The Maine Legislature recently passed LD 1418 on an emergency basis, requiring mortgagees to participate in mediation prior to seeking a foreclosure judgment. The new law requires mortgagees to notify homeowners of the availability of mediation and loan modifications when sending default notices and at the commencement of a foreclosure lawsuit. The mediation process requires the mortgagee to discuss all issues associated with the loan at mediation (both legal and financial issues) and to have a representative available during the mediation process with the authority to make decisions on the loan. The new foreclosure law requires the parties at the mediation to use forms and financial calculations associated with the affordability of mortgage loans available through the FDIC website.
The changes to the foreclosure laws also provide more protection to tenants of properties subject to foreclosure. At the commencement of a foreclosure, both the landlord and the mortgagee are responsible for the condition of the property. Tenants must be listed as "parties in interest" to any foreclosure lawsuit, and cannot be evicted from the property until the usual eviction process is followed under state law.
These changes to Maine's foreclosure laws will make it more likely that homeowners will retain their properties and result in more affordable home mortgages.