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Iowa: Statute of Limitation Clarification

Posted By USFN, Monday, October 13, 2014
Updated: Tuesday, October 13, 2015

October 13, 2014


by Benjamin W. Hopkins
Petosa, Petosa & Boecker, L.L.P. – USFN Member (Iowa)

On September 17, 2014, the Iowa Court of Appeals released a decision resolving a long, simmering issue concerning the state’s foreclosure judgment statute of limitation. In Kobal v. Wells Fargo Bank, N.A., Iowa Ct. App. No. 13-1926, the court unequivocally concluded that the two-year statute of limitation in Iowa Code Section 615.1 applies only to the foreclosure judgment, not the underlying mortgage.

The case involved a foreclosure judgment entered in 2008. An execution sale was not held within the two-year limitation period and, thereafter, the mortgagor filed an action to quiet title. The mortgagor contended the provision in section 615.1 that “After the expiration of … two years from … entry of judgment … all liens shall be extinguished,” rendered both the judgment and the underlying mortgage unenforceable. The court disagreed, finding such an interpretation wholly inconsistent with the language and context of Iowa Chapter 615.

The mortgagor has filed a petition for rehearing and, in any case, the issue will not be fully resolved until the Iowa Supreme Court weighs in on the matter. In the meantime, Kobal offers some comfort that engaging in loss mitigation efforts, after entry of a foreclosure judgment, will not expose the investor to risk that — should two years pass — its collateral will be lost.

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