Lenders filed foreclosures or repossessed 225,101 properties in February, a 27% drop from one year before and the lowest total in three years, according to RealtyTrac. It is also the largest yearly decrease since 2005. But RealtyTrac CEO James Saccacio said the lull during the storm is not due to improving conditions in the housing market. Instead, the slowdown came from mortgage servicers disrupted by problems in the foreclosure process, an issue that dragged down filings in January as well. "Foreclosure activity dropped to a 36-month low in February as allegations of improper foreclosure processing continued to dog the mortgage servicing industry and disrupt court dockets,” Saccacio said. RealtyTrac expects the numbers to increase over the next several months but may never return to the peak seen in March 2010 when more than 367,000 properties received a foreclosure filing. "While a small part of February’s decrease can be attributed to it being a short month and bad weather, the bottom line is that the industry is in the midst of a major overhaul that has severely restricted its capacity to process foreclosures," Saccacio said. At the end of 2010, mortgage servicers were found to be signing documents by the thousands without reviewing the documentation. The result has been an investigation from the 50 state attorneys general and several federal regulators. A settlement has been proposed but remains in the negotiation stage. Foreclosure filings were down in every category in February. Notices of default fell 48% judicial states from the year before and 41% in nonjudicial states. Scheduled foreclosure auctions dropped 21% from the year before in nonjudicial states and 49% in judicial states. Bank repossessions fell 18% from one year ago in nonjudicial states and 35% in judicial states. Nevada posted the nation's highest foreclosure rate for the 50-straight months, more than four years. There, one in every 119 homes received a foreclosure in February. Arizona was second with one in 178 homes receiving a foreclosure, and California was third with one in 239 receiving a filing. On the city level, Las Vegas held the top foreclosure rate in February. There, one in every 106 homes received a filing. Cities in Nevada, California and Arizona accounted all of the top 10 cities and 15 of the top 20. Write to Jon Prior. Follow him on Twitter: @JonAPrior