That's called lens flare, and even happens on $3000 camera lenses. When you point the lens directly into the sun like that, it's possible for the intense light to reflect inside the lens elements and you get the flare. The flare can appear in a variety of different ways depending on the lens construction. There is no lens on the planet that can eliminate this entirely. Try keeping the bright sun out of the frame and you should see it go away. Also, the difference between brightness of the *sun*(!) and that dark house is far, far, far, beyond what any HDR mode can deal with. Don't worry, your camera is working just fine.