Foreclosed Houses for Sale, New Home Loans Increase in Maine

by on States

The State Bureau of Financial Institutions’ quarterly survey showed that the number of foreclosed houses for sale in Maine continues to rise. But the survey also indicated that the number of new home loans in the state is also rising for the same period.

Superintendent Lloyd LaFountain said that the state is seeing a significant jump in the number of new home loans taken out from state-regulated institutions.

The comparative data for the second quarter of the previous year showed that the 12 credit unions and 20 banks that Maine regulates posted about 2,222 new first home loans. For the same period this year, the banks and credit unions initiated about 3,583 first loans.

Industry experts said that the jump in the number of foreclosed houses for sale was quite modest despite the quarterly survey results showing 260 foreclosures were initiated for all kinds of residential loans, an increase from 186 foreclosures posted for the same period last year.

Meanwhile, the number of second home loans taken out statewide dropped to 1,719 in the second quarter of this year, from 2,343 for the same quarter the previous year.

However, many industry experts are uncertain about the results of the state survey. They are not sure if the figures indicated in the survey are the true representation of what is really going on in Maine.

They said that many home loans were written by credit unions, mortgage companies and federally chartered banks and they all deal differently with their clients compared with local banks.

Experts explained that these institutions have ties with the local community and they would do everything they can to avoid making foreclosures, adding that they would work with troubled borrowers just to keep the loan active and current. The case is different with national banks, according to experts.

But because of this difference, experts said that the state survey may have downplayed the total foreclosures in Maine. They said that state-regulated financial institutions hold only a few of subprime loans that have brought the first wave of foreclosures in the country.
Experts pointed out that the conservative method of lending resulted to low number of foreclosed houses for sale in Maine compared with other areas in the country.