Iowa Foreclosure Laws

Most foreclosures in Iowa are handled by the court system; these are referred to as judicial foreclosures. Non-judicial foreclosures in Iowa are rather unique in that they are allowed only if the homeowner consents to their use.

The standard foreclosure begins when a lender issues a Notice of Default with the county recorder concerning a borrower's (homeowner's) delinquent mortgage payment status.  The homeowner usually then has 30 days to decide whether or not to deal with the foreclosure suit in court, or to waive this right and proceed with a voluntary non-judicial foreclosure. If the homeowner opts for a non-judicial foreclosure, then the lender and the homeowner must file the appropriate documents with the county register, at which point it is left up to the lender to pursue the foreclosure. In agreeing to this, the lender gains immediate control of the property and the homeowner waives all rights to redemption. Conversely, by agreeing to a non-judicial foreclosure, the lender waives all rights to collect any debt from the homeowner not satisfied by the foreclosure sale of the property.

If the path of judicial foreclosure is taken, the court allows the homeowner a certain period of time in which to pay the amount in default and retain possession of their property. If the homeowner cannot provide payment, the court can rule the homeowner in default and schedule a date for the property to be sold. Depending on the type of foreclosure sought by the lender, the sale date can be anywhere from two to twelve months after the court ruling. If the lender is granted a "foreclosure without redemption rights", the homeowner can appeal to the court to have the sale delayed for up to a year in order to give him or her a chance to pay off the debt owed and maintain ownership. If the lender is granted a "foreclosure with redemption rights", the sale usually takes place within two months, although the homeowner is allowed the chance of redemption for some time after that.

In either case of judicial foreclosure, the homeowner has the ability to halt the foreclosure process by paying off the amount in default (in addition to any additional costs) at any point up until the date of the foreclosure sale.

Generally, the county Sheriff handles the distribution and publication of the Notice of Sale. The Notice must be posted in at least three public places, including the courthouse. In addition, the Notice must be published twice in a weekly newspaper, the first occurring four weeks before the foreclosure sale, and the second at a date much closer to the sale. If the property is still occupied by the homeowner, they must receive notice of the sale at least 20 days prior.

The Sheriff is responsible for conducting the foreclosure sale, which is run in the style of a silent auction. Anyone who wishes to bid must write the amount of their bid on paper and place it in a sealed envelope along with a down payment of certain fees required. At the auction, the Sheriff opens each bid and announces it, and the property is awarded to the highest bidder.

If the foreclosure proceeded without the chance of redemption, the ownership of the property is immediately awarded to the winning bidder and that person must provide payment within a specific amount of time. If a right to redemption was granted, then the original homeowner may have anywhere from 30 days to one full year in which to provide payment of the winning bid, as well as any additional fees accrued.

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