For homeowners facing foreclosure in Iowa, the following is a summary of the state’s foreclosure laws:
Iowa only allows judicial foreclosures, meaning a bank must file a lawsuit in order to foreclose on a home.
Iowa also allows nonjudicial foreclosures, where the homeowner voluntarily gives up possession of the home and the bank agrees to waive any debt.
Iowa law requires the following notices:
- Thirty days before filing a foreclosure lawsuit suit to start the foreclosure, the bank must send a notice of the right to cure the default to the homeowner. If the property is agricultural, the bank must send the notice 45 days before initiating the foreclosure.
- After the right to cure concludes, but before initiating foreclosure proceedings, the bank must send the homeowner a demand for the accelerated balance due on the mortgage in order to later demand attorney’s fees. This notice gives the homeowner 14 days to pay the total outstanding loan balance before the bank initiates foreclosure proceedings.
- Along with the request for payment of the accelerated balance, the bank must mail the homeowner a form regarding the availability of counseling and mediation. A copy of this form must be mailed with the complaint for foreclosure.
- To initiate foreclosure proceedings, the bank must file a lawsuit in court. The bank will notify the homeowner by serving them a summons and complaint.
- If the bank is awarded a judgment, the court will order a foreclosure sale. A notice of the sale must be published in a local newspaper four weeks before the sale and posted in various public places.
Iowa Foreclosure Protections
Iowa law provides protections in accordance with the federal Service Members Civil Relief Act.
Iowa law also prohibits nonjudicial foreclosures if military service members took out a mortgage to purchase a home prior to military service.
Reinstatement and Redemption
In Iowa, the homeowner is allowed 30 days to reinstate after receiving the right to cure notice if the property is nonagricultural or 45 days if it is agricultural. The homeowner is not allowed reinstate if there was a previous default within the past year or two previous defaults at any time for agricultural land.
Under Iowa law, the homeowner can redeem depending on the type of foreclosure process the bank employs.
If the foreclosure is judicial with redemption, the homeowner can redeem the home within a year or six months if the bank waives the deficiency in the foreclosure action or 60 days if the homeowner abandons the home.
If the bank chooses to foreclose without redemption, the homeowner can requets a delay of sale and redeem before the sale. There is no post-sale right of redemption.
Iowa also offers an alternative nonjudicial voluntary foreclosure if the homeowner agrees to reject the redemption period.
Iowa law generally allows banks sue homeowners for the deficiency, but there are several restrictions.
If the foreclosure is judicial, the bank may include eviction as part of the foreclosure action. If the foreclosure is nonjudicial, the new homeowner must file a separate eviction lawsuit. For information regarding how to avoid foreclosure in Iowa, visit HUD.gov.