Although the economic outlook is not too bright for Americans with increasing gas prices affecting almost everything we travel in, use for warmth and feed ourselves with, nevertheless there are a few slivers of sunshine in the gray clouds.

There has been some recognition from the IRS that perhaps home owners in debt and foreclosures and short sales may not be entirely to blame.

Yes, it is easy to sit smugly on the sidelines and say things like 'over-mortgaged' or 'irresponsible' but it is a fact that we do tend to think that the laws of the land protect us to some extent. Now they will, but there are many suffering people out there who were scapegoats before the Government stepped in.

Because many homeowners took on big, complicated mortgages that became too expensive once the rates adjusted, the Government has finally attempted to legislate some rules about lending. It is too tempting to think that you can finally afford your own home, and of course understandably, many people could not resist.

There are still alternatives to foreclosure: A short sale or loan modification may help many of these people resolve their problems or even hang on to their homes. A couple of agencies have been set up to try and side step another wave of foreclosures, one is called Hopenow (it is on the net)and another one HUD, though this latter one is less successful at the moment.

If you are struggling with a sub prime mortgage, take the trouble and afford the expense to send your application for consideration by recorded delivery, special mail or registered post. So far 45,000 applications have been taken, and you may want to show that you have in fact, tried to access this Government approved help. You will need proof.

Refinanced mortgages with fixed rates are available now for homeowners struggling with sub-prime mortgages. Knowing that these mortgage holders could face even more increases in their mortgages in the next two years Hopenow are looking at the most serious cases, as their mandate is to avoid as many foreclosures as possible.

One thing is certain, because of this dire and much publicized situation, most new borrowers will now exercise more caution. They now realize that they need to read their loan documents and understand how much their monthly payments might increase in future years - without any pattern that is predictable.

Meanwhile the IRS is interested in giving these distressed homeowners a break on their next year's tax return. They will be allowed to exclude some forgiven mortgage debt from ordinary taxable income.

That's good public policy and should offer some people welcome relief from an onerous tax burden.

For those home owners who still want to hang onto their houses, and are working extra jobs to do so, be assured that the real estate market will likely bounce back. People always have to move to new jobs, get divorced, have a baby that needs a bedroom or in some cases, home owners just die. The market is always rolling over; it just has slower cycles sometimes and now is one of those times.

Some parts of the country have even seen an increase in the real estate market, (such as Manhattan and Scottsdale) and real estate agents in several states report that they have a healthy market.With building permits reportedly down to 1993 levels, new houses will be at a minimum this year a lucky break for existing home owners.