Homeowners

Don Atkins shared his life with Ted Horzella for 37 years. For the last three years of Horzella's life, the men were registered with the state of California as domestic partners. But when Horzella died in 2005 at the age of 76, Atkins was shocked to learn his annual property tax bill would rise from $1,400 to $10,400. He paid an attorney $6,700 to fight his assessment and Los Angeles County an additional $20,000 in taxes.

Government initiatives to stem the country's mounting foreclosures are hampered because banks and other lenders in many cases have more financial incentive to let borrowers lose their homes than to work out settlements, some economists have concluded. Policymakers often say it's a good deal for lenders to cut borrowers a break on mortgage payments to keep them in their homes. But, according to researchers and industry experts, foreclosing can be more profitable.

One of the mysteries of the recession is why mortgage lenders haven't tried harder to avert foreclosures. Because property values have plummeted in once-sizzling markets, lenders that repossess a house can lose half or more of the original loan's value. That leaves plenty of room to modify the terms of a loan and still obtain a better return on the lender's investment. Yet the number of loans going into foreclosure continues to mount, and the number of homes repossessed and sold this year is almost as high as it was a year ago. The latest evidence arrived last week, when the Treasury Department reported that a new federal program for troubled borrowers had benefited only 9% of the eligible homeowners.

The Gold Creek Ranch edges the Angeles National Forest north of Sunland, a 160-acre estate with high hills and open fields, where a 3-foot-tall wooden statue of Buddha rests under an oak tree and residents do yoga on flat rocks next to yucca plants. "It's a spiritual place," says Nicholas Bowrin, 47, who has been staying at the ranch for a little over two years. The ranch's owner, 77-year-old Jack Johnson, said the "property is my life." "I'm 23 miles from Hollywood and Vine right now, but I'm at the end of the world," Johnson said Thursday afternoon at the ranch, after fire licked at the private retreat.

In parts of California, including the northeast San Fernando Valley, it's hard to find a street without a foreclosed home being sold by a bank. Nationwide, foreclosures in July reached a record high -- one of every 355 homeowners received default or action notices or were foreclosed on. Foreclosures lower property values, hinder neighborhood safety and lower government revenue. And a single foreclosure can cost up to $34,000 for local government agencies, which have to absorb the cost of inspections, court actions, unpaid water and sewage charges and trash removal fees.

More than 50,000 homeowners are expected to begin streaming through the Los Angeles Convention Center today, hoping for a hand in restructuring their mortgages or avoiding foreclosure. The free five-day event, running through Monday, is organized by Boston-based Neighborhood Assistance Corp. of America. NACA hosted similar meetings nationwide this summer that attracted more than 180,000 participants. Counselors at 360 computer stations will scan homeowners' mortgage documents and send electronic files to nearly 2,000 on-site servicers and lenders, including representatives from Wells Fargo & Co., JPMorgan Chase & Co. and Bank of America Corp.

The drumbeat is growing in Washington for extending -- even expanding -- the popular $8,000 tax credit for first-time home buyers, a soon-expiring benefit that some experts estimate is on its way to spurring as many as 400,000 additional sales this year. The program has been a component in the federal effort to resuscitate the devastated real estate market. Reversing falling housing prices by stimulating sales is a key to halting the tide of foreclosures that have helped drag down the economy.

Opening a new front in the city's efforts to reduce tagging, the Los Angeles City Council on Tuesday approved an ordinance requiring that all new homes include a finish that is resistant to spray paint unless the owners promise to remove any graffiti themselves. The measure, which was unanimously approved, extends a provision in the Los Angeles Municipal Code requiring that new commercial buildings and apartments be coated to a height of 9 feet with an impermeable material, such as ceramic tile, baked enamel or a chemical gloss.

This year's $8,000 federal tax credit for first-time home buyers has attracted as many as 90,000 ineligible claimants -- including a 4-year-old child -- raising questions about efforts to extend the popular program. In all, tax credit claims totaling more than $600 million are suspicious, tax officials testified Thursday before Congress. The credit, on home sales to first-time buyers that close through Nov. 30, is an important piece of the $787-billion stimulus package enacted in February and is part of the Obama administration's effort to lift housing sales.

A national housing nonprofit has launched an education campaign in Southern California to combat scams targeting homeowners in peril of foreclosure. Loan modification fraud is on the rise, costing troubled homeowners thousands of dollars up front for mediation and counseling services that are provided free by federally approved nonprofits, Eileen Fitzgerald, chief operating officer of NeighborWorks America, said Monday at a news conference on the steps of Los Angeles City Hall.