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Richmond, California, would buy mortgages — but not homes — to reduce residents' debt burdens.
August's year-over-year gain is the first in four years.
The 10 markets with the highest negative-equity rates on expensive homes have seen those rates fall.
Generally, distressed properties come at a 14 percent discount -- but some sell for more than market value, RealtyTrac says.
As existing-home sales touch highest point since September, the share of foreclosures may indicate better market health.
Less than 2.5 percent of home loans are in foreclosure, which may lead banks to be more aggressive.
'The O.C.' star is reportedly $100,000 behind on her mortgage payments.
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