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FOR IMMEDIATE RELEASE 

July 31, 2008

 

Contact: Lloyd P. LaFountain III, Superintendent
Maine Bureau of Financial Institutions
207-624-8575

Bureau of Financial Institutions Finds Low Foreclosure Numbers at Maine Banks and Credit Unions

Foreclosures Trending Upward but Numbers Remain Relatively Low and
Do Not Threaten State-Chartered Banks or Credit Unions

AUGUSTA, MAINE – Superintendent Lloyd P. LaFountain, III announced on Thursday that a recently completed study by the State’s Bureau of Financial Institutions shows an increase in home foreclosures in Maine—but also indicates that foreclosure numbers remain relatively small and do not pose a threat to the stability of state-chartered banks and credit unions.

The study analyzed survey data on residential real estate lending from all 34 Maine-chartered financial institutions from October 2006 through March 2008.  Additionally, several federally-chartered banks and credit unions operating in Maine voluntarily provided responses to survey questions concerning this 18 month period of loan activity.

“The data show a rise in completed foreclosures, as well as loans in which the foreclosure process has been initiated,” Superintendent LaFountain commented.  “While troubled residential loans present substantial problems for impacted borrowers, the total remains nominal in terms of all mortgages held or serviced by responding Maine financial institutions and does not currently pose a threat to banks or credit unions in our State.”

According to the study, Maine’s 34 state-chartered financial institutions held nearly 88,000 mortgage loans, consisting of more than 49,000 first mortgage loans and approximately 38,000 junior lien mortgage loans (including home equity lines of credit). 
Of the 88,000 loans, 166 (126 first mortgages, 40 junior lien mortgages) were in process of foreclosure (IPF), or one loan for every 528. 

The Bureau also requests data on completed foreclosures (FC).  The number increased from 52 in 2006 to 67 in 2007.  For the three months ending March 31st of this year, there were 28 completed foreclosures, up from 25 for the prior three months.  Based on 88,000 mortgage loans, the 28 completed foreclosures represent one for every 3,130 loans.

In addition to “holding” loans on their balance sheet, financial institutions also “service” loans--typically ones they originated and sold to a third party but continue to play a role by processing the payments.  As of March 31st, Maine-chartered financial institutions serviced 11,550 first mortgage loans, of which 12 were in process of foreclosure, or one for every 963 loans.  In both 2006 and 2007, completed foreclosures of serviced loans totaled 9 each year.  For the three months ending March 31st of this year, there were 5 completed foreclosures, or one for every 2,311 loans.

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Although only limited data was collected from federally-chartered financial institutions, the data from those responding likewise show a modest trend toward more foreclosures in Maine.

The Bureau conducted an initial survey in October 2007 in preparation for a report to the Legislature on the status of mortgage lending in Maine, as required by the “Act to Protect Maine Homeowners from Predatory Lending.”  The data collected in the Bureau’s surveys are limited to Maine financial institutions, and primarily Maine state-chartered institutions.  Results may therefore differ from those presented by  national organizations such as RealtyTrac, the Mortgage Bankers Association (with  nearly 143,000 first lien mortgages in Maine) or First American CoreLogic (with approximately 15,000 subprime and Alternate-A owner-occupied first mortgages in Maine). 

More information on the status of residential real estate lending by Maine’s financial institutions is available in the Bureau’s 2008 Annual Report to the Legislature, which can be found at www.maine.gov/pfr/financialinstitutions/reports/pdf/legrep2008.pdf.

The Bureau of Financial Institutions is part of the Department of Professional and Financial Regulation, which encourages sound ethical business practices through impartial and efficient 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.
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Last Updated: September 15, 2011