A lender in Iowa forecloses on a borrower's residential home. After the foreclosure sale, the sale proceeds are $185,000, but the outstanding loan balance was $210,000. The lender wants to recover the remaining $25,000 from the borrower. Under Iowa law, which of the following statements is most accurate?
Correct Answer
A) The lender may seek a deficiency judgment against the borrower through the Iowa court system.
Iowa is a judicial foreclosure state, and Iowa law does permit deficiency judgments following a foreclosure sale. If the foreclosure sale proceeds are insufficient to cover the outstanding loan balance, the lender may petition the court for a deficiency judgment against the borrower for the remaining amount. In this scenario, the lender could seek a $25,000 deficiency judgment through the Iowa court system.
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Related Topics & Key Terms
Key Terms:
Related Concepts
An FHA loan is a mortgage insured by the Federal Housing Administration that allows lower down payments and credit scores than conventional loans. It is designed to help first-time homebuyers and borrowers with limited resources.
A fixed-rate mortgage has an interest rate that remains constant for the entire term of the loan, resulting in equal monthly principal and interest payments throughout the life of the mortgage.
Foreclosure is the legal process by which a lender takes possession of a property when a borrower fails to make mortgage payments. It allows the lender to sell the property to recover the outstanding debt.
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