Maine program tries to halt foreclosure before it’s too late

Cathy McKelway,  a H.U.D. certified housing counselor with Penquis CAP, provided advice to struggling homeowners on foreclosure mediation during foreclosure diversion informational session at Penobscot Judicial Center Thursday afternoon, March 25, 2010. Presiding over the session was Justice Robert Murray (background, right).   BANGOR DAILY NEWS PHOTO BY JOHN CLARKE RUSS
BDN
Cathy McKelway, a H.U.D. certified housing counselor with Penquis CAP, provided advice to struggling homeowners on foreclosure mediation during foreclosure diversion informational session at Penobscot Judicial Center Thursday afternoon, March 25, 2010. Presiding over the session was Justice Robert Murray (background, right). BANGOR DAILY NEWS PHOTO BY JOHN CLARKE RUSS
Posted March 25, 2010, at 9:46 p.m.
Abiel Martinez, left, and his wife, Bettyjo Martinez of Etna, talk with the BDN about their recent struggle to make their home mortgage payments. They attended a foreclosure diversion informational session with Justice Robert Murray and financial counselors at Penobscot Judicial Center Thursday afternoon, March 25, 2010. BANGOR DAILY NEWS PHOTO BY JOHN CLARKE RUSS
BDN
Abiel Martinez, left, and his wife, Bettyjo Martinez of Etna, talk with the BDN about their recent struggle to make their home mortgage payments. They attended a foreclosure diversion informational session with Justice Robert Murray and financial counselors at Penobscot Judicial Center Thursday afternoon, March 25, 2010. BANGOR DAILY NEWS PHOTO BY JOHN CLARKE RUSS
Justice Robert Murray holds participants' files as he presided over a foreclosure diversion informational session at Penobscot Judicial Center Thursday afternoon, March 25, 2010.  BANGOR DAILY NEWS PHOTO BY JOHN CLARKE RUSS
BDN
Justice Robert Murray holds participants' files as he presided over a foreclosure diversion informational session at Penobscot Judicial Center Thursday afternoon, March 25, 2010. BANGOR DAILY NEWS PHOTO BY JOHN CLARKE RUSS

BANGOR, Maine — Abiel and Bettyjo Martinez bought a home in Etna in 2005 with an adjustable rate mortgage, the only loan they were eligible for.

In two years, their interest rate ballooned to 12 percent and their monthly payment nearly doubled from $900 to $1,700.

They scraped by for a while until Abiel Martinez lost his job and watched several months pass before he could collect unemployment. Then his wife lost her job. So they went back to their lender to modify their loan.

“They told us we could modify, but we had to pay $3,800 to start that process,” he said. “How can we pay $3,800 if we can’t afford the mortgage?”

The mortgage company had no choice but to start foreclosure proceedings. The Martinezes and their three children were in danger of being forced from their home.

“We don’t want to leave,” Bettyjo Martinez said. “Our kids liked the schools. We made friends. It’s our home.”

So far, the couple hasn’t been foreclosed on, and if all goes well, they won’t.

A new program that was created from a state law passed last June to reduce foreclosures statewide allows them the opportunity to sit down face to face with their lender and work out a mutually beneficial agreement. The foreclosure diversion program, facilitated by the state court system, was created to assist homeowners and lenders in achieving resolution to mortgage foreclosure actions through mediation.

The Martinezes were among a couple dozen homeowners who sat through a session Thursday in a courtroom at the Penobscot Judicial Center in Bangor to learn more about the program.

Essentially, homeowners facing foreclosure can stall the process by scheduling a sit-down meeting with their lender. In some cases, lenders will lower interest rates; in others, the length of the loan is extended, which can lower payments. Sometimes, no agreement can be reached, but the process forces lenders to be more accountable and provide fair alternatives.

The Martinezes plan to schedule a mediation session within the next month and are optimistic that they will keep their home.

“We’re lucky this is even an option,” Abiel Martinez said. “We’re hopeful that we can avoid [foreclosure].”

Cathy McKelway, a housing counselor from the social services agency Penquis who offered an overview of the foreclosure diversion program on Thursday, urged property owners to take advantage if they can.

“I know it’s a frustrating process and I know people are angry, but I would say that won’t help in mediation,” she said.

What will help, she said, is meticulous documentation of finances, both revenues and expenses.

“You need to show the bank or mortgage company why it’s a good deal for them,” McKelway said.

Most of the participants who attended Thursday’s session — one of several held throughout the state in recent weeks — didn’t want to be interviewed about their housing woes or the circumstances that led to possible foreclosure.

Abiel and Bettyjo Martinez didn’t mind. They said they were taken advantage of by predatory lending.

“We were bullied,” Abiel Martinez said. “This is our chance to start over.”

Information about the state’s foreclosure diversion program is available at http://www.courts.state.me.us/court_info/services/foreclosure/index.html.

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