The Morning Sentinel

March 16

Foreclosures increase

BY ETHAN WILENSKY-LANFORD Staff Writer

Homeowners can call the Bureau of Consumer Credit Protection at 1-888-664-2569 to obtain assistance and advice on dealing with mortgage default.

BY ETHAN WILENSKY-LANFORD

Staff Writer

The number of Maine homes entering foreclosure in 2009 was about 20 percent higher than in 2008, according to the state's Bureau of Consumer Credit Protection.

In 2009, foreclosure proceedings were started on approximately 3,700 homes across the state, according to the data.

In 2008, that number was closer to 3,100.

"We are seeing a very steady high rate of defaults increasing in the state of Maine," said William Lund, superintendent of the Bureau of Consumer Credit Protection.

Not all defaults lead to full foreclosures, however. Many homeowners who fall behind on their payments can either sell their homes, or get out of default by modifying their mortgages or successfully getting back on track another way.

Last year, legislation from Rep. Sharon Treat, D-Hallowell, started the bureau sending packets of information to homeowners facing foreclosure. The packet describes the steps homeowners can take to avoid foreclosure, such as court-supported mediation.

A loophole in the law was closed this year that allowed some out-of-state mortgage service companies to opt out of the process by not notifying the bureau when a final notification of foreclosure is sent to the homeowner.

The bureau sends more than 100 information packets to homeowners every business day, Lund said, and has sent out 11,300 packets since July.

Mortgages in foreclosure held by Maine banks and credit unions increased 43 percent in 2009. The number of new primary mortgages, however, increased 56 percent during that same time.

"The increase in new first mortgage loans during 2009 is encouraging and welcomed news," said Lloyd LaFountain, superintendent of the Bureau of Financial Institutions, which oversees Maine banks and credit unions. "At the same time, we continue to see a modest increase in foreclosure activity, which indicates that too many individuals and families continue to struggle during a challenging economic time."

About 10 percent of the state's foreclosures in 2009 were litigated by Maine banks and credit unions. The remainder were brought by out-of-state lending institutions.

"Many loans were made in Maine and found their way to the secondary market, no matter who originated them," said Lund. "Sometimes it gets very difficult to know who is behind the curtain."

Economists have said the bundling and sale of mortgages helped the country enter recession. Many loans were made during a house-price bubble with "teaser" interest rates that exploded higher -- leaving mortgage holders unable to keep up with their payments and the bundled mortgages worthless in value.

Homeowners can call the Bureau of Consumer Credit Protection at 1-888-664-2569 to obtain assistance and advice on dealing with mortgage default.

Ethan Wilensky-Lanford -- 620-7016

ewlanford@mainetoday.com