Bureau of Financial Institutions Releases Fourth Quarter 2008 Home Foreclosure Data
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Bureau of Financial Institutions Releases Fourth Quarter 2008 Home Foreclosure Data

Professional & Financial Regulation – Financial Institutions

April 13, 2009 – (RealEstateRama) — Foreclosures and Loan Delinquencies Continue to Trend Upward but the Number of Completed and Initiated Foreclosure Proceedings Declines in Fourth Quarter

Superintendent Lloyd P. LaFountain, III announced on Friday that recently completed analysis by the Bureau of Financial Institutions of 2008 fourth quarter data submitted by Maine-chartered banks and credit unions shows a continuing modest increase in home foreclosures in Maine. Additionally, residential loan delinquencies were shown to increase at the end of last year.

The analysis, however, contains some positive signs including a decrease (from the previous quarter) in both the number of completed first lien foreclosures and the overall number of foreclosure proceedings being initiated. In general, foreclosure activity at Maine banks and credit unions appears to be lower than in many other states and it does not pose a threat to the stability of those financial institutions.

“Although foreclosures continued to trend upward during the fourth quarter of 2008, the rate of such activity in Maine, at least by state-chartered financial institutions, appears to be lower than in many other parts of the country. Additionally, there were encouraging signs, such as a decrease in the number of initiated foreclosures,” Superintendent LaFountain commented. “Overall, the level of foreclosures—while tragic on an individual basis—does not currently threaten the strength and solvency of Maine-chartered banks and credit unions.”

This most recent data covers October through December 2008. It pertains to residential real estate lending and was obtained from the 32 financial institutions (banks and credit unions) that have been state-chartered in Maine from the end of 2006 through December, 2008. The Bureau has been surveying state-chartered banks and credit unions regarding foreclosure activity since October 2006.

According to fourth quarter survey results, the 32 state-chartered financial institutions held 87,038 mortgage loans at the end of December, consisting of nearly 50,000 first mortgage loans and more than 37,500 junior lien mortgage loans (including home equity lines of credit). Of the 87,038 loans, 213 (148 first mortgages and 65 junior lien mortgages) were in process of foreclosure (IPF), or one loan for every 409 mortgages (one for every 334 first mortgages).

This continues the ongoing upward trend since 2006. During the third quarter of 2008, 195 loans were in IPF status. As a percentage of total mortgages, though, IPF loans remain low, 0.24% during the fourth quarter (up from 0.22% during the third quarter of 2008).

Beginning with the 2008 first quarter survey (January-March, 2008), data on the number of foreclosures initiated in the current quarter was requested. During the fourth quarter of 2008, foreclosure proceedings began on 59 first mortgages, 0.12% of all outstanding first mortgages, or one for every 839 first mortgages. This is down slightly from 62 initiated foreclosures during the third quarter (one for every 794 first mortgages).

The Bureau also requests data on completed foreclosures (FC). Numbers increased from 52 in 2006 to 67 in 2007. In 2008, that number jumped to 159. Completed foreclosures, however, declined from 51 in the third quarter to 37 during the fourth quarter of 2008. The number of FC remains low, especially in relation to the total number of outstanding mortgages – one for every 2,352 mortgages and one for every 1,894 first mortgages.

The Bureau does not regulate federally-chartered banks and credit unions operating in Maine. Data from those institutions are not included in the Bureau’s analysis—although anecdotal information suggests that foreclosure activity at federally-chartered banks and credit unions is comparable to what is occurring at state-chartered institutions.

Additionally, the survey does not contain data from mortgage companies licensed to do business in Maine, which are not regulated by the Bureau of Financial Institutions. In this case, anecdotal information and data from county registries of deeds suggest that foreclosure rates on loans initiated by mortgage companies is higher than what is experienced at state and federally-chartered financial institutions.

Results may therefore differ from those presented by national organizations such as RealtyTrac, the Mortgage Bankers Association (with nearly 143,000 first lien mortgages in Maine) or First American CoreLogic (with approximately 15,000 subprime and Alternate-A owner-occupied first mortgages in Maine).

More information on the status of residential real estate lending by Maine’s financial institutions is available in the Bureau’s 2009 Annual Report to the Legislature, which can be found at www.maine.gov/pfr/financialinstitutions.

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