Foreclosure filings rose 71 percent during the third quarter, although changes in many state laws regarding the foreclosure process served to temporarily decrease foreclosure activity during September. Default notices, auction sale notices and bank repossessions were reported on 265,968 properties in Sept., a 12 percent decrease from the previous month — but still a 21 percent increase from year-ago totals — according to data released Thursday by RealtyTrac, a foreclosure listing resource. Despite the monthly drop, foreclosure filings were reported on 765,558 U.S. properties during the third quarter, up more than 3 percent from the second quarter and up 71 percent from the third quarter of 2007, RealtyTrac said. “Much of the 12 percent decrease in September can be attributed to changes in state laws that have at least temporarily slowed down the pace at which lenders are moving forward with foreclosures,” said James J. Saccacio, chief executive officer of RealtyTrac. “Most significantly, SB 1137 in California took effect in early September and requires lenders to make contact with borrowers at least 30 days before filing a Notice of Default. In September we saw California NODs drop 51 percent from the previous month, and that drop had a significant impact on the national numbers given that California accounts for close to one-third of the nation’s foreclosure activity each month.” Another example of local legislation affecting foreclosure trends is North Carolina, Saccacio said, where legislation was signed into law in August that now requires lenders to provide homeowners and the state’s commissioner of banks a 45-day notice prior to filing a notice of default. As a result, NODs fell 66 percent in North Carolina in September, a trend that is likely to be more temporary than it is indicative of an improvement in the state’s housing situation. Underscoring how local legislation tends to only temporarily stall foreclosures, initial foreclosure filings in Massachusetts soared 465 percent between August to September after being much lower than normal in June, July and August. That temporary lull happened after a new law took effect in May requiring lenders to give homeowners a 90-day right to cure notice before initiating foreclosure. But in September, about 90 days after the law took effect, initial foreclosure notices jumped back up close to the levels seen earlier in the year. More than a few economists had in past months mistakenly attributed the drop in Massachusetts foreclosure activity for a bottoming of the state’s housing market. Top six states account for 60 percent of third quarter foreclosure activity Six states accounted for more than 60 percent of U.S. foreclosure activity in the third quarter, but the economic factors driving foreclosures varies widely among the six. Four — California, Florida, Arizona and Nevada — are seeing foreclosures jump as the housing market in each state continues to correct from an unsustainable run-up in home prices. Two others, Michigan and Ohio, are reeling from ailing local economies and job loss; as the nation’s unemployment rate appears set to rise amid a recession, it’s likely other states will see job-related foreclosure increases, as well. California alone accounted for more than 27 percent of the nation’s foreclosure activity, with 210,845 properties receiving a foreclosure filing during the quarter — up 4 percent from the previous quarter and up more than 122 percent from the third quarter of 2007. In comparison, foreclosure filings were reported on 127,306 Florida properties during the third quarter, the second highest state total. The state’s foreclosure activity increased 16 percent from the previous quarter, and nearly 109 percent from the third quarter of 2007. Ohio, Michigan and Nevada all reported foreclosure filings on more than 30,000 properties during the third quarter, although foreclosure activity in Ohio was down 11 percent from the previous quarter and foreclosure activity in Michigan was down 8 percent from the previous quarter. Sun Belt cities dominate top metro foreclosure rates in third quarter The cities with the 10 highest foreclosure rates among the nation’s 100 largest metropolitan areas in the third quarter were all located in California, Florida, Arizona and Nevada. California alone accounted for six of the top 10, and Stockton, Calif., took the top spot, with 3.69 percent of its housing units receiving a foreclosure filing during the quarter. Stockton’s foreclosure activity was down 9 percent from the previous quarter, but still up 87 percent from the third quarter of 2007. Other California cities in the top 10 for foreclosure rate were Riverside-San Bernardino at No. 3, Bakersfield at No. 4, Sacramento at No. 7, Fresno at No. 9 and Oakland at No. 10. With 3.48 percent of its housing units receiving a foreclosure filing during the third quarter, Las Vegas documented the second highest metro foreclosure rate in the nation during Q3, RealtyTrac said. Foreclosure filings were reported on 26,304 Las Vegas properties in the third quarter, up 21 percent from the previous quarter and up 129 percent from the third quarter of 2007. Two Florida metro areas were in the top 10: Fort Lauderdale at No. 5, with 2.30 percent of its housing units receiving a foreclosure filing during the quarter; and Orlando at No. 8, with 1.87 percent of its housing units receiving a foreclosure filing during the quarter. Phoenix documented the sixth highest metro foreclosure rate, with 2.11 percent of its housing units receiving a foreclosure filing during the third quarter. For more information, visit http://www.realtytrac.com.