The rule, which was adopted in 2019, limits the amount of fees creditors can collect on defaulted residential mortgages. It also sets timelines for repayment and gives borrowers more time to catch up on their payments before foreclosure can occur. Critics argue that the rule makes it too difficult for lenders to get their money back in a timely manner, while supporters of the rule say it helps keep people in their homes.
The idea to reconsider the rule was proposed by Republican state Representative Holly Stover. She believes there needs to be a balance between giving borrowers sufficient time to make good on their loans and making sure lenders are able to recover their investments. The bill would create an opportunity for lenders to have more options in dealing with delinquent borrowers, such as entering into forbearance agreements or restructuring loans.
Stover also proposed increasing the amount of fees creditors can collect from delinquents. Currently, Maine’s rule caps fees at the amount of principal and interest due within three months of the delinquency date. Stover wants to increase the cap to six months. Supporters of the change argue that this would give lenders more leeway in getting their money back, while opponents suggest that it would work against borrowers who need more time to catch up on payments.
There is also a proposal to allow lenders to foreclose without having to go through court. This would make it easier for lenders to start the foreclosure process, but opponents say it could lead to quicker and more aggressive foreclosures, potentially exacerbating the housing crisis in Maine.
In addition, the new rules would also extend the amount of time it takes for delinquents to be evicted from their homes. Right now, it can take 30 days, but Stover's proposal would increase that to 60 days. This would give borrowers more time to make good on their debt, but it would also mean longer waits for lenders.
If the proposed changes are approved, they would represent a major shift in Maine’s foreclosure laws. The current rules have helped protect borrowers from aggressive foreclosure tactics, but some argue that they have gone too far in that direction. The proposed changes could provide some much-needed balance between lenders and borrowers while still making it difficult for lenders to unjustly repossess homes.
This article was contributed on Dec 10, 2023
