Mediation has a long history in Iowa farm foreclosure cases. The world’s agricultural commodities market saw rapid growth in the 1970s. Land prices increased as a result. The farm crisis of the 1980s drove many farmers into bankruptcy and others into poverty. The crisis led to a rise in farm foreclosures, severely damaging farming communities across Iowa.
In response, the Iowa state legislature enacted Iowa Code chapter 654A, which requires creditors to seek mediation in some cases involving agricultural property. These mediation requirements remain in place today.
What Are The Requirements To Qualify For Mediation In Iowa Farm Foreclosures?
Anyone who owns agricultural land, or their bank, may request mediation through the farm mediation service.
Suppose the debt tied to the property is $20,000.00 or more. In that case, the bank must engage in mediation before filing a foreclosure case. There are a few exceptions to this rule. The bank may obtain a mediation release. If a foreclosure must be filed as a counterclaim in a lawsuit, then mediation is waived. The court can also determine that the bank would suffer irreparable harm if it had to endure the mediation process. For more information read our article on Agricultural Foreclosures in Iowa
What Is the Borrower’s Role in Farm Foreclosure Mediation?
The bank contacts the farm mediation service to begin the mediation proceedings. The mediation service gives the borrower a free initial consultation. After the consultation, the borrower may waive the mediation requirement. If the borrower does not waive mediation, the borrower will file a list containing each creditor’s name and place of business.
The borrower will be referred to a financial analyst through the Iowa State University ASSIST program. The financial analyst will help the borrower prepare for the initial mediation meeting. The farm mediation service will also notify the borrower that free legal assistance may be available through the legal assistance for farmers program.
What Is the Mediator’s Role in Farm Foreclosure Mediation?
The mediator’s job is to listen to both the borrower and creditors, attempting to mediate a non-foreclosure solution between the parties. They advise the borrower and creditors regarding available assistance programs, encouraging the parties to adjust, refinance, or provide payment of the debts. They plan to resolve the immediate issue while also setting a framework for any future issues. Sometimes there will be more than one mediation meeting.
If the borrowers and creditors reach an agreement, it is submitted to the farm mediation service. It becomes an enforceable legal contract and a mediation release notifying the court that the creditor has fulfilled its requirement. If the parties do not reach an agreement, the mediator will sign a statement that constitutes a mediation release.
What is the Creditor’s Role in the Mediation Process?
If for whatever reason, the mediator does not issue a mediation release, the creditor must be notified that they have seven days to appeal the decision.
The creditor is only required to attend the mediation sessions. It is not obligatory to agree with the borrower. The release may not be issued if the creditor does not participate in all mediation meetings. The creditor may request additional meetings if a release is not granted. Any foreclosure proceedings stay until the creditor obtains a mediation release.
Typically, mediation must be completed within 42 days of the initial request, but this can be extended if both parties consent.
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