A real estate for sale sign sits outside 65 George St. in South Portland on Wednesday, Dec. 30, 2020. Credit: Troy R. Bennett

Bankers and realtors predicted the pandemic-related closures and layoffs that began in spring 2020 would sharply boost home foreclosures and mortgage delinquencies, but that hasn’t happened.

Yet.

Federal and state pandemic aid, including unemployment bonus payments, stimulus checks, foreclosure moratoriums and delayed mortgage payments, all helped keep delinquencies and foreclosures low, lenders and realtors say. At the same time, Maine real estate sales and prices have continued their steep rises across most of the state, offering another safety net for troubled homeowners.

But two upcoming milestones will determine whether the aid and hot housing market can help struggling owners stay in their homes.

The state and federal foreclosure moratoriums expire on July 31 and the last of the forbearances, or delayed loan payments, will end around September. Some experts say both events could trigger foreclosures, while others say the hot housing market will give owners a chance to sell before that happens.

“If you haven’t made a payment in 18 months, it’s really difficult to come back into some sort of payment stream,” said Russell Cole, president and CEO of CUSO Home Lending in Hampden.

He expects “a little higher default rate” among borrowers who still need to transition out of forbearance, but said he remains cautiously optimistic about owners being able to avoid foreclosure.

Most forbearances lasted two to four months, but some were extended one or more times to 18 months, Cole said. CUSO handles home mortgages for about 25 Maine credit unions.

Nationally, 1.75 million homeowners are still in forbearance, down from 4.3 million last summer, according to the Mortgage Bankers Association in Washington, D.C. It did not have state breakdowns. Cole estimated about half of the forbearances in Maine weren’t necessary, as many homeowners applied for them early in the pandemic when there was a lot of uncertainty about the economy.

When pandemic restrictions went into full effect in April 2020, “there was an immediate ‘oh no, what’s going to happen,'” Renee Smyth, chief marketing officer at Camden National Bank, said.

But with unemployment and stimulus benefits, she said the bank “did not experience what we thought we were going to a year ago.”

The strong economy and Maine’s comparatively low unemployment rate also were factors helping homeowners, Smyth said. Maine’s unemployment rate was 5.3 percent in June 2020, about half the U.S. total, and 4.8 percent this June compared to 5.9 percent for the country, according to state data.

Some homeowners still aren’t out of the woods though. About 5.6 percent of the more than 118,000 loans being serviced in Maine at the end of March were past due 30 or more days and 1.4 percent of the borrowers were in foreclosure, according to the Mortgage Bankers Association.

The delinquency rate of loans 30 days or more past due in Maine has declined to 5.6 percent in March from a pandemic high of almost 7.3 percent at the end of June 2020, the bankers’ association said.

Bangor Savings Bank is seeing a small rise in delinquencies, with $1.1 million worth of loans 30 days or more past due in June, Jim Donnelly, chief commercial officer at the bank, said. That’s up from $740,000 in June 2019. Still, the bulk of borrowers are paying on time, he said.

Bangor Savings, along with CUSO and Camden National, said they have not seen an uptick in foreclosures and are working through the forbearances to get borrowers into a payment program they can afford. Borrowers still must pay for the months when they delayed their mortgage payments. Lenders typically add those months onto the end of their existing loan and sometimes assess a fee.

Donnelly said Bangor Savings is only foreclosing on vacant or abandoned properties now as it observes the moratoriums. It had 11 active foreclosure cases as of June 2021, down from the 24 in June 2019.

Brit Vitalius, founder of Vitalius Real Estate Group in Portland, doesn’t foresee a wave of foreclosures in the fall because of the strong real estate market. June home sales in Maine were up 15 percent from the previous year and the median sales price statewide rose 25 percent to $210,000, according to Maine Association of Realtors figures released Thursday.

That’s quite different from conditions during the Great Recession, when the housing market crashed and many homeowners found they owed more than their house was worth, he said.

“The value is there. If an owner got into trouble, they can sell their house and probably make money because it’s up 20 percent from a year ago,” Vitalius said. That’s true across the state, as rural areas also are seeing strong home sales and prices.

The majority of borrowers who have exited a forbearance have already resumed their mortgage payments fully or modified their loan, Adam DeSanctis, spokesperson for the Mortgage Bankers Association, said. He agrees with Vitalius that many struggling borrowers can benefit from the rising equity and tight supply of homes.

“Moving is certainly a better option than the credit hit of a foreclosure on the borrower,” DeSanctis said.