Iowa Foreclosure Law

Foreclosure in Iowa follows the judicial foreclosure process, meaning the lender has to take the case to court before he or she can foreclose. The law applies to mortgages in default, but not to deeds of trust. The average wait time is 150 days, or roughly five months.

Judicial foreclosure
In a judicial foreclosure, the lender files a lawsuit in a court with jurisdiction in the county where the home is located. If the court confirms the default, they issue a decree of sale. They also give the borrower a short time frame to cure the default by paying the overdue amount plus attorney’s fees. If the deadline isn’t met, the court then orders a foreclosure sale.

After the foreclosure is declared, a Notice of Sale will be put up at the county courthouse and at least two other public places in the county. The notice will also be published in a local newspaper for at least two weeks, with the first ad appearing at least four weeks before the sale date. If the borrower currently lives in the property, they will also be served the notice at least 20 days before the sale.

The sale is done through a public auction held anywhere from 9am to 4pm. Bids will be made to the sheriff in a written and sealed form, with any required fees enclosed. The sheriff then reads out the bids at the start of the auction. Once a winning bidder is identified, these papers will be returned to the other bidders.

Lenders can postpone the sale, but if the new date is more than three days away, the change has to be announced at the time and place originally planned.

Voluntary foreclosure

Borrowers can avoid the foreclosure suit by offering to transfer all their rights in the home to the lender. If the lender agrees, they immediately gain access to the property, but they also lose the right to file deficiency suits. This means that they can’t make additional claims against the borrower, even if the home’s current value is not enough to cover the unpaid balance.

If this method is followed, the borrower also has to sign a “Disclosure of Notice and Cancellation.” This form confirms that they are voluntarily waiving their rights to claim and live in the property. Both parties must also file a document with the county recorder stating that they have agreed to do a voluntary foreclosure.

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