The four states hit hardest by the housing bust -- Arizona, California, Nevada, and Florida -- used to see loans sour as much as eight times the national average. An analysis released last week by Fannie Mae, however, shows strong improvement in those states, with the exception of Florida. Only 7 percent of the firm's 2013 credit losses now originate from California. Meanwhile, Arizona -- with 2.4 percent of Fannie Mae's outstanding balances -- has seen its share of credit losses drop to 1.8 percent in the first six months of 2013 from almost 12 percent just two years ago. By contrast, Florida accounts for nearly 29 percent of Fannie Mae's losses -- an increase from 11 percent in 2011. Several Midwestern states also look riskier. Fannie Mae now has 10 percent of its loans and 22 percent of its losses in four of them -- Ohio, Illinois, Indiana, and Michigan -- that accounted for just 12 percent of losses in 2011. Researchers say the shift is caused by two main factors: one, a much longer foreclosure processes in states where courts approve them than where they do not; and, two, the fact that prices are now rising very quickly in the "sand states" of Arizona, California, and Nevada. A third factor is that the sand states' economies are adding jobs faster than in the four Midwestern states that Fannie Mae's research staff covers.