Foreclosure activity blipped up slightly in February but continues to recede on a year over year basis.  RealtyTrac, the Irvine California firm that tracks legal filings for the process, reported this morning that default notices, scheduled auctions, and bank repossessions or foreclosure sales were reported on 154,281 U.S. properties in February, one in every 849 U.S. housing units.  This was an increase of 2 percent from January but was 25 percent below the level in February 2012.

 "At a high level the U.S. foreclosure inferno has been effectively contained and should be reduced to a slow burn in the next two years," said Daren Blomquist, vice president at RealtyTrac. "But dangerous foreclosure flare-ups are still popping up in states where foreclosures have been delayed by a lengthy court process or by new legislation making it more difficult to foreclose outside of the court system. Foreclosure starts have been steadily building in those states over the last several months and likely will end up as bank repossessions or short sales later this year.

 "These new foreclosure hot spots include states like Washington, where seven straight months of rising foreclosure activity pushed the state's foreclosure rate to fifth highest nationwide -the highest it's ever been in our report - and Maryland, where eight straight months of rising foreclosure activity placed the state's foreclosure rate among the top 10 nationwide for the first time since July 2010," Blomquist noted.

Foreclosure starts jumped 10 percent in February after three straight months in which they declined but were 25 percent below starts one year earlier.  Bank repossessions were down 11 percent month-over-month to the lowest level since September 2007 and were 29 percent lower than one year earlier.

As Blomquist noted, the foreclosure story in the U.S. is now a state-by-state one and the list of troubled states are not necessarily the usual suspects from the last seven years.  There were huge annual jumps in foreclosure starts in perpetually troubled Nevada (up 334 percent), New York (139 percent) and New Jersey (70 percent) but Maryland which is not a familiar name on RealtyTrac reports was up 319 percent year over year.

Ohio is another state with emerging problems.  Overall foreclosure activity increased by 26 percent in February and was up 12 percent from the previous year and the state is now in fourth place nationally.  Activity there has increased on an annual basis in 11 of the last 13 months. 

Washington State saw its seventh straight month of increased activity on an annual basis.  There were 4,362 filings in the state, one in every 656 housing units, in February, a 123 percent increase from February 2012 and, as noted, the state is now fifth in the nation for foreclosure activity. 

In other states the foreclosure epidemic is merely continuing. Florida posted the nation's highest state foreclosure rate for the sixth consecutive month in February, reporting one in every 282 housing units with a foreclosure filing during the month.  In Nevada, with foreclosure starts at a 17-month high the state remained the second highest state for overall filings for the fifth month in a row following nearly five years in the top spot.  One in every 320 units in the state had a filing in February.

Despite the third straight month-over-month decrease in foreclosure activity, Illinois posted the nation's third foreclosure rate for the second month in a row. A total of 12,671 Illinois properties, one in every 417, had a foreclosure filing in February, down 10 percent from the previous month and down 5 percent from February 2012.

There were improvements in bank repossessions in 32 state compared to a year ago with big improvements in Oregon (down 78 percent), Massachusetts (down 69 percent), Nevada (down 59 percent), Georgia (down 58 percent), and California (down 49 percent).

Although California foreclosure starts rebounded 47 percent in February from an 88-month low in January, overall foreclosure activity in the state was down from a year ago for the 15th straight month, dropping the foreclosure rate down to No. 13 nationwide. February was the first month since December 2006 where the California foreclosure rate was not ranked among the top 10 state foreclosure rates nationwide.