Avoiding Foreclosure

If you fall behind in your mortgage payments, your home may be subject to foreclosure. Foreclosure is the legal process a lender can use to repossess your home. Both state and federal laws affect foreclosure proceedings. Iowa Code chapter 654 covers residential real estate foreclosures.

If you have fallen behind on mortgage payments

Reach out for help as soon as possible! Resources exist that may be able to help you catch up on your payments before an issue arises. (Be careful, however, to avoid mortgage scams.)

In Iowa, one of the resources you can consult is Iowa Mortgage Help. Iowa Mortgage Help is state-sponsored and provides free mortgage counseling services. Iowa Mortgage Help partners with Iowa Legal Aid, so eligible clients can also receive select legal services through Iowa Legal Aid.   

A temporary Iowa program for people who experienced financial hardship due to COVID is:

• Iowa Homeowner Assistance Fund

At the federal level, resources include:

• U.S. Department of Housing and Urban Development (HUD) housing counselors
• Mortgage assistance options through the Making Home Affordable program

If your loan is owned by Freddie Mac or Fannie Mae, you may have additional options to avoid foreclosure. Search here to find out if your loan is owned by Freddie Mac and search here to find out if your loan is owned by Fannie Mae. You may also have additional options if your loan is a HUD loan.

Iowa Legal Aid provides several different resources on foreclosure prevention, which you can access here.

The foreclosure process

The information below is a general overview, but the specifics of your mortgage, mortgage servicer (the company you make mortgage payments to), or property may make the time periods or options different than those described below.

Notices required before a foreclosure lawsuit is filed

• After you have been in default on your mortgage loan for at least 120 days, the lender can mail you a notice of right to cure default, which has the amount you owe, and includes a breakdown of principal, interest, late fees, and other costs. 12 C.F.R. section 1024.41(f)(1) and Iowa Code section 654.2B.

  • These notices tell you that you are behind on your payments (in “default”) and the amount you need to pay to catch up on your payments (“cure the default”).

• Within 30 days of receiving the notice (the period is different for agricultural land), you can "cure" the default by paying the amount of all unpaid installments due at the time you make the payment or by paying the amount stated in the notice of right to cure, whichever is less. Iowa Code section 654.2D.
• Prior to filing a foreclosure lawsuit, the lender must mail you a notice informing you of the availability of counseling and mediation. Iowa Code section 654.4B. 

Foreclosure lawsuit

The foreclosure lawsuit begins when a petition is filed in court and you are served with a summons (an order to appear in court) and a copy of the lawsuit. If you have not already contacted Iowa Mortgage Help, you should do so now.

The Iowa Legal Aid page Facts About Foreclosure provides additional information on what to do after you receive notice of a foreclosure action.