The number of default notices filed against California homeowners fell last quarter for the first time in 3 years.

But the good news isn’t good. It’s primarily due to changes made at the state level.

But on this note, the Bailout will change the current status quo on foreclosure. Look for many people to opt for loan modifications; if they can qualify, and if not, we may see a rise in short sales, as they may be fast tracked for a quick sale rather than the additional cost to lenders of going all the way to foreclosure.

Remember a short sale is when a property sells for less than is owed to the bank, but sells subject to bank approval.

If you become involved in such a transaction, make sure you consult your CPA and your lender for all tax consequences and financial liability, if any.