Maine’s Foreclosure Model

Posted Nov. 09, 2010, at 9:39 p.m.

If you are in trouble with your mortgage, the place to start getting help is the state, not private companies more interested in making money than saving your home.

At Maine’s Bureau of Consumer Credit Protection — the hot line number is 888-664-2569 — you will talk with a human being, unlike the automated recordings commonly used by the big banks and the federal aid system. You will be sent a packet of information about how to apply for a loan modification and, above all, the help of a sympathetic counselor.

If a homeowner is current in mortgage payments but may soon find them unaffordable, or if the borrower is in arrears or has received a foreclosure notice, the bureau often refers the consumer to a network of nonprofit organizations for no-charge counseling and negotiation.

In an emergency, the bureau retains the case under the Consumer Credit Code or under the state’s foreclosure prevention program.

Many of the hardship cases result from home purchases with little or nothing down. When home values slumped in the recession, many were quickly worth less than what was owed on the mortgage, putting the home “under water.”

William Lund, superintendent of the bureau, reported last month to the Legislature that it had persuaded lenders to postpone or cancel more than 40 foreclosure auctions, rescind several auctions already held and modify the terms of 52 mortgage loan contracts to make them affordable.

He said by e-mail that fewer Mainers are delinquent and fewer are foreclosed than the national average, probably because Maine’s “flatter” economy does not have the highs and lows of states such as Nevada and Florida.

The big banks, which account for many of Maine’s home mortgages, have admitted that mortgage servicers falsely swore that they had studied documents that they never had reviewed or, in some cases, even seen. The resultant turmoil over this “robosigning” — which was uncovered by a volunteer Maine lawyer — may help borrowers who bring suit to save their homes. Mr. Lund warned that many of the big national lenders are getting more careful with their paperwork and now are charging full speed ahead with foreclosures.

Maine’s foreclosure prevention program is becoming a model for other states, while the foreclosure mess festers as an ugly follow-on from the burst housing bubble.

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