Foreclosure & Alternatives Law
Foreclosure Laws in Iowa
Iowa homeowners facing foreclosure on their property are likely under a great deal of stress. Knowing one’s rights and responsibilities in such a situation can be empowering at such times.
Iowa is a state that conducts judicial foreclosures, which means that the mortgage holder must go through the civil court system to foreclose on the property. However, the homeowners may voluntarily sidestep the judicial foreclosure procedure. When doing so, they convey their property rights that are secured by the mortgage back to the lender. At that time, the mortgage holder is granted immediate access to the foreclosed property and waives all rights to file a deficiency judgment against the former homeowner.
When the procedure is handled in this manner, the former homeowners must sign a disclosure of notice and cancellation. This document acknowledges that they voluntarily surrender all rights to redeem the property at a later date and may no longer occupy the property legally. Both the mortgage holder and the borrower then execute a document declaring their wish to conclude the matter as a voluntary foreclosure. This document is then filed in the county recorder’s office.
Foreclosure Through the Courts
If the foreclosure is handled through the courts, the mortgage holder mails a notice of default and right to reinstate (or cure, as it is also known) to the homeowner. This must be done no fewer than 30 days before the suit is filed. The lender also has to file a demand for payment of the accelerated balance two weeks before they may file suit. The homeowner is given the option of paying all arrearages, plus cost of the judicial proceedings, to halt the foreclosure. This rarely happens, however, because if the homeowners had the financial wherewithal to meet their financial commitments regarding the mortgaged property, the situation would not have escalated to the point of foreclosure.
If the process continues, four weeks before the property is to be sold, the lender must post a notice of the intent to sell the property in the courthouse and two other public places or forums. The local newspaper that publishes the county’s legal news will publish the notice twice, once one month before the sale date and again, closer to the time of the sale.
In cases where the homeowners still have possession of and are occupying the property to be foreclosed, they must be served with the notice of foreclosure no fewer than 20 days before the property is due to be sold.
The sale itself is a public auction held between 9 a.m. and 4 p.m. at a time clearly stated in the sale notice. Sealed bids are submitted to the sheriff, who will give each bidder a receipt for their bids prior to the auction. Bidders may be required to include money for fees owed by the purchaser. At the time of auction, all bids are unsealed and announced. If the sale is postponed for more than three days for any reason, at the time that the sale would have been made, a notice of the new sale date and time is announced publicly.
Under the terms of a judicial foreclosure, the former homeowner has one year to redeem the property after it is sold. The time is shortened to six months when a waiver of rights to a deficiency judgment is given by the lender. This redemption offer is not valid with voluntary foreclosure proceedings.
If you find yourself falling in arrears on your mortgage payments and are concerned that foreclosure is imminent, it is always a good idea to seek the advice of a legal professional who can advise you of your rights during foreclosure.