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The cost of renting a place to live rose sharply last year: The average rental price rose almost 12% in 2010 while the average price of homes for sale dropped about 10%, according to data from HotPads.com, a website that lists homes for rent and sale.

Rents hit a national average of $1,319 by December, up from $1,181 in January 2010, according to HotPads.com. The figures were calculated from a sample of one million active rental prices on the website.

In the release, the hike in rents was blamed on a shaky economy and high unemployment, which drives more people to “low-risk housing options.” There are also a growing number of people forced into the ranks of renters because they’ve lost a home to foreclosure, according to the release.

Read more real-estate news in this week’s pages, including the latest on mortgage rates and a Realty Q&A with advice for a homeowner who is heading toward retirement with an underwater mortgage.

It’s possible that some relief could come for rents in the year ahead. The folks at HotPads.com expect to see foreclosed and long-standing for-sale properties re-enter the market as rentals in 2011. That increase in supply could help ease rent prices.

—Amy Hoak, Real Estate writer

Underwater on the house — and close to retirement

I would appreciate your help on this topic. I have read various articles on MarketWatch that you have written and have been looking for more detailed information. My wife and I own a home in California that is underwater. We owe about $950,000 and it is now valued, if it went to foreclosure, at around $650,000.

Read more: Underwater on the house — and close to retirement.

Mortgage rates fall: Freddie Mac

Mortgage rates dropped this week, Freddie Mac reported, with rates on the 30-year fixed-rate mortgage averaging 4.77%.

Read more: Mortgage rates fall: Freddie Mac.

Bank stocks hit by foreclosure ruling

Bank stocks fell sharply Friday as the highest court in Massachusetts reportedly ruled that two foreclosures were invalid because banks didn’t show they owned the mortgages.

Read more: Bank stocks hit by foreclosure ruling.

Commentary: What if we repealed Dodd-Frank?

Rep. Michele Bachmann, the Republican from Minnesota, has made it official. She’s calling for a repeal of the Dodd-Frank Act, the regulatory overhaul enacted this summer that administration officials called “financial reform.”

Read more: What if we repealed Dodd-Frank?

Bank of America settles mortgage dispute

Bank of America Corp. BAC, +1.22% said Monday it’s reached a settlement with Fannie Mae and Freddie Mac of outstanding repurchase claims arising from certain home loans sold to them by Countrywide Financial Corp.

Read more: Bank of America settles mortgage dispute.

For B. of A., mortgage ‘put backs’ aren’t over

Bank of America Corp. unveiled a $2.8 billion deal with Freddie Mac and Fannie Mae on Monday that settles legal spats over losses on hundreds of billions of dollars in home loans that the lender sold to the government-owned mortgage giants.

Read more: For B. of A., mortgage ‘put backs’ aren’t over.

Goldman Sachs sued over mortgage-debt deals

Bond insurer ACA Financial Guaranty Corp. said Thursday that it has sued Goldman Sachs Group Inc. over a controversial mortgage-related vehicle that got the investment bank into legal trouble last year.

Read more: Goldman Sachs sued over mortgage-debt deals

S&P warns on ‘shadow inventory’

Standard & Poor’s Ratings Services said Monday that it’s taking longer for the U.S. housing market to absorb foreclosed homes, which means there may be a major drag on prices for a few more years.

Read more: S&P warns on ‘shadow inventory.’