Massachusetts Governor Deval Patrick will announce a new state program to help homeowners in his state avoid foreclosure, according to the Boston Globe this morning. He's pressing mortgage companies to accept a short sale (less than what is actually due on the mortgage) so homeowners late on their monthly payments can get out without going into foreclosure. Short sales are a common tool used to avoid foreclosure, but in today's market with housing prices dropping, it's been much harder to get banks to accept a deal. Wells Fargo (NYSE: WFC), Countrywide Financial (NYSE: CFC), J.P. Morgan Chase (NYSE: JPM), Citigroup (NYSE: C) and HSBC have been in talks with the Massachusetts Department of Housing and Economic Development to come up with a plan.

Many times in today's housing market the borrower owes more than the house is worth. I've heard from people who attend auctions regularly that the number of buyers (aside from the banks themselves) at auctions keeps dropping because there are no good deals - the minimum price set by the institution is higher than the property could sell for on the open market.