The foreclosure laws in Iowa only allow judicial foreclosures. The Judicial foreclosure process requires the lender to take the homeowner to court in order to have a judge grant the foreclosure.
The Judicial Foreclosure process is used when the
mortgage or deed of trust does not include a Power of Sale clause. In a
judicial foreclosure, the lender files a lawsuit and obtains a court order
allowing them to foreclose on the property. The court must reside in the same
county as the property that is being foreclosed upon. Once the foreclosure is
granted an auction will be announced and the home will be sold to the highest
bidder.
Homeowners can avoid the foreclosure suit by offering to transfer all thir rights in the property back to the lender. If the lender agrees, they immediately gain access to the property, but they also lose the right to file a deficiency suit. If this method is followed, the borrower also has to sign a "Disclosure of Notice and Cancellation." This form confirms that they are voluntarily waiving their rights to claim and live in the property. Both parties must also file a document with the county recorder stating that they have agreed to do a voluntary foreclosure.
