Foreclosure-related filings fell 7 percent in November, in part because of state laws that prolong the foreclosure process and more aggressive efforts by lenders to modify the loan terms of some troubled borrowers, data aggregator RealtyTrac said today.

The drop in filings may only be a lull, RealtyTrac said, citing a recent report by the Mortgage Bankers Association that the delinquency rate for loans not yet in the foreclosure process climbed to a record 7 percent during the third quarter.

Foreclosure-related filings fell 7 percent in November, in part because of state laws that prolong the foreclosure process and more aggressive efforts by lenders to modify the loan terms of some troubled borrowers, data aggregator RealtyTrac said today.

The drop in filings may only be a lull, RealtyTrac said, citing a recent report by the Mortgage Bankers Association that the delinquency rate for loans not yet in the foreclosure process climbed to a record 7 percent during the third quarter.

The MBA projects 2.2 million homes will enter the foreclosure process in 2008, and that layoffs and the worsening economy could increase that number next year (see story).

Another indication that foreclosure filings may be headed back up: Data collected by federal bank regulators shows more than half of borrowers who were granted loan modifications during the first quarter had re-defaulted after six months.

Many of those delinquencies could turn into foreclosures next year, said RealtyTrac CEO James Saccacio, and November’s lower foreclosure activity may only indicate "a temporary lull before another foreclosure storm hits in the coming months."

Foreclosure-related filings, which include default notices, auction sale notices and bank repossessions, were reported on 259,085 U.S. properties during the month, RealtyTrac said. The volume of properties with foreclosure filings was up 28.3 percent in November compared to the same month last year.

The report counts the total number of properties with at least one foreclosure filing reported during the month, based on data collected from more than 2,200 counties that account for more than 90 percent of the U.S. population.

Homes are typically subjected to more than one foreclosure filing as they move through the foreclosure process. In the end, many aren’t repossessed by lenders because borrowers are able to refinance their loans on better terms or negotiate a short sale or loan modification.

The 10 states with the highest foreclosure rates were Nevada, Florida, Arizona, California, Michigan, Georgia, Ohio, Colorado, Utah and Idaho.

Four of those states — Nevada , Florida, Arizona and Colorado — saw foreclosure-related filings fall from October to November, while filings increased in the six other states.

In Nevada, foreclosure-related filings fell nearly 4 percent from October, but the state stayed at the top of the foreclosure rate list. One in 76 homes in Nevada received a foreclosure-related filing in November, more than six times the national average of one in 488 homes.

Foreclosure-related filings fell 9.45 percent in Florida, 24.97 percent in Arizona, and 0.87 percent in Colorado.

The 10 states with the lowest rate of filings were West Virginia, Nebraska, Vermont, Mississippi, South Dakota, Montana, North Dakota, Kentucky, New Mexico, and Louisiana.

In terms of the raw number of foreclosure filings, California, Florida and Michigan led all states. Foreclosure-related fillings rose 6.21 percent in California, to 60,491, despite a new law that took effect in September requiring that loan servicers contact borrowers at least 30 days before filing a notice of default.

North Carolina, Maryland and New Jersey have also passed laws that slow down the foreclosure process, while Massachusetts and Connecticut have provided borrowers with a stronger "right to cure" delinquent loans.

California accounted for six of the 10 metro areas with the highest rate of foreclosure filings — Merced, Modesto, Stockton, Riverside-San Bernardino, Bakersfield, and Vallejo-Fairfield.

Three Florida metros were also on that top 10 list: Cape Coral-Fort Myers, Fort Lauderdale, and Port Lucie-Fort Pierce. Rounding out the top 10 list of 230 metro areas tracked in the report was Las Vegas, where one in 61 properties were subjected to foreclosure-related filings.

The RealtyTrac U.S. Foreclosure Market Report counts the total number of properties with at least one foreclosure filing reported during the month, based on data collected from more than 2,200 counties that account for more than 90 percent of the U.S. population.

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