If you’re an Iowa homeowner who's behind on your mortgage payments, the lender can't start foreclosing immediately. Instead, it must typically wait until your payment is 120 days delinquent so that you have time to explore a way to keep your house with a loss mitigation option.
After the waiting period expires, however, the lender can begin the foreclosure process. The process will probably be judicial (through court). Iowa foreclosure law specifies how foreclosure procedures work, and both federal and state laws give you rights and protections throughout the process. Once you understand the Iowa foreclosure process, your options, and what's ahead, you can protect your rights and take advantage of opportunities to save your home.
This article details the Iowa foreclosure process, as well as rights that might help you save your home.
120-Day Waiting Period Before Foreclosure Begins
During the foreclosure crisis, many homeowners lost their homes because they didn’t have adequate time to find a foreclosure alternative, such as a loan modification. The federal government passed several new laws to address this problem that are designed to ensure that struggling homeowners receive a fair opportunity to work out a way to save their home from foreclosure.
Under the Dodd-Frank Act, in most cases, the loan servicer must delay starting a foreclosure until the mortgage payment obligation is more than 120 days overdue. During this period, the homeowner can apply for an option that will help the owner keep the house and avoid foreclosure in a process known as “loss mitigation.”
If the borrower completes a loss mitigation application during the waiting period, the servicer can't officially start the foreclosure until after:
- notifying the borrower of the failure to qualify for a foreclosure alternative (and the appeal period expires)
- the borrower rejects the loss mitigation option, or
- the borrower fails to follow the terms of the loss mitigation agreement. (12 C.F.R. § 1024.41 (2025).)
After the period expires or the loss mitigation process concludes, the lender can proceed with the foreclosure under Iowa law.
Understanding the Iowa Foreclosure Process
In Iowa, most foreclosures go through the court system in what’s known as a "judicial foreclosure."
Notice About Your Right to Reinstate the Mortgage
At least 30 days before officially starting the foreclosure (or 45 days for agricultural property), the lender will mail out a notice informing the borrower of the right to reinstate the loan (pay all overdue amounts in one lump-sum payment). (Iowa Code § 654.2D, Iowa Code § 654.2A (2025).)
If you can catch up, you’ll continue making your payment as if you had never fallen behind. The lender might agree to a reinstatement after this period passes.
Mediation and Counseling Options for Iowa Homeowners
If the property is a one-family or two-family dwelling that's the residence of the owner, the lender also has to inform you about the availability of counseling and mediation on a form as the attorney general prescribes. (Iowa Code § 654.4B (2025).)
Demand Letter Giving 14 Days to Pay Off the Loan
After the period to reinstate expires, the lender will send the borrower a demand that gives the borrower 14 days to pay off the loan, otherwise it can't qualify for an award of attorneys' fees. Sending out this notice entitles the lender to attorneys’ fees in the foreclosure judgment. (Iowa Code § 654.4B (2025).)
Judicial Foreclosure Officially Starts
The foreclosure officially begins when the lender files a lawsuit (a petition) in court and serves it on the borrower. If the borrower doesn’t respond to the suit, the lender will win by default (automatically) and will receive a foreclosure judgment from the court allowing it to sell the home.
By contrast, if the borrower files an answer, the lender might file a motion for summary judgment. If the court doesn't agree that the lender is entitled to this kind of judgment, the case will move to the litigation stage. After completing discovery—a period wherein each side can ask for evidence from the other—the merits of the case will be decided. If the lender wins, the court will order a foreclosure sale.
Posting and Publishing Notice of the Foreclosure Sale
Notice of the sale will be posted publicly and published two times in a newspaper. The first publication must be at least four weeks before the sale takes place. (Iowa Code § 626.75 (2025).)
Foreclosure Sale
The foreclosure sale is an auction open to the public.
What Is the Redemption Period After an Iowa Foreclosure?
Some Iowa homeowners can get their home back after the foreclosure sale by using a process called “redemption.” (All states permit borrowers to redeem before a foreclosure sale.) To redeem a home, the foreclosed owner must pay the full judgment or the amount that the buyer paid at the foreclosure sale. Whether you have a redemption right depends on the type of foreclosure used by the lender.
Judicial Foreclosure With Redemption
In this foreclosure, you can redeem the home within one year after the sale. But if the property is less than ten acres, the lender waives a deficiency judgment (discussed below), and the terms of the mortgage allow for it, the redemption period will be reduced to six months or three months depending on the circumstances. If you permanently move out of (abandon) the home, the redemption period is 60 days. (Iowa Code § 628.3, § 628.26, § 628.27 (2025).)
Judicial Foreclosure Without Redemption
If the lender chooses to foreclose without redemption (meaning, without a redemption period after the sale), you can redeem before the sale by paying the foreclosing party the amount stated in the judgment. But you don't get a right to redeem after the sale happens. Instead, you can ask the court to delay the sale. The delay will be six months (or three months if the lender waives a deficiency judgment in the foreclosure lawsuit), or two months if you don’t live in the home. (Iowa Code § 654.20 (2025).)
However, the downside to asking for a delay is that the lender might be able to seek a deficiency judgment when it might otherwise not be able to. Consider consulting with an Iowa attorney to discuss whether you should ask for a delay of sale and about your risk of a deficiency judgment. (Iowa Code § 654.26 (2025).)
Nonjudicial Foreclosure in Iowa: What It Is and How It Works
Iowa law allows for a nonjudicial foreclosure (a foreclosure that doesn’t require court approval) in a process known as an “alternative nonjudicial voluntary foreclosure.” In this type of foreclosure, the borrower agrees to give the house to the lender. By agreeing to give up ownership in an alternative nonjudicial voluntary foreclosure, you waive the right to redeem the home. (Iowa Code § 654.18 (2025).) This transaction is similar to a deed in lieu of foreclosure.
"Nonjudicial foreclosures of nonagricultural properties" are also allowed in Iowa. These foreclosures apply to properties that are neither used for an agricultural purpose nor an owner-occupied one- or two-family dwelling. (Iowa Code § 655A et. seq (2025).)
When Lenders Can Seek a Deficiency Judgment in Iowa
When the foreclosure sale price is less than the balance owed on the mortgage loan including foreclosure-related fees and costs), the difference is a deficiency balance. Some states, including Iowa, allow the lender to get a “deficiency judgment” for this amount, but with some restrictions.
Under Iowa law, the foreclosing lender can't get a deficiency judgment in any of the following circumstances.
- The mortgage contract reduces the redemption period and the lender waives a deficiency judgment in the foreclosure action. (Iowa Code § 628.26 (2025).)
- The lender chooses to foreclose without redemption and waives its right to obtain a deficiency judgment in the petition. (Iowa Code § 654.26 (2025).)
- The lender forecloses without redemption and doesn't include a waiver of the deficiency in the lawsuit, but you don’t request a delay of the foreclosure sale (and the property is a one- or two-family primary residence). (Iowa Code § 654.26 (2025).)
- The lender agrees to an alternative nonjudicial voluntary foreclosure. (Iowa Code § 654.18 (2025).)
- A deficiency judgment isn't allowed if the foreclosure is an involuntary nonjudicial foreclosure of a nonagricultural mortgage.
Iowa Foreclosure Laws: Where to Find Them
You can locate the majority of Iowa’s foreclosure laws in the Iowa Code (sections 654.1 through 654.26 and 655A.1 through 655A). Statutes change, so checking them is always a good idea.
How courts and agencies interpret and apply the law can also change. And some rules can even vary within a state. These are just some of the reasons to consult with an attorney if you’re facing a foreclosure.
Getting Help With a Foreclosure in Iowa
Iowa Legal Aid offers free information on foreclosures and might be able to provide legal representation in some cases. Iowa Mortgage Help offers a hotline at 877-622-4866, which connects callers with local, certified housing counseling agencies for personalized assistance.
Additionally, you can find a HUD-approved housing counselor by visiting hud.gov.