The Trusted Adviser
June 2011 | Volume 4 • Number 4




Countrywide Home Loans, Inc v Russ, 330 Wis 2d 834, 794 NW2d 927, 2009 AP 2873 (Wis Ct App 2010).

Facts:Countrywide Home Loans, Inc. (Countrywide) was the successor in interest to a mortgage obtained by the Russes for a home purchased in 1996. In 2008, the Russes ceased paying the mortgage and Countrywide filed for foreclosure of the mortgage. The Russes failed to appear and Countrywide was awarded a default foreclosure in October 2008.

In April 2009, at a sheriff's sale, Countrywide was the sole bidder and bid the amount remaining on the mortgage, $68,674.54. However, the trial court refused to confirm the sale, stating that the bid amount shocked the court's conscience because it was only 45 percent of the home's estimated fair market value of $155,800. Countrywide appealed.

Holding:Reversed and remanded. The statutory provision at issue was Wisconsin Statutes Section 846.165(2) which requires that, when a property sells for less than the amount due on the mortgage, a sale shall not be confirmed until the court is satisfied that a mortgaged property has sold for a fair value. The court explained that a trial court "does not have the unfettered freedom to deny confirmation of a mortgage-foreclosure sale; there must be a demand for a deficiency judgment" to trigger the consideration of the property's fair value. In this case, Countrywide did not seek a deficiency judgment, so the bid price could not create an undue burden on the mortgagors.

Furthermore, a fair value need not be at or near the fair market value, but instead must be what an "able and willing buyer" would pay. In this case, Countrywide was the only bidder, indicating a lack of alternative buyers for a higher value. Therefore, the court found that the trial court improperly applied the shock-the-conscience test to the bid price and improperly denied confirmation of the sale.










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[Last update: 5-24-11]