Maine foreclosures are judicial, which means they go through the court system. If you're a homeowner facing a possible foreclosure in Maine, you should educate yourself about federal mortgage servicing laws and state foreclosure laws, including:
You can find a summary of some of the main aspects of Maine foreclosure laws, as well as federal laws, below along with citations to the statutes so you can read the law yourself.
Under federal law, the loan servicer generally can’t start a foreclosure until the loan obligation is over 120 days' delinquent. (12 C.F.R. § 1024.41). Also, federal law requires servicers to work with borrowers who are behind in their monthly payments to try to avoid a foreclosure. The process of working out a way to prevent a foreclosure is called "loss mitigation."
Maine’s foreclosure laws are summarized below.
Again, foreclosures in Maine are judicial, which means the bank must file a lawsuit in court to foreclose.
The foreclosing bank provides three notices in a Maine foreclosure: a notice of right to cure, a complaint and summons, and a notice of sale. The borrower will also receive a notice from the Bureau of Consumer Credit Protection.
Notice of right to cure. The foreclosing bank must send a notice by both certified mail, return receipt requested, and first class mail about the borrower's right to cure. The borrower gets least 35 days to cure the default (make up the missed payments) before the bank can officially start a foreclosure. (Me. Rev. Stat. tit. 14, § 6111).
Notice from the Bureau of Consumer Credit Protection. After sending the notice of right to cure, the bank must file a statement with the Bureau of Consumer Credit Protection. The Bureau will then send a notice to the borrower that includes a summary of the borrower’s rights and available resources, including information about Maine’s foreclosure mediation program. (Me. Rev. Stat. tit. 14, § 6111).
Summons and complaint. To officially start the foreclosure, bank files a lawsuit in court and gives notice of the suit by serving the borrower a summons and complaint. The bank must attach a form to the complaint that the borrower may use to answer the complaint and to request mediation. (Me. Rev. Stat. tit. 14, § 6321-A). The borrower gets 20 days to file an answer to the complaint.
Notice of sale. After the redemption period (see below) expires, the bank publishes a notice of sale in a newspaper for three weeks. The bank also mails a notice of sale to all parties who appeared in the foreclosure action no less than 30 calendar days before the sale. (Me. Rev. Stat. tit 14, § 6323).
Maine law provides special protections against foreclosure to certain military service members and to borrowers who take out a type of loan that is called a “high-cost home loan.” (A high-cost home loan is a type of mortgage loan that has particular characteristics and the annual percentage rate or points and fees exceed certain amounts.)
Protection against foreclosure for certain military service members. Maine law provides certain military servicemembers (including state military forces on active state service) with the opportunity to stay (postpone) court proceedings. (Me. Rev. Stat. tit 37-B, § 389-A). (A federal law, the Servicemembers Civil Relief Act, also provides protections to military servicemembers who're facing foreclosure.)
Protections regarding high-cost home loans. Maine’s law imposes certain restrictions when it comes to high-cost home loans. For example, the creditor can't charge a prepayment penalty and cannot engage in flipping (that is, the making of a high-cost home loan to a borrower that refinances an existing home loan when the new loan results in little or no economic benefit to the borrower). If the creditor violates the law, the borrower can get damages. (Me. Rev. Stat. tit 9-A, § 8-506).
“Reinstating” is when you catch up on the defaulted mortgage's missed payments, plus fees and costs, to stop a foreclosure. Maine law provides the borrower the right to cure the default and reinstate the mortgage within 35 days after the bank gives the notice of right to cure. (Me. Rev. Stat. tit 14, § 6111).
In addition, the bank and the borrower may enter into an agreement at any time prior to the sale for the borrower to bring the mortgage current. The foreclosure will then be stayed so long as the borrower doesn't default again. (Me. Rev. Stat. tit 14, §§ 6321, 6323).
In some states, you can redeem (repurchase) your home within a specific amount of time after the foreclosure. But in Maine, the redemption period takes place before the sale. After the court issues a foreclosure judgment, there is a 90-day redemption period. (Me. Rev. Stat. tit. 14 § 6322). The bank then provides notice of the sale.
The borrower may redeem the home after the redemption period expires, but before the sale takes place, if the foreclosing party allows it. (Me. Rev. Stat. tit. 14 § 6323).
When the total mortgage debt exceeds the foreclosure sale price, the difference is called a “deficiency.” Some states allow the foreclosing bank to seek a personal judgment (called a “deficiency judgment”) against the borrower for this amount, while other states prohibit deficiency judgments with what are called anti-deficiency laws.
Under Maine law, the foreclosing bank may obtain a deficiency judgment in the same action as the foreclosure, but the court will limit the judgment to the amount established as of the date of the sale. (Maine Rev. Stat. tit. 14, § 6323). If the bank buys the home at the foreclosure sale, the deficiency is further limited to the difference between the fair market value of the property at the time of the sale and the total outstanding debt. (Maine Rev. Stat. tit. 14, § 6324).
In Maine, the foreclosing bank (typically the purchaser at the foreclosure sale) may get a writ of possession (an eviction order) against the foreclosed homeowners as part of the foreclosure action.
Consider talking to a lawyer if you want to get more information about foreclosure procedures in Maine or find out about potential defenses to a foreclosure. Moreover, it's a good idea to make an appointment to speak to a HUD-approved housing counselor to learn about different alternatives to foreclosure.