Foreclosure is the legal process by which the lender in a mortgage arrangement takes possession of the property (typically a house) that secured the loan. This is done when the Storm Lake, Iowa debtor has repeatedly failed to make their payments. When a house is foreclosed, it is typically sold at auction shortly thereafter. This is because banks typically want to get rid of the property as soon as possible, even if it means losing some money, and an auction is an easy way to do this.
In all states in the United States, including Iowa, foreclosure by judicial sale is an option. This allows the sale to be conducted under the supervision of a court, to ensure that the bank makes a good faith effort to get a fair price, and that the proceeds above and beyond the balance of the mortgage (if there are any) go back to the debtor. In some states, original mortgages are treated as "non-recourse" loans, meaning that, at most, the lender can take ownership of the house in the event of foreclosure, even if it is worth less than the amount due. The bank cannot go after the debtor for the remaining balance once it sells the house. You should consult a lawyer in Storm Lake, Iowa to find out if this is the case here. This typically does not apply if the mortgage has been refinanced.
How Can I Avoid Foreclosure in Iowa?
Most importantly, you must not ignore the problem. Doing so will not make it go away, and will probably make it worse. You should stay in close contact with your bank, and be forthright with them. You should keep in mind that banks typically don't want to take your Storm Lake home. They aren't in the real estate business, and expect to make money through interest on the loan, not by selling your house. If you are up-front with them early on, they will probably make a reasonable effort to accommodate your financial system if it will keep you from defaulting.
If you can't work things out with your lender, there are other options. You could try a "short sale," which is when you sell your house for whatever amount you can get for it, and use the proceeds to pay your mortgage. If the house sells for less than you owe, the bank still gets those proceeds, but the remainder of the loan will be forgiven. You might also consider a "short refinance" which allows a portion of the debt to be forgiven, while refinancing the rest, hopefully under better terms.
How Can A Storm Lake, Iowa Attorney Help?
If you are facing foreclosure, a good Storm Lake, Iowa real estate attorney can help. While keeping your home might not always be possible, a lawyer can increase your odds of success, and help you minimize the negative impact if you do end up losing your home.