The number of foreclosure filings in the United States fell last month to the lowest level in nearly four years as banks delayed processing defaults, Bloomberg reported.

Saddled with an increasing inventory of seized properties, banks have fallen behind on processing paperwork as they address their documentation procedures following claims that they improperly repossessed homes.

A total of 214,927 properties received default, auction or repossession notices in May, the lowest number since November 2007, according to RealtyTrac Inc. The Irvine, Calif.-based company said filings dropped 33 percent from a year earlier and 2 percent from April.
Processing delays, however, could be skewing the data as lenders deal with the real estate owned (REO) properties on their balance sheets.

“Foreclosure processing delays continue to mask the true face of the foreclosure situation,” RealtyTrac CEO James Saccacio said. “Even at a significantly lower level than a year ago, the new supply of (real estate owned properties) exceeds the amount being sold each month.”
 
About 28 percent of borrowers owe more than on their homes then they are worth, according to Zillow Inc. In the first quarter, home prices fell 3.6 percent to an eight-year low, according to the S&P/Case-Shiller index of values in 20 U.S. cities.