Home Foreclosures Continue to Increase but Delinquent Mortgage Loans Decrease at Maine Banks and Credit Unions

GARDINER, MAINE – Bureau of Financial Institutions Superintendent Lloyd P. LaFountain, III announced this week that first quarter 2010 data submitted by Maine-chartered banks and credit unions shows a continuing increase in completed home foreclosures in Maine.

However, the inventory of mortgage loans in the foreclosure process declined for the first time since the Bureau began surveying state-chartered financial institutions in 2006.  Further, the number of delinquent mortgage loans also declined in the first quarter.

In general, foreclosure activity at Maine banks and credit unions remains lower than in many other states and does not pose a threat to the stability of Maine-chartered financial institutions.  While there is modest improvement in several of the first quarter 2010 data compared to fourth quarter 2009 data, the current data are still comparatively high.

Regarding new home loans, the survey revealed that after experiencing a substantial increase in 2009, the number of newly initiated first mortgage loans fell from the prior quarter–down 24%, with sales of existing homes falling 43% during the same period.

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

According to first quarter survey results, the 32 state-chartered financial institutions held 84,991 mortgage loans at the end of March, consisting of 49,087 first mortgage loans and 35,904 junior lien mortgage loans (including home equity lines of credit).

Of the 84,991 loans, 289 (226 first mortgages and 63 junior lien mortgages) were in process of foreclosure (IPF), or one loan for every 294 mortgages (one for every 217 first mortgages).  At the end of the fourth quarter of 2009, 305 loans were in IPF status.  This represents the first quarterly decrease in IPF, since surveying began.  As a percentage of total mortgages, IPF loans remain relatively low, 0.34% at the end of the first quarter (down from 0.36% at the end of the fourth quarter of 2009).

IPF 12/06 12/07 12/08 3/09 6/09 9/09 12/09 3/10 # Loans
1st REM 62 120 148 177 185 200 226 226 49,087
Jr. REM 20 35 65 63 75 71 79 63 35,904
All REM 82 155 213 240 260 271 305 289 84,991
1st REM 0.15% 0.26% 0.30% 0.36% 0.38% 0.41% 0.46% 0.46%
Jr. REM 0.08% 0.12% 0.17% 0.17% 0.20% 0.19% 0.22% 0.18%
All REM 0.12% 0.20% 0.24% 0.28% 0.30% 0.32% 0.36% 0.34%

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 first quarter of 2010, foreclosure proceedings were started on 85 first mortgages, 0.17% of all outstanding first mortgages, or one for every 577 first mortgages.  This represents a noticeable decrease from the prior quarter.  However, foreclosure proceedings initiated on junior mortgages increased during the quarter.

Foreclosures Initiated 3/08 6/08 9/08 12/08 3/09 6/09 9/09 12/09 3/10
# 1st REM 45 35 62 59 65 61 76 103 85
% 1st REM 0.09% 0.07% 0.13% 0.12% 0.13% 0.13% 0.16% 0.21% 0.17%
FC Start/1st REM 1,060 1,362 794 839 756 800 639 473 577
# Jr. REM 26 14 26 20 16 27 22 20 25
% Jr. REM 0.07% 0.04% 0.07% 0.05% 0.04% 0.07% 0.06% 0.05% 0.07%
FC Start/Jr. REM 1,424 2,709 1,449 1,877 2,319 1,371 1,669 1,833 1,436

The Bureau also requests data on completed foreclosures (FC).  The table below shows numbers increasing from 52 in 2006 to 67 in 2007.  In 2008, that number jumped to 159 and increased further in 2009, to 175.  Completed foreclosures in the first quarter of 2010 totaled 76 mortgages, 0.089% of outstanding mortgages, with the majority of the increase occurring in junior mortgages.  This represents a substantial increase from the fourth quarter of 2009, but the overall number of FC, though rising, remains low, especially in relation to the total of outstanding mortgages – only one for every 1,123 mortgages and one for every 1,082 first mortgages.

FC 2006

*

2007 ** 2008

**

3/09 6/09 9/09 12/09 2009

**

3/10
1st REM 50 52 119 21 35 33 37 126 45
Jr. REM 2 15 40 17 5 22 5 49 31
All REM 52 67 159 38 40 55 42 175 76
% of Prior Quarter-end Loans
1st REM 0.12% 0.12% 0.24% 0.042% 0.071% 0.068% 0.076% 0.26% 0.092%
Jr. REM 0.01% 0.05% 0.11% 0.045% 0.013% 0.059% 0.014% 0.13% 0.085%
All REM 0.07% 0.09% 0.19% 0.044% 0.046% 0.064% 0.049% 0.20% 0.089%

*     Annual percentage is based on number of loans outstanding at 12/31/06;

**    Annual percentage is based on average number of loans outstanding in the year.

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

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.

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