Completed Home Foreclosures and Delinquent Mortgage Loans Decrease at Maine-Chartered Banks and Credit Unions

AUGUSTA, ME – September 21, 2010 – (RealEstateRama) — Bureau of Financial Institutions Superintendent Lloyd P. LaFountain, III announced this week that second quarter 2010 data submitted by Maine state-chartered banks and credit unions shows a decrease in completed home foreclosures in Maine. Additionally, the number of delinquent mortgage loans declined for the second consecutive quarter.

However, the total mortgage loans in the foreclosure process increased after holding steady in the first quarter. In general, foreclosure activity at Maine banks and credit unions remains lower than in many other states and it does not pose a threat to the stability of Maine state-chartered financial institutions.

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

The number of new first mortgage loans initiated in the second quarter increased significantly from the prior quarter–up 46%–but was below originations in the second quarter of 2009. The growth in originations is attributed to higher home sales in the quarter, bolstered by the expiration of the federal tax credit and record low interest rates, and increased refinancing activity, also bolstered by the record low interest rates.

This most recent data covers April through June 2010. 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 June 2010. The Bureau has been surveying state-chartered banks and credit unions regarding foreclosure activity since October 2006.

According to second quarter survey results, the 32 state-chartered financial institutions held 85,211 mortgage loans at the end of June, consisting of 49,132 first mortgage loans and 36,079 junior lien mortgage loans (including home equity lines of credit). Of the 85,211 loans, 297 (234 first mortgages and 63 junior lien mortgages) were in process of foreclosure (IPF), or one loan for every 287 mortgages (one for every 210 first mortgages). At the end of the first quarter of 2010, 289 loans were in the foreclosure process. As a percentage of total mortgages, IPF loans remain relatively low, 0.35% at the end of the second quarter (up marginally from 0.34% at the end of the first quarter).

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 second quarter of 2010, foreclosure proceedings were started on 67 first mortgages, 0.14% of all outstanding first mortgages, or one for every 733 first mortgages. This represents the second consecutive quarter of noticeable decrease from the prior quarter. Foreclosure proceedings initiated on junior mortgages also decreased during the quarter.

The Bureau also requests data on completed foreclosures (FC). As seen in the table below, the number of FC more than doubled in 2008 and increased further in 2009, to 175. While the number of both first and junior lien mortgages declined in the second quarter of 2010, dropping to a total of 60 mortgages, 0.071% of outstanding mortgages, the quarterly total is much higher than any other quarter except the first quarter. Nevertheless, the overall number of FC, though rising, remains low, especially in relation to the total of outstanding mortgages – only one for every 1,417 mortgages and one for every 1,197 first mortgages.

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.

The Bureau of Financial Institutions is part of the Department of Professional and Financial Regulation, which encourages sound ethical business practices through impartial regulation of insurers, financial institutions, creditors, investment providers, and numerous professions and occupations for the purpose of protecting the citizens of Maine. Consumers can reach the Bureau through the Department’s website (www.maine.gov/pfr); by calling 1-800-965-5235 or by writing to Bureau of Financial Institutions, 36 State House Station, Augusta, Maine 04333.