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(From the Press Herald) – By Hannah Laclaire
While home foreclosures are on the rise across the United States, Mainers appear to be at less risk of losing their homes than residents in most other states.
About 95,712 homes nationwide, or one in every 1,459 properties, were subject to foreclosure filings during the first three months of 2023, according to Attom, a California firm that tracks property data.
In Maine, a total of 227 homes – one in every 3,250 – had foreclosure filings, ranking the state No. 10 among those with the lowest foreclosure rates.
South Dakota recorded the lowest rate, with just one foreclosure filing for every 15,535 homes, according to Attom.
Maine’s home foreclosure rate has also fallen much more steeply than the rates elsewhere.
The new data from Attom show the foreclosure rate in Maine fell 39% during the first three months of the year, compared to the same period last year. The 2023 first-quarter rate declined 37% from the last three months of 2022.
Nationally, the trend over the last three months has been far different. Attom said 22% more U.S. homes went into foreclosure during the first quarter of this year than a year ago, and nearly 6% more homes had filings than during the last three months of 2022.
Rob Barber, Attom’s Chief Executive Officer, attributed the trend to rising unemployment rates, other economic challenges and the end of some pandemic housing relief.
Foreclosures began to rise after an emergency federal moratorium on them ended in August 2021. A year ago, the foreclosure rate in Maine was soaring by double-digit percentages.
But now “people are paying,” said Lori Michaud, President of the Maine Association of Mortgage Professionals.
Michaud, who also is President and Chief Executive Officer of CUSO Home Lending, said that before the pandemic, the organization had between 20 and 30 foreclosures per year. Now that’s down to about 10.
Bangor Savings Bank closed out its most recent fiscal year March 31 with three foreclosures. In March 2020, on the eve of the pandemic, the bank had seven. Bangor Savings services about 19,000 real estate loans, spokesperson Jaclyn Fish said.
Trendspotting
As for why Maine is faring the foreclosure trend better than other states, there are a few theories.
Unemployment is low. The housing market is booming. And it’s actually pretty hard to foreclose on a property in Maine.
“Maine is a judicial state, so we (the lenders) have to go through a lot of red tape,” Michaud said. “We have to jump through so many hoops and everything has to be perfect. You have to make sure you’re dotting all the I’s and crossing all the T’s.”
Michaud estimated that the average foreclosure in Maine takes a little over a year, but it can be more. In New Hampshire, the process averages about 90 days.
“I think Maine is probably one of the worst” for how long it takes to close, she said.
Brittany Eaton, Collections Manager at Town and Country Federal Credit Union, said the credit union has been more proactive about interventions before a loan gets to the foreclosure stage, and that members have been open to conversations.
“People have been thinking in a different way since the pandemic,” she said.
The credit union’s foreclosure and delinquency rates are low, Eaton said, with very little change over the last few years. But she’s not ready to say more won’t be coming.
“In our world, every day seems to be different,” she said.
Todd Mason, President and Chief Executive Officer of the Maine Credit Union League, also is cautiously optimistic.
“While it is good that Maine is doing well compared to national foreclosure rates – and we hope that continues – care is needed with drawing too many conclusions,” he said.
Low Inventory, High Equity
One positive sign, Mason noted, is that Maine’s hot housing market is giving people more equity in their properties, which also might be providing a cushion against foreclosure.
“For many homeowners, Maine’s tight housing market has helped drive up the value of homes across the state,” he said. “In the event they do need to sell their home due to a financial hardship, they are more likely to be able to pay off whatever is left on their mortgage. While this will not prevent foreclosures from happening completely, it may prevent a wave of foreclosures from inundating the marketplace.”
Eaton, at Town and Country, said the credit union hasn’t foreclosed in this market, but historically, in situations with low inventory, houses have sold quickly. The auction process is often fast, with interest from people who want to flip homes to sell for a profit.
After nearly three years of nonstop price increases, Maine’s housing market has been showing signs of stabilizing for several months. High interest rates have curbed some of the more dramatic price increases, but the state’s limited inventory is preventing things from cooling completely.
Only 858 homes changed hands last month, a 16.78% decline from March 2022, according to data from the Maine Association of Realtors.
The statewide median sales price for homes sold last month was $337,500, a 3.85% increase over the price in March 2022, and a 2.5% increase from the month before.
The median is the price at which half the homes sold for more money and half sold for less.
Spring is a traditionally busy time for the housing market, and prospective buyers, adjusting to the higher rates, are back in the game, said Carmen McPhail, Association President.
But the inventory problem has kept prices high while also slowing some statewide growth, said McPhail, who is also an associate broker at United Country Lifestyle Properties of Maine. In five of Maine’s 16 counties, median sales prices declined between 2.5% and 10% during the first quarter of the year.
Nationally, sales fell 21% from March 2022, and prices fell by 1.4% to a median of $380,000, according to the National Association of Realtors. It was the second month in a row of declining prices.
Similarly, regional sales fell 21% last month from the year before, but the median price in the Northeast rose by 1% to $395,400.
According to mortgage buyer Freddie Mac, the 30-year fixed-rate mortgage averaged 6.52% in March. At such rates, affordable home ownership remains out of reach for many prospective buyers.
“Unless rates drop into the mid-5% range, demand will only modestly recover,” Freddie Mac said in a news release.
But in Maine, demand doesn’t seem to be the problem. Houses are being snapped up quickly.
Nationally, houses were on the market for 29 days, on average, down from 34 days in February. In Maine, houses were on the market for an average of 16 days last month, down from 27 days the month before. In southern Maine, houses sold even faster. Homes in York and Cumberland counties were only on the market for seven days, on average, according to data from Maine Listings.