U.S. foreclosure activity dropped to its lowest level in nearly two years in November, as the country's biggest lenders put the breaks on their proceedings amid allegations that they'd been taking over properties without properly verifying the paperwork, according to a report from RealtyTrac released today and reported by Sarabeth Sanders at therealdeal.com.

The country's 262,399 foreclosure filings represent a 21 percent month-over-month and a 14 percent year-over-year decline - the largest in almost six years by both measures, the article said.

In New York City, there were 863 foreclosure filings last month, down a dramatic 41 percent from the 1,466 filings recorded in October and 56 percent from the 1,949 filings in November 2009, the article added.

"The area's declines were so large in part because New York is among the nation's judicial foreclosure states, which are seeing the most radical effects of lenders' foreclosure freezes. According to the RealtyTrac, initial foreclosure filings were down 31 percent month-over-month in states that use a judicial foreclosure process, compared to a mere 9 percent month-over-month decline in states that do not," the article said.

"The added element of the judicial states is, [in addition to the lenders being more attentive to detail in processing, the judges who are reviewing these cases... all this has caused them to step up their review," said Daren Blomquist, a RealtyTrac spokesperson. "That's just slowing everything down," the article continued, adding that "Yesterday, HSBC announced that it would restart foreclosure proceedings in New York, and Bank of America plans to resume foreclosures in January. Blomquist said he expects nationwide foreclosure activity to return to its typically higher levels sometime in the first quarter of 2011."

An article by Christine Ricciardi yesterday at housingwire.com noted that "a November report from analytics firm 1010data, conducted in conjunction with CoreLogic, show New York has bumped California out of the top five worst housing markets in the country."

"According to the November report," the article continued, "delinquencies in both the subprime and Alt-A mortgage sectors are higher in New York than they are in California. Approximately 44% of subprime and Alt-A mortgages in New York are 60-days or more delinquent. In California, approximately 38% of subprime mortgage loans and Alt-A mortgage loans are 60-days or more delinquent."

Jonah Green, director of mortgage analytics at 1010data, the article said, "attributed the firm's findings to how New York handles foreclosures. New York is one of 23 judicial states, which deals with foreclosures through the legal system and gives borrowers a trial before being foreclosed on. California is a nonjudicial state, meaning a foreclosure doesn't need to be approved by a state court. Green said the time it takes for a servicer or lender to repossess and liquidate a home in New York is much longer than California because of the judiciary process."

"Securitized Alt-A and subprime loans that are being liquidated in New York haven't made a payment in 32 months," Green told HousingWire. "In California, however, it is only 19 months."

"In 2009, the liquidation rate in California was 15 months," the article continued, "compared to 21 months in New York. Green said the judiciary process of dealing with foreclosures slows a state's recovery rate. Ultimately, he believes this trend will spread to other judicial states and the shadow inventory will continue to grow, slowing a recovery....The current rate of unemployment in New York is 8.3% and in California, it's more than 12%. Based on these figures, he said, there should be more demand for housing in New York, and the market should have hit bottom because prices haven't gone down that much. The only reason it hasn't is because homes cannot be liquidated because borrowers are awaiting trial.