Threatening possible criminal and civil prosecution, Attorney General Brown of CA ordered 386 mortgage foreclosure consultants to post $100,000 bonds and register with his office.  Brown also unveiled a new loan modification fraud website (http://ag.ca.gov/loanmod).

Also this week, Brown closed two fraudulent foreclosure-assistance companies — U.S. Foreclosure Relief Corp. and H.E. Servicing, Inc. –and secured a court judgment of more than $1million in restitution for homeowners who paid upfront fees for non-existent loan-modification services.  Under the judgment, a court-appointed independent receiver will oversee the repayment program, which will be paid through frozen company funds and the sale of personal items owned by the executives of the companies.

By law, individuals and businesses offering mortgage-foreclosure consulting, loan-modification, and foreclosure-assistance services, unless exempt, must register with the attorney general’s office and post a $100,000 bond.  It also is illegal for loan-modification consultatns and businesses to charge up-front fees for their services.  Non-profit housing counselors certified by the U.S. Dept. of Housing and Urban Development (HUD) provide free assistance to homeowners.

The California Association of Realtors reported on March 10th that in 2009, nearly half of the homes sold went to first-time buyers. But the chief economist for CAR said that because of the pending end of the first-time buyers tax credit, this % will probably dip in 2010.

This 47% is up from 35.9% in 2008 and the highest since just more than 50% in 1995.

Leslie Appleton-Young, the CAR’s chief economist, said that the rist was due to falling prices, low mortgage rates, and the tax credit. She predicted that the proportion of first-time buyers could still rise above 50% this year because the more expensive end of the market continues to be weak. “The top end is challenged by unrealistic pricing by sellers,” she said.

Sales have reduced the inventory of unsold homes, but they still stood at 5.8 months for starter homes and 14.8 months for the top end.

A little more than half of all sales last year were distressed properties — bank-owned and properties selling as short sales.

Young continued,”I think it’s going to be flat for the foreseeable future. Price trends will vary by price category. Areas that went down the sharpest and have the greatest degree of distressed sales will come back strongest and have the sharpest recovery. It’s already happened. At the upper end, I think we’ll see a more sluggish price performance over the next couple of years.”

Throughout the country, people continue to default on their home loans — but lenders have backed off on forced evictions, allong many to remain in their homes, essentially rent-free.

Several factors are driving the trend, industry experts say, including government pressure on banks to modify loans and keep people in their homes.

Allowing borrowers to stay in their homes helps protect the bank’s investment as it negotiates with the homeowner, said a spokesman for a major lender. “If the person’s in the property, there’s less chance for vandalism, and they’re probably maintaining the house, he said. Economists say the situation wo’t last forever, but in the meantime the “amnesty” may allow at least some homeowners to regain their financial footing and avoid eviction.

For some reason, banks are being more lenient with homeowners who are behind on their loans. Whether it’s a strategy to try and slow down the volume of foreclosures or simply a matter of the banks being able to keepup with volume is something that banks only know for sure.

Lenders say the trend reflects their efforts to work with borrowers to modify loans to avoid foreclosure.