New data from RealtyTrac shows that foreclosure filings nationwide dropped 14 percent between January and February, as overall activity last month sunk to its lowest level since February of 2008.

RealtyTrac says total foreclosure filings – including default notices, scheduled auctions, and bank repossessions – were reported on 225,101 properties in February, a 27 percent decrease from a year earlier and the biggest year-over-year decline since the company began issuing its report in 2005.

One in every 577 U.S. housing units received a foreclosure filing last month, as default notices, auction announcements, and new REOs all hit their lowest readings in more than a year and a half in RealtyTrac’s study.

On the surface, all good news for an industry trying to get a handle on delinquencies and property repossessions, but RealtyTrac says the sharp decline is likely the result of processing delays following last fall’s robo-signing problems.

“Foreclosure activity dropped to a 36-month low in February as allegations of improper foreclosure processing continued to dog the mortgage servicing industry and disrupt court dockets,” said James Saccacio, RealtyTrac’s CEO. “[T]he bottom line is that the industry is in the midst of a major overhaul that has severely restricted its capacity to process foreclosures.”

Saccacio added, “We expect to see the numbers bounce back, but…monthly volume may never return to its peak in March 2010 of more than 367,000 properties receiving foreclosure filings.”

A total of 63,165 U.S. properties received default notices (NOD, LIS) for the first time in February. Foreclosure auctions (NTS, NFS) were scheduled for the first time on 97,293 homes last month, while lenders completed foreclosure on 64,643 properties.

Nevada posted the highest state foreclosure rate for the 50th straight month with one in every 119 homes there receiving a foreclosure filing during the month, despite a 22 percent decrease in the state’s overall activity.

Arizona claimed the nation’s second highest foreclosure rate at one in every 178 housing units with a foreclosure filing. California took the No. 3 spot with a foreclosure rate of one in every 239 homes.

One in every 273 Utah housing units had a foreclosure filing in February, the nation’s fourth highest foreclosure rate. Idaho had one in every 298 of its homes receive a filing, giving it the nation’s fifth highest rate.

Other states with foreclosure rates ranking among the top 10 in February were Georgia, Michigan, Florida, Colorado, and Hawaii.

Drilling down to the metro level, RealtyTrac says for the second month in a row, no Florida cities posted foreclosure rates in the top 20. That’s in stark contrast to 2010, when the state accounted for nine of the top 20 metro foreclosure rates.

Nevada, California, and Arizona cities, on the other hand, continued to dominate RealtyTrac’s metro list, accounting for all top 10 metro foreclosure rates and 15 of the top 20 metro foreclosure rates in February.

More Ann Arbor foreclosure and Short Sale Listings can be found here.