A bill entitled “An Act to Expedite the Foreclosure Process” LD 1389 was signed by the Governor on April 5, 2014 and it takes affect August 1, 2014. The law was passed after a comprehensive study and report was issued by the Attorney General Janet Mills. Attorney Bopp Stark was part of the Attorney General’s commission to study the Maine judicial foreclosure process. Attorney General Mills found that many aspects of Maine’s foreclosure laws work well and do not need change. She commended the effectiveness of the Maine Foreclosure Diversion Program that provides mediation for homeowners who live in the home being foreclosure on. A.G. Mills also recognized that the foreclosure crisis is not going away and there were about 400 more foreclosure filings in 2013 than 2012.
One issue raised during the study involved the time it takes to complete a foreclosure on a property in Maine. The research done around this issue showed, however, that the timing of foreclosures is largely in the hands of the lenders foreclosing. Many times lenders will not file a foreclosure after the homeowner has been in default for many months or even years. There are court procedures which would allow a lender to file a motion if the mediation fails and get a judgment without a trial but many have been unable to complete the basic rules to win such a motion. Then, many lenders wait months or even years after getting a judgment to auction off the property. Lenders claim these delays benefit homeowners by allowing them to live for “free” for months or years in the home but for most homeowners, it creates severe anxiety and uncertainty living each day wondering if they will be able to stay in their homes or when they will have to leave. The time can provide a benefit to both sides, however, as it allows lenders and homeowners to work together to find a solution to the foreclosure. With the many loan modification programs available for homeowners, the time provided can be a lifeline to saving their homes.
The new law will allow lenders to move more swiftly on properties that they can prove have been abandoned and are vacant. The lender has to show that several elements have been met including:
- The homeowner has not answered the foreclosure complaint,
- The homeowner has not communicated with the lender for 90 days,
- There exists evidence of abandonment showing the property is vacant. These include doors and windows that are boarded or broken, trash has accumulated on the property, the house is not being kept up, and the locks have been changed by the lender and the homeowner has not complained.
The court has to find by clear and convincing evidence that the property has been abandoned. The homeowner or lawful occupant can oppose this at any time, even after judgment enters. If lenders can meet this burden, they can ask the court for a quicker judgment and also a reduced time for the homeowner to redeem the property from 90 days to 45 days.
The new law also supports and strengthens the mediation program, allows the State to regulate property-preservation entities, and provides a provision to provide more desperately needed funding to HUD-certified housing counselors to assist homeowners with loan modification applications.