Iowa Foreclosure Laws

Iowa foreclosure laws

Iowa is among those states of the United States of America that have very rigid policies about foreclosures. Iowa foreclosure laws become especially stringent when agricultural land is involved. Iowa foreclosure laws offers two options that can used to resolve foreclosure of non agricultural property. Alternative non-judicial voluntary foreclosure procedure and Judicial Foreclosure are the two options provided.

Under the alternative non-judicial voluntary foreclosure procedure an agreement is signed by the borrower and lender indicating their consent for voluntary foreclosure. A notice regarding this kind of a voluntary foreclosure is to be compulsorily sent to all the parties mentioned in the agreement. The persons who have been served with the notice are given a period of one month to initiate redemption proceedings if any. A statutory voluntary foreclosure form needs to be signed by the borrower. With this the title of the foreclosure property passes on to the lender. The lender is then free to repossess the property. He is expected to relinquish any rights to sue the borrower after repossessing the distressed property. At the same time the borrower also gives up his rights to redemption of the distressed property and also his right to occupation and use of the distressed property.

The voluntary redemption procedure works in favor of both the parties involved. Time, effort and money that would have been used by legal procedures are saved and a speedy solution that suits everyone is reached.

When an amicable solution like the voluntary redemption procedure is not a viable option the lender can opt for a judicial foreclosure procedure. As in other states of the US in Iowa too a judicial foreclosure procedure requires a lawsuit to be filed in court. This procedure is governed by principles of equity law in Iowa. The lender can choose from suing on the note or suing to foreclose the mortgage. Once a lawsuit for foreclosure of property is filed, the court debates the merits of the case and gives directives regarding the amount due from the borrower and the procedure to be followed for the sale of the foreclosure property.

If the lender chooses to sue for foreclosure without redemption the borrower has no chances of redeeming the foreclosed property. The one consideration extended to the borrower is that if he bids an amount equal to the outstanding loan amount of the foreclosure property he is preferred over other bidders whose bids may even be higher.

The Foreclosure Law in Iowa supports borrowers of repossessed homes by allowing them a right to effect cure by paying up before the foreclosure. Borrowers are served with a notice of their rights to cure and given a stipulated time period to do so. When the lender is a bank or any other institution, giving the borrower the right to cure on residential property is compulsory. Individual lenders are not under any such compulsion.