Help for Underwater Homes

The number of American homes that end up in foreclosure has started to decline, a welcome development that partly reflects an improving housing market.

But a look at data that tracks distressed home sales reveals another reason why foreclosures are becoming less prevalent: More homeowners are turning to so-called short sales—where they sell their homes for less than what they owe in mortgage debt and the bank typically eats the difference.

In the past, short sales were rare. Now they are becoming increasingly common in part because lenders, homeowners and real-estate agents have become more experienced at marketing and pricing ...

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