Matt Rourke  /  AP
In this March 24, 2011 file photo, Sheila Lloyd, right, who is facing foreclosure, outside City Hall in Philadelphia.
updated 1/12/2012 8:00:11 AM ET 2012-01-12T13:00:11

About 1.9 million homes entered the foreclosure process in 2011, the lowest level since 2007 when the recession began, according to a report Thursday by the foreclosure listing firm RealtyTrac Inc.

The firm cautioned that the decline does not necessarily indicate that the housing market is getting better, as many foreclosures have been delayed due to confusion over documentation and legal issues involved in the process.

There have also been problems with the way some lenders were handling foreclosures. Specifically, signing off on home foreclosures without first verifying documents — a practice referred to as "robo-signing." Many of the nation's largest 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.

The listing firm anticipates 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 remain 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.

RealtyTrac said that 2011's foreclosure activity is 34 percent lower than 2010 and the lowest since 2007. The Great Recession began in December 2007 and ended in June 2009.

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 percent 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 percent from a year earlier.

Copyright 2012 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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