Foreclosure

In Maine, foreclosure is a type of court case generally brought by a lender to sell a borrower's (homeowner's) home to satisfy a debt. In a foreclosure case, the homeowner is the "defendant" and the lender is the "plaintiff."

A foreclosure case usually takes several months or more to complete. Simply filing a case does not allow a lender to take possession of the home or require a homeowner to move out. There are often ways to settle the case before it is completed.

If you are a Maine homeowner who lives in a 1-4 unit property that is in foreclosure, you have the right to request mediation through the Foreclosure Diversion Program.

Foreclosure Step by Step

Step 1: Notice of Default Letter

If a homeowner falls behind in paying the mortgage, the lender sends a letter to the homeowner saying how much must be paid by a certain deadline (giving at least 35 days) in order to get back on track and avoid foreclosure. This is called a "notice of default and right to cure" letter (default letter). See 14 M.R.S. § 6111.

Please note: if the homeowner tries to pay after the deadline, the amount needed to catch up will be more than the amount the default letter requires because more will be needed after the deadline. Even if the lender accepts the default letter amount after the deadline, the homeowner will still be behind in monthly payments and/or the total amount due. 

Step 2: Foreclosure Summons & Complaint

If the homeowner does not catch up by the deadline in the default letter, the lender may start a foreclosure action by "serving" the homeowner with a foreclosure summons and complaint.  The homeowner may be served in person by a sheriff, or by mail (if the homeowner signs and returns a receipt of the mailed complaint).

Once a foreclosure case has started, if the lender accepts any payment from the homeowner, even for less than the full amount owed, the foreclosure is cancelled (unless the parties agree in writing that it is not). Because of this, it is not uncommon for homeowners who try to send in checks after they have been served to have those checks returned. See 14 M.R.S. § 6321 ¶ 5.

The foreclosure court papers contain important information, including:

• The location and address of the court where the case has been filed;
• The clerk's office telephone number;
• The amount claimed to be owed; and
• A Response to Complaint and Request for Mediation form for the homeowner to return to the court within 20 days.

Step 3: Homeowner's Response

To object to a foreclosure or to request mediation, a homeowner must respond to the complaint within 20 days by filing a response with the court. There are several ways to do this. The homeowner's response may be:

• A court document called an "answer" prepared by an attorney or by the homeowner;
• The one-page Response to Complaint and Request for Mediation form. This form is also included with the foreclosure papers; or
• Another form of written request for mediation.

Even if the deadline has passed, a homeowner may still contact the court or send in a response to the foreclosure complaint.  

Step 4: First Call Day and Mediation

If you have requested mediation, the clerk's office will mail you a notice of when and where to come for an Informational Session and first mediation session ("First Call Day"). Please note: the location may be different from the court where the foreclosure case was filed. Learn more about foreclosure mediation.

If you are unable to come to First Call Day (or any court event) on the date scheduled, you must ask the court in writing to change your date.

Step 5: Foreclosure Case is Settled OR Goes Forward "On The Docket"

You may be able to settle your case in mediation (or at any other point in the process). If your case is settled, you may ask the court for a "stay" (pause) until any steps needed to finish the case are completed. If no additional steps need to be taken, the parties can ask the court to close the case (sometimes called a "Stipulation to Dismissal"). Then the case is over. 

Some settlement options you might discuss in mediation include:

• A "loan modification."  (A change in the terms of the loan so the homeowner can afford the payment.)
• Setting up a "repayment plan." (This is where the homeowner pays a part of the back payments on top of the regular monthly payment for a set period of time until payments are up to date.) 
• A "short sale."  (Where the parties agree that the home is to be sold for less than is owed, with the sales proceeds going to the lender in exchange for the foreclosure being dropped (dismissed).) 
• Giving a "deed in lieu of foreclosure." (The homeowner gives a deed to the property to the lender in exchange for the lender dropping (dismissing) the case.)

If the case is not settled before or during mediation, it is returned to the court docket (a list of cases the clerk's office manages). The case then moves forward.  Each side is allowed a certain amount of time to gather information ("discovery") and/or make requests of the court for orders or rulings ("motions"). After discovery and motions are completed, the case is scheduled for trial. The parties may settle the case at any point before, or even during, trial.

Step 6: Conclusion of the Case

Dismissal: This is when the case is canceled. Parties can agree to ask for a case to be dismissed, or a judge can order a dismissal when one party asks for it and the judge agrees that dismissal should be granted.

Judgment: After a trial, the court orders judgment for the plaintiff or judgment for the defendant. The party against whom judgment is entered can file an appeal within 21 days of entry of judgment. The parties can also agree to a judgment (a "Stipulation to Judgment"), which cannot be appealed.

Step 7-Post Judgment, "Period of Redemption," and Public Sale
When judgment for the plaintiff (lender) is entered, a 90-day "period of redemption" begins unless an appeal is filed. This means the homeowner has 90 days to pay the full amount of the judgment to "redeem" (save) the property.  The homeowner can stay in the home during this period.
 
After the 90-day redemption period is over, if the homeowner has not paid the amount in the judgment to redeem the property, the lender can then take possession of the property and go forward with a public sale. The lender is allowed to bid on the property at the public sale. See 14 M.R.S. § 6323.