HARP-assisted refinances drove record refinance activity in the month of June, FHFA revealed Tuesday.

The agency released its Refinance Report for June 2012, showing that refinance volume remained strong in June as mortgage rates fell to all-time lows. An estimated 33 percent of refinance volume was done through HARP, the highest percentage since HARP’s inception.

The report revealed that at the end of June, Freddie Mac and Fannie Mae had refinanced 422,969 loans throughHARP in 2012, more than the estimated total of 400,000 for all of 2011. This brings the total number of HARPrefinances by the GSEs to 1.4 million.

In addition to record-low mortgage rates, FHFA attributed the increased HARP volume to enhancements made to the program in late-2011. The newly-enhanced program, called HARP 2.0, removes the loan-to-value (LTV) ceiling for borrowers refinancing into fixed-rate loans and eliminates or lowers fees for some borrowers.

HARP refinances for loans with LTV ratios greater than 125 percent sharply increased in June, making up more than 40 percent of total HARP volume. Lenders began selling Fannie Mae and Freddie Mac securities containing these loans starting June 1.

Additionally, data showed that more than two-thirds of borrowers in Nevada, Arizona, and Florida-the states hit hardest by the housing downturn-refinanced throughHARP in June, compared to 33 percent nationwide.

Underwater borrowers (those with LTV ratios greater than 105 percent) made up 62 percent of HARP volume in June, a 32 percent increase from May. These borrowers made up more than 80 percent of HARP volume in Arizona, Florida, and Nevada. In Idaho and California, they represented more than 70 percent of HARPrefinances.

An estimated 18 percent of underwater borrowers nationwide opted for the shorter 15- and 20-year mortgages, a slight drop from 19 percent in May. Shorter mortgages build equity faster than traditional 30-year mortgages.

FHFA issued a notice Wednesday to warn of the controversial use of eminent domain recently proposed in San Bernardino County.

In San Bernardino County, officials are considering the use of eminent domain to seize underwater mortgages. The mortgages would be taken at fair market value, and then restructured into new loans with terms reflecting the current market. Chicago and Berkeley are also exploring the proposed use of eminent domain.

In the notice, which was sent to the Federal Register, FHFAstated it had “significant concerns about the use of eminent domain to revise existing financial contracts and the alteration of the value of Enterprise or Bank securities holdings.”

FHFA said that in relation to the Fannie Mae and Freddie Mac, the use of an eminent domain program could result in a cost to taxpayers.

FHFA also stated it had significant concerns regarding a “chilling effect on the extension of credit to borrowers seeking to become homeowners and on investors that support the
housing market.”

As conservator for the GSEs and as a regulator for Federal Home Loan Banks, FHFA stated it may need to take action “to avoid a risk to safe and sound operations and to avoid taxpayer expense.”

Along with concerns, the agency also raised several questions, including the constitutionality of the proposed use of eminent domain; the effects on holders of existing securities; and the impact on millions of negotiated and performing mortgage contracts.

FHFA said it is accepting input on topic through its Office of General Counsel (OGC) no later than September 7, 2012.

Views on the topic may be emailed to eminentdomainOGC@fhfa.gov or sent to FHFA OGC, 400 Seventh Street SW., Eighth Floor, Washington, D.C. 20024. Input may be made public.

In another sign the housing sector may be languishing – again – the Pending Home Sales Index (PHSI) dipped 1.4 percent in June to 99.3 from a downwardly revised 100.7 in May, the National Association of Realtors reported Thursday. Economists had expected a 0.9 percent increase to 101.6.

The original May report had the index at 101.9, returning to its level of March.

After positive reports earlier this month – an increase in builder confidence measured by the National Association of Home Builders’ Housing Market Index, a jump in starts and a pop in the median price of an existing home – housing statistics have faltered with a drop in sales in both new and existing homes.

Indeed, a drop in the PHSI reinforced Wednesday’s report showing a drop in new home sales for June. Both track contracts, not closings, and provide a current snapshot of homebuyer interest and a reflection of the economy.

The PHSI had been rising steadily until April. Existing home sales rose in the last half of 2010 before leveling.

That said, even with the decline in June, the index is up 9.5 percent on a year-year basis though the 12-month improvement in June was the weakest in five months.

Pending home sales are counted when sales contracts are signed, and are viewed as a leading indicator of existing home sales.

Recent PHSI reports suggest home re-sales should have been a bit stronger but existing home sales fell to an eight-month low in June tracking a month-month decline in thePHSI in April.

The drop in the PHSI was the second in the last three months and was widespread. The index fell in three of the four census regions, improving only in the West where it increased 2.6 percent. The index fell 7.6 percent in the Northeast, 2.0 percent in the South and 0.4 percent in the Midwest. On a year-year basis, the index was up in all four census regions led by a 17.3 percent improvement in the Midwest. It was up 12.2 percent year-year in the Northeast, 8.8 percent in the South and 3.0 percent in the West.

The PHSI has been drifting upward, albeit modestly for most of the past two years. The June drop coming in the middle of the traditional home buying season is a disappointing signal tempered further by the reality that a substantial number of sales contracts are failing to meet underwriting tests and/or other loan standards.

Lawrence Yun, NAR chief economist, blamed a lack of inventory for the drop in the index.

“Buyer interest remains strong but fewer home listings mean fewer contract signing opportunities,” he explained. “We’ve been seeing a steady decline in the level of housing inventory, which is most pronounced in the lower price ranges popular with first-time buyers and investors.”

Yun also cited delays in the foreclosure process due to legal challenges.

“There have been some delays with recent foreclosure sales as banks take steps to ensure there are no paperwork problems,” he said. “This is causing an uneven performance in sales closings, which is likely to continue, but we also see notably higher levels of sales activity compared with a relatively flat performance in the preceding four years.”

The index is based on a large national sample, representing about 20 percent of transactions for existing-home sales. An index of 100 is equal to the average level of contract activity during 2001, which was the first year to be examined as well as the first of five consecutive record years for existing-home sales; it coincides with a level that is historically healthy.

Lawmakers released a damning report Thursday that found Countrywide Financial deployed 17,979 loans to peddle influence with elected officials, stall GSE reform, and solicit exclusive access for Fannie Mae and the ultimately doomed mortgage unit over the course of more than a decade.

The 136-page report rounds off an investigation into the so-called “Friends of Angelo” circle that in some cases allegedly supplied mortgages free of upfront fees, origination points, and default penalties to influential insiders and power-brokers, including members of Congress, senior executives with Fannie Mae, and high-ranking congressional staffers.

The findings offer a sweeping indictment against the defunct mortgage unit, which Bank of America acquired in 2008. Rep. Darrell Issa (R-California), chairman of theHouse Oversight and Government Committee, led a roughly three-year investigation that culminated in the report Thursday.

According to the report, Angelo Mozilo, then-CEO of Countrywide, instructed staff members and lobbyists to offer deals in order to deliberately curry favor with elected officials and their staffers. Staffers were instructed to approve loans for VIP borrowers “regardless of documentation or qualifying challenges” in some instances.

The investigation found that Countrywide often waived points and offered discounts on loans to those who receivedVIP home loans. Waiving so-called “junk fees,” or upfront fees, could mean anywhere from $350 to $400 in savings for select borrowers.

A VIP unit separate from the normal complaints process offered “enhanced customer service” to people forwarded by Mozilo and others.

Among those who reportedly received sweetheart deals: former Sen. Chris Dodd (D-Connecticut), who later helped shepherd through the Dodd-Frank Act, along with twoHUD secretaries, three former CEOs with Fannie Mae, and many others.

The investigation found that former Fannie Mae CEO Jim Johnson, a longtime political figure who briefly chaired the vice-presidential search committee for President Barack Obama, forwarded HUD secretaries Henry Cisneros and Alphonso Jackson to the VIP unit, among others.

Countrywide – the likes of which later bore losses for acquirer Bank of America and transferred loss to the taxpayer during the financial crisis – also shielded certain loans from the typical foreclosure process and other penalties.

For example, the mortgage unit took a loss on a loan for former Fannie Mae CEO Daniel Mudd, advising staffers to conceal any “derogatory information” related to his loan in order to continue “any benefit we generate,” according to the report. Mudd later left the mortgage giant before it entered federal conservatorship in 2008.

The report delineated a close relationship between Countrywide and Fannie Mae. In one instance, the GSEfronted 70 lobbyists for the House Financial Services Committee, helping kill four bills introduced by members to reform the mortgage companies.

The companies also engaged the Senate Banking Committee with their lobbying muscle.

According to the report, Dodd – who served as chairman and left Congress in 2010 after clearing an ethics investigation over any links to Countrywide’s VIP unit – made a VIP referral for Mary Jane Collipriest, communications director for then-Sen. Robert Bennett (R-Utah).

Speaking with MReport, Mark Calabria, a former Senate Banking Committee staffer, now with the Cato Institute, says that “it was generally known” that Countrywide “was running a very extensive lobbying campaign,” withVIP loans “a crucial feature of it.”

He tells us that the House and Senate committees “were a particular target.” According to Calabria, he turned down a VIP loan from an unnamed lobbyist with Countrywide in 2005.

A spokesperson for the House Financial Services Committee did not immediately return requests for comment.

Richard Simon, a spokesperson with Bank of America, which cooperated with the investigation, declined to comment, noting that the financial institution discontinued the VIP program when it bought Countrywide in 2008.

CNN reported by midday Thursday that other congressional offices named by the report had refuted findings with separate statements.

It was not immediately clear whether the report would lead to further investigations.

The rental market appears to be doing more than just sustaining its health. After surveying property managers,TransUnion found that increasing prices aren’t keeping tenants away.

Overall, managers reported they are doing better than the year before and are having an easier time attracting in residents despite the increase in prices.

The credit bureau’s June survey included 1,248 property managers across the U.S. who represented a range of property sizes.

Almost half (48 percent) of the managers surveyed reported rental price increases on the majority of their units since last year in June.

Approximately 44 percent said rental prices remained the same. In TransUnion’s 2011 rental survey, 39 percent of respondents stated that prices increased while 48 percent said prices were the unchanged.

For large properties (more than 200 units), 70 percent of managers reported price increases this year compared to 64 percent last year. Among small property (200 units or less) managers, 46 percent reported price increase from last year, an improvement from 36 percent last year.

“Data throughout the last year has pointed to a healthier rental market, and our survey helps validate the current strength of the rental industry,” said Steve Roe, VP of TransUnion Rental Screening Solutions. “The rise in rental prices, coupled with a decrease in vacancy rates and the ability to attract new residents with less effort are all positive signs for the market and rental property managers.”

Even with rental prices increasing, property managers are having an easier time with finding tenants. Nearly 73 percent of managers said finding residents is not difficult compared to 67 percent last year.

The percent of respondents stating vacancy rates for their properties are between 0 percent and 5 percent increased to 83 percent this year from 81 percent in 2011. When dividing up respondents based on property size, large property managers saw an increase to 64 percent his year compared to 60 percent last year.

In addition, 70 percent of small property managers said their vacancy rates are at 0 percent, which is an increased from 66 percent in 2011.

Even with a healthier rental market, property managers still face the issues with finding quality residents.

Nearly 60 percent of respondents said they are concerned or very concerned with finding reliable tenants.

“Though this number is down from 65% in last year’s survey, it does point to the continued unease about the economy and a lingering question about the ability of tenants to make timely rental payments,” said Roe.

More than half of the respondents (53 percent) said they have had a renter leave the unit with unpaid rent or damages, and about 18 percent said a tenant has done so in the last year.

“Finding reliable tenants is critical as property managers can lose thousands of dollars in rent if a tenant skips out of a rental unit, or if the property manager must take action to evict someone from a unit,” said Roe.

The survey included 1,107 small property managers and 141 large property managers.

TransUnion offers two rental screening services to screen residents: CreditRetriever, which is for large property management companies and SmartMove, which targets small and independent property managers.

The Consumer Financial Protection Bureau (CFPB)released a report Thursday showing that although reverse mortgages are meant to help borrowers in retirement, they are in fact causing problems for many who don’t fully understand them.

A reverse mortgage is a type of home loan that lets older homeowners access the equity they have built up on their homes and defer loan payment until they sell the home, move out, or pass away. The original purpose of reverse mortgages was to allow these homeowners to convert home equity into an income stream or line or credit to use in retirement. Borrowers were largely expected to age in place with their loans, living in their current homes until they passed or needed skilled care.

Reverse mortgages require no monthly mortgage payments, but borrowers must still pay property taxes and homeowner’s insurance. The report showed that nearly 10 percent of reverse mortgage borrowers are at risk of foreclosure because they failed to pay those costs.

“Reverse mortgages are complex and have the potential to become a much more pervasive product in the coming years as the baby boomer generation enters retirement,” said CFPB director Richard Cordray. “With one in ten reverse mortgages already in default, it is important that consumers understand what they are signing up for and that it is the right product for them.”

The report found that many reverse mortgage borrowers do not understand how their loan balance will rise and their home equity will fall over time. In addition, the influx of new choices brought on by innovations and policy changes have made the matter too complex for many homeowners. The bureau further found that the tools currently available to help consumers understand the risks and tradeoffs are not enough. The report called for improved methods for housing counselors to help consumers understand their choices.

There are many other problems with reverse mortgages as they currently stand, the report pointed out. Many consumers are getting reverse mortgages before the age of 70 (with the most common age for a new borrower being 62, the first age at which reverse mortgages are available), and some are even getting them before retiring.

“These borrowers will have fewer resources to pay for everyday and major expenses later in life and may find themselves without the financial resources to finance a future move-whether due to health or other reasons,” said the report.

Another problem is that 70 percent of borrowers are taking out the full amount of proceeds as a single lump sum instead of treating the payment as an income stream. As a result, these borrowers have fewer available financial resources later in life. They may not be able to continue paying taxes and insurance on their homes, leading to potential foreclosure. The report found that borrowers who save or invest their money may earn less on the savings than they spend paying interest on the loan.

Finally, the bureau addressed the issue of deceptive or misleading marketing materials about reverse mortgages. The report cited examples of mailers that depict reverse mortgages as a government benefit or entitlement program in the vein of Medicare and use images resembling government seals to entice consumers. It can be difficult for consumers to tell that a reverse mortgage is a financial product, not a government benefit.

In order to address these issues and help consumers better understand reverse mortgages, the CFPB has released arequest for information.

Home price purchases were mixed month-over-month in May, with non-distressed prices up and short sales down, according to the Campbell/Inside Mortgage Finance HousingPulse tracking survey.

From April to May, transactions reported by HousingPulse survey respondents revealed the average price for non-distressed properties rose 1.7 percent, while the average price for short sales fell 0.7 percent. For damaged REOs, the average price went up 1.8 percent and for move-in ready REOs, the average price dropped 1.5 percent.

The stabilization of home prices seen in some instances is due to a shortage of inventory, HousingPulse reported. These shortages are led by underwater homeowners who are holding onto their homes until home prices move up.

Also, for distressed properties, there’s a shortage of inventory due to slower processing of foreclosures by mortgage servicers, according to HousingPulse.

Move-in ready REO properties are in demand and sat on the market for an average of 10.6 weeks in May, the lowest of any property category.

Using a three-month moving average, the HousingPulse Distressed Property Index (DPI) revealed that the share of distressed properties in the housing market in May was 46.1 percent. This marks the 27th consecutive month in which the DPI hovered above 40 percent.

Anecdotal evidence also suggests that the shortage is especially prevalent in California.

One realtor in the state said that inventory in Orange County was “super low” and the months’ supply of unsold homes is down to just 45 days.

Another California agent said that inventory in the Santa Clarita Valley, which is 35 miles north of Los Angeles, is very low, and reported less than 500 listings, which is well below the 1,500-1,800 properties the agent stated is the average.

The Campbell/Inside Mortgage Finance HousingPulse Tracking Survey includes approximately 2,500 real estate agents nationwide each month.

The deadline to request a free, independent foreclosure review has been extended for another two months, and so far, nearly 200,000 people have requested a foreclosure review, the Office of the Comptroller of the Currency(OCC) and the Federal Reserve Board announced Thursday.

The new deadline to request an independent foreclosure review is getting pushed back from July 31 to September 30, 2012. The review is for those who believe they have suffered financial harm as result of servicing errors during a foreclosure process between 2009 and 2010. The property must be the borrower’s primary residence and serviced by a participating servicer to be eligible.

The OCC first issued consent orders for the reviews on April 13, 2011 against 12 mortgage servicers, and so far, about 193,630 people have requested a free review. In addition, independent consultants have reviewed servicers’ portfolios and selected 144,817 files to review.

Currently there are 156,826 files under review, and 11,939 files have been completed, according to the OCC.

If financial harm did occur as a result of a faulty foreclosure process, relief may be available in the form of lump-sum payments, rescission of a foreclosure, a modification, or corrections on credit reports, deficiency amounts, and records.

Efforts from the OCC to reach out to borrowers have included 4.4 million letters sent to those who may be eligible for a review, and the agency also required servicers to pay for advertising announcing the review.

The IndependentForeclosureReview.com website has been visited 600,386 times, and 7,948 borrowers have submitted requests for review online as of May 31. The toll-free number, 1-888-952-9105, has received 241,048 calls, and 25,752 people have requested forms.

The independent foreclosure review is separate from the $25 billion servicing settlement reached between federal and state officials and five of the largest servicers.

As part of OCC’s agreements, four banks – Bank of America, Citibank, JPMorgan Chase, and Wells Fargo – received penalties totaling $394 million.

Examples of servicer actions that could lead to relief include Servicemembers Civil Relief Act violations; modifications that were not approved but should have been, lack of proper notification during the foreclosure process, and errors that did not result in foreclosure, but still led to financial injury.

Under a new guideline, military members with Fannie Mae and Freddie Mac loans will now have an easier time with short sales.

Federal Housing Finance Agency (FHFA) Acting Director Edward J. DeMarco announced in a release Thursday that military homeowners who receive Permanent Change of Station (PCS) orders can sell their homes via short sale without having to go into default first.

“It is in everyone’s interest for the men and women serving in our armed forces to focus on the important job they are doing defending our country, rather than worry about the maintenance and leasing of a property in another jurisdiction,” said DeMarco in a release. “These Fannie Mae and Freddie Mac policy changes, in combination with related guidance last fall, should now provide military homeowners with access to the immediate and automatic full range of foreclosure alternatives.”

Last year, Fannie Mae and Freddie Mac issued guidance to servicers to have PCS orders count as a hardship for military members seeking relief.

The new policy takes an even greater step forward and will allow military members with PCS orders to sell a primary residence purchased on or before June 30, 2012 for less than the balance on their mortgages even when current on their payments. Short sales transactions typically require homeowners to be delinquent on their mortgage.

The GSEs also won’t pursue a deficiency judgment or a contribution under the new policy. Typically, borrowers contribute to closing costs and can also be pursued for the remaining balance after a short sale is completed.

Since PCS orders require military members to relocate, they can create a hardship, especially at a time when millions are underwater and can’t sell their home due to negative equity. This led many service members to be stuck with two residences or to default on their mortgage.

In response to the new guideline, Freddie Mac’s Interim Head of Single Family Business and Information Technology Paul Mullings said, “We look forward to working with our servicers on this new short sale policy. Together we can help ease the challenge of relocation for military families when Permanent Change of Station orders are received.”

The guideline was issued by the Consumer Financial Protection Bureau, Fed’s board, FDIC, National Credit Union Administration, and the OCC.

The new rule is only applicable to military homeowners with a GSE-backed mortgage; this information can be checked by visiting Fannie Mae or Freddie Mac online.

While the lights of the housing market continue to flicker, rental market activity has been a bright spot, said Freddie Mac’s U.S. Economic and Housing Market Outlook for June.

The Enterprise’s report, released Tuesday, showed that newly formed households seem more interested in renting over owning as the economy struggles to get back on its feet. Freddie Mac expects this trend to continue for the near future.

“Further increases in rental demand are likely in the coming year as newly formed households postpone homeownership decisions until the economy strengthens and they have accumulated sufficient savings,” said Frank Nothaft, VP and chief economist for Freddie Mac. “Overall apartment market trends may show further vacancy declines and rent gains, with property values improving as well.”

The report showed that over the year ending March 2012, an additional 1.5 million households moved into rental housing, a 4 percent increase in a year. The Census Bureau has also reported that rental vacancy rates in buildings with at least five apartments have dropped more than two percentage points over the past two years. In addition, both Reis and Axiometrics have reported increases in occupancy rates during the two years through the first quarter of 2012.

Rents have begun to rise in a number of metropolitan areas as rental markets tighten. A broad market measure prepared by the Bureau of Labor Statistics shows a rent increase of 2.5 percent during Q1 2012 compared to a year ago. Reis found a 2.8 percent gain in its markets during the same period, while Axiometrics reported a 4 percent rise in nominal rents. However, average rent adjusted for inflation stayed below where it was for most of the decade prior to the Great Recession.

The increase in rental demand has helped enhance property values, on average up about 25 percent during the past two years from the low during Q1 2010. This level is still 14 percent below the pre-Great Recession peak, but the increase has prompted a supply response from developers.

Starts of buildings with at least five apartments have increased 48 percent in the first five months of 2012 when compared to the same period in 2011. The National Association of Home Builders reported that its Multifamily Production Index jumped to its highest reading since 2005, and its index for market-rate rental construction reached its highest level since the series’ start eight years ago. Construction of rental apartments in buildings containing at least five dwellings is expected to add nearly 200,000 in 2012, the highest increase in one year since 2008.

Asking prices fell flat in May after three consecutive monthly increases while also decreasing from the year before, according to reports from Trulia.

Asking prices on homes for sale were unchanged in May on a seasonally adjusted basis and fell by 0.2 percent year-over-year. However, when excluding foreclosures, asking prices actually rose 1 percent on a yearly basis, while foreclosure prices dropped 5.8 percent over the same time period.

According to Trulia, asking prices lead sales prices by approximately two or more months.

“Asking prices and employment both stagnated in May, yet one more reminder that the housing recovery depends on job growth,” said Jed Kolko, Trulia’s chief economist.

Due to the gains in April and March, asking prices rose 1.6 percent on a quarterly basis.

Out of the 100 largest metros, 41 saw yearly price gains, and more than double, 86, had quarterly price increases.

“Metros where prices rose the most have stronger demand from faster job growth and tighter supply from fewer foreclosed homes on the market,” said
Kolko.

Trulia named Seattle as a turnaround metro since prices rose 4.4 percent quarter-over-quarter (February to May) after seeing a dramatic 12.5 percent yearly drop (February 2011-2012). Cleveland, Las Vegas, Milwaukee, Tacoma, and Toledo were also counted as top turnaround metros for their quarterly increases after their yearly falls.

While asking prices did not show upward movement in May, rent was up 1.6 percent on a quarterly basis and up 6 percent from a year ago. In April, the year-over-year increase in rent was 5.4 percent and 4.8 percent in March.

Out of the 25 largest rental markets in the U.S., only Las Vegas saw a yearly decline in rent.

Ten Places with Greatest Yearly Rental Increases

1. San Francisco (14.4 percent)
2. Oakland, California (11.4 percent)
3. Miami, Florida (11.3 percent)
4. Denver, Colorado (10.5 percent)
5. Boston, Massachusetts (9.8 percent)
6. Seattle, Washington (9.6 percent)
7. Houston, Texas (9.2 percent)
8. Portland, Oregon (6.8 percent)
9. Chicago, Illinois (6.4 percent)
10. New York (5.9 percent)

Purchasing foreclosures also means discounts, but with the markdown is the price of repairs. According to RealtyTrac, foreclosures or REOs sold at an average discount of 27 percent compared to non-distressed properties in the first quarter of 2012. Through an FHA203(k) loan, potential buyers who want to purchase a discounted foreclosure but don’t have cash for the repairs may find a way to receive financing.

According to HUD, the 203(k) program is the department’s main program for rehabilitating and repairing single family properties, and it’s viewed as an important tool to revitalize neighborhoods.

In order to be eligible, the property must be purchased as a primary residence or it can be for a HUD approved nonprofit. Also, the property must be a one-to four-family residence that has been completed for at least one year.

Dan Green, loan officer with Waterstone Mortgage and author of themortgagereports.com, explained that FHA203(k) program can be used on any 1-4 unit residential property, and is not limited to just HUD properties or foreclosures.

The maximum amount that can be taken out for the property is based on the value or the purchase price of the property before rehabilitation (whichever is less), plus the estimated cost of rehabilitation or 110 percent of the property after improvements, according to HUD.

A down payment is required, and the minimal amount for a down payment is 3.5 percent of the accepted bid price plus the cost of financing additional repairs.

Since there is more “file” to underwrite for an FHA 203(k) loan, Green said the approval process takes longer than a standard FHA mortgage.

“FHA 203k approvals take more time, but are no more difficult than any other mortgage type,” said Green. “Borrowers should expect to provide the documentation required, and should respond to loan officer requests in a timely manner.”

Attorney General Kamala Harris’ “Homeowner Bill of Rights” continues to work through the California Legislature as two more bills pass, the Office of the Attorney General announced Thursday.

AB 2610 and SB 1473 will require buyers of foreclosed homes to allow tenants at least 90 days before starting eviction proceedings. Under the bills, if the tenant has a fixed-term lease, the new owner must honor it unless they can demonstrate that certain exceptions apply. The bills are intended to correct incongruities within California law and between state and federal law.

“Tenants are unsuspecting victims in the mortgage and financial crisis,” said Harris. “They can rent on time but may suddenly find themselves forced to move. These bills will give tenants important rights and fair treatment when they live in a rental that is under threat of foreclosure.”

SB 1473 passed out of the Senate in a 25-13 vote. AB 2610 passed the Assembly in a 54-13 vote.

The Homeowner Bill of Rights, introduced by Harris in February following the National Mortgage Settlement, has been a topic of much debate on both a state and national level.

Advocates argue that the bills are necessary to protect homeowners and renters who have faced difficulties caused by the foreclosure crisis. Critics are calling attention to vague wording in some of the bills’ provisions, saying that they could potentially cause damage to lenders and servicers, further harming the state’s economy.

Some of the other bills in the package saw approval from their houses on Wednesday, including AB 1950, which would extend the statute of limitations on foreclosure-related scams from one to three years. AB 1763/SB 1474 also passed in their respective houses and would give the attorney general the power to form special grand juries for investigations of financial crimes in multiple districts. Two other bills regarding blight prevention (AB 2314 and SB 1472) have also passed in their respective houses.

SB 900 and AB 278, regarding due process and foreclosure reduction, are under review by a Joint Legislative Conference Committee.

Sen. Loni Hancock (D-Berkeley), author of SB 1473, explained her goal of protecting renters.

“Too often, California tenants are the unwitting victims when a home they are renting is foreclosed on,” said Hancock. “The inconsistency between state and federal law has left renters confused and, at times, misled about their legal protections. This bill provides common sense solutions to help protect California citizens caught in the crossfire of the mortgage foreclosure crisis.”

For pre-foreclosure homes, which are residential properties in default or scheduled for auction, sales were at their highest quarterly level since the first quarter of 2009, according to RealtyTrac’s foreclosure sales report.

Pre-foreclosure sales, which are typically sold through the short sale process, accounted for 12 percent of all sales during the first quarter, an increase from 10 percent in the previous quarter and 9 percent a year ago.

Also, third party purchases for pre-foreclosures increased to 109,521, a 16 percent rise from the previous quarter and a 25 percent jump from a year ago.

On the other hand, third parties purchased less bank-owned homes compared to a year ago. With the number at 123,778 for REO homes purchased in the first quarter, the total is a 2 percent quarterly increase but a 15 percent decrease from a year ago.

REO sales accounted for 14 percent of all sales in the first quarter.

Pre-foreclosure homes sold for an average price of $175,461 in the first quarter, a 10 percent decrease from a year ago. The average pre-foreclosure sales price was the lowest in the history of RealtyTrac’s foreclosure sales report, which began in the first quarter of 2005.

REOs sold for an average price of $147,995 in the first quarter, down by only 2 percent from a year ago.

Pre-foreclosures sold at an average discount of 21 percent compared to non-foreclosures while REOs were discounted at about 33 percent.

Pre-foreclosure homes in the first quarter took about 306 days to sell after starting the foreclosure process, up from an average of 256 days a year ago. REOs that sold in the first quarter took about 178 days to sell after completing the foreclosure process.

In 27 states, pre-foreclosure sales increased including Wisconsin (94 percent), Michigan (81 percent), Georgia (80 percent), Texas (46 percent), and Illinois (46 percent).

For REO sales, 21 states saw quarterly increases including Oregon (41 percent), North Carolina (23 percent), Ohio (21 percent), Florida (13 percent) and Wisconsin (13 percent).

The states that had the highest share of foreclosure sales out of all residential sales were Nevada (56 percent), California (47 percent) and Arizona (40 percent).

Among the 20 largest metro areas, the biggest annual increases in pre-foreclosure sales were in Atlanta (78 percent), Detroit (75 percent), San Antonio (74 percent), Sacramento (70 percent), and Dallas (69 percent).

Metro areas that experienced the largest gains annually inREO sales were Minneapolis (33 percent), Boston (30 percent), Philadelphia (22 percent), Atlanta (15 percent), and Chicago (13 percent).

States with the Highest Ave. Foreclosure Discount

1. Massachusetts (45 percent)
2. Kentucky (41 percent)
3. Pennsylvania (40 percent)
4. Connecticut (39 percent)
5. Rhode Island (38 percent)

States with the Highest Ave. REO Discount

1. Massachusetts (51 percent)
2. Connecticut (50 percent)
3. New York (47 percent)
4. Kentucky (47 percent)
5. Pennsylvania (45 percent)

States with the Highest Ave. Pre-Foreclosure Discount

1. Massachusetts (38 percent)
2. Nebraska (37 percent)
3. Rhode Island (33 percent)
4. California (31 percent)
5. Louisiana (31 percent)

The Pending Home Sales Index (PHSI) gave back its entire March increase in April, falling to 95.5 from 101.1 one month earlier, the National Association of Realtorsreported Wednesday. The March index was revised downward from the originally reported 101.4, adding to the gloomy report.

Economist had expected the index to increase 0.5 percent from March.

Even with the decline though, the index is up 14.4 percent since April 2011, but is now at its lowest level since December, dampening expectations at the onset of the home-buying season.

Pending home sales are counted when sales contracts are signed and are viewed as a leading indicator of existing home sales; recent reports suggest that home re-sales should be a bit stronger over the next couple of months but at a level that is still fairly subdued. April pending sales would be included in the home sales report for June.

The PHSI in February – which translated into reported sales (closings) in April – had been 97.4, up 0.4 percent from 97.0 in January. April existing home sales, as reported, were up 3.4 percent from March.

In percentage terms, the month-month 5.5 percent decline in the index was the steepest since April 2011 when the index dropped 7.7 percent month-month.

The decline was the first in four months and was widespread. The index fell in three of the four census regions, improving only in the Northeast, and there by a modest 0.9 percent. The index plunged 12.0 percent in the West to 94.9, its lowest level since March 2011.

The PHSI has been drifting upward, albeit modestly for most of the past two years. The April drop coming at the beginning of the traditional home buying season is a disappointing signal tempered further by the reality that a substantial number of sales contracts are failing to meet underwriting tests and/or other loan standards.

Lawrence Yun, NAR chief economist offered a positive spin on the disappointing report saying a one-month setback in light of many months of gains does not change the fundamentally improving housing market conditions.

“Home contract activity has been above year-ago levels now for 12 consecutive months. The housing recovery momentum continues,” he said.

The index is based on a large national sample, representing about 20 percent of transactions for existing-home sales. An index of 100 is equal to the average level of contract activity during 2001, which was the first year to be examined as well as the first of five consecutive record years for existing-home sales; it coincides with a level that is historically healthy.

A foreclosure prevention agency found that the pending expiration of the Mortgage Debt Relief Act of 2007 is prompting struggling homeowners to strategically default on their loan.

YouWalkAway.com conducted a national survey and found 34 percent of respondents indicated that the act, which is set to expire December 31, 2012, contributed to their decision to walk away sooner rather than later from their property. Those surveyed were YouWalkAway.com clients who were actively considering or navigating through the foreclosure process.

The Mortgage Debt Relief Act releases homeowners from the obligation of paying taxes on mortgage debt forgiven from a short sale, foreclosure, or modification. Taxpayers are eligible if the property is the primary residence.

“The survey results are not surprising; YouWalkAway.com saw a number of homeowners reach out to us in early and mid-2011 due to the impending 2012 deadline,” said Jon Maddux, CEO of YouWalkAway.com, in a release. “Many were prompted to begin the foreclosure process in 2011 in order to ensure their foreclosure is complete by the end of 2012.”

While the expiring act motivates homeowners to seek completion of the foreclosure process before the expiration date, for those who won’t qualify in time, Maddux said not extending the act will then cause short sales to stop immediately due to the fear of getting hit with a huge tax bill.

In addition, 78 percent of respondents from the YouWalkAway.com survey expressed intentions of walking away from their home. Of those, at least 74 percent would qualify for relief under the act.

“Potentially millions of people will find themselves stuck with a huge tax bill after foreclosure if the government doesn’t renew the Debt Relief Act at the end of 2012 or if they don’t finalize their foreclosure by that date. The bill may just expire, like when Congress chose not to renew the home buyer’s tax credit,” said Maddux.

Cheryl Gerhardt, a CPA who has worked with YouWalkAway.com clients, said about 80 percent of the people who approach her about foreclosure tax consequences qualify for the relief under the act.

“These are usually people who purchased during the height of the market from 2005 to 2007 and never had the opportunity to take out a second, whereas a few years ago clients who were getting foreclosed upon had made purchases in the early 2000’s, took out a home equity line of credit and could not qualify,” said Gerhardt.

In March, House Bill H.R. 4290, or Homeowner Tax Fairness Act, was introduced to extend the act to 2015. The bill is sponsored by Rep. James McDermott.

The Mortgage Relief Act was actually extended in October 2009, three months before the act’s expiration date.

YouWalkAway.com works with borrowers facing foreclosure as well as those opting to strategically default on their underwater homes. The survey the agency conducted reached out to 2108 borrowers and received responses from over 25 percent of those contacted.