How to avoid foreclosure in Iowa

How foreclosure works in Iowa, step by step

1. Missed payments and the notice of right to cure

   Federal rules generally stop your servicer from starting a foreclosure until you are more than 120 days behind. Before filing in Iowa, the lender must give you a written notice of right to cure. You then have 30 days to catch up on the missed payments, without paying the whole loan, and the lender cannot call the full balance due during that time.

   12 C.F.R. § 1024.41(f); Iowa Code §§ 654.2B, 654.2D

2. Counseling and mediation notice

   Before filing against an owner-occupied one or two family home, the lender must send you a notice about free counseling and mediation, and must serve it again with the court papers. If you did not get it and want counseling or mediation, you can ask the court to delay the sheriff's sale for up to 60 days.

   Iowa Code § 654.4B(2)

3. The lender files a petition in district court

   You are served with an original notice and petition, usually by the sheriff. You have 20 days after service to serve a written answer or motion. Look at the first page: if the lender has elected foreclosure without redemption, a notice in capital letters must say so.

   Iowa Code § 654.20; Iowa R. Civ. P. 1.303

4. File a demand to delay the sale

   If the lender elected foreclosure without redemption, you can file a written demand for delay of sale at any time before judgment. For your one or two family home, this delays the sale until 6 months after judgment, or 3 months if the petition waives a deficiency judgment. Be careful: if the lender did not waive a deficiency, filing the demand lets the lender seek one, so get legal advice first.

   Iowa Code §§ 654.20, 654.21, 654.26

5. Judgment

   The court decides how much is owed and orders the home sold. Until the sale you can still stop it by paying the full amount of the judgment.

   Iowa Code §§ 654.5, 654.21

6. Sheriff's sale

   The sheriff must give 4 weeks' notice of the sale, post it in three public places, and publish it twice in a local newspaper. If you live in the home, the sheriff must also serve you with written notice at least 20 days before the sale. The sale is a public auction, and you are allowed to bid.

   Iowa Code §§ 626.74, 626.75, 626.78, 626.80, 654.23

7. After the sale

   In a foreclosure without redemption, the buyer gets a deed and the right to possession immediately, and you cannot buy the home back. In a foreclosure with redemption, you can stay in the home during the redemption period and get it back by paying the sale price plus interest and costs to the clerk of court.

   Iowa Code §§ 654.23, 654.24, 628.3, 628.13

Iowa foreclosure deadlines to know

These are the periods written into the law. Your own dates are on the notices you received. If a notice and this page disagree, trust the notice and ask a counselor or lawyer.

Your rights as a homeowner in Iowa

Other Iowa protections

• 30 day notice of right to cure

  The lender cannot call the whole loan due, take the property, or file a foreclosure until 30 days after it gives you a proper written notice of right to cure. The notice must state the exact amount needed and the exact date by which you must pay.

  Iowa Code §§ 654.2B, 654.2D

• Right to demand a delay of the sale

  When the lender elects foreclosure without redemption, you can file a written demand before judgment that pushes the sale of your one or two family home back 6 months, or 3 months if the lender waived a deficiency. Your mortgage cannot sign this right away in advance.

  Iowa Code §§ 654.20A, 654.21

• Counseling and mediation notice, with a 60 day sale delay if it was skipped

  The lender must tell you about free counseling and mediation before filing. If the notice was not served and you want counseling or mediation, the court must delay the sheriff's sale for up to 60 days, but you have to ask before the sale.

  Iowa Code § 654.4B(2)

• No out-of-court foreclosure on a home you live in

  Iowa's nonjudicial foreclosure chapter does not apply to a one or two family home occupied by its owner. A voluntary out-of-court foreclosure needs your written agreement, the lender must waive any deficiency, and you can cancel within 5 business days.

  Iowa Code §§ 655A.9, 654.18

• Protections kept if you had to move out

  For these homeowner protections, the home still counts as your residence if you left because of a natural disaster, damage you did not cause on purpose, or National Guard or federal active duty.

  Iowa Code § 654.1A

Iowa mortgage assistance programs

If the home is sold for more than you owe

If the sheriff's sale brings in more than the mortgage debt and costs, and there is no other lien on the property, the extra money must be paid to you. Other lienholders are paid first if there are any. Ask the clerk of court in your foreclosure case how to claim it. In a voluntary out-of-court foreclosure you give up any extra money, which the required disclosure form must tell you.

Iowa Code §§ 654.7, 654.18

Ways to avoid foreclosure

Most of your options come from federal rules and from whoever owns or insures your loan, so they work the same way in Iowa as anywhere else. What changes by state is how much time you have to use them.

• Repayment plan
• Forbearance
• Payment deferral or partial claim
• Loan modification
• Reinstatement
• Short sale
• Deed in lieu of foreclosure
• Chapter 13 bankruptcy