The US economy is in the throes of a recession. Unemployment is at its peak. As people lose jobs, even those with very sound credit scores are faltering on mortgage payments. Hence, foreclosures have become common.

The federal government had come up with a program by which loans of homeowners are being modified, first on a temporary basis and then permanently. The program started off on a slow pitch. However, the Federal government has now asked banks to hasten the process.

Experts say that the real estate scenario will improve only when the economy does. A silver lining is that California which was once battered by foreclosures is showing signs of steady improvement. The foreclosure crisis has shown signs of waning. This was revealed by a trade group.

In fact, the Mortgage Bankers Association said that the foreclosures in California have dropped from that of previous year. Problems are however, rampant in Michigan, Indiana, Ohio and Illinois.

The Chief Economist Jay Brinkman said, "California is showing signs of improvement. We are seeing it on a quarter-to-quarter basis and year-over-year basis." There are some statistics to prove this. In the last one year, California is no longer in the fourth rank where foreclosures are concerned. Rather it has moved to the seventh rank. Even loan defaults have fallen in the first half of 2010.

It may be mentioned here that the states which are worst affected by foreclosures are California, Nevada, Arizona and Florida. Hence improvement in the foreclosure scenario in California indeed spells good news for the economy.
Brinkman said, "A year ago they had 45.3 percent of the problem loans. That’s down to 37.9 percent. We’re looking now at Illinois, Ohio, Michigan and Indiana. They’re climbing back into the list of problems."
In Sacramento, too, the scenario is improving. Here, homeowners are resorting to short sales to prevent foreclosures. That usually happens when homeowners owe more on their homes than what they are worth. In such cases, they sell homes at a lower price in order to prevent foreclosures.

A real estate agent Keller Williams says, "All those houses that were vacant before were sold in the last year or two. A year ago it seemed every other house on some of those streets were vacant." However, the scenario is improving now. With less vacant houses, the property prices are also improving. Experts say that the employment scenario has to improve if the foreclosure crisis is to be abated.

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