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Caroline Wentworth is trying to save her home in Buxton. She and her husband recently filed for bankruptcy in an effort to prevent foreclosure. Her adjustable rate pushed her mortgage payment from $1,200 to $2,000 per month.

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FALLING BEHIND: MAINERS COPE WITH THE SLOWDOWN

SUNDAY: Inflation in basic commodities of life -- especially food and fuel -- is squeezing many family budgets dry.

MONDAY: Mainers are falling behind on paying their car loan, utility and credit card bills.

TODAY: Foreclosure and mortgage delinquency rates have hit record levels in Maine.

WEDNESDAY: Small businesses are finding that Mainers don't think this is the time to be opening their wallets, and that has implications for the broader economy.

THURSDAY: Some individuals and groups are finding a silver lining in the slowdown.

FRIDAY: The next few months -- as Maine enters its crucial summer tourism season -- will reveal just how big an impact the economic climate has on jobs and overall economic activity.

FORECLOSURE PROCESS

THE FORECLOSURE process must follow a series of steps:

• First, a borrower needs to be given notice that a mortgage is in default and there are 30 days to cure the default.

• After that period, a foreclosure complaint is served, normally by a sheriff's deputy.

• A homeowner has 20 days to answer the complaint. If there's no response, a default judgment can be entered in the lender's favor.

• If the complaint is answered, a discovery period follows in which the homeowner can review documents from the lender. Mortgage-holders usually ask for summary judgment, but if the borrower raises valid issues that need to be resolved, the matter can go to trial. Those issues could include disputes over how much is owed, whether the loan is actually in default or whether the mortgage company engaged in predatory lending practices.

• If the judge rules in favor of the lender, a judgment of foreclosure is entered.

• The borrower has 90 days to exercise the right of redemption by paying back the full amount of the loan, plus legal costs and fees. The borrower can also attempt to sell the property during the period. The mortgage company could, but is not obligated to, agree to a "short sale," in which the home is sold and money turned over to the lender and part or all of any balance left is waived.

• If the property is not redeemed, the borrower may be evicted and the lender takes possession of the property and holds a public sale. The money goes to pay off the mortgage, then any lienholders. The borrower can object to how proceeds were distributed, but not to the sale itself.

Source: Pine Tree Legal Assistance

 

MORTGAGE TROUBLE

PORTLAND METROPOLITAN STATISTICAL AREA

Percent of mortgages at least 60 days past due

Dec. 2006

Subprime 12.11

Prime 0.73

Dec. 2007

Subprime 22.15

Prime 1.30

Percent of mortgages in foreclosure

Dec. 2006

Subprime 5.56

Prime 0.23

Dec. 2007

Subprime 10.91

Prime 0.43

 

Source: First American CoreLogic

 

Third of six parts

Maine isn't the kind of state where a drive through a large subdivision reveals home after home up for foreclosure sale.

Instead, the foreclosure problem in Maine reflects the spread-out nature of the state -- a house here, another there, a few more a couple of miles away.

But the lack of visibility doesn't blunt the impact of the mortgage crisis that has washed over Maine, much as it has the rest of the country.

Nearly a quarter of Mainers with subprime mortgages -- the type of loans extended to people with less attractive credit histories -- are at least 60 days behind in their house payments. And nearly one in eight subprime borrowers is in foreclosure, the months-long, agonizing process of losing a home.

Mainers with good credit histories and prime loans also are falling behind on mortgages and facing foreclosure at a much higher rate than in the past.

The increasing pace of foreclosures is a symptom of an ailing economy. It is also one of the chief causes of the economic stress that threatens to become a recession -- or, more likely, already has.

The current economic upheaval is falling largely on the shoulders of the American homeowner.

The drive to pull equity from homes in the early part of this decade led homeowners to refinance, often with adjustable rate mortgages that are now "resetting" to higher interest rates. Relatively easy credit lured others to buy homes they couldn't really afford, using mortgages that featured interest-only payments or waived income verification in exchange for higher rates.

And Wall Street compounded those less-than-wise individual financial decisions by packaging loans together as the basis for bonds -- which plummeted in value as borrowers fell behind on their mortgage payments.

The fallout has rippled through financial markets, scared off investors and rattled business executives. It's also wreaking havoc on families like Caroline Wentworth's.

"I've been through the worst nightmare in my life in the past year," said Wentworth, of Buxton, "and it's not over yet."

Wentworth's rising mortgage bills pushed her to file for bankruptcy, and she's among a growing number of Mainers struggling to hang on to their homes as the country slips into a near-certain recession.

Already, a record number of Maine homes are in foreclosure. Thousands of homeowners are on the same track as mortgage delinquency rates climb -- doubling in the last year among sub-prime borrowers -- and the number of adjustable rate resets remains high.

The number of homeowners turning for help to agencies such as Pine Tree Legal Services is "off the charts," said Chet Randall, a staff attorney and coordinator of a foreclosure- prevention project.

The state's rural nature and lack of large subdivisions may mask the extent of the problem, Randall said, but it's as bad in some parts of Maine as in Florida and California, states that are the poster children of the mortgage crisis.

"The idea that we would somehow avoid the problem or that it would not happen here has proven to be a fallacy," said William N. Lund, superintendent of the Maine Bureau of Consumer Credit Protection.

The Maine numbers are sobering. The percentage of borrowers with subprime mortgages that are 60 days or more past due or in foreclosure stood at 23.8 percent statewide in December, according to data compiled by First American CoreLogic, a mortgage research firm.

A year earlier, the percentage was 13.8 percent.

According to the data, 11.9 percent of Maine homes paid for with a subprime mortgage were in some stage of foreclosure in December, up from 6.2 percent in December 2006.

Even homeowners with prime mortgages -- those who have better credit -- are struggling to make house payments. Delinquencies on those mortgages were 1.63 percent in December, up from 1.07 percent for the same month in 2006,...