She signed the mortgage, not the note. Wells Fargo never told her about the default
The Iowa Supreme Court reversed a Wells Fargo foreclosure, ruling the bank skipped a required notice to a mortgage signer.
The November 6 decision turned on a question servicers encounter regularly: who counts as a “borrower” when the mortgage and the note name different people?
In 2019, a couple purchased a house in Mason City, Iowa, as joint tenants. Wells Fargo provided $260,775 in financing. The man signed the promissory note as sole borrower. The woman did not. But both signed the mortgage, and the document - prepared by Wells Fargo - identified both as “Borrower” in its definitions and on the signature page.
By late 2021, the man had moved out. The woman stayed in the house.
The loan defaulted in June 2022. Wells Fargo sent notice-of-right-to-cure letters to the man at two addresses. It sent nothing to the woman. Under Iowa Code section 654.2D, a lender must give “a borrower on a mortgage on a homestead” written notice and 30 days to cure before foreclosing.
The woman called Wells Fargo repeatedly, seeking information on what was owed. The bank refused, saying it was not authorized to share details. The overdue amount was $6,110.54. She stated in a court affidavit she could have gathered sufficient funds to cure the default had she received notice.
Wells Fargo filed for foreclosure in February 2023 on a balance exceeding $247,000. The mortgage was later assigned to Newrez LLC, doing business as Shellpoint Mortgage Servicing, which replaced Wells Fargo as plaintiff.
The district court sided with the lender. So did the court of appeals. Both reasoned the woman was not a “borrower” because she had no personal liability on the note.
The Iowa Supreme Court disagreed unanimously. Justice Mansfield wrote that the statute refers to “a borrower on a mortgage” - not borrower in the abstract. Wells Fargo drafted the document that called her one, and admitted it would not have granted the loan without her signature as co-owner pledging 50% of the property’s equity as collateral.
Wells Fargo also invoked a mortgage clause stating that notice to one borrower constitutes notice to all. The court found Iowa law requires otherwise: section 654.2D(2) requires notice to each borrower in default.
For servicers handling loans where multiple parties signed the mortgage, the signal from Iowa is direct: pre-foreclosure notice goes to every person the mortgage names as a borrower, note signer or not.
The case has been remanded for further proceedings. No final resolution has been reached on the remaining issues.
