This report is the first systematic investigation of the nature and extent of predatory lending in Maine. Based on research conducted during July and August 2005, we examine Maine's subprime mortgage market and determine the extent and impact of predatory lending in the state between 2000 and 2005. In this research we draw on a number of sources, including available empirical data on the subprime market, publicly available foreclosure records and lien histories, and interviews with various stakeholders and borrowers. In addition, we review the relevant laws and regulations in Maine's Consumer Credit Code asking the basic question: Do current laws in Maine provide an appropriate framework to regulate subprime mortgage lending given the predatory practices we have seen in the research?
In answering this question, this paper highlights five major findings:
- Maine is vulnerable to abusive lending practices.
- Maine is experiencing significant levels of predatory mortgage lending.
- Predatory lending in Maine occurs in the subprime mortgage market largely dominated by out of state non-bank lenders and mortgage brokers.
- The consequences of predatory lending include foreclosure and loss of equity.
- Maine's current legal framework lags behind other states and is inadequate to protect Mainers.