RealtyTrac, a leading online source for foreclosed and distressed real estate, reported that the overall foreclosures continue to drop in July even as the number of properties sliding into the foreclosure process dropped.

“U.S. foreclosure activity continued its uneven descent in July as the overall numbers declined on an annual basis for the 22nd straight month, but properties starting the foreclosure process increased on an annual basis for the third straight month,” said Daren Blomquist, vice president of RealtyTrac.

“Recent foreclosure activity patterns vary significantly from state to state, often hinging on the level of dysfunction that exists in each state's foreclosure process. 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. But in states like Texas, Arizona and Virginia, where the average time to foreclose is well below the national average of 378 days, foreclosure activity continues on a long-term downward trend.

“Recent legislation and court rulings could lengthen the foreclosure process in some of the states with the shorter timelines, however, resulting in a temporary foreclosure lull and subsequent rebound in those states as well,” Blomquist continued. “Case in point is a new Oregon law that took effect in July and gives homeowners in default — or at risk of default — the right to request mediation to avoid foreclosure. Oregon foreclosure activity dropped 42% from June to July, hitting a five-year low, but we would expect the Oregon numbers to trend back higher sometime in the next several months based on the pattern we've seen in other states with similar legislation.”

RealtyTrac reported that 38 states and the District of Columbia posted annual decreases in foreclosure activity, but there were some notable exceptions where foreclosure activity increased annually, including Florida (38%), Ohio (25%), Illinois (22%), and New Jersey (21%) — all judicial foreclosure states where foreclosures are processed through the court system, the firm noted.