Opinion ID: 4520102
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Heading: introduction

Text: This case requires us to interpret an Iowa statute relating to priority of advances under mortgages. See Iowa Code § 654.12A (2013). A bank made a series of loans to a farmer between April 2011 and March 2017. Near the middle of that time period, in 2014, the bank obtained a mortgage on a farm property with a future-advances clause. The bank’s mortgage contained specific-dollar-amount language, as required by Iowa Code section 654.12A: NOTICE: THIS MORTGAGE SECURES CREDIT IN THE AMOUNT OF $148,000.00. LOANS AND ADVANCES UP TO THIS AMOUNT, TOGETHER WITH INTEREST, ARE SENIOR TO INDEBTEDNESS TO OTHER CREDITORS UNDER SUBSEQUENTLY RECORDED OR FILED MORTGAGES AND LIENS. In May 2017, with his indebtedness to this bank exceeding $556,000, the farmer turned to another bank for financing. He took out a loan from the second bank for approximately $589,000, also secured in part by the same farm property. In 2018, the first bank filed a foreclosure proceeding. The fighting issue now is whether the first bank’s lien on the farm priority has priority for all amounts due to the first bank or only up to $148,000, plus interest. Based on the text of the statute, and other relevant considerations we discuss within this opinion, we conclude the first bank’s priority is capped at $148,000, plus interest. We also hold the first bank is not allowed to collect default interest at 18% as part of its first-priority lien because there was no written agreement to pay such a rate. Accordingly, we reverse the foreclosure decree entered by the district court and remand for further proceedings. 3