House
Study
Bill
531
-
Introduced
HOUSE
FILE
_____
BY
(PROPOSED
COMMITTEE
ON
COMMERCE
BILL
BY
CHAIRPERSON
COWNIE)
A
BILL
FOR
An
Act
relating
to
shortening
the
periods
of
time
for
redeeming
1
real
property
from
foreclosure
and
delaying
sale
of
2
foreclosed
property.
3
BE
IT
ENACTED
BY
THE
GENERAL
ASSEMBLY
OF
THE
STATE
OF
IOWA:
4
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Section
1.
Section
535.8,
subsection
4,
paragraph
e,
1
subparagraph
(1),
Code
2018,
is
amended
to
read
as
follows:
2
(1)
Notwithstanding
section
628.3
when
a
foreclosure
of
a
3
mortgage
on
real
property
results
from
the
enforcement
of
a
4
due-on-sale
clause,
the
mortgagor
may
redeem
the
real
property
5
at
any
time
within
three
years
eighteen
months
from
the
day
of
6
sale
under
the
levy,
and
the
mortgagor
shall,
in
the
meantime,
7
be
entitled
to
the
possession
thereof;
and
for
the
first
8
thirty
fifteen
months
thereafter
such
right
of
redemption
is
9
exclusive.
Any
real
property
redeemed
by
the
debtor
shall
10
thereafter
be
free
and
clear
from
any
liability
for
any
unpaid
11
portion
of
the
judgment
under
which
the
real
property
was
12
sold.
The
right
of
redemption
established
by
this
paragraph
13
is
not
subject
to
waiver
by
the
mortgagor
and
the
period
of
14
redemption
established
by
this
paragraph
shall
not
be
reduced.
15
The
times
for
redemption
by
creditors
provided
in
sections
16
628.5
,
628.15
,
and
628.16
shall
be
extended
to
thirty-three
17
sixteen
months
in
any
case
in
which
the
mortgagor’s
period
18
for
redemption
is
extended
by
this
paragraph.
This
paragraph
19
does
not
apply
to
foreclosure
of
a
mortgage
if
for
any
reason
20
other
than
enforcement
of
a
due-on-sale
clause.
As
used
in
21
this
paragraph,
“due-on-sale
clause”
means
any
type
of
covenant
22
which
gives
the
mortgagee
the
right
to
demand
payment
of
the
23
outstanding
balance
or
a
major
part
thereof
upon
a
transfer
by
24
the
mortgagor
to
a
third
party
of
an
interest
of
the
mortgagor
25
in
property
covered
by
the
mortgage.
This
paragraph
applies
to
26
any
foreclosure
occurring
on
or
after
May
10,
1980.
However,
27
this
paragraph
does
not
apply
if
the
lender
establishes,
based
28
on
reasonable
criteria
which
are
not
more
restrictive
than
29
those
used
to
evaluate
new
mortgage-loan
applications,
that
the
30
security
interest
or
the
likelihood
of
repayment
is
impaired
as
31
a
result
of
the
transfer
of
interest.
32
Sec.
2.
Section
628.3,
Code
2018,
is
amended
to
read
as
33
follows:
34
628.3
Redemption
by
debtor.
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The
debtor
may
redeem
real
property
at
any
time
within
1
one
year
six
months
from
the
day
of
sale,
and
will,
in
the
2
meantime,
be
entitled
to
the
possession
thereof;
and
for
the
3
first
six
three
months
thereafter
such
right
of
redemption
is
4
exclusive.
Any
real
property
redeemed
by
the
debtor
shall
5
thereafter
be
free
and
clear
from
any
liability
for
any
unpaid
6
portion
of
the
judgment
under
which
said
real
property
was
7
sold.
8
Sec.
3.
Section
628.5,
Code
2018,
is
amended
to
read
as
9
follows:
10
628.5
Redemption
by
creditors.
11
If
no
redemption
is
made
by
the
debtor
as
above
provided,
12
thereafter,
and
at
any
time
within
nine
four
months
from
the
13
day
of
sale,
said
redemption
may
be
made
by
a
mortgagee
before
14
or
after
the
debt
secured
by
the
mortgage
falls
due,
or
by
any
15
creditor
whose
claim
becomes
a
lien
prior
to
the
expiration
of
16
the
time
allowed
for
such
redemption.
17
Sec.
4.
Section
628.15,
Code
2018,
is
amended
to
read
as
18
follows:
19
628.15
After
nine
Creditors
after
four
months.
20
After
the
expiration
of
nine
four
months
from
the
day
of
21
sale,
the
creditors
can
no
longer
redeem
from
each
other,
22
except
as
hereinafter
provided.
23
Sec.
5.
Section
628.16,
Code
2018,
is
amended
to
read
as
24
follows:
25
628.16
Who
gets
property.
26
Unless
the
defendant
redeems,
the
purchaser,
or
the
creditor
27
who
has
last
redeemed
prior
to
the
expiration
of
the
nine
28
within
four
months
aforesaid
from
the
day
of
sale
,
will
hold
29
the
property
absolutely.
30
Sec.
6.
Section
628.26,
Code
2018,
is
amended
to
read
as
31
follows:
32
628.26
Agreement
to
reduce
period
of
redemption.
33
The
mortgagor
and
the
mortgagee
of
real
property
consisting
34
of
less
than
ten
acres
in
size
may
agree
and
provide
in
the
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mortgage
instrument
that
the
period
of
redemption
after
sale
1
on
foreclosure
of
said
mortgage
as
set
forth
in
section
628.3
2
be
reduced
to
six
three
months,
provided
the
mortgagee
waives
3
in
the
foreclosure
action
any
rights
to
a
deficiency
judgment
4
against
the
mortgagor
which
might
arise
out
of
the
foreclosure
5
proceedings.
In
such
event
the
debtor
will,
in
the
meantime,
6
be
entitled
to
the
possession
of
said
real
property;
and
if
7
such
redemption
period
is
so
reduced,
for
the
first
three
8
months
month
after
sale
such
right
of
redemption
shall
be
9
exclusive
to
the
debtor,
and
the
time
periods
in
sections
10
628.5
,
628.15
,
and
628.16
,
shall
be
reduced
to
four
two
months.
11
Sec.
7.
Section
654.20,
subsection
1,
Code
2018,
is
amended
12
to
read
as
follows:
13
1.
If
the
mortgaged
property
is
not
used
for
an
agricultural
14
purpose
as
defined
in
section
535.13
,
the
plaintiff
in
an
15
action
to
foreclose
a
real
estate
mortgage
may
include
in
the
16
petition
an
election
for
foreclosure
without
redemption.
The
17
election
is
effective
only
if
the
first
page
of
the
petition
18
contains
the
following
notice
in
capital
letters
of
the
same
19
type
or
print
size
as
the
rest
of
the
petition:
20
NOTICE
21
THE
PLAINTIFF
HAS
ELECTED
FORECLOSURE
WITHOUT
REDEMPTION.
22
THIS
MEANS
THAT
THE
SALE
OF
THE
MORTGAGED
PROPERTY
WILL
OCCUR
23
PROMPTLY
AFTER
ENTRY
OF
JUDGMENT
UNLESS
YOU
FILE
WITH
THE
COURT
24
A
WRITTEN
DEMAND
TO
DELAY
THE
SALE.
IF
YOU
FILE
A
WRITTEN
25
DEMAND,
THE
SALE
WILL
BE
DELAYED
UNTIL
TWELVE
SIX
MONTHS
26
(or
SIX
THREE
MONTHS
if
the
petition
includes
a
waiver
of
27
deficiency
judgment)
FROM
ENTRY
OF
JUDGMENT
IF
THE
MORTGAGED
28
PROPERTY
IS
YOUR
RESIDENCE
AND
IS
A
ONE-FAMILY
OR
TWO-FAMILY
29
DWELLING
OR
UNTIL
TWO
MONTHS
FROM
ENTRY
OF
JUDGMENT
IF
THE
30
MORTGAGED
PROPERTY
IS
NOT
YOUR
RESIDENCE
OR
IS
YOUR
RESIDENCE
31
BUT
NOT
A
ONE-FAMILY
OR
TWO-FAMILY
DWELLING.
YOU
WILL
HAVE
32
NO
RIGHT
OF
REDEMPTION
AFTER
THE
SALE.
THE
PURCHASER
AT
THE
33
SALE
WILL
BE
ENTITLED
TO
IMMEDIATE
POSSESSION
OF
THE
MORTGAGED
34
PROPERTY.
YOU
MAY
PURCHASE
AT
THE
SALE.
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Sec.
8.
Section
654.21,
Code
2018,
is
amended
to
read
as
1
follows:
2
654.21
Demand
for
delay
of
sale.
3
At
any
time
prior
to
entry
of
judgment,
the
mortgagor
may
4
file
a
demand
for
delay
of
sale.
If
the
demand
is
filed,
the
5
sale
shall
be
held
promptly
after
the
expiration
of
two
months
6
from
entry
of
judgment.
However,
if
the
demand
is
filed
and
7
the
mortgaged
property
is
the
residence
of
the
mortgagor
and
8
is
a
one-family
or
two-family
dwelling,
the
sale
shall
be
held
9
promptly
after
the
expiration
of
twelve
six
months,
or
six
10
three
months
if
the
petition
includes
a
waiver
of
deficiency
11
judgment,
from
entry
of
judgment.
If
the
demand
is
filed,
the
12
mortgagor
and
mortgagee
subsequently
may
file
a
stipulation
13
that
the
sale
may
be
held
promptly
after
the
stipulation
is
14
filed
and
that
the
mortgagee
waives
the
right
to
entry
of
a
15
deficiency
judgment.
If
the
stipulation
is
filed,
the
sale
16
shall
be
held
promptly
after
the
filing.
At
any
time
prior
17
to
judgment,
the
mortgagor
may
pay
the
plaintiff
the
amount
18
claimed
in
the
petition
and,
if
paid,
the
foreclosure
action
19
shall
be
dismissed.
At
any
time
after
judgment
and
before
20
the
sale,
the
mortgagor
may
pay
the
plaintiff
the
amount
of
21
the
judgment
and,
if
paid,
the
judgment
shall
be
satisfied
of
22
record
and
the
sale
shall
not
be
held.
23
EXPLANATION
24
The
inclusion
of
this
explanation
does
not
constitute
agreement
with
25
the
explanation’s
substance
by
the
members
of
the
general
assembly.
26
This
bill
shortens
the
periods
of
time
associated
with
27
redemption
of
real
property
from
foreclosure
in
Code
chapter
28
628.
It
changes
the
period
of
time
that
a
defendant-debtor
may
29
redeem
real
property
from
within
one
year
of
sale
to
within
30
six
months
of
sale.
It
also
changes
the
period
in
which
the
31
defendant-debtor
has
the
exclusive
right
of
redemption
from
six
32
months
after
sale
to
three
months
after
sale.
The
period
of
33
redemption
by
creditors
is
reduced
from
nine
months
after
sale
34
to
four
months
after
sale.
After
those
four
months,
creditors
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cannot
redeem
from
each
other.
Unless
the
defendant-debtor
1
redeems,
the
purchaser,
or
the
creditor
who
last
redeemed
2
within
four
months
of
the
day
of
sale,
will
hold
the
property
3
absolutely.
4
Under
current
law,
a
mortgagor
and
mortgagee
can
agree
to
5
reduce
the
period
of
redemption
from
foreclosure
as
described
6
in
the
mortgage
instrument
to
a
period
of
six
months.
The
bill
7
would
allow
the
mortgagor
and
mortgagee
to
agree
to
reduce
8
the
period
of
redemption
by
the
debtor
to
three
months.
The
9
debtor’s
right
of
redemption
would
be
exclusive
the
first
10
month,
as
opposed
to
three
months.
Under
the
bill,
the
time
11
for
redemption
by
creditors
would
be
shortened
from
four
months
12
to
two
months.
13
The
bill
also
alters
Code
chapter
654.
The
bill
changes
14
the
notice
requirement
and
rule
for
foreclosure
without
15
redemption
by
changing
the
length
of
time
a
sale
can
be
16
delayed
when
a
defendant-mortgagor
makes
a
written
demand
to
a
17
plaintiff-mortgagee
to
delay
sale.
The
bill
delays
the
sale
by
18
six
months
from
entry
of
judgment
as
opposed
to
the
current
12
19
months.
If
a
plaintiff-mortgagee’s
petition
includes
a
waiver
20
of
deficiency
judgment,
a
defendant-mortgagor’s
written
demand
21
will
only
result
in
a
three-month
rather
than
a
six-month
delay
22
of
sale
following
entry
of
judgment.
23
Notwithstanding
Code
section
628.3
when
a
foreclosure
of
24
a
mortgage
on
real
property
results
from
enforcement
of
a
25
due-on-sale
clause,
the
bill
amends
Code
section
535.8(4)(e)(1)
26
to
shorten
the
period
that
a
mortgagor
may
redeem
the
real
27
property
from
any
time
within
three
years
to
anytime
within
28
18
months
from
the
day
of
sale
under
the
levy.
The
bill
also
29
shortens
the
period
during
which
the
mortgagor’s
right
of
30
redemption
is
exclusive
from
the
first
30
months
to
the
first
31
15
months
and
the
period
during
which
creditors
may
redeem
32
under
Code
sections
628.5,
628.15,
and
628.16
from
33
months
33
to
16
months.
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