Iowa Foreclosure Laws

Questions

Answers

How are mortgage liens treated in Iowa?

Iowa is known as a lien theory state where the property acts as security for the underlying loan. The document that places the lien on the property is called a mortgage.

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How are Iowa mortgages foreclosed?

In Iowa, the lenders go to court in what is known as a judicial foreclosure proceeding where the court must issue a final judgment of foreclosure. The property is then sold as part of a publicly noticed sale. A complaint is filed in court along with what is known a lis pendens. A lis pendens is a recorded document that provides public notice that the property is being foreclosed upon.

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What are the legal instruments that establish a Iowa mortgage?

The documents are known as the mortgage, note, and in a commercial transaction, a security agreement. In Iowa, a lender can use a deed of trust as a loan document but it must be foreclosed in the same manner as a mortgage. Sometimes the mortgage document is combined with the security agreement. A mortgage is filed to evidence the underlying debt and terms of repayment, which is set forth in the note.

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How long does it take to foreclose a property in Iowa?

Depending on the court schedule, it usually takes approximately 150-180 days to effectuate an uncontested foreclosure. This process may be delayed if the borrower contests the action, seeks delays and adjournments of hearings, or files for bankruptcy. Typical notice requirements include posting the notice of sale in three (3) public places in the county, one of which to include the courthouse; two (2) publications (the first at least four (4) weeks before the date of sale) in the designated paper in the county where the property is located, and personal service of the notice twenty (20) days before the sale. Foreclosure sales will occur between 9AM and 4PM by sealed bid. Agricultural property requires there to me a mediation procedure outlined in Iowa Code Chapter 654.2C, and in general a defaulted borrower has the right to cure certain defaults thirty (30) days after receiving a default notice.

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Is there a right of redemption in Iowa?

Iowa has a statutory right of redemption, which allows a party whose property has been foreclosed to reclaim that property by making payment in full of the sum of the unpaid loan plus costs. There is a time limit to undertake such redemption for homestead property of one (1) year. If a lender waives rights to deficiency the redemption period is six (6) months. The redemption period on abandoned property can be shortened to sixty (60) days under similar circumstances. This is referenced under Iowa Code, Chapter 628.26 and 628.27.

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Are deficiency judgments permitted in Iowa?

Yes, a deficiency judgment may be obtained when a property in foreclosure is sold at a public sale for less than the loan amount that the underlying mortgage secures. This is referenced under Iowa Code, Chapter 654.6. This means that the borrower still owes the lender for the difference between what the property sold for at auction and the amount of the original loan. A lender may waive deficiency in order to shorten the redemption period.

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What statutes govern Iowa foreclosures?

The laws that govern Iowa foreclosures are found in Chapter 654 of Iowa Code. (Foreclosure of Real Estate Mortgages) Other pertinent laws are found in Chapter 615 and Chapter 628 (Redemption).


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