Sacramento-area home sales hovered around two-year lows during February, branding the start of 2010 as real estate's long slow winter.

But prospects for spring are stronger with thousands of new sales contracts blossoming across the region, say real estate agents and mortgage brokers. Most will close escrow in March and April.

"The people who have money out there are buying right now," said Lori Mode, a Keller Williams agent in Elk Grove. They include first-time buyers and investors from as far away as Australia, she said Thursday. A $589,000 bank repo in Wilton fetched "10 offers the first week, and it went for almost $100,000 over the asking price," she said.

That's a silver lining in an otherwise lackluster February sales report. Amid a short month, wet weather and unemployment that has reached 13.1 percent regionally, buyers and sellers closed just 2,464 escrows in Amador, El Dorado, Nevada, Placer, Sacramento, Sutter, Yolo and Yuba counties, La Jolla researcher MDA DataQuick reported.

That was up from January's 2,428 sales, but well under 2,809 in February 2009. Buyers closed 2,162 escrows in February 2008 and 2,534 in February 2007.

"January and February were dismal," acknowledged Jon Dobbel, Elk Grove branch manager of Summit Funding. "It's the rain, the unemployment, the housing depression and the inability of people who own a house to buy a house because it's upside down. The move-up market is virtually dead."

The new home market is equally rough. Just 6.6 percent of February's regional sales were new homes, 163 in all, DataQuick reported. In 2005 new homes accounted for 25 percent of sales.

But Dobbel, too, is cheered by a March "that has just taken off. We're going to be up about 300 percent in closings over February."

February's median sales price for new and existing homes in Sacramento County rose slightly from January, reaching $169,000, DataQuick reported. That's a 5.6 percent gain from Feb. 2009 when repos were 70 percent of sales and prices bottomed out at $160,000. They went as high as $180,000 during the second half of 2009. Median is that point where half cost more and half less.

Sales prices were also 5 percent higher than last year in Sutter County and 2.7 percent higher in Yolo County. Other area counties, especially the affluent suburban zones, saw prices dip from last year as owners slashed them to sell.

At this point, Sacramento's housing recovery is lagging coastal California. The Bay Area saw sales prices jump 20 percent from last year. Prices rose 10 percent in the Los Angeles, Inland Empire and San Diego region.

DataQuick analyst Andrew LePage said the high-end markets there have awakened from being "asleep a year ago." Foreclosures are also a smaller part of their sales mixes.

Sacramento County's February repo market share was 54.8 percent, reflecting a continuing widespread mortgage crisis where 12.3 percent of area home loans are seriously delinquent, in foreclosure or tied to a bank repo listed for sale. The foreclosed inventory attracted large numbers of absentee buyers, usually investors, who accounted for 27.4 percent of sales. DataQuick said 34 percent of buyers paid cash in a county market where nearly one in four sales were priced below $100,000.

"As an investor you pretty much have to be cash," said Warren Adams, a broker associate with Security Pacific Real Estate in Fair Oaks. Banks, he said, have stopped lending to most investors after they buy four houses. First-time buyers are getting most of the rest.

"I would say a majority of my accepted offers are owner-occupied," he said. Adams attributed March's rise in activity to the season, low interest rates and possibly an April 30 deadline for an $8,000 first-time buyer federal tax credit. Buyers must be in sales contracts by then and close escrow by June 30 to qualify.

Mortgage rates have stayed below 5 percent, before paying points, for seven of 2010's first 11 weeks, according to federal mortgage giant Freddie Mac. Rates this week for 30-year fixed loans were 4.96 percent.

Sacramento-area home builders opened 2010 with 201 new home sales in January, a 4 percent increase from the same time in 2009.

They posted the gain as home builders statewide saw January sales fall 12 percent from January 2009, according to the California Building Industry Association. Statewide, builders reported selling 1,886 new houses and condominiums.

Builders statewide saw median sales prices reach $386,000, a 6.3 percent gain from a year earlier. The opposite occurred in Sacramento, Placer, El Dorado and Yolo counties, where prices for new homes fell 2.2 percent from January 2009. The capital region's January 2010 median was $322,150, the Sacramento-based CBIA reported.

Builders in Yuba and Sutter counties reported six January sales, down from eight in January 2009. Their median sales price rose 12.4 percent from a year earlier to $278,300.

– Jim Wasserman

Sacramento-area residents are almost certain to get state tax relief for 2009 forgiven mortgage debt – eventually.

First, allow for politics.

On Monday, Gov. Arnold Schwarzenegger signaled his intent to veto a wide-ranging bill that – among other provisions – bans the state from taxing debt forgiven in short sales and loan modifications.

But the governor's spokesman said Schwarzenegger is "absolutely, 100 percent" committed to ensuring that Californians who escaped one harrowing financial encounter with lenders don't have another with the state this year. A majority of lawmakers have repeatedly said the same.

"We're looking to get this done with another bill," said Schwarzenegger spokesman Aaron McLear on Monday. McLear said the governor is looking at AB 1779 by Assemblyman Roger Niello, R-Fair Oaks, and SB X6 14 by Sen. Ronald Calderon, D-Montebello. Both would prevent the state from labeling forgiven mortgage debt as extra new income and taxing it.

The federal government has banned such taxes through 2012. California lawmakers and the governor banned them in 2007 and 2008, but haven't reached agreement yet for 2009. Niello's proposal extends protections through 2010; Calderon's through 2013.

The governor's veto threat stems from a dispute with the Democratic-controlled Legislature over SB X8 32, a bill passed by both houses in recent days. McLear said Schwarzenegger will likely veto it over a business tax issue unrelated to the forgiven mortgage debt issue.

The governor opposes a clause that penalizes the state's largest businesses for seeking some tax refunds. Businesses, backed by such groups as the California Chamber of Commerce, say they sometimes overpay taxes to avoid penalties for underpaying. But some businesses routinely fish for refunds whether or not they're fairly owed one, said Democrats, pointing to similar prevention measures by the federal government.

"This anti-fraud provision was adopted by the Bush administration in 2007," Alicia Trost, spokeswoman for Senate President Pro Tem Darrell Steinberg, D-Sacramento, said in a statement Monday.

The forgiven mortgage debt and business refund provisions are among dozens in a bill that aligns many of the state's tax codes with those of the federal government.

A foreclosure sign sits outside a home for sale in Phoenix, Tuesday, Feb. 17, 2009.

Homeowners defaulting on mortgages today may be surprised to learn years from now that they still owe thousands of dollars – and a collection agency is coming after them to get it.

That's because lenders have been quietly selling second mortgages and home equity lines left unpaid after foreclosures and short sales. The buyers: collection agencies, which in California have up to four years to make a claim.

If they win court judgments, these collectors could have years to pursue borrowers with repayment plans, and even garnish their wages, said Scott CoBen, a Sacramento bankruptcy attorney.

"The only relief a consumer will have is entering into a debt negotiating plan or filing for bankruptcy," said Sylvia Alayon, a vice president with the New York-based Consumer Mortgage Audit Center. The firm provides mortgage analysis to lenders, advocacy groups and attorneys.

The phenomenon suggests an ominous, looming echo of today's real estate meltdown. As debt collectors surely seek at least partial repayment of millions of dollars in unpaid Sacramento home loans, some say renewed financial stresses on tens of thousands of local consumers could dampen economic recovery.

"I think there will be a lot of unhappy people when it hits," said CoBen. "We saw this in the '90s. This is not really new. Just when you think you're back on your feet, you're making money and the economy's good, they hit you with this."

Alayon said most people are so stressed out and exhausted by trying to save their homes today that they are unaware they could face another hit later. And many who are losing homes don't get the advice necessary to prevent future fallout, say nonprofit loan counselors.

"You've got tens of thousands of people in California who have this hanging over their heads who don't even know it," said Scott Thompson, principal at for-profit Carmichael-based Mortgage Resolution Services. He fears a new wave of bankruptcies might flatten people just starting to recover from losing their homes.

"So many of these are people with 750 or 800 credit scores who made a bad decision," said Thompson. "Or they're people who suffered income cuts. These are people, in terms of the economy, whom we need to participate."

But an entire industry is gearing up to buy their debt at deep discounts and collect what they can, Alayon said.

"It's a big business and investors are coming out of the woodwork. It's a very lucrative business," she said. Real estate insiders and financial players know it as "scratch and dent."

Total amount of debt unknown

Regionally, no one knows for sure how much unpaid debt is on the line. CoBen said people who used their borrowings for a traditional loan on a house in which they lived generally have little to worry about.

But statistics suggest that tens of thousands of borrowers locally may be vulnerable in years ahead. Generally, they are people who defaulted not only on their first mortgage but also on a home equity loan or second mortgage.

In California, banks can't collect from borrowers for primary, so-called "first-lien," loans that go unpaid. When a house is foreclosed or sold through a short sale, the lender of the first loan gets the house back or the proceeds from another buyer.

But banks also made thousands of "second-lien" loans, including those used to finance 20 percent down payments across Sacramento during the housing boom.

The Sacramento metro area – Sacramento, Yolo, Placer and El Dorado counties – now ranks second nationally for delinquencies on these loans, according to Oakland-based Foresight Analytics, a real estate consulting firm. The firm said 7.9 percent of the $2.9 billion in area "seconds" now on bank balance sheets are delinquent. Only Las Vegas has a higher rate.

A separate category of "seconds" includes home equity loans and home equity lines of credit. Nationally, about 3.4 percent of those loans are currently delinquent, according to Foresight.

One especially alarming indicator is the $28 billion in home equity loans and home equity lines of credit that homeowners took out from 2002 through 2006 in Sacramento, Placer, El Dorado and Yolo counties. More than 386,000 capital-area households extracted home equity during those years as house values more than doubled, according to San Diego property researcher MDA DataQuick.

An unknown number of these loans ended in default amid more than 52,000 area foreclosures in the past three years and thousands more short sales. In short sales, lenders accept less than what they're owed to avoid the high cost of foreclosing and reselling in a down market.

Owners are generally, but not always, on the hook for the second loans left over from a foreclosure or short sale. Most investor mortgages, too, leave the borrower liable for potential unpaid debt.

In many short sales, experienced real estate agents or attorneys can negotiate away debt obligations for the second-lien loan. But many inexperienced borrowers don't know that, and sign final-hour agreements giving lenders the right to pursue them later.

"Seek advice," counseled Doug Robinson, spokesman for national nonprofit mortgage counselor NeighborWorks America. He said nonprofit counselors can help.

"Often when you work with a real estate agent, they're not really equipped to handle the repercussions. They're set up to make the sale," he said.

Government takes steps to help

This release would apply only to short sales done through the administration's Home Affordable Foreclosure Alternatives program.

On the state level, Sen. Ellen Corbett, D-San Leandro, recently introduced SB 1178, which would expand California's protections for some people who refinance and take on a second mortgage.

People who refinance, but use the funds to improve their homes or to stay in their homes with a better interest rate, would be protected. Lenders could not seek court judgments to collect from these borrowers in the event of foreclosure or short sales.

"If you refinance a property and aren't using the money for personal reasons, you shouldn't lose your personal protections," said California Association of Realtors lobbyist Alex Creel. He said the idea has been around for years but has become more urgent as thousands lose income and fall into mortgage trouble.

The bill would apply to all foreclosures or short sales that occur after it becomes law. It doesn't matter when the loan was made, Creel said.

SB 1178 is still in the early stages of consideration. It must clear both houses of the Legislature and be signed by Gov. Arnold Schwarzenegger by Sept. 30 in order to take effect.

Columbus Center, above, a massive condo-office complex near downtown Boston, was abandoned this week. CalPERS stands to lose $91 million.

California's two big public pension funds took fresh hits to their troubled real estate portfolios this week, suggesting the fallout from the real estate bubble hasn't completely run its course.

First up was CalPERS, which Wednesday walked away from a controversial Boston investment that cost it about $91 million.

Then came CalSTRS. A New York skyscraper it co-owns is about to go into default, a credit-rating agency warned Thursday. Default could cost the California State Teachers' Retirement System its share of a $75 million investment.

The two losses by themselves don't represent enormous drains on the pension funds, which control portfolios totaling $336 billion. But they show that the funds have yet to completely extricate themselves from the financial debacles that cost them a combined $100 billion in the fiscal year ended last June 30, including several billion in real estate.

"Real estate remains a very difficult situation for us," said Joseph Dear, CalPERS' chief investment officer, in remarks to the pension fund's board last month.

Troubles in real estate and other sectors are straining the state and local government entities that rely on CalPERS and CalSTRS pensions. The California Public Employees' Retirement System is imposing rate hikes on state and local governments to help it recover from its investment losses. CalSTRS, which needs permission from the Legislature to raise rates, is preparing to introduce a bill next year.

Additionally, both funds are considering lowering their official forecasts of future investment returns, which could increase the funding pressure on state and local governments.

Real estate could be the biggest trouble spot for the foreseeable future. Ben Thypin, senior market analyst with New York consultant Real Capital Analytics, said all big real estate investors are continuing to struggle with post-bubble economics.

"I don't think it's going to get much worse," he said, referring to the market in general and not the California pension funds' investments. "That doesn't necessarily mean there won't be other bombshells."

CalPERS' real estate portfolio lost 47 percent of its value in a year's time and was valued at $13.7 billion at the end of January. CalSTRS' real estate holdings declined by 38 percent in the 12 months ending last June 30, falling to $13 billion.

In its latest headache, Cal-PERS this week notified Massachusetts officials that it's abandoning a massive mixed-use project called Columbus Center. The project, a six-building condo-hotel complex to be built over the Massachusetts Turnpike near downtown Boston, had been stalled for years. Besides financial problems, it got tangled up in a thicket of state and local politics, as neighborhood groups and some elected officials complained about the size of the project and the use of public subsidies.

State officials warned Cal-PERS last month that they were about to terminate a lease the developers need to build a deck over the turnpike. Now the CalPERS group is walking away.

"With the deterioration in the market, the project's no longer viable," said Steve Sugerman, a spokesman for Cal-PERS real estate consultant Wilson Meany Sullivan.

Sugerman said the investors spent $120 million on Columbus Center; CalPERS' share came to $91 million.

Residue remains from the Boston deal; state officials want CalPERS and its partners to spend $4 million cleaning up the construction site. Sugerman said the partners are committed to finding an "amicable resolution."

CalPERS declined comment on the situation, referring questions to the Wilson Meany firm.

The big pension fund went into the Boston deal with its longtime manager MacFarlane Partners of San Francisco. MacFarlane, which steered CalPERS into a separate real estate deal that cost the pension fund more than $900 million, resigned last October as a CalPERS manager.

The $920 million loss, on a housing investment known as LandSource Communities, represented one of the largest real estate losses incurred by either pension fund.

CalSTRS, meanwhile, could lose its share of a $75 million investment in a 35-story New York skyscraper it purchased in 2006 in partnership with New York developer Silverstein Properties Inc.

On Thursday, debt rating service Fitch Ratings warned that the mortgage on the building faced "imminent default." Fitch said the loan was turned over to a "special servicer," a firm that deals with troubled debts.

CalSTRS spokesman Ricardo Duran confirmed that the two partners had poured $75 million into the property. He declined further comment.

Dara McQuillan, a spokesman for Silverstein, said the firm believes it will be able to restructure the debt.

Legislation to prevent the state from taxing forgiven mortgage debt cleared the state Assembly early Monday, offering potential tax relief to thousands of Californians who lost their homes in 2009.

"The feds don't do it and we're not going to do it, either," Assemblyman Charles Calderon, D-Montebello, said Monday before a 47-27 vote that sent the measure to Gov. Arnold Schwarzenegger.

Schwarzenegger's office signaled later that he may veto the measure. The governor opposes an unrelated provision in SBX8 32 concerning tax refunds sought by corporations.

"Our position hasn't changed," said Schwarzenegger spokesman Mike Naple.

The Assembly vote ratified earlier state Senate approval of a measure that aligns many California tax codes with those of the federal government. One clause would eliminate state tax penalties for those who received loan modifications last year or did short sales. In loan modifications, lenders sometimes forgive a few months of payments. In short sales, they agree to sales prices below what they're owed to avoid foreclosing. The differences in both are considered forgiven debt for the homeowner and typically taxed as extra income.

Vacaville homeowner Mark Mosley said Monday he received a $21,000 tax bill last week for a $59,000 loan modification he received in 2009. He said his lender notified him he owes $13,000 to the federal government and $9,000 to the state.

It's almost certain, however, that Mosley doesn't owe federal taxes. The federal government has banned the IRS from taxing forgiven mortgage debt through the end of 2012. The state government had similar bans in place for the 2007 and 2008 tax years. But it hasn't yet extended the ban to the 2009 tax year.

While every homeowner's case can be different, typically those who live in the homes they own can avoid being taxed for forgiven debt. Lawmakers called it a fairness issue Monday, arguing that people having mortgage hardships shouldn't also get hit with a big state tax bill.

"We should provide relief to those who are struggling and at risk of losing their homes," said Assemblywoman Mariko Yamada, D-Davis.

Schwarzenegger opposes a clause that penalizes businesses for seeking some tax refunds. Businesses say it's often hard to calculate what they owe the state, and thus, overpay to avoid stiff penalties. But Democrats say some companies unfairly seek state tax refunds that they aren't owed.

Sacramento-area accountants say rising numbers of taxpayers who did short sales or received loan modifications in 2009 now fear they'll be walloped anew by a cash-starved state government intent on taxing their forgiven debt.

It's impossible to ease the fears or specifically answer many questions, these accountants say.

"We've had quite a few clients fall into that category," said Jennifer Neronde, office manager at Rocklin-based Cramer and Associates CPA.

Uncertainty reigns with less than six weeks before the April 15 filing deadline because the forgiven debt question has gotten caught up in a larger tussle over business taxes between the Legislature and Gov. Arnold Schwarzenegger.

It's headed for a Capitol showdown next week.

Monday, the Assembly is scheduled to vote on SB32 X8, a bill by Sen. Lois Wolk, D-Davis, that would ban the state from taxing mortgage debt forgiven in 2009.

But Schwarzenegger is threatening to veto the bill over an obscure clause opposed by business groups. That clause establishes new tax penalties on firms that file unfounded claims for refunds. Business associations believe it will unfairly punish them for tax withholding decisions they claim are difficult to calculate. The clause, along with forgiven mortgage debt, is among dozens in the bill to align California's tax codes with federal codes.

The governor wants the business penalty provisions stripped from the bill, said his spokesman Mike Naple.

"The governor would prefer that the provision be taken out of the bill and addressed in separate legislation," Naple said.

The state gave homeowners who occupied their homes a pass on forgiven mortgage debt in 2007 and 2008. The federal government, meanwhile, has backed off on taxing forgiven mortgage debt through the end of 2012. In the past, both branches of government treated forgiven debt as taxable income.

In a short sale, for instance, a lender might accept a sales price of $200,000 on a home where it's owed $325,000. The $125,000 left unpaid is classified as forgiven debt, which used to qualify as new taxable income. The Bush administration, backed by the real estate industry, blocked the IRS from taxing forgiven debt in 2007. It's a temporary measure to encourage borrowers to call lenders and negotiate alternatives to foreclosure.

In many cases, borrowers try short sales after they fail to get loan modifications, say real estate agents like Larry Henderson, of Prudential Norcal Realty in Carmichael. He said he gets frequent questions about the complicated tax implications of short sales.

"I make it clear to my clients they should talk with a lawyer or a CPA," he said.

A plan for a controversial 72-acre housing and commercial development on an old railyard near Sacramento City College was recommended for approval Thursday night by the Sacramento City Planning Commission after a marathon hearing.

In an 8-0 vote, the commission adopted a master plan for Curtis Park Village, which encompasses 522 homes and 259,000 square feet of commercial space, and forwarded it to the City Council for approval. The council is expected to consider the plan at an April 1 hearing.

"I am not rejoicing," said developer Paul Petrovich, who has shepherded his multimillion-dollar project through years of public scrutiny and debate. "I have my work cut out for me."

The master plan submitted by Petrovich is largely consistent with the city's general plan for the area, said Greg Bitter, principal planner for the city. After a five-hour hearing, the commission recommended a plot of senior housing be shifted to the east side of the property, he said.

Petrovich and some residents in adjacent Curtis Park have butted heads over the project, which would replace what is now an abandoned, toxic gash of land where locomotives once were repaired.

Some of the nearby neighbors, led by the Sierra Curtis Neighborhood Association, have battled with Petrovich, contending the design is too suburban because it caters to automobiles and features too much commercial space.

Petrovich, who has developed urban and suburban projects all over the Sacramento region, said he has made repeated concessions in the design, such as shifting roads. But he cannot cut commercial space – the revenue generator in a development – and make the $200 million project pencil out, he has said.

For one, his cost to clean up the toxic railyard has escalated since he bought the land in 2004.

Rosanna Herber, president of the Sierra Curtis Neighborhood Association, said the group would present its concerns to the council.

"We believe the council will be more amenable to changes, like a street grid in the development," she said.

The commission did make some changes in response to neighbors who want a pedestrian-friendly development, she said.

"But there needs to be additional things that need to happen," she said.

Her group, despite prolonged debates with Petrovich, is not opposed to developing the site, she said.

"We absolutely want to see it developed. It's a key infill parcel at the heart of the city," she said.

Bob Tull of Cool, right, talks with bank representative Kris Caya about his mortgage Friday at the Sacramento Convention Center. Hundreds of homeowners attended the eight-hour event in hopes of obtaining mortgage relief, or at least making progress.

Hundreds of area homeowners poured into the Sacramento Convention Center on Friday with tales of financial distress, worry, fear and anger.

They were looking for hope at an eight-hour foreclosure prevention workshop matching up borrowers with more than a dozen mortgage lenders and nonprofit home loan counselors.

About 300 people were in line when the doors opened at 12:45 p.m. Some cradled stacks of home and loan documents in their arms; others dragged small carry-on bags behind them.

One of those in line, Peggy Tripp, said, "I just don't know who else to turn to. Nobody else will talk with me. So I'm hoping I can get some satisfaction here today."

Tripp, a mother of three, said she has no financial reserves remaining to save her home.

Mary Pendleton, who said she lives in the Rosemont area east of downtown Sacramento, said she has been struggling to make a $2,200-a-month payment "for a long time, long before all this began. We don't have any savings left."

Bob Tull of the El Dorado County community of Cool said he was hoping to get his nearly $3,000-a-month payment modified, having "burned through about all I have." Tull said he worked more than 30 years as a contractor, and now he's delivering mail to help out.

Several attendees openly expressed anger.

One man randomly told passers-by that he had been "scammed" by his bank. Another carried a small, handmade sign that read, "Why bail out banks when they won't bail out us?"

Lenders attending Friday's gathering included Bank of America, Wells Fargo, JPMorgan Chase, Citi, GMAC, HomEq, PNC, Select Portfolio, Saxon, Suntrust and Ocwen.

Workshop organizers said lenders mailed invitations to borrowers, but Jonelle Smith of Sacramento said she showed up with home loan documents "because a friend of mine told me this was going on. … I'm hoping to get some help from somebody, anybody."

A couple of hours later, a disconsolate Smith walked away, saying, "I couldn't get help today."

The workshop was a repeat of a December 2008 convention center event that attracted more than 1,000 area borrowers to visit with representatives of 19 lenders. Back then, some borrowers reported help on the spot and others remained frustrated.

Friday's event was a collaboration that included the U.S. Treasury, the U.S. Department of Housing and Urban Development, the Obama administration's Making Home Affordable program, the Hope Now Alliance and NeighborWorks America.

The Hope Now Alliance includes counselors, mortgage companies, investors and other mortgage market participants that help homeowners who may not be able to pay their mortgages. NeighborWorks America is a national nonprofit organization created by Congress to provide financial support, technical assistance and training for community-based revitalization efforts. Both are based in Washington, D.C.

Andrea Risotto, a spokeswoman with the U.S. Treasury Homeownership Preservation Office, said she was hopeful some attendees could get loan modifications on-site or within a short amount of time.

"It's also important that they've come here to get help … bring their paperwork and start that process," she added. "I know that some (attendees) have not talked to their lender … so just getting their foot in the door is a start."

Risotto said some homeowners who attended Friday's workshop but need follow-up visits with paperwork or other issues will be asked to return today for additional help.

Eric Selk, director of outreach with the Hope Now Alliance, said organizers also were warning homeowners to avoid people seeking payment to rework loans or modify foreclosures.

"We know that's been happening in California," he said. "… There are unscrupulous operators out there. The (services) here are free."

Friday's workshop commenced amid some progress.

The U.S. Treasury said mortgage lenders permanently modified 116,297 home loans nationwide in January, far exceeding 66,465 in December and 31,382 in November. About 20 percent of the January modifications were in California.

The federal government and various agencies are encouraging lenders to reach out to distressed homeowners, particularly in California, where the real estate crisis has had a profound impact.

The California Association of Realtors said this week that 67 percent of all home sellers in California in 2009 did so as a result of difficulties related to meeting their mortgage obligations.

An unassuming Victorian in midtown Sacramento gives little indication that it was the site of a notorious Sacramento crime case, in which seven elderly tenants were found buried in the yard in 1988.

The Mansion Flats home where police unearthed the bodies of seven people who were under the care of convicted serial killer Dorothea Puente is on the market.

A "for sale" sign went up Wednesday in front of the vacant 1930 two-story tan Victorian with navy and white trim at 1426 F St. Realtor Andrew Chechourka is waiting for Bank of America to determine a price and give him the go-ahead to officially list the property.

"It's a duplex, so it's good for an investor," Chechourka said. "It's ready for move-in."

The 1,834-square-foot house with detailed woodwork and a carpet of clover taking over the small patch of front lawn offers little clue to the property's sordid past.

Puente first rented the top floor in 1980, but left in 1982 to serve time for drugging, then stealing checks and valuables from the elderly. She returned to the home in 1985, renting both floors, and took in disabled tenants. Bodies were first discovered in 1988.

Puente was charged with nine murders, convicted of three, and is living her life in the Central California Women's Facility near Chowchilla. She maintains the victims all died of natural causes.

The home was sold by then-owners Ricardo and Veronica Ordorica in 2002 for $155,000, according to property records. The buyer, Richard Vasquez, updated the home, painting the interior and exterior, refinishing the wood floors, and paving the side yard where the bodies had been discovered.

Vasquez sold the home in 2005 for $500,000 to John Burdette III; and Burdette sold the home to Tom and Lissette Decarli for $560,000 six months later, records show.

The house went through foreclosure in June 2009, with the last reported price being $335,750.

Bank of America spokeswoman Jumana Bauwens would only say the bank owns the property and that it is listed for sale. She did not respond to a request for the listing price.

The top floor is a three-bedroom, one-bath unit; the bottom floor has two bedrooms and a bathroom, Chechourka said. The kitchens both have granite countertops and there are laundry hook-ups, he said.

Chechourka, who works for Kraft Real Estate in Fair Oaks, didn't realize the property's ignominious past until he Googled the address for a map, he said.

"It's a basic disclosure item – we'll have to tell people that it has a notorious history," he said.

Scott Humphrey, 42, who lives on the same block, admired the home Thursday and wouldn't think twice about living there, he said.

"I believe in karma, not ghosts," he said.

Dorothea Puente, also known as Dorothea Montalvo, was booked into a women's prison in Frontera in 1984 for earlier crimes prior to her Sacramento murder spree.

Two-thirds of California home sellers last year put their houses on the block because they couldn't make their mortgage payments, the California Association of Realtors said Thursday.

According to a CAR survey, 30 percent of respondents said they fell behind on house payments; nearly one in five said job loss was to blame; and 15 percent said increased mortgage payments forced them to sell their homes.

The survey results point in part to a double-whammy for homeowners: plunging home equity combined with resets in their adjustable rate mortgages. Tighter underwriting standards added to the troubles, CAR said.

Housing starts jumped sharply last month in California and Sacramento from a year earlier, an industry association said Wednesday.

But the California Building Industry Association, which released the statistics, said the increased activity in January might not mean much.

"Given the fact that we're comparing this month to one of the lowest months on record doesn't exactly bring a housing recovery to mind," said association President Liz Snow in a press release. "Still, it's nice to see some increase in homebuilding activity."

Some 2,979 housing permits were pulled statewide in January, up 48 percent from a year earlier but down 18 percent from December.

In the Sacramento region, 211 permits were pulled in January. That was up 41 percent from a year earlier. It was also an increase of 23 percent over December.

The figures were a far cry from the boom era. In January 2006, for instance, 707 housing permits were pulled in Sacramento.

Galt and Auburn were among the top 10 California cities seeing the greatest percentage increase in median home prices in January 2010 compared with the same period a year ago, according to data released this week by the California Association of Realtors.

Both saw gains of 19.9 percent, tying for eighth on the list, just ahead of Chino Hills with 19.1 percent.

The association said the median home price in Galt in Sacramento County last month was $161,000, compared with $134,250 in January 2009.

The median home price in Auburn last month was $298,000, compared with $248,500 the previous year.

Statewide, the median single-family home price in January was $287,440, up 15 percent from $249,960 in the year-ago period, but down 6.3 percent from $306,820 in December.

The median price of a single-family home in the greater Sacramento region rose 3 percent in January compared with the same month a year ago, far below a 15 percent statewide gain reported Tuesday by the California Association of Realtors.

The association said the Sacramento region's median home price last month was $174,830, up from $169,670 in January last year but down from $189,140, or 7.6 percent, in December.

Statewide, the median single-family home price in January was $287,440, up from $249,960 in the year-ago period, but down 6.3 percent from $306,820 in December.

The association also said January sales in the Sacramento region were down 24.9 percent compared with January 2009 and off by 29.5 percent compared with December. The respective statewide sales declines were 10.6 percent and 3 percent.

Nineteen months after the catastrophic failure of one of Sacramento's top lenders, Pasadena-based IndyMac Bank, a flurry of local lawsuits alleges that the bank's successor – OneWest Bank – is systematically working to push home loan borrowers into foreclosure.

The allegations filed in the Eastern District of U.S. Bankruptcy Court claim that OneWest can make more money by foreclosing than by keeping borrowers in their homes. That's due to its so-called "shared-loss" agreement with the Federal Deposit Insurance Corp., at least 10 local lawsuits allege.

A video made in Fairfield and circulating widely on the Internet also alleges that OneWest stands to earn millions from taxpayers by foreclosing on borrowers as a result of its shared-loss agreement with the FDIC.

The FDIC declined to comment on the Sacramento lawsuits, but it recently denounced the video's "blatantly false claims." The agency told The Bee that its agreement with OneWest contains provisions to make sure the lender is taking adequate steps to modify loans.

OneWest declined to comment on either the lawsuits or the video.

The FDIC, which seized IndyMac in July 2008, sold the failed institution to Pasadena-based OneWest in March 2009.

As part of the deal, the FDIC agreed to absorb some losses from the troubled loan portfolio. That's after OneWest absorbs the first $2.5 billion in losses, the FDIC said.

But Sacramento bankruptcy lawyer Peter Macaluso claims the shared-loss agreement will reward OneWest for foreclosing on homes. Here's how, he said: The company bought IndyMac's troubled portfolio at a 30 percent discount. It can count on the FDIC eventually reimbursing 80 percent or more of its losses – and also can keep proceeds from the foreclosure sales.

"They're deliberately blowing people out in a systematic pattern," said Macaluso.

He has filed eight lawsuits in U.S. Bankruptcy Court on behalf of area IndyMac borrowers who have filed for Chapter 13 bankruptcy protection.

Macaluso alleges that OneWest improperly boosted his clients' monthly loan payments – sometimes by more than $1,000 – by doing a new escrow analysis after they had filed for bankruptcy protection. He said his clients can't afford the increases and are in danger of losing their homes.

On Friday, he said OneWest has since rescinded the extra payments in three cases.

Elk Grove bankruptcy attorney Mark Wolff makes similar allegations in two lawsuits in U.S. Bankruptcy Court.

"We made the allegations that it's a systematic approach they've employed, and it's a violation of bankruptcy code," said Wolff. He said he previously filed similar actions against Bank of America and JPMorgan Chase. His clients also are still in their homes.

A third attorney, Sean Gjerde of Elk Grove, recently filed a civil suit against OneWest in Sacramento Superior Court. It alleges violations of the Truth In Lending Act, claiming that OneWest is unresponsive to attempts to modify an Elk Grove client's IndyMac mortgage.

"As soon as OneWest took over, the communication stopped," Gjerde said. "My client has been in default for a long time and it's been like heck to even get them to talk to me."

The local lawsuits represent another messy aftermath of IndyMac's implosion in July 2008, a development that added to fears of an imminent U.S. financial collapse.

IndyMac was a leading Sacramento lender, ranking 10th in loan volume during the riskiest part of the housing market: mid-2005 to mid-2007. Statistics from researcher MDA DataQuick show IndyMac made 5,312 home loans worth $1.4 billion during this period in Sacramento, Placer, El Dorado, Yolo, Sutter and Yuba counties.

A Treasury Department performance report last week showed that OneWest has temporarily or permanently modified 25 percent of its loans that are 60 days or more late. Twelve lenders reported higher modification rates and nine reported worse rates. The report said OneWest had permanently modified 3,087 of its 112,000 delinquent loans by the end of January.

The video criticizing OneWest and the FDIC has gone viral on the Internet in real estate and lending circles. It was produced by partners in a Web-based real estate and mortgage firm, thinkbigworksmall.com.

The FDIC said the video had "no credibility."

OneWest wouldn't weigh in. "We're not commenting at all," said bank spokeswoman Diane Henry. "I think the FDIC was pretty clear."

The FDIC said the insurance corporation – established in 1933 to protect customers' bank deposits – currently has 94 shared-loss agreements in place with financial institutions that assumed troubled loan portfolios. The agency said OneWest must absorb the first 20 percent of its loan losses – $2.5 billion – before it can receive government funds to cushion the rest. Then, OneWest can be reimbursed for 80 percent or more of its losses.

The FDIC said it hasn't yet paid a penny to OneWest. It also noted that OneWest owns just 7 percent of the loans covered in the shared loss agreement. The rest are owned by investors.

FDIC officials also noted that they can rescind the deal if OneWest isn't complying properly with its agreement to modify loans.

FDIC spokesman David Barr offered no comment on the Sacramento lawsuits filed against OneWest.

In Roseville, Emily Touchstone is not among those suing OneWest. But she is soon to leave for the East Coast after losing a house refinanced with a IndyMac adjustable-rate loan in 2006. She said she couldn't get a OneWest modification after starting the process in March 2009. In October she lost her job.

Touchstone told a story familiar in Sacramento: months of phone calls, fielding requests for more information and then still more. Months behind on payments, she recently lost the house to OneWest. She called it a "preventable thing."

In Elk Grove, Tom Cravalho said the Association of Community Organizations for Reform, the housing counseling group known as ACORN, dropped his case in December, saying it got little response from OneWest.

"They said there was no communication from your lender," he said.

Cravalho called his 2005 IndyMac adjustable-rate refinance loan a "mistake." Now, he and his wife fear losing a $200,000 down payment on the house they bought in 2002.

Trouble started in February 2008 when Cravalho lost his job running a Contractors State License Services School branch in Sacramento. Eventually he turned to attorney Gjerde for help with a modification.

Gjerde has tried, but recently filed suit against OneWest, saying the bank didn't respond to him, either.

"They aren't even paying lip service," he said. "At least some lenders pay lip service."

TAHOE'S WEST SHORE: An artist's rendering shows the renovation plans for Homewood ski resort, which include a 180,000-square-foot main ski lodge, 50 to 60 hotel rooms, a spa and fitness center, 42 two-bedroom condos and 30 penthouse units.

Development takes much of the blame for the long decline in Lake Tahoe's legendary clarity. Now, in a move they admit seems "counterintuitive," regulators are counting on more housing, ski lodges and hotel rooms to help reverse it..

Although construction of new projects has all but ceased at the sensitive Sierra lake, the Tahoe Regional Planning Agency (TRPA) has launched a new initiative – dubbed the Community Enhancement Program – with the goal of attracting a different breed of builder.

The idea: to replace blighted or environmentally damaging projects from the 1950s and '60s with new, "green" buildings that not only fit in with their surroundings but also would hold back lake-clouding runoff.

The trick will be for developers to find a way to profit from their projects while navigating what many consider to be the most highly regulated and closely scrutinized review process in the country.

"It seems counterintuitive, particularly if you're an environmentalist, that building a large hotel with time shares and retail areas is good for the environment," TRPA spokesman Dennis Oliver said. "But most of Tahoe's environmental problems have been caused by poorly designed developments from 50 or 60 years ago, so we need to tear out that bad stuff and then build some good stuff – to remake these properties that are the source of the runoff that's polluting the lake."

If the enhancement program works, the lake gets cleaner, the scenic beauty of Tahoe is preserved and the small communities around the lake – from Crystal Bay to Homewood to the South Tahoe Y – are reborn as walkable pockets of commerce and culture.

But not everyone is convinced it can work.

"I see a lot of flaws in the program," said Jerry Wotel, a retired aerospace engineer and the volunteer president of a homeowners group called North Tahoe Citizen Action Alliance. "Some of the things developers are proposing will have an enormous impact on their neighborhoods. The types of projects being proposed are not at all what the program calls for."

TRPA is offering incentives to developers who show their redevelopment projects can deliver environmental gains – such as reduced air pollution, vehicle travel or sediment pollution.

By minimizing a project's carbon footprint, treating storm-water runoff and creating incentives for cyclists, pedestrians and public transit, developers can purchase development credits. These credits include additional commercial floor area, tourist accommodation units and multi-residential units – building blocks stockpiled by TRPA when old motels or shopping centers are torn down.

When TRPA announced the program a couple of years ago – after an extensive series of public hearings around the basin that drew an estimated 3,000 people – it expected two or three applications. It got nine.

The first project to move forward has been Boulder Bay, a proposal to tear down the 63-year-old Tahoe Biltmore on the north shore and replace it – and its runoff-generating asphalt parking lots – with a new 300-room hotel, 59 condos, a health and wellness center, 20,000 square feet of shops and restaurants, and a small casino. Developer Roger Wittenberg has been holding public hearings on Boulder Bay and will release a final environmental impact statement in a few months.

Boulder Bay has attracted substantial support, but also opposition from some residents and environmentalists who have fought against development around Tahoe for decades.

On Tahoe's west shore, another big project is on the horizon. Developer JMA Ventures proposes to renovate the existing Homewood ski resort with a 180,000-square-foot main ski lodge, 50 to 60 hotel rooms, a spa and fitness center, 42 two-bedroom condos, 30 penthouse units, underground parking, a small retail area, a midmountain lodge with a restaurant and pool, and 12 two-story condos.

JMA executive vice president David Tirman said the developers held more than 20 meetings and talked with more than 1,000 Homewood neighbors before drawing up their initial plans for Homewood Mountain Resort. He said the plans reflect what residents wanted – a community gathering place designed in the Old Tahoe architectural style.

Homewood has already installed a new filtration system in two parking areas to collect and filter runoff before it reaches the lake. Since 2006, the firm has been revegetating eroding slopes and thinning fire-prone forests on its property. When construction starts, the new buildings will have cisterns to collect water and recycle it for snowmaking. When buildings are torn down, some of the old lumber and materials will be used in the new construction.

Tirman says the project will have other benefits. More hotel rooms and condos will help even out visitor traffic, currently concentrated on the weekends. The proposed outdoor amphitheater will be a cultural draw. Links with a dial-a-ride, water taxis and mass transit will cut down on traffic jams that plague the area, Tirman predicted.

"Our project demonstrates that through good planning there can be redevelopment that is in balance with the natural environment and can actually make improvements," Tirman said.

Although Tirman spent months studying examples of Sierra architecture – including old photos of the Ahwahnee Hotel at Yosemite – to develop the look of Homewood, Wotel of the citizens alliance says the planned development is just too big and will stick out in the sleepy west shore hamlet.

"It's going to bring as many visitors to Homewood as there are residents in Homewood," Wotel said. "There's no way you can say it isn't going to change things. It's too big, too dense and not along the scale of the community."

Ultimately, TRPA's 15-member governing board – which includes members from Nevada and California – will have to decide whether the plans for Homewood and Boulder Bay fit with the agency's vision for Lake Tahoe. A variety of other state, federal and local agencies also review developments proposed for Lake Tahoe.

TRPA consultant Darin Dinsmore, a planner and landscape architect, says it's time for Tahoe planners to embrace innovative environmental efforts like the community enhancement plan. Dinsmore helped design the program for TRPA. In meeting after meeting around the basin in 2007, he heard residents plead for a program to revitalize neighborhoods while protecting the lake.

Dinsmore noted that the city of Vancouver, B.C., recently passed a law requiring projects to achieve the highest rating from the Leadership in Energy and Environmental Design (LEED) Green Building Rating System. LEED certification is costly and time-consuming, but the Canadian developers went along with the law because the highest standards ensure the resale value of their projects, Dinsmore said.

"Tahoe used to be at the forefront of innovations like that," Dinsmore said. "But not anymore.

"Do we need to have another Olympics to start thinking outside the box? Seventy-two percent of the fine particulates getting into the lake are coming from these commercial zones. What are we going to do about that?"

Dinsmore and Oliver of TRPA point out that even if large projects like Boulder Bay and Homewood get approved, they aren't going to be built overnight. The economic reality is that construction has to be phased in slowly, as condo buyers emerge from the shadows of the current recession and as financing becomes available to the builders. Oliver noted that some projects already approved at Tahoe have been stalled while builders – rejected for financing from banks – turn to private equity firms for construction loans.

"(Community enhancement) is not a job we'll finish in one year or 10 years but in a generation," Oliver said. "But as long as we're making forward progress, that's OK."

So TRPA finds itself in an unexpected position: After years of fending off development pressure on the 500-square-mile Tahoe basin, it's trying to figure out a regulatory environment that actually encourages development.

"The cost of doing nothing is sustained environmental degradation coming off existing development built 50 years ago," Oliver said.

HOMEWOOD: The proposed midmountain lodge at Homewood Mountain Resort would replace an existing tent facility and concrete foundation. Developer JMA Ventures executive vice president David Tirman said the developers held more than 20 meetings and talked with more than 1,000 Homewood neighbors before drawing up their initial plans for the ski resort. He said the plans reflect what residents wanted - a community gathering place designed in the Old Tahoe architectural style.

An artist's rendering shows the view from State Route 28 and Stateline Road of Boulder Bay after the proposed project's completion.

Developer Roger Wittenberg has been holding public hearings on Boulder Bay.

The Boulder Bay development calls for the 63-year-old Tahoe Biltmore on the north shore to be torn down and replaced with a 300-room hotel, 59 condos, a health and wellness center, shops and restaurants, and a small casino.

A worker removes a roof overhang at the 65-acre site.

Sacramento general contractor Otto Construction started demolition of the historic Tri-Valley Growers cannery this week at Richards Boulevard and North Seventh Street, opening the way for development of the 65-acre infill project Township 9.

Plans for the transit-focused project include up to 2,900 residential units, offices and stores north of downtown Sacramento. Township 9 is a joint venture between Sacramento-based nonprofit Nehemiah Corp. of America and Sacramento developers Ron Mellon and Steve Goodwin.

Demolition will take four months and set the stage for $30 million in state bond funding to build streets and other infrastructure for the project, the partners say.

Regional Transit has scheduled an October opening for its $44 million extension of the Green Line to a new nearby light-rail station. Sacramento apartment developer St. Anton Partners will start construction late this year on a pair of four-story buildings containing the site's first 180 residences.

An excavator rips apart an old building at the historic Tri-Valley Growers cannery at Richards Boulevard and North Seventh Street on Friday.

The new year in home sales opened with a thud.

January sales fell to their lowest point in almost two years across the capital region, San Diego researcher MDA DataQuick reported Thursday. The firm counted just 2,428 closed January escrows on new and existing houses in Amador, El Dorado, Nevada, Placer, Sacramento, Sutter, Yolo and Yuba counties.

The tally was well below 2,806 sales in January 2009 – and the lowest since March 2008.

"I think people are just scared," said Larry Henderson, a real estate agent with Prudential Norcal Realty in Carmichael. "I think they're still afraid houses are going to go down." He said his bigger fear, however, is that interest rates will climb to 6 percent this year and freeze out his clients who are first-time buyers.

January's weak sales numbers imitated a pattern seen statewide, where the month is always one of the year's slowest for sales. DataQuick analysts said January is a poor month to chart emerging trends, and cautioned against seeing weak numbers as "substantial lasting changes in the market."

Despite fewer sales, year-over-year prices for new and existing homes combined continued to hold steady. They ranged from flat in Sacramento County to 4 percent and 5 percent annual declines elsewhere.

But median prices for existing homes in Sacramento County, the largest sector of the real estate market, fell from $178,000 in December to $166,000 as lower-end homes gained more market share.

"January closings really skewed toward foreclosure resales," said DataQuick analyst Andrew LePage. He said bank repos were 52.7 percent of the county's sales, the highest since September.

Many of these repos were scooped up by investors who shopped aggressively during the holidays and accounted for 28 percent of January sales in Sacramento County. That is the highest monthly investor share since 2000. DataQuick said 31.8 percent of buyers in Sacramento paid cash, continuing a yearlong pattern that has frozen out scores of first-time buyers.

Henderson called the climate "brutal" for buyers trying to purchase their first home.

Home sales registered the sharpest drops from January 2009 in Sacramento, Yolo, Sutter and Yuba counties. A year ago in those counties, cheap bank repos accounted for as many as seven in 10 sales. That buying frenzy has since slowed.

Sales rose from January 2009 in the more affluent suburban, rural and resort counties: Placer, El Dorado, Nevada and Amador. They had few bank repo sales early last year, making their low 2009 tallies easy to beat, LePage said.

Regionally, January marked a seventh straight month of sales numbers that failed to beat those of the same time a year earlier. That pattern follows 14 months of year-over-year sales gains that ran from April 2008 to June 2009. Many of those gains overlapped with a buying frenzy ignited by banks dumping thousands of discounted repo properties onto the market.

LePage said January's higher percentage of foreclosure resales "is more cleanup of a mess we already know about." He said there are still no indicators of another massive wave of repo listings.

"If there's going to be a new wave of foreclosures we're going to see those first in notices of default (the first step of the foreclosure process), and we haven't seen that. They're elevated but it hasn't taken off."

Data for resale single-family detached homes that closed escrow.

Percent changes are from the same month one year earlier.

Source: DataQuick Information Systems, DQNews.com