The reduction in overall foreclosure filings reported for the 22d consecutive month was driven primarily by a 21 percent year-over-year decrease in bank repossessions, known as REOs.
Yet New Jersey experienced a 21 percent increase in REOs in July year-over-year, which RealtyTrac officials attributed more to the way the state processes foreclosures than an overall increase in activity.
"In states like Florida, Illinois and New Jersey, where processing and procedural issues slowed foreclosure activity to a crawl last year, foreclosure numbers continue to rebound off those artificially low levels," said Daren Blomquist, RealtyTrac vice president.
New Jersey and Pennsylvania handle foreclosures through the courts. It typically takes 964 days for a foreclosure to make its way through the New Jersey Superior Court and an average of 564 days in Pennsylvania.
Housing advocates in Pennsylvania also have attributed some of the increase in foreclosure activity in the last year to the end of the successful Homeowners Emergency Mortgage Assistance Program, which provided low-interest bridge loans to the unemployed to avert bank repossessions, and its Act 91 notification of alternatives to loss of homes.
That program is scheduled to resume as a result of legislative approval in June to use nearly $70 million the state received in the settlement of foreclosure-processing complaints by 49 U.S. attorneys general against five major lenders earlier this year.
The hardest-hit states continue to be in the West and South.
Some communities, such as San Bernardino, Calif., are looking into using eminent domain to restructure performing - meaning non-delinquent - mortgages that aren't guaranteed by Fannie Mae and Freddie Mac.
Borrowers who owe more on their mortgages than their properties are worth would be affected. The mortgage debt would be lowered enough so the borrowers could refinance into new loans.
The Federal Housing Finance Agency, which oversees Fannie and Freddie, said Wednesday it had "significant concerns about the use of eminent domain to revise existing financial contracts and the alteration of the value of the agency's securities holdings."
The agency, which also oversees the 12 Federal Home Loan Banks, also expressed concern that "such programs could negatively affect the extension of credit to borrowers seeking to become homeowners and on investors that support the housing market.
San Bernardino-Riverside-Ontario, Calif., has a foreclosure filing for every 187 houses with a mortgage. Pennsylvania's rate is one in every 1,116 homes.
Some lenders are attempting to reduce their inventories of repossessions through donations to nonprofit housing organizations.
The Wells Fargo Housing Foundation, for example, is donating foreclosed houses to affiliates of the nonprofit Rebuilding Together in eight cities, including Philadelphia.
In 2011, the foundation donated 1,245 properties to Rebuilding Together and other groups.
A house donated to Rebuilding Together Philadelphia in the Northeast was sold to a low-income first-time home buyer whom the organization described as soon to be training as a police officer.
The buyer did not want the exact location or his name used, the organization said.
Contact Alan J. Heavens at 215-854-2472, firstname.lastname@example.org or @alheavens at Twitter.