The front door of a condemned Cedar Street property in Belfast, which has been vacant for years and is in pre foreclosure. The house is one of the problematic properties that Belfast Code Enforcement Officer Steve Wilson brought to the attention of city officials this week. Credit: Abigail Curtis / BDN

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Foreclosures are rising in Maine, creating some bargain real estate, but buyers need to do their homework first.

The number of foreclosure filings in Maine rose to 168 in May, up 33 percent from April and up 127 percent from May of last year,  according to a report released Thursday by ATTOM Insights, a real estate data company. The bumpup comes after federal and local relief measures, including deferred mortgage payments and interest forgiveness, ended last fall.

The May number represents only 0.2 percent of Maine’s housing units, but foreclosure filings are rising across most of Maine except in the Augusta-Waterville area, where they were down by 31 percent compared to April but up 20 percent compared with May 2021.

Maine ranked 15th nationally in its May foreclosure filing rate, according to ATTOM. Foreclosure filings include default notices, scheduled auctions and bank repossessions.

“Foreclosure activity overall is continuing its slow, steady climb back to normal after two years of government intervention led to historically low levels of defaults,” Rick Sharga, executive vice president at ATTOM, said.

This undated file photo shows a home in Southfield, Mich., that was foreclosed and sold for $24,500 after the owner failed to pay $285 in taxes, penalties and interest. Credit: AP Photo | Ed White File

About 891 foreclosed Maine homes are up for sale at auction now, according to Realtystore.com, a foreclosure website.

The most, some 134, are in Penobscot County, with 22 listed in Bangor ranging in price from $10,000 for a three-bedroom home on Pearl Street to $270,520 for a four-bedroom home on Holland Street.

Foreclosures typically are far less expensive than standard homes because the sellers, whether they be financially struggling owners or banks that have taken over ownership, want to get rid of the homes quickly.

There are five different types of homes that could be available at bargain prices, according to Investopedia.

— A pre-foreclosure occurs when a mortgage lender has notified a borrower they are in default, but the homeowner can try to sell the property and attempt to avoid a foreclosure proceeding, which can harm their credit. Prospective buyers can find pre-foreclosure listings in county and city courthouses or online.

— A short sale is when the lender will accept less for a property than the amount still owed on the original mortgage. Buyers usually need to prove financial hardship that will cause them to default on their loan. A bank must approve the selling conditions, so the process can take much longer than a usual home purchase.

— A sheriff’s sale auction happens after the lender notifies the borrower they are in default, although it does allow time for a homeowner to catch up on payments. The auction is usually managed by local law enforcement and the property goes to the highest bidder.

— Bank-owned properties are those that did not sell at auction and that the bank owns. There are online listings of these real estate-owned properties on websites including RealtyTrac.com.

— Government-owned homes are those bought with loans from the Federal Housing Administration or the Department of Veterans Affairs and repossessed by the government when they go into foreclosure. They are sold by brokers representing the federal agency.

Apart from additional paperwork and longer times to close on a purchase, foreclosed homes can be riskier to buy. Sales are often “as-is,” meaning there could be significant repairs, especially if the home was empty for a while, according to RocketMortgage.com.

The previous owner may not have been able to maintain the home, so a buyer should have enough cash to pay for updates and repairs. Foreclosed homes also may attract squatters, and the new owner will have to legally evict them, another high cost.

Still, more homes appear to be headed for foreclosure as macroeconomic factors pressure consumers.

“With inflation now at a 41-year high and runaway prices on necessities like food and gasoline, we may see foreclosure activity ramp up a little faster than most forecasts suggest,” Sharga said.