Maine Bank Report Shows Rise in Foreclosed Properties

A report released this week by banking institutions and credit unions chartered in Maine showed that the total number of foreclosed properties in the state increased in the first three months.

The number of foreclosure actions on first mortgages increased in March compared to January, according to Lloyd LaFountain III, superintendent of Maine’s Bureau of Financial Institutions.

The bureau said that out of 86,279 outstanding mortgage loans on March 31, there were 240 foreclosed properties, representing 0.28 percent of total loans. LaFountain said that the negligible foreclosure-loan ratio does not pose a threat to the solvency and strength of banking institutions and credit unions chartered in Maine.

The superintendent further explained that the relatively low number of foreclosed properties may be an indication of the success of homeowner assistance schemes and loan modification efforts launched in the state.

Maine Representative Sharon Treat said that the total number of foreclosed properties across the state will further be reduced with the passage of the foreclosure mediation program bill.

The bill, sponsored by Treat and modeled after a similar law in Connecticut, would help homeowners save their homes through the help of the courts.

The program offers foreclosure prevention counseling programs and a hotline for foreclosure counseling.

Under the program, homeowners will be able to work out an affordable repayment scheme with their lenders through a mediation conference supervised by the court. The bill would enable retired judges to help as mediators.

The bill also requires lenders to send to the mediation meetings a bank representative who has the authority to modify loans or work out a repayment scheme during the mediation meetings.

Based on the Connecticut mediation program, the Maine program will cost around $900,000 annually over the next several years. It would be backed by money collected from the addition of real estate transfer taxes on foreclosed properties purchased at auctions. Fees collected from court filing would also be used.

The program, which was created by a group of legislators, bankers and lawyers that comprise the Commission on Foreclosure Diversion, was also designed to facilitate unquestioned foreclosures through the courts. Typically in Maine, uncontested foreclosures take 9 months to close while contested foreclosures take more than 12 months.

David Kennedy, a member of the commission, said that the program would not be able to solve all problems related to foreclosure, but it would reduce the number of families forced out of foreclosed properties.

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