Mar 082017

The following article is reprinted with permission from “State News Updates” — an e-newsletter from Representative Paul Stearns, District 119.

Foreclosure Diversion Program

The Foreclosure Diversion Program (FDP) in the Maine courts gives lenders and homeowners in foreclosure a chance to explore other options and work out their differences.  In mediation, both parties, with the help of a neutral mediator, talk about whether it is possible to avoid a foreclosure on the property.  Some other options include a loan modification or short sale.

To participate in mediation, a homeowner must live in the home, and the property must have no more than four (4) units.  When a qualified homeowner in foreclosure requests mediation, the case enters the FDP.  Homeowners attend an informational session, where a judge explains the court process and a housing counselor or legal services attorney explains more about working with lenders to modify loans.  The homeowner attends the first mediation session on the same day.

At mediation, the homeowner(s) and their attorney(s), if they are represented, meet with the lender and the lender’s attorney.  A mediator is present to help the parties to make sure that everyone is heard and that important issues are discussed.  The mediator submits a report about the mediation to the court.  Sometimes parties return at a later date for another mediation session.

How Do I ask for mediation?

All requests for mediation must be in writing and given or sent to the court clerk.  A copy of the request must also be given or sent to the attorney for the lender.  Homeowners can request mediation by using the one-page Answer form attached to the foreclosure complaint, by filing an Answer without the form, or by writing a letter to the court to ask for mediation.

How Do I prepare for mediation?

Homeowners can call the Bureau of Consumer Credit Protection’s foreclosure hotline:  1-888-664-2569 to discuss the situation, to find a housing counselor, or to be directed to legal assistance.  In addition, the best preparation is to decide on your goals.  Do you want to stay in the house?  Do you have money to pay for it?  Lenders can best prepare for mediation by knowing the status of the loan, having all documentation of the loan in order, and by bringing any forms required for review of the loan to mediation, even if the forms were previously provided with the complaint.  Lenders should know what options for loan modification apply in each situation and should have obtained a reasonable fair market value of the property.

What is the benefit of mediation?

Parties have a chance to talk with each other in an informal setting.  The mediator is impartial and is trained to help parties discuss issues and explore options.  New ideas for settlement may come up at mediation that neither party knew were possible before meeting.  Parties make the decisions.  The mediator does not decide your case.  Because of the communication established in mediation, many foreclosure cases are dismissed.  More than half of the foreclosure cases mediated in the FDP from 2010 through 2015 were dismissed.

How Do I contact the Foreclosure Diversion Program staff?

If you have questions or suggestions about the Foreclosure Diversion Program, please contact:  Laura Pearlman, the Foreclosure Diversion Program Manager at (207) 822-0706 or by email,

How Do I contact a Foreclosure Mediator?

All Foreclosure Diversion Program mediators are independent contractors to the Judicial Branch.  Their names appear here by consent.

Operation of the Foreclosure Diversion Program is governed by: 14 M.R.S. §6321-A and Maine Rule of Civil Procedure 93.

For more information, click here.

Aug 052016
Let's think about this.

Let’s think about this.

Since I’m not actively engaged in brokerage on a daily basis, I take some extra steps to make certain I’m keeping current with “what’s going on in the business.” I know all too well the hazards created when class content and delivery aren’t in tune with the current environment.

One of those steps is to scan the media regularly and consistently. Recently there have been some headlines regarding action taken by the CFPB (Consumer Financial Protection Bureau) that are at best misleading. One I saw this morning claimed “CFPB makes clear lenders’ ability to share closing disclosure.” Actually, the CFPB has proposed some changes to TRID (TILA-RESPA Integrated Disclosure Rule). Until those changes are adopted, nothing has changed. The original rules remain in place.

In layman’s terms, the current rules adopted last fall created a reluctance on the part of lenders to share Closing Disclosures (a detailed statement of the buyer/borrower’s costs) with third parties–including real estate licensees. I suspect this stemmed in part from a desire to protect borrowers’ privacy. That would seem to be noble goal. But it was a change that did not sit well with some licensees who had become accustomed to the lender sending the previous disclosure (called ” the HUD”) to the licensees involved in the transaction.

Under the new rule, lenders were given strong confidentiality guidelines that actually go far beyond the issue of who gets the closing disclosure. Those guidelines increased the borrowers’ confidence that information about them and their transaction would remain confidential. Nothing, however, took away the borrower’s right to share that information with others.

Personally, I never understood why this created a problem for licensees. Under the new rule, the lender would send the closing disclosure to the borrower. The borrower would, if he or she wished, contact his real estate licensee and provide a copy for review and discussion. I informally polled some of my students and, while many admitted it felt like an extra step, no one reported a serious problem with the process. In exchange for what might be seen as an extra step, the buyer/borrower received additional protections and maintained responsibility for the the process. So the campaign to change this rule feels a bit like a solution in search of a problem.

Perhaps someone can help me understand why this change is necessary. The lines of communication between a real estate licensee and his or her client should be open and frequent. We say it often, “The agent (licensee) advises, the client decides.” Why would that not apply here? The information contained in a closing disclosure belongs to the client, not the licensee. This change might actually be seen as a power grab, taking away a borrower’s right.

We sometimes hear licensees “complain” that buyers and sellers do not accept enough responsibility for what happens in a transaction and are quick to blame the licensee when things go wrong. If that’s true, does it really make sense to take this step?

I haven’t looked at the specific language of the proposed rule changes, but a summary indicates the change will include (among other things) “guidance on sharing the disclosures with various parties involved in the mortgage origination process.” It seems to me that we already have that and we might think about what we’re doing and saying if we change that guidance.


Oct 022015

panic_button_400_clr_2667Many will recognize the title of this post as a line delivered often by Henny Penny in a folk tale that by some estimates has been around for more than twenty-five centuries. As with most stories that old, there are various endings–some happy, some not so happy for Henny as she and her friends get eaten by a fox. The moral therefore has several twists, but the commonalities are usually around the theme of having some courage and not believing everything you hear. We might also conclude, rightfully, that hysteria is often contagious.

TRID (TILA-RESPA Integrated Disclosure rule) is coming this weekend. Actually, it’s been coming for a long time. Now it’s finally arriving.

There has been a certain amount of “The Sky is Falling” hysteria surrounding the implementation TRID. This is evidenced by some of the dire warnings that licensees should expect problems, add extra time to their closing windows, etc.

Personally, I think it may rain for a while, but the sky will not likely fall. Why? For one thing, the changes aren’t really that massive. However, any change that impacts an entire industry (real estate, lending, legal/closing) will surely create some temporary disruption. Learning curves are real, but their steepness often depends on the learner. The changes didn’t come as a surprise. I suspect some lenders are well prepared and will find the change relatively smooth. One thing that will help those lenders is for the other parties to become informed and stay calm.

The CFPB (Consumer Financial Protection Bureau) has actually created a “Real Estate Professional’s Guide” on their website that might be very reassuring, particularly if you accept the idea that we most greatly fear the unknown. Did you know, for example, there are only three changes that will trigger a new three-day review period? (And one of those three has existed for quite some time–it’s not new.)

I’m not suggesting it wouldn’t be a good idea to prepare customers and clients for the change. In fact, educating your buyers about the “new” process will streamline the steps between pending and purchase–as it always has. I’m less certain that we need to start adding days and weeks to closing. We still need to focus on our clients’ needs. Another thing that hasn’t changed is the reality that the length of time required to close is still dependent on the capability of each and all of the involved parties: borrowers, licensees, lenders, title companies, attorneys, etc.

In at least one version of the tale, the panic starts when an acorn falls on Henny Penny’s head and she mistakenly concludes it’s the sky that is falling. The implementation of TRID will be an acorn for those licensees who do not panic, become informed, and facilitate keeping their client’s transactions on track. If it helps, you can give yourself the nickname “Ducky Lucky” and be like a duck: be calm on the outside while you’re paddling fast beneath the water.



What do I do…?

 Posted by at 7:30 am
Feb 042014

“What do I do in this situation?” is a continuing ed class I’ll be teaching on Thursday, February 13th at the Ramada Inn in Bangor. This is a case study based class with lots of discussion and some situations that just might make your eyes cross! There’s still time to sign up by visiting the Arthur Gary School of Real Estate website or calling the office at 856-1712. Additional classes will be available that day, taught by colleague Dale Midgely. Dale will be covering “What every real estate agent should know about financing” and “The A-Z’s of Rural Development Housing Loans.” Both include all the latest financing information… change is a constant!

Just a note–these classes will be held, we are not cancelling due to the storm. 


Here’s a lead!

 Posted by at 7:03 am
Dec 062013

But don’t get too excited…

My name is Begenc Gundogdyyew from Turkmenistan, I want to buy a family living home in your country, please let me know if you can assist me. What i need is a single family home, a big kitchen, a car garage that can content up to 3 cars, a flower garden and also a pool. I will be happy if u can put the pictures together and sent it to me for me to make selection with my wife and children. I am ready to purchase a house that will not be more than $2,000.000 (Two Million US Dollars).

The life of my family is no longer safe here in Turkmenistan, the government and my political opponent want to assassinate me and my family, they have several time tried to assassinate us, but the Almighty God has always been with us. You know when you are against the wrong doing and evil acts  of the government you are bound to have a lot of enemies.

Please I want you to assure me that you will assist me and my families relocate to a very safe and gated area in  your city,  i want you to keep this plan of mine very confidential let it just be between you and me please, this is due to my present situation in Turkmenistan.

Waiting for your quick reply.


Begenc Gundogdyyew

money bagsI’ll provide the email address to licensed agents who have completed a course I’ve taught and will agree to pay my agency a 25% referral fee. No, wait… for a limited time I’ll give the referral for a mere 15%.

I’d suggest you sign Begenc up as a client fairly quickly as that would invoke the fiduciary duty of confidentiality he seeks. Unfortunately, the world already knows his motivation and his price range–a mistake he might not have made if he’d seen the Real Estate Brokerage Relationships Form prior to having a substantive communication with us. He hasn’t, however, disclosed his time frame for completion and students from my courses will probably recognize the need to “qualify” him on that point. “If we find a property today that meets your family’s needs, are you…?”

You also probably noticed he hasn’t mentioned whether or not he’s been to a lender and pre-qualified for the requisite mortgage to purchase the property. However, given the nature of this potential transaction it would probably make sense to get a client agreement before suggesting that or asking for proof of funds.

I might also suggest that you clarify his cap of two million. He may not realize there are closing costs, transfer tax, etc. (You do know how to estimate those, right?) If he’s working close at two million, it might make sense to reduce that top end–or at least be prepared to negotiate a closing cost concession with the seller.

In the interest of fairness to those considering a client relationship with Begenc, I should probably also point out Begenc wishes to be in a “gated community” in a city, thereby eliminating much of the Maine Market. Of course we also don’t know how he defines “city” and that should probably be a point of clarification in preparing a buyer representation agreement.

Since it sounds like this will be more than an “arm’s length” transaction done without a showing, it probably wouldn’t be necessary to have a disclaimer that your company is not including personal protection services.

There. Now tell the truth… how often do you get offered a referral like this (only 15%!) AND some advice for getting started? What a change from the “Have you got any good foreclosures under $20,000 that I can buy and flip…? I must have the Christmas Spirit to be this generous!


There Might Be A Reason…

 Posted by at 7:16 am
Jan 022013

Let me start with a disclaimer: I am not in any way, shape, or form a reverse mortgage expert. For that matter, I’m not sure I know anyone who is… but with that, let me share a news story with you. The Bangor Daily News recently ran an article Seldom-used financial tool helps seniors purchase new homes without mortgage payments. I will tell you that the tool involved is a “reverse mortgage for purchase” and the story involves a woman in Westbrook who successfully used one.

The article notes that while these loans have been available since 2009, there haven’t been very many issued. There might be a reason for that. Understanding the concept will make most people’s head hurt and I don’t know too many lenders who are familiar with the program. If you are over 62 years old and would like to downsize–it will be worth reading the article and doing some research. Just use some caution and consider all of the financial implications.


How Much Mortgage Can You Afford?

 Posted by at 8:21 am
Aug 102012

I’ve decided to “try” this… with some hesitation. A short version description is that the National Association of Realtors has offered members the ability to “reprint” articles. I’ve placed the word reprint in quotes, because what really seems to happen is I get the beginning of the article–you have to click a link which takes you to an NAR sponsored site. Frankly, I think I’d really prefer to write my own stuff and keep you here, but maybe from time to time I should offer some material from others. This article seemed like a reasonable test–the information is fairly specific and, I think helpful–at least for the curious. If you’re at all seriously wondering, I recommend an appointment with a loan officer. Anyway, I’d welcome comments!

Visit for more articles like this.



No Whining!

 Posted by at 5:25 am
Dec 052011

As if to reinforce my previous post, I read a news item this morning pointing out that pending sales are up but along with that REALTORS are reporting a signficant number of “settlement failures.” (A settlement failure happens when a buyer and seller agree to a “deal,” but something happens and the sale doesn’t actually take place.) The talking heads are of course blaming this on the lenders. (By the way, the statistics on the failures are not hard numbers-they are based on a survey of REALTORS who are reporting they are experiencing the problem.)

One comment posted to the story by a REALTOR included the observation that the “entire industry is being held hostage to ridiculous underwriting standards.” I confess to chuckling a bit.

I have an idea for her. I think she should start making $100,000 plus loans, asking herself just how much assurance she wants that her borrowers are going to pay her back. My guess is she’ll want some underwriting standards, documentation, and won’t be making loans to just everybody. If she can come up with enough money, she can turn an entire industry around.

 (Just to put the lending risk into perspective, a separate article notes that in cases where the lender or federal government modified mortgages to assist the borrower nearly half are in foreclosure again anyway.)

There’s no doubt that mortgages are a lot harder to get now than a couple of years ago. Personally, I’m not sure that’s a bad thing. But to those who are whining, I would suggest that unless we are going to start opening our own banks, “it is what it is” and we (REALTORS) need to start dealing with it. Whining about it isn’t going to help one bit.

We can’t continue to shout, “It’s a great time to buy!” because it’s only a great time to buy for those who can and not everyone can.

My personal experience is that it’s not THAT difficult–there are lenders with money to loan who have reasonable expectations. Buyers (and agents) who are looking for the slam dunk are going to be disappointed. You do have to work for the mortgage and the sale. Sorry.


Don’t Blame The Lenders

 Posted by at 5:05 am
Oct 192011

I’m actually having some fun these days working with a buyer client and lender to put together some “unconventional” financing by today’s standards. But it also makes me a little crabby when I hear people whining about lenders and blaming them for everything that’s wrong with the economy and real estate.

But then again I also smiled when I heard what Greg Rand, CEO of OwnAmerica, had to say on “Rand on Real Estate”–his radio talk show. Admittedly he focuses on the commercial market, but he also makes a point that’s worthy of some thought. Lenders aren’t trying to make things difficult; they are simply returning to standard lending practices they were using a few years ago.