Bureau of Financial Institutions Announces Continued Modest Increase in Home Foreclosures, But Increase in New Mortgage Loans

March 15, 2010 – (RealEstateRama) — Bureau of Financial Institutions Superintendent Lloyd P. LaFountain, III announced this week that fourth quarter 2009 data submitted by Maine-chartered banks and credit unions shows a continuing increase in home foreclosures in Maine. 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 Maine-chartered financial institutions.

At the same time, the number of new first mortgage loans initiated during 2009 increased substantially—up 56% compared with 2008.

“The increase in new first mortgage loans during 2009 is encouraging and welcomed news,” Superintendent LaFountain commented. “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.”

This most recent data covers October through December 2009. 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 2009. The Bureau has been surveying state-chartered banks and credit unions regarding foreclosure activity since October 2006.

According to fourth quarter 2009 survey results, the 32 state-chartered financial institutions held 85,328 mortgage loans at the end of December, consisting of 48,677 first mortgage loans and 36,651 junior lien mortgage loans (including home equity lines of credit). Of the 85,328 loans, 305 (226 first mortgages and 79 junior lien mortgages) were in process of foreclosure (IPF), or one loan for every 280 mortgages (one for every 215 first mortgages). This continues the ongoing upward trend since 2006. At the end of the third quarter of last year, 271 loans were in IPF status. As a percentage of total mortgages, though, IPF loans remain relatively low, 0.36% at the end of the fourth quarter (up from 0.32% at the end of the third quarter of 2009).

The Bureau also requests data on completed foreclosures (FC). The table below shows numbers increasing from 52 in 2006 to 67 in 2007. In 2008, that number jumped to 159 and increased further in 2009, to 175. Completed foreclosures in the fourth quarter of 2009 totaled 42 mortgages, 0.049% of outstanding mortgages. This represents a substantial decrease from the third quarter, and the overall number of FC remains low, especially in relation to total outstanding mortgages – only one for every 2,030 mortgages and one for every 1,312 first mortgages.

Beginning in 2008, data on the number of foreclosures initiated in the current quarter was requested. During the fourth quarter of 2009, foreclosure proceedings were started on 103 first mortgages, 0.21% of all outstanding first mortgages, or one for every 473 first mortgages. This represents a noticeable increase from the prior quarter. However, foreclosure proceedings initiated on junior mortgages decreased for the second consecutive quarter.

The survey does not include data from entities not regulated by the Bureau which include federally-chartered banks, federally-chartered credit unions and mortgage companies licensed to do business in Maine.

More information on the status of residential real estate lending by Maine’s financial institutions is available in the Bureau’s 2010 Annual Report to the Legislature, which can be found at www.maine.gov/pfr/financialinstitutions.