A USDA Program for Low-Income, Rural Homeowners is Driving Mainers Into Debt — ProPublica

Off a two-lane stretch of U.S. Route 1 in rural Caribou, Maine, sits a white ranch-style home that’s been consumed by weeds and vines.

The home was as soon as the success of a dream. The proprietor had bought it in 2006 by means of a federal mortgage program designed particularly for individuals like her: impoverished, first-time owners who reside in probably the most rural components of the USA. The mortgage, which got here instantly from the U.S. Division of Agriculture, required no down fee.

However issues began going mistaken from the day she moved in. First, the basement flooded. Then the furnace stopped working. As main restore prices accrued over the following six years, the lady’s well being deteriorated till she was pressured to depart her job as a supervisor at Kmart. Her incapacity examine was not sufficient to cowl medical bills and the maintenance required for the home — not to mention the $855 month-to-month mortgage.

So in 2012 she drove to a USDA workplace 20 miles away and tried to present the home again. She mentioned employees there wouldn’t settle for her keys, telling her as an alternative to name a toll-free quantity for assist, as company protocol requires. She left a message and didn’t hear again. She stopped paying her mortgage and moved out.

Her dream house sat deserted for greater than a decade.

USDA steerage says the agency should act quickly when debtors fall behind on funds “to attenuate any potential loss to the Authorities and to the borrower.” A immediate sale retains the federal government from having to pay the authorized and administrative prices related to foreclosures down the highway and should shield the borrower from incurring a significant blemish on their credit score historical past.

However that didn’t occur. Relatively, 13 years handed earlier than a sheriff’s deputy knocked on the door of the lady’s public housing residence in Could and served her with foreclosures papers on the now dilapidated ranch house that’s been overtaken by squatters. The federal government’s delay harm the worth of its funding and left the lady with a invoice far better than the price of the mortgage she initially took out — with extra curiosity and different charges that had accrued over these years.

The girl, now 68, declined to be interviewed, however her lawyer, Tom Cox, mentioned she allowed him to share her expertise on the situation that she not be named to guard her privateness.

Since March, the USDA has filed 56 foreclosures within the federal court docket system towards properties bought with a rural improvement mortgage, also called a Part 502 direct mortgage. All however one have been in Maine. The debtors have been in default for a median of practically 9 years.

As within the case of the Caribou home-owner, the USDA’s delays in these circumstances have resulted in debtors racking up extra debt due to the curiosity and costs that piled up within the intervening years, based on a Bangor Day by day Information and ProPublica examination of the foreclosures circumstances and interviews with former USDA officers and authorized specialists.

On common, debtors within the 55 Maine circumstances owe $110,000 greater than they might have had the company moved to take possession of the properties after they first defaulted, the Bangor Day by day Information and ProPublica discovered. This consists of what the USDA calls “preservation and inspection” fees, a broad class on the foreclosures filings that may embrace house repairs and yard upkeep, amongst different issues.

Debtors who can’t pay danger having the federal government garnish their wages or federal benefits equivalent to Social Safety. The Caribou lady had her incapacity checks garnished six instances since 2015 to offset her debt earlier than the USDA even foreclosed on her property, based on her lawyer. The easiest way to maintain the federal government from garnishing federal advantages is to file for chapter, attorneys mentioned.

“It actually undermines the idea of giving entry to homeownership to a inhabitants who won’t in any other case have been capable of afford it,” mentioned Rhiannon Hampson, former USDA rural improvement director for Maine who stepped down in January earlier than President Donald Trump was inaugurated. “The irony, with all of those charges piled on, is that they will’t afford to get out of it.”

The current wave of foreclosures filings in Maine underscores the federal government’s failure to watch a mortgage program that since its founding in 1949 has poured tens of billions of tax {dollars} into giving the poorest People a shot at homeownership.

The USDA doesn’t publicly report how typically it information foreclosures. U.S. Rep. Chellie Pingree, a Maine Democrat and member of a Home appropriations subcommittee overseeing the USDA’s direct mortgage program, has proposed language within the Home agriculture appropriations report for the 2026 fiscal yr calling on the company to commonly report the variety of foreclosures and deserted properties associated to the direct mortgage program. The invoice awaits a vote earlier than the total Home of Representatives.

The USDA commonly filed foreclosures in Maine previous to the coronavirus pandemic however has not often finished so lately, based on Richard H. Broderick Jr., a Maine lawyer with whom the company had contracted to file foreclosures till 2022. Kevin Crosman, the Maine lawyer now submitting foreclosures on behalf of the USDA, wouldn’t touch upon why the company began doing so once more.

Reporters visited 12 of the 55 properties within the Bangor Day by day Information’ core protection space in Could. No less than 5 gave the impression to be deserted and in disrepair — with home windows boarded up or an indication affixed to the door saying it was being cared for by a New York firm — elevating doubts that the federal government will recoup its investments.

The USDA is meant to take custody of properties bought with a Part 502 direct mortgage and start the foreclosures course of when the home-owner turns into incapacitated, dies or has deserted it, based on the company’s handbook. In any other case the properties could languish and lose worth.

Company tips don’t specify how quickly the federal government ought to step in after a mortgage falls into delinquency, however beneath federal regulation, lenders can not foreclose on a property till debtors have been in default for 120 days.

Practically a fifth of the USDA’s 159,208 Part 502 direct loans in its lively nationwide portfolio — 30,496 — have been delinquent as of March, based on inside company knowledge obtained by the Bangor Day by day Information and ProPublica. That price is double what a 1993 inside company report mentioned was acceptable. However neither the USDA nor the White Home would say why the company is specializing in foreclosures in Maine. Vermont is the one different state by which the USDA has filed a single foreclosures, based on federal court docket filings.

The foreclosures began simply earlier than Trump’s Justice Division sued the state of Maine in April over its inclusion of transgender athletes in ladies’ sports activities, half of a bigger spat between Trump and Maine Gov. Janet Mills. The White Home wouldn’t say whether or not the foreclosures are linked in any option to these ongoing conflicts.

The Trump administration is looking for to eliminate the 76-year-old rural homeownership program within the White House’s budget proposal for the 2026 fiscal yr. A few of his predecessors, together with Barack Obama and George W. Bush, have additionally sought to chop again the $880 million direct mortgage program, which has bipartisan help in Congress.

A USDA spokesperson mentioned the Trump administration is within the means of reviewing the loans to “perceive the magnitude of the issues it has inherited.” The company famous that in Maine alone, greater than 800 properties are thought of delinquent and practically 400 properties are being tracked for foreclosures. The USDA didn’t reply to extra questions.

“Hopelessly in Debt”

In 2013, months after the Caribou lady had deserted her property, she obtained a letter at her new residence from the USDA informing her that she needed to pay the federal government $22,000 in missed mortgage funds and late charges or she’d lose the Caribou house, mentioned Cox, her lawyer. He mentioned she didn’t pay as a result of she didn’t need the home anymore. The USDA despatched her practically a dozen letters between 2014 and 2015 claiming foreclosures was imminent, however a decade handed earlier than she was served with foreclosures papers this spring.

An indication on the entrance door says the property is being maintained by a New York Metropolis firm, which didn’t return calls looking for remark. A inexperienced tarp stretches throughout lacking sections of the roof. Inside, piles of rubbish and feces litter the ground.

An actual property dealer who inspected the house in June with Cox estimated the worth of the home to be round $40,000, a steep depreciation from the 2006 buy worth of $144,000.

In the course of the time since she deserted the property, what the lady owes USDA continued to balloon, Cox mentioned.

His consumer now owes the federal government $393,463, based on court docket paperwork — practically 10 instances what the house is price. Practically 60% of that includes curiosity that accrued after she defaulted, in addition to $91,304 in “preservation and inspection” charges.

“If the USDA had handled this again in 2012, they could have gotten most or all of their a refund by promoting the house” earlier than it deteriorated, Cox mentioned. “They’re not going to gather it now. It’s an enormous waste of presidency sources and cash to let this occur.”

Different USDA debtors merely proceed residing of their properties lengthy after they default on their loans, accumulating extra debt with every passing yr that the federal government doesn’t transfer to gather.

Christine Ogden had stopped paying the $465-a-month mortgage for her blue saltbox house within the coastal Maine city of Searsport in 2013, based on court docket paperwork. She mentioned she advised the USDA on the time to take her house after the company threatened her with foreclosures if she didn’t pay.

However it took the federal government till 2019 to aim to foreclose upon her property. The case was dismissed in 2020 amid the coronavirus pandemic. 5 years later, in April, she obtained a summons to seem in federal court docket to begin foreclosures proceedings once more.

Ogden now owes $203,787 on what had been a $66,200 mortgage, based on court docket paperwork. Half of her debt includes curiosity that accrued after she defaulted, in addition to different charges she wouldn’t have needed to pay had the USDA addressed the delinquency sooner, an evaluation by the Bangor Day by day Information and ProPublica discovered.

Ogden, who has lived rent-free in the home for 12 years, says she is unable to pay the burgeoning debt and doesn’t know what is going to occur. The foreclosures will harm her credit score, making it more durable for her to get one other mortgage or discover rental housing, she mentioned.

“I am 59,” Ogden mentioned. “I’ll be homeless, mainly.”

Little Authorities Oversight

The house owners of one other property, in Norridgewock in central Maine, additionally stopped paying their mortgage — and moved out of the home — years earlier than the USDA foreclosed on the house this spring, court docket information present. The house owners haven’t appeared to reside on the property since at the least 2014, based on property tax information, and defaulted on their mortgage in 2019 — however the authorities didn’t file for foreclosures till April.

The house owners, it turned out, have been violating USDA guidelines by renting out their house. The tenant, who answered the door when a reporter visited in Could after the foreclosures was filed in federal court docket, wouldn’t share his title however estimated that he has paid $100,000 in lease to the house owners in the course of the 12 years he mentioned he has lived there. USDA tips enable debtors to lease their properties for as much as three years, and solely beneath very slender circumstances.

Properties bought beneath the 502 direct mortgage program are alleged to be the borrower’s everlasting residence and never meant to generate revenue, based on USDA guidelines. Owners can lease out their properties solely as a result of sure life occasions equivalent to if their households outgrow their present house or if they’re shifting for a job. However the borrower should nonetheless pay the mortgage each month.

The USDA says the house owners of the Norridgewock house owe the company $276,191. The owners reside in Tennessee, based on foreclosures summons and different court docket information filed this yr by the USDA; they didn’t reply to calls made to telephone numbers listed beneath their names.

USDA employees based mostly in Maine who as soon as have been in shut contact with debtors after they bumped into monetary bother now have little to no oversight of Part 502 loans. That’s as a result of a significant restructuring within the Nineteen Nineties eradicated most of the county workplaces that had managed all facets of the loans and centralized the servicing of those loans to an workplace in St. Louis, mentioned Leslie Strauss, a senior coverage analyst for the Housing Help Council, a Washington, D.C.-based nonprofit targeted on inexpensive rural housing.

These adjustments got here on the heels of an inside examine in 1991 concluding that centralizing the administration of those loans would end in higher service and a decrease delinquency price of about 10%, based on a 1993 report by the U.S. Authorities Accountability Workplace. Greater than three a long time later, the delinquency price for Part 502 direct loans has practically doubled to 19%.

Hampson, Maine’s former USDA rural improvement official who now leads financial improvement for the Gulf of Maine Analysis Institute, mentioned she had been pushing the company to permit native employees to regain oversight of debtors’ monetary conditions “in order that we will exit and monitor what’s happening, in order that we aren’t caught without warning.”

However her effort didn’t acquire traction, Hampson mentioned.

Because the foreclosures accrued in Maine in current months, the USDA web site published an advisory directing struggling Maine debtors to name the St. Louis workplace for assist. However fewer employees members can be found to reply after Trump’s current cuts to the federal workforce.

As of early Could, 1,536 staff — practically a 3rd of the agricultural improvement workplace — had taken the buyout, based on USDA paperwork outlining the outcomes of the Trump administration’s two monetary incentive affords to stop. Of these, 197 labored within the St. Louis workplace.

“We are able to’t afford failure,” Hampson mentioned of the long-delayed foreclosures resulting in insurmountable debt. “The onus is on the federal government to be sure that we’re offering the correct of security nets to forestall this type of factor from taking place.”