The number of homes entering the foreclosure process fell sharply in July compared to a year ago, but homes continued to gush out the other end of the foreclosure pipeline and were repossessed by lenders at near record levels, according the latest numbers from data aggregator RealtyTrac.

Lenders repossessed 92,858 homes in July, up 9 percent from June and 6 percent from a year ago, RealtyTrac said. It was the eighth month in a row where bank repossessions were at a higher level than the same time a year ago.

The monthly tally of homes becoming "real estate owned" (REO) has been higher only once since RealtyTrac began tracking it in the spring of 2005. The all-time record for bank repossessions was set in May, when lenders took back 93,777 properties.

But the number of homes beginning the foreclosure process when lenders served their owners with default notices was essentially flat from June to July, at 97,123. That’s a 28 percent decline from the same time a year ago, and a 32 percent reduction from the April 2009 peak.

Foreclosure auctions were scheduled for 135,248 homes in July, up 2 percent from June but down 2 percent from a year ago.

A total of 325,229 were subject to some sort of foreclosure-related filings in June, including default notices, scheduled auctions and bank repossessions, up 4 percent from June but down nearly 10 percent from a year ago.

Not all homes that are subjected to a default notice complete the foreclosure process, as some owners are able to get current on their loans again, or negotiate a loan modification or short sale.

RealtyTrac’s statistics show default notices have declined on a year-over-year basis for six consecutive months, suggesting that there is light at the end of the foreclosure tunnel.

But it may be some time before the reduction in homes starting the foreclosure process translates into reductions in homes reaching the end of the foreclosure pipeline to be repossessed by lenders.

According to statistics collected from loan servicers by Lender Processing Services, homeowners who were in the foreclosure process in June were behind on their loan payments by 461 days on average, up from 251 days in January 2008.

If that trend holds, many homes entering the foreclosure pipeline today may not show up in lenders’ REO inventory for a year or more.

The 10 states with the highest rates of foreclosure-related filings were Nevada (one filing per 82 homes), Arizona (1 in 167), Florida (1 in 171), California (1 in 200), Idaho (1 in 240), Michigan (1 in 241), Utah (1 in 242), Illinois (1 in 269), Georgia (1 in 320) and Maryland (1 in 335).

That compares with one filing per 397 homes for the U.S. as a whole.

In terms of raw numbers of properties hit with foreclosure related filings, five state accounted for more than 50 percent of the U.S. total: California (66,910), Florida (51,557), Illinois (19,602), and Michigan (18,833). Rounding out the top 10 states were Nevada (13,727), Ohio (13,511), Georgia (12,577), Texas (11,727) and Maryland (6,961).

Looking back a year, the share of foreclosure filings dropped in each of the top 10 metro markets for foreclosure rates: Las Vegas (one filing per 71 homes); Cape Coral-Fort Myers, Fla. (1 in 92); Modesto, Calif. (1 in 102); Merced, Calif. (1 in 111); Riverside-San Bernardino-Ontario, Calif. (1 in 112); Stockton, Calif. (1 in 115); Bakersfield, Calf.  (1 in 118); Orlando-Kissimmee, Fla. (1 in 129); Phoenix-Mesa-Scottsdale, Ariz. (1 in 132); and Vallejo-Fairfield, Calif. (1 in 136).

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