Staff Writer 

It is a lot easier to find Suzan Smith’s Hollis home than it is for her to find who controls the mortgage on it.

For more than eight years, Smith, 62, has lived in a two-story, three-bedroom home with dormers and a woodstove, a new roof and windows and a repaved driveway.

Smith loves the woodstove and is proud of the paved driveway.

“The woodstove made me want to buy the house. Before the driveway was paved, we had so much dirt in here it was pathetic,” Smith said.

Now Smith is packing her things and preparing to move. Facing foreclosure proceedings, she has put her home on the market.

Smith’s cousin Kathy Rollins lives nearby. She is also facing foreclosure on the home she shares with her boyfriend and expects to move into a mobile home once their three-bedroom home on five acres is sold. 

Court records at Biddeford District Court list One West FSB, based in San Diego, as the lender holding Smith’s mortgage. Unaware that the foreclosure was filed this month, Smith had been trying to work with Kalamazoo, Mich.,-based Indy Mac to try and stave off losing her home, and said she did not know when One West took over her mortgage.

Smith said she called Indy Mac last September after missing a payment and spent 18 minutes on hold. Smith said she could not reach anyone else at Indy Mac until March, when a company representative said they could not help her.

That call came as Indy Mac sent Smith a letter explaining it could not accept payments on her mortgage unless they were made by certified check or money orders. With the letter were returned money orders worth $750.

Rollins knows who controls her mortgage – it is Countrywide Financial, which was sold to Bank of America last fall. She says the company initiated a foreclosure on her home about a year and a half ago and has refused to work with her on refinancing the more than $348,000 she owes.

Real estate agent Ann Cowan has been working with Rollins and Smith as they try and sell their homes. She can attest to the difficulties they have had even reaching someone to talk to about the foreclosures.

“It is almost like the left hand does not know what the right hand is doing,” Cowan said. “I have to mentally psych myself up to make the calls.”

Rollins was more succinct.

“You get tired of talking to educated idiots,” she said.

Rollins and Smith are experiencing the kind of difficulties that led state Rep. Sharon Treat (D-Hallowell) to introduce legislation requiring mandatory mediation for Mainers threatened with foreclosure.

Treat’s bill, LD 1418, will require mediation in hopes of finding refinancing or better payment arrangements for consumers. It also will require lenders to list the name, address and phone number of “persons having authority to modify a mortgage loan” on foreclosure documents.

Also, the bill will expand the number of days a lender can demand the full balance of a mortgage after filing a notice a default from 30 to 35 days and prohibit anyone buying a foreclosed property from automatically evicting tenants.

“There are very responsible homeowners trying to stay in homes but unable to find out who to talk to,” Treat said.

An additional problem is homeowners often do not know their legal rights when facing foreclosure, Treat said.

Chet Randall, an attorney with Pine Tree Legal Services, agreed, and added that mortgages sold as asset-based securities from investment banks often leave the most convoluted paper trails when trying to avert foreclosure. 

‘The layering of responsibility has created an additional challenge,” Randall said.

Treat’s bill was the subject of legislative hearings in early May and referred unanimously to the Legislature by its 13-member Insurance and Finance Committee May 18. Treat said she expected the bill to be voted on in the Maine House and Senate this week.

Treat said the bill is an extension of the work she did on a predatory lending bill passed by the Legislature last year and research of similar laws in Connecticut and Ohio showing homeowners can avoid losing their homes about 50 percent of the time after mediation with lenders.

“Many cases are not far away from resolution,” Randall said. He estimates more than 50 percent of foreclosures are unnecessary. 

Once lenders realize mediation is a legal requirement, “they will adjust their culture,” Randall said.

In York County, clerks say there have been 233 foreclosures filed in Springvale District Court, 190 in Biddeford District Court and 80 in York District Court this year through May 20. Statewide, Randall said he expects 6,000 foreclosure petitions to be filed this year, an increase from the more than 5,200 filed in 2008.

Court documents show a foreclosure comes after a lender is unsuccessful getting payments on a mortgage and has filed a notice of default allowing the lender to ask for the total amount owed in a lump sum.

Randall said a homeowner should call their lender at the first sign they might not be able to make payments. 

In a foreclosure, a lender asks a judge to order the property be sold at auction to pay the outstanding debt after a consumer has missed payments and a notice of foreclosure has been filed.

The lender will seek payment for the loan principal, accrued interest, late charges, escrow advances and other fees.

Without mediation, Cowan said her advice to homeowners facing foreclosure is “sell the house as soon as possible and be realistic on the price.”

In 11 foreclosures filed at Biddeford District Court since the beginning of May, 10 were filed by out-of-state banks, including three each by Bank of America and Wells Fargo. Eight of the foreclosure filings involve mortgages the current lender purchased from the original mortgage company, and three mortgages were contained in asset-backed securities sold through investment banks.

Three mortgages were adjustable rate mortgages, one of which could ultimately have charged a borrower more than 15 percent interest for a 30-year mortgage. Foreclosure petitions filed by Bank of America and Wells Fargo Bank seek additional interest charges of more than $35 and $24 per day against borrowers “from sale date.” Those sale dates are June 2006 and May 2005, respectively. 

Smith’s loan, which was initiated through Quicken Loans, was an interest-only loan for the first 10 years – meaning none of the $149,000 principal would be paid during the first decade of the loan.

Smith said it was her generosity that led her to the loan, as she was refinancing an earlier loan she had obtained in 2004 to help a former boyfriend pay off some of his debts.

When the relationship ended, Smith said her daughter offered to move in, and help pay for a new loan, provided the loan could be used to help her buy a car. Then her daughter moved out, and Smith, who receives Social Security disability, was left with the payments.

“I’ve got one of those neon signs on me that says sucker,” Smith said.

Rollins, 61, said she first began missing payments on the mortgage when she could not work because her car broke down and she could not afford to repair it. She lost her job delivering displaced luggage from Manchester, N.H., Airport to customers and called Countrywide to see about refinancing her loan.

At Pine Tree Legal Services, Randall said services are available to those with a maximum household income of $41,000. But information on how to combat a foreclosure proceeding is free and available at Pine Tree Legal’s Web site, www.ptla.org. 

The Pine Tree Legal Services office in Portland can be reached at 774-8211. York County Community Action Corporation in Sanford also provides homeowner counseling including foreclosure protection and can be reached at 324-5762 in Sanford and (800) 965-5762 in York County.

The information includes the template for a response letter to be filed in court in response to a foreclosure petition.

Staff writer David Harry can be reached at 282-4337, ext. 241

Some tips to avoid foreclosure:

- If you are having trouble making payments, call your lender immediately and ask about “workout plans” to reduce interest or extend the length of your mortgage.

- If payments are more than expected, get legal help to investigate possible predatory lending. Visit www.ptla.org or call 774-8211 for assistance from Pine Tree Legal Services in Portland.

- Homeowner counseling services are available at York County Community Action Corporation in Sanford. Call 324- 5762 in Sanford or (800) 965-5762 from York County for more information.

- If a notice of default has been filed, save your mortgage payments in a separate account.

- Get legal help and create a file including pay stubs, income verification, mortgage documents and bank statements from the last three months. Visit www.ptla.org for the full list of needed file contents.