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Defaults on the Decline as REOs Rise

Declines in new default notices, which were down on a year-over-year basis for the sixth straight month in July, are being offset by near-record levels of bank repossessions, and REOs continue to skyrocket compared to a year ago for the eighth straight month, according to RealtyTrac.

The Irvine, Calif.-based foreclosure tracker said that foreclosure filings-default notices, scheduled auctions and bank repossessions-were reported on 325,229 properties in July, a 4% increase from June and almost a 10% decrease from July 2009. One in every 397 U.S. housing units received a foreclosure filing during the month.

"July marked the 17th consecutive month with a foreclosure activity total exceeding 300,000," said James Saccacio, chief executive officer of RealtyTrac.

A total of 97,123 U.S. properties received default notices for the month. This was a small 1% increase from the previous month but a 28% decrease from a year ago. Default notices in July were down 32% from their peak of 142,064 in April 2009.

For the category of foreclosure auctions, a total of 135,248 properties were auctioned in July, up 2% from June and down 2% from July 2009. Scheduled auctions in July decreased 14% from their peak of 158,105 in March 2010.

Lenders foreclosed on 92,858 U.S. properties in July, 9% more than in June and a 6% increase from July 2009. July's bank repossession total was the second highest monthly total since RealtyTrac began tracking REO activity in April 2005 and was 1% below the monthly REO activity peak of 93,777 in May 2010.

With one in every 82 housing units receiving a foreclosure filing in July, Nevada and Arizona continued to document the nation's highest rate for the 43rd straight month.

A total of 13,727 Nevada properties received a foreclosure filing in July, up 7% from June but a nearly 30% drop from a year ago. July was the 10th straight month where overall Nevada foreclosure activity decreased on a year-over-year basis.

Arizona foreclosure activity decreased on a year-over-year basis for the sixth straight month, but the state still posted the nation's second highest state foreclosure rate. One in every 167 Arizona housing units received a filing during July-more than twice the national average.

One in every 171 Florida housing units received a foreclosure filing in July, the nation's third highest rate, and one in every 200 California housing units received a filing in July, the fourth highest state foreclosure rate.

Foreclosure activity in Idaho increased nearly 19% from June, boosting the state's rate to fifth highest. One in every 240 Idaho housing units received a foreclosure filing in July.

Other states with foreclosure rates ranking among the top 10 in July were Michigan, Utah, Illinois, Georgia and Maryland.

California alone accounted for 21% of the national total in July, with 66,910 properties receiving a foreclosure filing during the month, down 3% from the June and down 38% from July 2009.

With 51,557 properties receiving a foreclosure filing during June, Florida accounted for 16% of the national total in July despite a nearly 9% decrease in activity from July 2009.

Illinois foreclosure activity increased 33%, the biggest monthly increase among states in the top 10. A total of 19,602 Illinois properties received a foreclosure filing in July, the third highest state total and accounting for 6% of the national total.

Michigan accounted for just under 6% of the national total, with 18,833 properties receiving a filing in July, and Arizona accounted for 5% of the national total, with 16,298 properties receiving a filing in July.

Other states with foreclosure activity totals among the nation's 10 highest in July were Nevada (13,727), Ohio (13,511), Georgia (12,577), Texas (11,727) and Maryland (6,961).

All 10 metro areas with the nation's highest foreclosure rates in July posted year-over-year decreases in foreclosure activity, but five of the top 10 posted increases compared to June.

The two biggest monthly increases were in No. 2 Cape Coral-Fort Myers, Fla., where foreclosure activity was up 21% from June, and in No. 9 Phoenix-Mesa-Scottsdale, Ariz., where foreclosure activity was up 19% from the previous month.

Foreclosure activity increased nearly 9% in the Las Vegas-Paradise metro area, which registered the highest rate among metropolitan areas with a population of 200,000 or more. One in every 71 Las Vegas housing units received a foreclosure filing in July, more than five times the national average.

Other metro foreclosure rates in the top 10 were Modesto, Calif., at No. 3 (one in every 102 housing units receiving a filing); Merced, Calif., at No. 4 (one in every 111); Riverside-San Bernardino-Ontario, Calif., at No. 5 (one in 112); Stockton, Calif., at No. 6 (one in 115); Bakersfield, Calif., at No. 7 (one in 118); Orlando-Kissimmee, Fla., at No. 8 (one in 129); and Vallejo-Fairfield, Calif., at No. 10 (one in 136).