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) -- Approximately 1.7 million properties entered some stage of foreclosure during the first six months of 2011, according to RealtyTrac, a group that monitors the foreclosure market.

However, that figure is artificially depressed, thanks to persistent

paperwork problems with mortgage servicers

and a sluggish housing market. The numbers, RealtyTrac says, should actually be much higher.

"We estimate that as many as 1 million foreclosure actions that should have taken place in 2011 will now happen in 2012, or perhaps even later," James Saccacio, CEO of RealtyTrac, said. "This casts an ominous shadow over the housing market, where recovery is unlikely to happen until the current and forthcoming inventory of distressed properties can be whittled down to a manageable number."

Foreclosure activity actually increased by 4% in June, a slight uptick that follows

two consecutive months of decreases


Year over year, the numbers show an even clearer trend.

Foreclosure filings were reported on 222,740 U.S. properties last month, a decrease of 29% from June 2010, and the ninth straight month that foreclosure activity decreased on a year-over-year basis. The steady declines led foreclosure activity for the first six months of 2011 to decrease by 25% from the previous six months and by 29% decrease from the first half of 2010.

In June, Rick Sharga, RealtyTrac's senior vice president, told


that the backlog of distressed properties will extend the housing market's recovery well into next year.

State by state, Nevada posted the nation's highest foreclosure rate during the six-month period despite continued decreases in foreclosure activity. Nearly 5% of all Nevada housing units (one in 21) received at least one foreclosure filing in the first half of 2011.

Arizona had the second highest state foreclosure rate in the first half of the year, with 2.82% of its housing units (one in 36) receiving a foreclosure filing, and California had the third rate, with 1.96% of its housing units (one in 51) receiving a foreclosure filing during those six months.

Other states with high foreclosure rates include Utah (1.65%), Georgia (1.50%), Idaho (1.49%), Michigan (1.34%), Florida (1.28%), Colorado (1.19%), and Illinois (1.15%).

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