments, after finishing bankruptcy, or years after selling the property.
Keep all documents, dispute the notice with your loan servicer, and contact a Wisconsin attorney experienced in foreclosure defense.
Yes. Even if the case is dismissed, credit reports may reflect delinquencies or foreclosure filings, which require correction.
Wrongful foreclosures and zombie mortgages remain a serious concern for Wisconsin homeowners. Mistakes by lenders or servicers can threaten families’ homes, finances, and peace of mind. Understanding your rights, keeping detailed records, and acting quickly are the best ways to prevent lasting damage.
If you believe you are facing a wrongful foreclosure, professional guidance can help protect your rights and explore your options. Debt Advisors Law Offices has extensive experience assisting Wisconsin residents in bankruptcy and foreclosure matters. Contact our firm today to request a free consultation and learn how we may be able to help.
Learn about bankruptcy protections, types of bankruptcy, how to get started, what to expect, and who to trust. Filing bankruptcy is the ONLY way to completely eliminate debt. If bankruptcy is right for you, it offers powerful protections that cannot be achieved through alternative solutions such as hardship relief, loans, or debt settlement.
