Iowa is one of the few states where judicial or in court foreclosure is the only method available to the bank.
Foreclosure begins in this state when the bank decides that the home owner is not going to be able to come current on their payments. The banks first step is to have their attorney file a complaint against the homeowner in court. This is done to get the court to issue a decree of sale. Once this has been obtained from the court having jurisdiction over the county where the home is located, then the process of selling the home can begin.
The court, once they find the homeowner exclusively in default, will give them a short period of time in which to catch up all the delinquent payments, plus extra costs like attorney's fees. If in this short time frame, the homeowner is not able to come up with this money, the court will order the home to be sold.
First the notice of sale needs to be posted in a minimum of three public places, in the county where the home is located. One of the public places must be the court house of this same county. Additionally, two advertisements announcing the scheduled sale date must be placed in a local paper with circulation in the county where the home is located. The first of these ads must be run no less than four weeks before the scheduled sale date. The second ad just must be run sometime before to the sale date.
The sale is a public auction. It is held between the hours of 9:00 am and 4:00 pm. The time must be clearly stated in the notice of sale.
Iowa allows for bids to be made by people not attending the auction. This is done by submitting a sealed written bid to the sheriff prior to the scheduled sale date. This sealed and written bid must be accompanied by payment of any fees required to be paid at the public auction by the purchaser of the home. If the winning bid is not one of the sealed and written bids, then the sheriff must return that sealed and written bid to any person who submitted the written bid, who was there at the sale making the bid in person.
Other Iowa jurisdictions include the fact that the home owner is required to sign a disclosure of notice cancellation. This document states other other things, that the borrowers voluntarily giving up his rights to reclaim or occupy the home. Both the bank and the homeowner must file a jointly executed document with the county recorders office stating that they have chosen to proceed with the foreclosure using the voluntary foreclosure procedures.
The state of Iowa does not allow the bank to pursue a deficiency jurisdiction. In most states, the bank can seek additional money from the former homeowner. This amount of money that is allowed to be bought is to help the bank make up the difference between what the home sold for at auction, and what was owed on the loan. This however is not a worry for the person who loses their home to foreclosure in this state.