Maine Pushes Own Government Foreclosures Program

by Donald Hanz on States

Troubled homeowners in Maine can thank their state legislators for their efforts to set up state government foreclosures programs that would help them.

On Tuesday, state legislators will conduct public meetings to discuss several bills aimed at implementing their own government foreclosures program. These include bills that set up mandatory mediation between lenders and troubled homeowners, that protect renters of houses in foreclosure and that reduce the backlog of private lender and government foreclosures in courts.

The mandatory mediation proposal was introduced by Representative Sharon Treat of Hallowell. The bill, supported by CEI and other nonprofits, seeks to institute a mandatory mediation for homeowners at risk of foreclosure within the Alternative Dispute Resolution Service of the courts. The proposal aims to ensure that troubled borrowers know all the options available to them and to make sure they get the chance to negotiate with their lender.

The bill would also require homeowners and lenders to maintain homes even if they are at risk of private lender or government foreclosures. The homes should not be allowed to contribute to neighborhood blight. The bill also prohibits renters from being forced out of foreclosure properties.

Representative Treat reiterated that the bill would not grant any money to any party. It just aims to help the courts ensure both lenders and borrowers get fair treatment in the foreclosure process and reduce the backlog of cases of private lender and government foreclosures.

Carla Dickstein, top executive at the nonprofit Coastal Enterprises Inc., said foreclosures sales are rising because of the rising numbers of the unemployed and the worsening economy.

Based on reports from the Center for Responsible Lending in March 2009, there were 5,455 in private lender and government foreclosures in Maine as of December 2008 and over half of those in foreclosures were subprime loans. Maine foreclosures are negligible compared to those of other states such as California, Nevada and California, but Main’s foreclosure rate is still higher than the nationwide average, based on studies from the Center for Responsible Lending.

Lloyd LaFountain, superintendent of the Maine Department of Professional and Financial Regulation, explained that foreclosures initiated by financial institutions chartered in Maine are lower than those initiated by financial companies in other states. As of December last year, the 32 mortgage lenders chartered in the state held over 87,000 home loans.

Dickstein of CEI said there are homeowners who can no longer be saved by the state’s government foreclosures program because they already have accumulated large arrears and large balances, but there are still some who can be helped through mandatory mediation.