Beginning no later than July 1, 2009 and in some instances sooner, Iowa's foreclosure law is changing in significant ways. These changes are primarily intended to assist and protect borrowers or mortgagors of one and two-family dwellings which are the mortgagors' residence. If you are involved in or affected by this type of foreclosure, you will be interested in the the following updates:
1. Judgment Creditors: Judgement Creditors have been offered additional protections if sheriff's sales result in grossly inadequate sales amounts, but lose out on simplified notice procedures for those seeking to foreclose out the Judgment Creditor's interest.
2. Mortgage Mediation Assistance: EFFECTIVE MAY 1, 2009, mortgagors are entitled to receive notice of mortgage mediation assistance along with certain notices pertaining to acceleration of the mortgage indebtedness or initial attorney communications. Failure to provide the notice may result in the delay of a sheriff's sale.
3. Limitation on Attorney Fee Awards and Extended Cure Periods: Also EFFECTIVE MAY 1, 2009, after the expiration of any applicable cure period and prior to the foreclosure action, the mortgagor is entitled to an additional 14 day notice regarding the mortgagee or creditor's ability to accelerate the balance of the loan. Failure to provide this notice precludes an award of attorney fees on the accelerated balance.
4. **Junior Lien Removal**: In what may prove to be the most important and controversial aspect of the new law is the ability of the mortgagor to negotiate for a reduced balance on the note secured by its mortgage while at the same time removing junior liens. This junior lien removal is only allowed if the mortgagee agrees to at least a 10 percent reduction in the net present value of the underlying indebtedness, but permits the junior lien holder to contest the removal under certain circumstances.
These changes are sweeping and significant. Contact your legal professional as soon as possible if you can take advantage of or are adversely affected by these changes. Note that except in those circumstances in which the law is changed effective May 1, 2009, all other changes take effect July 1, 2009.