BY BETH QUIMBY

Portland Press Herald

Maine has received $19.6 million in emergency federal funds to help communities buy and resell homes that have been foreclosed upon, as part of a national effort to keep neighborhoods from deteriorating.

Sanford, which state officials and industry watchers say has more homes in foreclosure than any other Maine community, is expected to be a major beneficiary of the program.

Other areas with relatively large numbers of foreclosures also might benefit from the program, including Bangor, Lewiston, Auburn, Gorham, Portland, Biddeford and Saco, said Michael Baran, acting director of Maine's Office of Community Development. He said the state is still trying to analyze which areas have large numbers of foreclosures and will have a more complete picture by the end of the week.

State officials say they expect the program to help more than 150 moderate-income Maine families to buy homes from the municipalities. The purchases also will help stabilize real estate values in communities that have seen large numbers of foreclosures, by taking the properties off the market and keeping them from becoming vandalism targets.

Officials in Maine's hardest-hit communities called the program badly needed.

"Nothing like this has happened before," said Bill Keefer, director of the Sanford Housing Authority.

Housing specialists estimate anywhere from 30 to 100 homes are in foreclosure proceedings in Sanford. On Monday, there were 67 Sanford properties listed as being in foreclosure proceedings on the Realty Trac Web site, which lists foreclosures nationwide. That compared to 27 in Portland and 15 in Lewiston.

Just what triggered Sanford's large number of foreclosure proceedings is unclear, officials said. Housing specialists cited a number of potential factors, from subprime lenders targeting the area to a rush on the town's more-affordable homes in the past six or seven years.

Subprime loans are those given to borrowers who do not have the best credit. The inability of many of those borrowers to repay their mortgages has been blamed for much of the national foreclosure crisis.

Observers of the real estate market in Maine said they do not expect the numbers of foreclosure proceedings to subside anytime soon. "We foresee foreclosures to continue at an advanced pace," said Baran at the Office of Community Development.

The infusion of federal funds comes as Washington policy makers are shifting some of their focus away from the chaos in the nation's credit markets and back toward the foreclosure crisis that dominated headlines earlier this year.

Nationally, $3.92 billion is being distributed by the U.S Department of Housing and Urban Development to help communities struggling with foreclosure and declining property values.

In Maine, 4.3 percent or 13,877 of all housing loans during the past 18 months went into foreclosure, compared to 4.8 percent nationwide, according to HUD. Harder-hit states include Nevada, at 9 percent, Florida at 8 percent, California at 7 percent and Arizona at 6 percent, the agency said.

Baran said his office is looking for community groups to run the programs. In Sanford, a collaboration of officials from the town, York County Community Action Corp., the Sanford Housing Authority and the York County Shelter Programs Inc. would likely would be involved.

The group would buy up properties, renovate them and resell the houses to low- or moderate-income families.

The cutoff for income eligibility for a family of four would vary, depending on the community, from as low as $59,100 in some Aroostook County towns to a high of $88,100 in some York County communities.

Baran said the community groups would not be allowed to make a profit but could plow the money from resales back into more home purchases. The money, minus what is used for renovations, will have to be returned the federal government at the end of five years.

The program is on the fast track, and Maine has to submit a final plan to the federal government by Dec. 1. Baran said the first properties could become available by the middle of next year.

Michael Dubois, a broker with Prudential Prime Properties in Sanford, said the program will be good for neighborhoods with large numbers of foreclosed homes. He is currently handling two dozen sales of foreclosed homes in southern Maine, including a home in Sanford listed for $29,900. He said thieves broke into the home last weekend, and stole the plumbing.

"Many of the foreclosure properties are in very nice condition, but there are a lot of them in poor condition, which is a detriment to the neighborhood," said Dubois.