Mortgage Foreclosure Law
We represent bankers, lenders, individuals, business that have loaned money and received a mortgage as collateral, when the borrower has not paid as required by the terms of the note or mortgage.
How to Find Iowa's Foreclosure Laws
The citations to Iowa's foreclosure statutes are:
- Iowa Code Sections 654.1 through 654.26.
- Iowa Code Sections 655A.1 through 655A.9.
Most Common Type of Foreclosure Procedure in Iowa
Most Iowa foreclosures are judicial (with or without redemption), which means they go through the state court system. Iowa law also allows:
- alternative nonjudicial voluntary foreclosures (where the borrowervoluntarily gives up possession of the home and the lender agrees to waive any deficiency), and
- nonjudicial foreclosures of non-agricultural property (which only applies to property that is neither used for an agricultural purpose nor is an owner-occupied one- or two-family dwelling).Iowa Code §§ 654.18, 655A et. seq.
Notice of the Foreclosure
There are several different types of notice the lender will provide during the Iowa foreclosure process: a notice of the right to cure the default, a demand for payment of the accelerated balance, a notice of the option for counseling and mediation, a summons and complaint, and a notice of the foreclosure sale.
Notice of the right to cure the default. At least 30 days before filing the suit to start the foreclosure, the lender must mail a notice of the right to cure the default (reinstate) to the borrower. Iowa Code § 654.2D. If the property is agricultural, the lender must mail the notice 45 days before starting the foreclosure. Iowa Code § 654.2A. (The right to reinstate is discussed in more detail below.)
Demand for payment of the accelerated balance. After the right to cure expires, but before starting the foreclosure action, the lender must send the borrower a demand for the accelerated balance due on the mortgage, otherwise it cannot later get an award of attorney's fees. This notice gives the borrower 14 days to pay the total outstanding loan balance before the lender starts a foreclosure action. Iowa Code § 654.4B(1).
Notice of the option for counseling and mediation. Along with the demand for payment of the accelerated balance (or other initial communication from the attorney representing the lender), the lender must send a form informing the borrower about the availability of counseling and mediation. Another copy of this form must be sent along with the complaint for foreclosure. Iowa Code § 654.4B(2).
Summons and Complaint. To officially start the foreclosure, the lender files a lawsuit in court. The lender will give notice of the lawsuit to the borrower by serving him or her a summons and complaint.
Notice of the foreclosure sale. If the lender gets a judgment, the court will order a foreclosure sale. A notice of the sale must be published in a newspaper four weeks prior to the sale and posted in several public places. Iowa Code § 626.75.
Special Foreclosure Protections in Iowa
Iowa law provides protections similar to the federal Servicemembers Civil Relief Act. Among other things, Iowa law prohibits a nonjudicial foreclosure if the service member entered into a mortgage to purchase real estate prior to military service. Iowa Code § 29A.103.
You Can Reinstate the Mortgage Before the Foreclosure Sale in Iowa
“Reinstating” is when you catch up on the defaulted mortgage's missed payments (plus fees and costs) in order to stop a foreclosure.
In Iowa, the borrower gets 30 days to reinstate after receiving the notice of the right to cure if the land is nonagricultural (or 45 days if the property is agricultural). The borrower cannot reinstate if there was a previous default within the past year (or two previous defaults at any time for agricultural land). Iowa Code §§ 654.2A, 654.2D.
Right of Redemption After Foreclosure in Iowa
In some states, you can redeem (repurchase) your home within a certain period of time after the foreclosure. Under Iowa law, whether and when the borrower can redeem depends on the type of foreclosure process the lender uses.
Judicial foreclosure (with redemption). If the foreclosure is judicial with redemption, the borrower can redeem the home within one year, six months (if the lender waives the deficiency in the foreclosure action and other criteria are met), or 60 days (if the borrower abandons the home). Iowa Code §§ 628.3, 628.26, 628.27.
Judicial foreclosure without redemption. If the lender elects to foreclose without redemption, the borrower can demand a delay of sale and redeem before the sale. There is no post-sale right of redemption. Iowa Code § 654.20
Alternative nonjudicial voluntary foreclosure. If the borrower agrees to this type of foreclosure, there is no redemption period. Iowa Code § 654.18.
Iowa's Deficiency Laws
When the total mortgage debt exceeds the foreclosure sale price, the difference is called a “deficiency.” Some states allow the lender to seek a personal judgment (called a “deficiency judgment”) against the borrower for this amount, while other states prohibit deficiency judgments with what are called anti-deficiency laws.
Iowa law generally allows lenders to sue borrowers for the deficiency, but there are several restrictions.
Notice to Leave After the Foreclosure Sale
If the foreclosure is judicial, the foreclosing party may generally include the eviction as part of the foreclosure action. If the foreclosure is nonjudicial, the new owner (usually the foreclosing party) must file a separate eviction lawsuit.