Are there any foreclosures, short sales or distress properties in your town or neighborhood? If you answered “no,” you probably aren’t paying close attention to the local real estate market.

Good times or bad, these situations always occur. Even during the peak years of 2004 and 2005 for home sales, there were still mortgage lender foreclosures and distress property sales. Today, the numbers of these sales are rapidly rising. If you’re interested, the current buyer’s market in most cities is a great time to acquire these below-market-value properties.

WHAT CAUSES FORECLOSURES AND DISTRESS PROPERTIES?

The number of homes for sale rose more steeply last month in Santa Clara County than in any other of 13 counties included in a monthly report from a local realty brokerage.

The inventory of for-sale homes rose 9 percent in the county from July 31 to Aug. 31, to 6,412 houses and condos, according to a monthly report prepared by Redwood City-based Movoto. The second-highest increase was 5.3 percent in San Diego County, followed by a 4.1 percent uptick in San Francisco.

Democratic lawmakers are drafting bills that would impose new restrictions on mortgage lenders and loan servicers. The bills would ban yield-spread premiums and prepayment penalties on higher-priced loans, and increase liability for mortgage brokers and investors who buy securities backed by mortgage loans.

Sen. Christopher Dodd — a presidential hopeful and chairman of the Senate Banking Committee — released details of a proposed bill Wednesday that has the endorsement of groups including the NAACP, the AARP, and the Center for Responsible Lending.

The bill proposed by Dodd, D-Conn., would expand the Homeownership and Equity Protection Act (HOEPA) to cover more loans, and create good faith and fair dealing requirements for lenders and brokers.