Foreclosure starts in February showed some pick-up in activity month-over-month, while REOs fell to their lowest level since September 2007, according to RealtyTrac’s foreclosure market report for February.

RealtyTrac reported a 10 percent increase in foreclosure starts from January after three straight months of declines. Year-over-year, foreclosure starts were still down 25 percent.

Bank repossessions, or REOs, hit a 65-month low in February, according to RealtyTrac, and were 11 percent lower from the previous month and down 29 percent from February 2012.

Overall, 154,281 properties in February were handed some type of foreclosure filing, which includes default notices, scheduled auctions, and bank repossessions. The total represents a 2 percent increase from January and a 25 percent decrease from year ago levels.

“At a high level the U.S. foreclosure inferno has been effectively contained and should be reduced to a slow burn in the next two years,” said Daren Blomquist, VP at RealtyTrac. “But dangerous foreclosure flare-ups are still popping up in states where foreclosures have been delayed by a lengthy court process or by new legislation making it more difficult to foreclose outside of the court system. Foreclosure starts have been steadily building in those states over the last several months and likely will end up as bank repossessions or short sales later this year.”

According to the report, 32 states saw a month-over-month increase in foreclosure starts, while 16 experienced yearly increases.

A handful of states saw foreclosure starts surge year-over-year, including Nevada (+334 percent), Maryland (+319 percent), Washington (+172 percent), New York (+139 percent), and Arkansas (+75 percent), and New Jersey (+70 percent).

Florida continued to lead as the state with the highest foreclosure rate for the sixth consecutive month, with one in every 282 housing units receiving a foreclosure filing in February. The national average is one in every 849 housing units.

Florida also contained seven of the top 10 metros with the highest foreclosure rates. Miami ranked No. 1 and was followed by Orlando (No. 2), Ocala (No. 3), Tampa (No. 4), Palm Bay (No. 5), Jacksonville (No. 8), and Naples (No. 9). Other metros ranked among the top 10 included two in IllinoisRockford and Chicago at No. 7 and No. 10, respectively, as well as Las Vegas, which ranked No. 6.

Nevada maintained its spot for the fifth straight month as the No. 2 state for its foreclosure rate.

Illinois, Ohio, and Washington rounded out the top five. RealtyTrac noted annual foreclosure activity in Washington has been on the rise for seventh consecutive months, and the state’s No. 5 ranking was the highest it has received since the report began in January 2005.

Foreclosure activity in Maryland also continued to trend upward and rose for the eighth straight month. The state also posted the ninth highest foreclosure rate, making February the first time it has been on the top 10 list since July 2010.

California, on the other hand, did not record one of the 10 highest foreclosure rates, a first since December 2006, RealtyTrac reported. Though, the state did see a 47 percent increase in foreclosure starts after dropping to an 88-month low in January.

bu Esther Cho