Mainers who bought homes under a poorly supervised federal program have fallen even further into crushing debt because federal officials have let their foreclosure cases languish.
Nearly a year after the U.S. Department of Agriculture filed more than 50 foreclosure cases against Mainers who failed to repay loans through a low-income homeownership program, only 11 have been closed. A third are still pending simply because a USDA official has yet to sign basic documents, according to a Bangor Daily News review of cases.
Many already owed hundreds of thousands of dollars by the time the USDA filed for foreclosure last April because the agency waited years to prosecute their cases, a Bangor Daily News and ProPublica investigation found. The longer these cases unnecessarily sit in court, the larger the debt grows for homeowners who fell behind on their payments.
In 19 of the cases, a judge has already ruled the USDA can take possession of a property. But the USDA’s lawyer has struggled to get the USDA to sign paperwork required to take over the properties. He has filed dozens of motions to delay the cases as he awaits those signatures, court records show.
That delay is simply “wasting money,” said Geoff Walsh, a senior lawyer with the National Consumer Law Center, who specializes in foreclosure cases and has represented a number of rural development mortgage holders. In the meantime, the USDA has to pay the maintenance costs and property taxes on the abandoned properties.
“They should have foreclosed as soon as they realized the house was abandoned and sold it to somebody else,” he said. “Instead, they either let it get worse, so that they lose value from property deterioration, or they spend a lot of money hiring contractors to go out and do work on the properties. It makes no sense.”
In a statement, the USDA declined to comment on why the cases have been so delayed, but blamed former President Joe Biden’s administration for the delay in filing the cases against the homeowners to begin with.
“These lengthy delays have had negative impacts on taxpayers, program sustainability, and borrowers, whose outstanding interest continues to compound,” the agency said. “USDA views foreclosure as a last resort, and it is only pursued after exhausting all program remedies.”
About 84% of the homes in the Maine cases went into default before Biden took office in January 2021. On average, they sat in default for nearly nine years before the USDA took action. Some have physically deteriorated, damaging the property value. Some homes have sat vacant for years after owners abandoned them or died.
U.S. Rep. Chellie Pingree, a Democrat from Maine’s 1st District who sits on an appropriations subcommittee overseeing the USDA, has unsuccessfully tried to learn more about the Trump administration’s handling of the Maine cases since the summer.
“My office continues to monitor this situation closely and is working to get additional information from USDA about the status of these cases, including why we’re seeing so many delays,” Pingree said.
While about a third of these cases remain essentially a signature away from closure, others cases are still being hashed out in court.
One involves a homeowner who tried to turn over the keys to her home to a USDA office in Presque Isle in 2012 and vacated the home 13 years before the USDA filed for foreclosure.
Her attorney, Tom Cox, has argued that the government’s inaction means the court should reduce the amount of money she owes, which he estimated could be up to $450,000. Her former home, which she purchased for $144,000, is now worth about $40,000 due to a lack of upkeep, he said.
“I think the USDA has created an unnecessary tragedy for a lot of these homeowners,” Cox said.