Maine has fewer foreclosures than other parts of the country, but subprime loans and adjustable rate mortgages have affected the real estate industry here, and experts say more people are losing their homes.
“The auction phone is starting to ring more than it has in the past,” sad Joe Maloney, owner of Maloney Realty Auction in Auburn.
Currently, no one fully tracks Maine’s foreclosures. That will change in January, when state law requires the Department of Professional and Financial Regulation to collect the numbers.
Until then, experts say, the best information comes from the Mortgage Bankers Association, which tracks mortgage delinquencies and foreclosures using data from its members. The association said its information represents about 80 percent of the mortgage industry in Maine.
In the last quarter, according to the association, the percentage of subprime foreclosures increased just more than 1 percent to nearly 8 percent. The number of subprime, adjustable rate mortgage holders who were late with their payments increased 3 percent.
Prime mortgage foreclosures also rose, but barely. According to the association, the percentage of prime foreclosure ticked up .04 percent over the last quarter, to .63 percent.
Maine now ranks 23rd for new foreclosures, up from 29th at the end of 2006, according to the Mortgage Bankers Association.
Since mortgage problems began cropping up several months ago, the Maine Bureau of Consumer Credit Protection has fielded an increasing number of calls from Mainers struggling with subprime loans and adjustable rate mortgages. When a loan looks fishy, the department investigates. But more and more, calls are coming from homeowners with perfectly legal loans. They just can’t pay.
“We are a law enforcement agency. Our role is not counseling and our role is not being a liaison,” said Director Will Lund. “But I think in service to the public right now we are edging toward that.”
To help, the bureau tries to get homeowners who have been avoiding notices and collection efforts to talk to their lender. It tries to get homeowners connected to the right department within their mortgage company. And it educates homeowners about their rights and responsibilities.
But some Mainers still end up in foreclosure. Auctioneers see it every day.
For Maloney of Maloney Realty Auction, business is up about 25 percent.
For Stefan Keenan, real estate manager for Keenan Auction Company in South Portland, business is up “across the board,” including foreclosures and homeowners who need a quick sale before they fall into foreclosure. Last year he ran 190 property auctions. This year he’s on track for 220.
That’s not near the 700-auction peak he saw in the early 1990s, when Maine real estate plummeted. But, he said “I have a sense we haven’t seen the worst of it yet.”
Tom Saturley, president of Tranzon Auction Properties in Portland, currently has 10 properties scheduled for auction, seven of them from foreclosure.
“We will see a fairly significant increase as a result of subprime,” he said.
Real estate agents agree.
“We are seeing a lot of foreclosures coming into the pipeline,” said Mark Pilot, sales manager at Caldwell Banker Millett Realty in Auburn. “Folks like Fannie Mae, different lenders across the country, some local as well, they’ve kind of prepared us, saying ‘Buckle up, there are more foreclosures coming.'”
He estimated Millett Realty has seen a 50 percent increase in foreclosed homes from a year ago. The company has also seen a “tremendous increase” in lenders who want a broker’s opinion on the value of a home as part of the pre-foreclosure process.
At Keller Williams Realty Mid Maine in Auburn, broker Sue Messervier has also seen an increase in a type of pre-foreclosure. For her it’s short sales, or the sale of a home that’s worth less than the amount left on the mortgage. Lenders typically agree to a short sale when a homeowner is behind in payments and foreclosure would be the only other way to recoup a loan. They may get less money than they loaned out, but short sales avoid the cost and time of a foreclosure.
“It’s been probably years since I’ve been at the level I’m at now,” said Messervier, who has several short sales in her inventory.
But despite the increasing foreclosures, Maine still remains in a better position than other parts of the country. And while industry experts believe more foreclosures are coming, they also agree it won’t mean real estate chaos.
“The bottom’s not going to fall out,” Saturley said.
And for people not caught in subprime loans, adjustable rate mortgages or other financial problems, experts have advice.
“I think it’s a great time to buy,” Saturley said.
23rd for new foreclosures
22nd for delinquent payments
Percentage of U.S. mortgages that are delinquent: 5. 1 percent
Percentage of Maine mortgages that are delinquent: 4.7 percent
Percentage of U.S. mortgages in foreclosure: 1.4 percent
Percentage of Maine mortgages in foreclosure: 1.7 percent
Percentage of non-prime borrowers (FHA and subprime) in Maine: 18 percent
Source: Mortgage Bankers Association