Foreclosure in Iowa

How an Iowa foreclosure works, step by step

1. Generally, the legal foreclosure process can't start until you're at least 120 days behind.
2. If the home is your homestead, your lender must give you a written notice of right to cure. You then have 30 days from the date it's given to catch up.
3. Before filing, the lender must tell you about counseling and mediation on a form set by the Attorney General.
4. The lender files a petition in court. It may choose foreclosure without redemption in that petition. Once you're served, you generally have 20 days to serve a motion or answer.
5. If the lender wins, the court orders the home, or as much of it as needed, sold to pay the judgment, with interest and costs.
6. The sale notice is posted in at least three public places in the county, including the courthouse. It's also published twice in a county newspaper, the first time at least four weeks before the sale. If you live in the home, you must be served written notice of the time and place of sale at least 20 days before it.
7. The sale is a public auction held between 9:00 a.m. and 4:00 p.m., at the hour set in the notice.
8. If the sale allows redemption, you have up to one year to redeem and can stay in the home meanwhile. If the lender chose foreclosure without redemption, the buyer gets a deed and possession right away.
9. If you stay after a foreclosure sale, the new owner can use a summary court case called forcible entry and detainer.

Your 30-day right to cure

To cure, you pay all missed installments without the loan being accelerated, or the amount stated in the notice, whichever is less. Curing restores your rights under the loan and the mortgage. This notice rule doesn't apply if the lender is an individual person, or if the home isn't a one- or two-family dwelling you live in.

If you can catch up, I think the cure window is the best time to try. Ask for the exact figure in writing.

Counseling and mediation help

If the court finds you weren't served the counseling and mediation notice and you want counseling or mediation, it must delay the sheriff's sale. That delay can't be longer than sixty days.

Iowa Mortgage Help runs a statewide referral hotline and offers foreclosure intervention, negotiation and mediation with servicers and lenders.

If you get the mediation notice, I think it's worth acting on early, while there's still time before a sale.

With redemption or without: the lender's choice

In a regular Iowa foreclosure, you can redeem the home for up to one year after the sale, and for the first six months only you can redeem. If you redeem, you're free of any unpaid part of the judgment. If the mortgage says so and the lender gives up any deficiency judgment, the redemption period for a home that isn't farm land can be cut to three months.

For a home that isn't farm land, the lender can choose foreclosure without redemption in its petition. If you don't file a demand to delay the sale, the sale happens promptly after judgment. If you do and it's your one- or two-family home, the sale waits six months after judgment, or three months if the lender gave up a deficiency judgment.

Whether or not you demand a delay, you have no right to redeem after that sale.

Read the first page of the petition closely. It tells you which kind of foreclosure you're in.

The sheriff's sale

The sale is a public auction between 9:00 a.m. and 4:00 p.m., and the notice must set the starting hour. A sale can be put off without new notice, but no more than twice and for no more than sixty days in total, unless the parties agree in writing.

Check the published notice for the date, and confirm it again close to the sale.

How long it takes

Foreclosure generally can't legally start until you're at least 120 days behind. Once it starts, how long you have until the sale depends on your state.

For FHA loans, HUD's time frame runs from the first legal action until the lender has clear title to the home and possession of it. In Iowa, that's 17 months, and the first legal action is filing a petition in court.

Iowa's own markers: 30 days to cure before the case, 20 days to answer after you're served, then either up to a year to redeem after the sale, or a sale soon after judgment unless you demand a delay.

These are official markers, not a forecast. Your case can move faster or slower, so don't count on extra time.

Deficiency, surplus and redemption

If the home sells for less than the judgment, the lender can collect the rest from you, unless you agreed otherwise. But if the mortgage was signed on or after July 1, 2009, on a one- or two-family home you lived in, that judgment becomes void two years after it's entered, not counting time it was stayed by a bankruptcy or court order. In a foreclosure without redemption, if you don't demand a delay of the sale, the lender can't get a deficiency judgment on your one- or two-family home.

Any money left after paying the mortgage and costs is paid to you, if there are no other liens on the home.

Redemption works as described above: up to one year after a regular sale, or none after a sale without redemption.

Handing the home back: voluntary foreclosure

If you and your lender both agree in writing, the mortgage can be foreclosed by you deeding the home to the lender. The lender must then give up any deficiency or other claim against you on the mortgage. It also can't report to a credit bureau that you're delinquent on the mortgage.

• The required disclosure says you give up your right to reclaim or stay in the home.
• It also says you won't owe the shortfall, but you won't get any extra money either.

Protections when you sell, lease or get offers

• Iowa's foreclosure reconveyance law covers deals where you transfer title during a foreclosure and get something back that lets you stay, such as a lease, an option to buy or a contract for deed. You can cancel until midnight of the third business day after signing, or until 8:00 a.m. on the last day of your redemption period, whichever comes first. If the deal includes a lease with an option to buy, the buyer must check that you can make the lease payments and buy the home within the option term. The buyer must notify every mortgage lender on the home and follow the mortgage terms, including any due-on-sale clause.
• A paid foreclosure consultant can't take any fee until every promised service is done. And no contract can stop you from contacting your lender, servicer, a counselor, a lawyer or anyone else who may help.
• If you're buying on a real estate contract, the seller must give you a notice with 30 days to fix the default and pay the cost of serving the notice before the contract can be forfeited.
• Wholesaling means signing an assignable contract with a home's owner in order to market and sell that contract interest to someone else. A wholesaler must be a licensed real estate broker or be represented by one.
• The Attorney General warns you to be careful of anyone who promises certain foreclosure relief, asks for fees up front, or tells you to stop talking to your lender.

Three of these touch how I buy: the reconveyance rules if you'd stay in the home after a cash sale or payment takeover with me, the contract rules if I buy with seller financing, and the wholesaling rule if a contract were ever assigned. And don't stop talking to your lender while you weigh any offer, including mine.

Free help in Iowa

• Iowa Mortgage Help (Iowa Finance Authority). A statewide referral hotline and mediation with servicers and lenders.
• Iowa Attorney General: home and property. The Attorney General says HUD-approved housing counselors can help you understand your options, prepare to talk with your servicer, and avoid rescue scams.
• Iowa Judicial Branch: representing yourself. The courts' starting point if you'll handle your case without a lawyer.
• Iowa Code chapter 654: foreclosure of real estate mortgages. The full foreclosure law, from the Iowa Legislature.
• CFPB: find a housing counselor. Search HUD-approved counseling agencies in Iowa.