Foreclosure sales increased 92.3 percent from the prior year, when most major lenders had voluntary moratoriums in place while awaiting the implementation of the Administration’s Home Affordable Modification Program (HAMP). Foreclosure sales increased 24.2 percent from February, with 79.2 percent of those going back to bank and the remainder sold to 3rd parties, primarily investors.

“Despite efforts to promote foreclosure alternatives like loan modifications and short sales, the simple reality is that there isn’t a program for everyone” says Sean O’Toole, Founder and CEO of ForeclosureRadar.com. “Unravelling trillions in excess debt will take time, and foreclosure is part of the solution, not the problem.”

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There’s great news for struggling homeowners from the California Legislature. Thousands of Californians whose homes were foreclosed on or sold at a loss will get tax relief under a measure approved Thursday by the state Legislature. The bill would waive state taxes on mortgage debt that has been forgiven in a short sale. It is expected to affect about 34,000 taxpayers.

Gov. Arnold Schwarzenegger said he would sign the measure, which would also provide about $60 million in tax credits to green-energy companies, when it reached his desk. Californians can already claim the tax breaks on federal returns. Lawmakers passed the measure in time for people to take advantage of it by the April 15 deadline for filing tax returns.

“The mortgage-debt tax relief provision in this bill will provide financial shelter for tens of thousands of Californians who have lost their hopes and dreams in the housing market crash, and it’s about time we gave these folks a helping hand,” said state Sen. Ron Calderon (D-Montebello).

The short-sale provision would mean about $34 million less in tax revenue for the state over three years, according to the Franchise Tax Board.

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