An estimated 1.9 million homes entered the foreclosure process in 2011, the lowest mark since 2007 when the recession began, according to a report by the foreclosure listing firm RealtyTrac Inc.
The firm reported that 2011's foreclosure activity is 34% lower than 2010.
The decline does not necessarily point to an improving housing market, as many foreclosures have been delayed because of confusion over documentation, legal issues involved in the process and robo-signing, according to RealtyTrac.
Robo-signing is the act of signing off on home foreclosures without first verifying documents. Many of the largest U.S. banks reacted by temporarily ceasing all foreclosures, re-filing previously filed foreclosure cases and revisiting pending cases to prevent errors.
"Foreclosures were in full delay mode in 2011, resulting in a dramatic drop in foreclosure activity for the year," RealtyTrac CEO Brandon Moore said in a statement.
RealtyTrac expects that 2012's foreclosure rate will be higher than last year's, but will remain below the peak of 2010.
High unemployment, a sluggish housing market and falling home values are still major factors in homeowners falling behind on their mortgage payments. Many borrowers also have simply stopped paying their mortgage because they owe more on the mortgage than the home is worth.
In 2011, Nevada, Arizona and California were among those with the most foreclosures. Other states among those with the highest foreclosure rates for the year were Georgia, Michigan, Florida, Illinois, Colorado and Idaho.
The company said that December's foreclosure filings on 205,024 homes were the lowest monthly total since November 2007. The figure was also 20% below the prior-year period's results.
In the fourth quarter, there were foreclosure filings for 586,133 homes in the U.S., down 27% from a year earlier.