Iowa foreclosure laws: how the process works and how long it takes

• Iowa Code § 654.1 et seq.: Establishes Iowa's judicial foreclosure process for mortgages. Requires a district court civil action, service on all parties with an interest in the property, opportunity for the borrower to contest, and an order for sheriff's sale. Governs the distribution of sale proceeds and post-sale confirmation requirements.
• Iowa Code §§ 628.3, 628.26A: Grants the mortgagor (borrower) a right to redeem the property after the sheriff's sale by paying the full purchase price plus interest and costs. For residential properties, the redemption period is 12 months. For agricultural land, the borrower and lender can agree, with court approval, to extend it up to five years. The borrower may remain in possession during the redemption period.
• Iowa Code § 654.26: If the lender elects foreclosure without redemption, it may waive a deficiency judgment in the petition. Without a waiver, it cannot get a deficiency judgment against an owner-occupied one- or two-family home if the owner does not file a demand to delay the sale. The section does not set a fair-market-value credit.
• Iowa Code § 654.20 et seq.: Provides an alternative foreclosure track for property not used for an agricultural purpose. The lender elects it in the petition, which must carry a notice in capital letters on its first page. The sale is held promptly after judgment unless the borrower files a demand to delay it; the borrower has no right to redeem after the sale, and the purchaser is entitled to an immediate deed and immediate possession. The lender may, but need not, include a waiver of deficiency judgment in the petition.
• Iowa Code § 561.16: Iowa's extremely generous homestead exemption: unlimited dollar value for homestead property up to ½ acre within a city, town, or village, or up to 40 acres of rural property. The exemption protects against most unsecured judgment creditors but does not bar the mortgage lender from foreclosing its lien.
• Iowa Code Ch. 654A: Requires mediation before foreclosure on agricultural property when the borrower is a farm operator with a secured debt of $20,000 or more, unless a court finds the delay would cause irreparable harm. The agricultural mediation requirement does NOT apply to residential mortgage foreclosures.
• Iowa Code Ch. 655A: Authorizes non-judicial foreclosure of mortgages at the lender's option. It does not apply to agricultural land or to a one- or two-family home occupied by its owner when the foreclosure starts. The borrower has thirty days after service of the notice to cure the default or file a rejection; if neither happens, the lender takes the borrower's interest once it records the notice, and the debt is extinguished.

After foreclosure sale, the purchaser may need to obtain a court order for eviction. The federal Protecting Tenants at Foreclosure Act provides 90-day notice to bona fide tenants.

Surplus proceeds from the foreclosure sale (above the debt and costs) belong to the former owner or junior lienholders.

Generally first in time, first in right. Iowa recording statutes govern lien priority. Property tax liens have priority over all other liens including first mortgages.

10-year statute of limitations for mortgage foreclosure actions, counted from when the cause of action accrues (Iowa Code § 614.1(5)). Separately, an action to foreclose a mortgage more than 20 years after its recorded date is barred unless the record shows that less than 10 years have passed since the debt matured or the right of action accrued, or shows an extension of maturity that ended less than 10 years ago (Iowa Code § 614.21). For a mortgage on farm property or on a one- or two-family home that is the borrower's residence, the foreclosure judgment becomes void two years after it is entered, not counting time execution was stayed by a bankruptcy or court order (Iowa Code § 615.1).

• Unpaid property taxes: Property tax liens have priority over mortgage liens in Iowa. Each year the county treasurer offers at public sale all parcels with delinquent taxes. After one year and nine months from the sale (sooner for some sales), the certificate holder can serve notice that the right of redemption will expire and a deed will issue unless the property is redeemed within 90 days after service (Iowa Code §§ 445.28, 446.7, 447.9).

Unlimited dollar value for homestead property up to ½ acre within a city, town, or village (Iowa Code § 561.16), or up to 40 acres of rural agricultural or residential homestead. Iowa's unlimited homestead exemption protects against unsecured judgment creditors but does not bar the mortgage lender from foreclosing its security interest in the homestead. Iowa's homestead exemption has no dollar cap. It does not protect a homestead from debts contracted before the homestead was acquired, but the homestead can be sold for such a debt only to satisfy a deficiency remaining after the debtor's other property liable to execution is exhausted (Iowa Code § 561.21).

Iowa's National Guard civil relief law covers members of the state's military forces on state active duty or full-time national guard duty for at least 30 consecutive days, but not duty under federal orders issued under Title 10 of the U.S. Code. For a mortgage taken out before entering that service, on property the member owned before the service and still owns, the creditor cannot foreclose for a default during service without a court order, and unless the court finds the service does not materially affect the member's ability to pay, it must grant relief such as a stay of the case (Iowa Code §§ 29A.90, 29A.91, 29A.103). For a pre-service mortgage, the federal SCRA generally requires a court order to foreclose during active duty and for 12 months after it ends, and a servicemember can ask for an interest rate reduction to 6% during active duty and for one year after.

Under the federal rule, qualified principal-residence debt may be excluded from income if canceled before January 1, 2026, or under an arrangement entered into and documented in writing before that date. Bankruptcy or insolvency exclusions may apply separately.