Foreclosure in Maine

How a Maine foreclosure works, step by step

1. Generally, the legal foreclosure process can't start until you're at least 120 days behind.
2. Your lender sends a letter saying how much you must pay, and by what deadline, to get back on track. It must give you at least 35 days. It goes to your last known address by certified mail, return receipt requested, and by regular first-class mail.
3. Within 3 days of mailing that notice, the lender must report certain information to the state's Bureau of Consumer Credit Protection. The Bureau then sends you a letter with a summary of your rights and resources, including information on foreclosure mediation.
4. If you don't catch up by the deadline, the lender can sue to foreclose in the Superior Court or the District Court where the home is. You may be served in person by a sheriff, or by mail if you sign and return a receipt. Within 60 days of starting the case, the lender must record a copy of the complaint, or a clerk's certificate of filing it, at the registry of deeds.
5. To fight the foreclosure or ask for mediation, you must file a response with the court within 20 days.
6. If you asked for mediation, you go to an Informational Session first, then mediation. If the case doesn't settle there, it goes back on the court's docket.
7. If the court enters judgment for the lender, a 90-day period of redemption begins, unless an appeal is filed. You can stay in the home during this period.
8. If you don't redeem by the end of that period, your remaining right to possession ends. The lender must then publish a notice of the sale once a week for 3 weeks in a newspaper in your county, starting no more than 90 days after the redemption period ends.
9. The public sale must be held 30 to 45 days after the first newspaper notice. The home goes to the highest bidder, who gets the deed.
10. After the sale, the lender must file a report of the sale and where the money went with the court, and mail you a copy.

The Foreclosure Diversion Program

Maine's courts run the Foreclosure Diversion Program. It offers mediation if you ask for it, live in the home, and it's your primary home. You ask for it by filing a response with the court within 20 days. Before your first mediation, you attend an Informational Session.

• The lender must take part in person, through someone who has the power to agree to a settlement, a loan modification or dismissal of the case.
• For cases scheduled for mediation, the court can't issue a final judgment until the mediator's report is done.
• The courts say about 60% of cases mediated since the program began in 2010 have been dismissed, which means they ended without a foreclosure.

Mediation is your best chance to put real numbers in front of someone with the power to say yes. Talk to a housing counselor before you go.

Catching up and paying off

If you pay what the cure notice asks before its deadline, you're restored to all your rights under the mortgage, as if the default never happened.

• Once the case starts, if the lender accepts any payment from you, even a partial one, the foreclosure is cancelled, unless you both agree in writing that it isn't.
• You and the lender can agree to pause the foreclosure while you catch up, as long as you make the agreed payments.
• After judgment, if you pay the amount the court found due, with interest, during the redemption period, the lender must discharge the mortgage.
• Once the redemption period ends, the lender may still choose to let you redeem or reinstate the loan before the sale, but it doesn't have to.

The public sale

The notice must give the time, place and terms of the sale, and it runs once a week for 3 weeks in a newspaper in the county where the home is. The lender and other parties in the case can bid. The lender sells to the highest bidder and delivers the deed.

How long it takes

Foreclosure generally can't legally start until you're at least 120 days behind. Once it starts, how long you have until the sale depends on your state.

For FHA loans, HUD's time frame runs from the first legal action until the lender has clear title to the home and possession of it. In Maine, that's 27 months, and the first legal action is a court complaint.

Maine's courts say a foreclosure case usually takes several months or more. The law's own markers are at least 35 days to cure, 20 days to respond to the complaint, 90 days to redeem after judgment, and a sale 30 to 45 days after the first newspaper notice.

These are official markers, not a forecast. Your case can move faster or slower, so don't count on extra time.

Deficiency, surplus and redemption

If the sale brings less than you owe, the court assesses the shortfall, called a deficiency, against you. If the lender bought the home at the sale, the deficiency is limited to the gap between what the court found due, plus interest and sale costs, and the home's fair market value from an independent appraisal. If the lender files its report of sale late, it loses the right to seek a deficiency judgment.

If the sale brings more than is owed, the extra money, called the surplus, must be paid to you. If you never appeared in the case, the surplus goes to the clerk of courts, who holds it for you for 6 months.

Your right to redeem runs for 90 days after the judgment, before the sale, and you redeem by paying the amount the court found due, with interest.

Protections when you sell, lease or get offers

Maine's Foreclosure Purchasers Act covers deals where title to your home in foreclosure is transferred, and you get an interest back, or a promise of one, that lets you stay, such as a lease, an option to buy or a contract for deed. A foreclosure purchaser must have a state license.

• You must get the contract at least 3 business days before the deal closes.
• You can cancel until midnight of the fifth business day after you sign, or until 8:00 a.m. on the last day of your redemption period, whichever comes first.
• The buyer must get a certificate that you received counseling from an approved nonprofit counselor about the deal.
• If the home isn't conveyed back to you, the buyer must pay you at least 82% of its fair market value, less mortgage payoffs, within 150 days after you leave.
• The buyer can't claim to be your advisor or consultant.

• A land installment contract must say that it isn't a mortgage and that the buyer doesn't get title until the price is paid in full.
• If a buyer under a contract for deed defaults, the seller can foreclose at least 30 days after giving notice, and the buyer gets a 60-day redemption period.

Two of these could touch how I buy. If a seller-financed deal is set up as a land installment contract, those rules apply. And if any deal would let you stay in the home after you sell, the Foreclosure Purchasers Act is the law to read first. Don't stop talking to your lender while you weigh any offer, including mine.

Free help in Maine

• Maine Judicial Branch: Foreclosure Diversion Program. Mediation includes you, the lender, the lawyers on the case and a neutral mediator.
• Maine Judicial Branch: foreclosure step by step. The courts' own walk-through of a foreclosure case.
• Maine Bureau of Consumer Credit Protection: Foreclosure Prevention Program. The state's page on its foreclosure prevention program.
• MaineHousing: trouble making your mortgage payment?. MaineHousing borrowers who lose a job may qualify for Maine HOPE, the HomeOwnership Protection for unEmployment plan.
• CFPB: find a housing counselor. Search HUD-approved counseling agencies in Maine.