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46 Legal Industry Update State Focus IOWA Iowa Supreme Court Concludes Statute of Limitation Applies to Judgment Only By Benjamin W. Hopkins and Ryan C. Holtgraves, Petosa Law LLP On January 29, the Iowa Supreme Court issued its decision in U.S. Bank National Asso- ciation v. Callen, Iowa No. 14–1536, 874 N.W.2d 112 (2016,) conclusively interpreting Iowa's foreclosure judgment statute of limitation to bar enforcement of the judgment only, not the underlying mortgage. THE CASE In 2006, Cathy Callen and Jereme Lamb executed a promissory note secured by a home mortgage. Callen and Lamb eventually defaulted on the note, and U.S Bank brought an in rem foreclosure action and obtained judgment. e foreclosure decree was entered against the defendants in February 2010. Two sheriff sales of the property were set but then canceled. U.S. Bank eventually filed a Notice of Rescission in March 2012 pursuant to Iowa Code 654.17 which states: "[a]t any time prior to the recording of the sheriff 's deed, and before the mortgagee's rights become unen- forceable by operation of the statute of limita- tions, the judgment creditor … may rescind the foreclosure action …" e Notice of Rescission was filed after the two-year statute of limitation period under Iowa Code 615.1 but prior to the 10- and 20- year statutes of limitation under Iowa Code 614.1(5) (actions founded on written contracts) and 614.21 (foreclosure of ancient mortgages), respectively. U.S. Bank filed a second foreclosure action in October 2013, and the Callens counter- claimed for quiet title and wrongful foreclo- sure, arguing that the Notice of Rescission was untimely and that the Mortgagee's right to foreclose the mortgage was lost with the run- ning of the two-year statute of limitation under Iowa Code 615.1. U.S Bank prevailed on its motion for summary judgment in district court, and the decision was affirmed by the Iowa Court of Appeals. e Iowa Supreme Court, upon further review of the Court of Appeals decision, reasoned that the case turned on interpretation of the phrase "all liens in Iowa Code § 615.1, which states: "[a]fter the expiration of a period of two years from the date of entry of judg- ment … a judgment entered in [a residential mortgage foreclosure action] shall be null and void, all liens shall be extinguished, and no execution shall be issued except as a setoff or counterclaim …" e Callens urged the Court to interpret the phrase "all liens" to include the underlying mortgage lien. However, based on its analysis of the statutory language, context, and legisla- tive intent of 615.1, the Iowa Supreme Court concluded that, when interpreted in light of the statute as a whole, the phrase "all liens" refers only to foreclosure judgment liens. Furthermore, the Court stated that 654.17(2) reinforced its conclusion due to the fact that, under that statute, parties utiliz- ing Iowa's rescission process are permanently barred from seeking a deficiency judgment in a subsequent action. WHAT IT MEANS Ultimately the Court held that the Mort- gagee retained the right to foreclose the mort- gage and that the Notice of Rescission was filed in a timely fashion before the mortgagee's rights became unenforceable under either the 10- or 20-year statutes of limitation. GEORGIA Georgia Borrowers No Longer Have Standing to Challenge Assignments By Brent Wardrop, Weissman PC e question of whether a borrower can chal- lenge an Assignment of Mortgage has been a hot- button issue throughout Georgia the last several years, prompting countless lawsuits seeking to enjoin or rescind foreclosure sales. e Georgia Supreme Court recently provided much-needed clarity in Ames v. JP Morgan Chase Bank, NA, 783 S.E.2d 614 (Ga. 2016). THE CASE In Ames, the borrowers filed both state and federal lawsuits alleging that the assignment of the subject Security Deed was invalid. e Georgia Court of Appeals ruled that the Ameses lacked standing based on a string of Georgia opinions supporting the conclusion. e Georgia Supreme Court affirmed this, holding that the Security Deed does not afford a borrower any rights to dispute an assignment to a third party; an assignment does not breach any duty owed to a borrower under state law or the terms of the Security Deed, and the assignment itself does not grant a borrower any new rights. e primary basis for the last holding is that an assignment "is a contract between the deed holder and the assignee" (Ames at 620, quoting Bank of Cave Spring v. Gold Kist, Inc., 173 Ga. App. 679, 680 (1985)). e borrower, of course, is rarely the deed holder or the assignee and, as such, lacks standing to challenge the assignment even if the assignment affects the debtor in some ways. WHAT IT MEANS e end result in Georgia is that in most cases, the borrower cannot attack the assign- ment. If a borrower files a lawsuit raising this lone issue in an attempt to delay a foreclosure sale, lenders and services should contact their legal counsel to determine whether the sale must be canceled in light of Ames. "The end result in Georgia is that in most cases, the borrower cannot attack the assignment."

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