U.S. mortgage foreclosure filings fell for a second straight month in February, and registered the smallest year-over-year increase in four years as housing-rescue activities continue, a report released by real estate data firm RealtyTrac on Thursday showed.

Foreclosure filings which include mortgage default notices, house auctions and home repossessions by banks were reported on 308,524 properties in February, down 2 percent from January, but still up 6 percent from the same month a last year.

Experts believed that the possible reasons for the slowdown in foreclosure are the government foreclosure relief programs as well as severe weather appears to have slow down the processing of foreclosure records in some Northeaestern and Mid-Atlantic States.

Foreclosures, considered the biggest threat to the U.S. housing market, remain vulnerable to setbacks as it relies heavily on government rescue and relief programs for its recovery.

There may be more clouds in the forecast, however, due to unemployment numbers and the large number of adjustable rate loans that are still leaving homeowners way under water, RealtyTrac’s VP Rick Sharga said.

"The 6 percent year-over-year increase we saw in February was the smallest annual increase we've seen since January 2006, when we began calculating year-over-year increases, but it still marked the 50th consecutive month of year-over-year increases in foreclosure activity" said Realtytrac’s CEO James Saccacio in a statement.

One in every 418 U.S. housing units received a foreclosure filing in February as reported in RealtyTrac’s 2010 U.S. Foreclosure Market report.

Nevada’s foreclosure rate remained highest among all the US states for the 38 consecutive month despite a month-over-month drop in foreclosure activity of nearly 7 percent and a year-over-year fall of 30 percent.

In Nevada, one in every 102housing units received a foreclosure filing during the month of February -- more than four times the national average.

In Arizona and Florida, where both registered nearly identical foreclosure rates, with one in every 163 housing units receiving a foreclosure filing in both states in February are in second and third spot.

California ranked fourth highest among the states, with one in every 195 housing units receiving a foreclosure filing during the month.

Nearly 1.1 million borrowers have enrolled in the Obama administration’s foreclosure prevention program since it started a year ago. From this more than 170,000 troubled have completed the application process and received permanent modifications.

At that rate, some 15.5 percent of those who entered the program have received permanent modification through February, up from 11.5 percent a month earlier, according to a Treasury Department report released Friday.

To receive a permanent loan modification, homeowners are required to make three monthly payments and provide proof of their income and a letter documenting their financial hardship. To date, about 90,000 borrowers have dropped out.

The program is designed to help borrowers by lowering their monthly payment by reducing mortgage rates to as lows as 2 percent for five years and extending loan terms to up to 40 years.

An additional 91,800 permanent modifications have been approved by servicers and are pending borrower acceptance. And more than 88,600 people have been denied lasting help because they did not meet the program's criteria, while another 1,499 homeowners have had their permanent modification

At present, more than 835,000 people are currently in trial modifications, where applications are being reviewed by banks to determine if they can make the reduced payments and gather necessary paperwork to verify financial hardship.

The government has set aside $75 billion in subsidies to entice mortgage companies to participate but only less than 1 percent has been used for the purpose.

According to the results of Mortgage Bankers Association’s Weekly Mortgage Applications Survey for the week ending March 5, 2010, the Market Composite Index which is a measure of mortgage loan application volume increased 0.5 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 1.2 percent compared with the previous week.

The weekly applications survey covers roughly 50 percent of all residential mortgage originations and tracks the average interest rate for 30 year and 15 year fixed rate mortgages, 1 year ARMs as well as application volume for both purchase and refinances applications.

The Refinance Index fell 1.5 percent the previous week and the seasonally adjusted Purchase Index increased 5.7 percent compared to the previous week. The unadjusted Purchase Index increased 7.2 percent compared to a week earlier and was 10.7 percent below the same week last year’s figure.

The four week moving average for the seasonally adjusted Market Index is up 0.8 percent. The four week moving average is up 0.7 percent for the seasonally adjusted Purchase Index, while this average is up 1.0 percent for the Refinance Index.

The refinance share of mortgage activity fell to 67.2 percent of total applications from 69.1 percent a week earlier. The refinance share is at its lowest level since it was 66.1 percent in October 2009. The adjustable-rate mortgage (ARM) share of activity increased to 5.1 percent from 4.8 percent of total applications from the previous week. This is the highest ARM share since November 2009 when it was 5.3 percent.

The average contract interest rate for 30-year fixed-rate mortgages rose to 5.01 percent from 4.95 percent, with points falling to 0.82 from 0.99 (including the origination fee) for 80 percent loan-to-value (LTV) ratio loans.

The average contract interest rate for 15-year fixed-rate mortgages increased to 4.32 percent from 4.27 percent, with points decreasing to 0.88 from 1.36 (including the origination fee) for 80 percent LTV loans.

The average contract interest rate for one-year ARMs increased to 6.80 percent from 6.77 percent, with points increasing to 0.3 from 0.29 (including the origination fee) for 80 percent LTV loans.

The extremely harsh winter weather in January and February didn’t help pending home sales as it fell sharply to its lowest reading since April 2009 and the National Association of Realtors expects more declines in the future.

NAR’s pending home sales index fell to a seasonally adjusted reading of 90.4 which is 7.6 percent down from December but still 12.3 percent above January 2009’s index reading. The index is considered a forward-looking indicator or gauge of future sales because there is a one to two month lag from the contract signing to sales completion. A reading of 100 is equal to the average level of sales activity in 2001, when the index begun.

“January pending sales, though still higher than one year ago, remain much lower than expected given that a large number of potential buyers are eligible for the expanded home buyer tax credit,” said NAR chief economist Lawrence Yun. “Moreover, the abnormally severe and prolonged winter weather, which affected large regions of the US, hampered shopping activity in February.”

Regionally, the West got the biggest drop in pending sales where pending sales declined 13.2 percent from December. However, the pending sales index is 1.4 percent above its January 2009 reading.

In the Midwest, pending sales dropped 8.9 percent from December but 11.8 percent above same month last year’s level.

In the Northeast, the index declined 8.7 percent but is 20.5 percent above January 2009 reading.

In the South, there was a 2.1 percent decline from December and 18 percent above the same month last year’s level.

“We will see weak near-term sales followed by a likely surge of existing-home sales in April, May and June,” Yun said. “The real question is what happens in the second half of the year. If there is sufficient job creation, housing can become self-sustaining with stable to modestly rising home prices because inventory has been trending downward.”

The Mortgage Bankers Association (MBA) has released its Weekly Mortgage Applications Survey for the week ending Feb. 26, 2010. Mortgage loan application volume increased last week for the first time in a month as borrowing rates declined which boosted purchases and refinancing mortgage activities.

The Market Composite Index, a measure of mortgage loan application volume, climbed 14.6 percent on a seasonally adjusted basis compared with the previous week. On an unadjusted basis, the Index increased 15.5 percent compared to a week earlier.

“Mortgage applications rebounded last week, particularly refis, as rates dropped back below 5 percent,” said Michael Fratantoni, MBA’s Vice President of Research and Economics. “Purchase activity remains subdued, with application volumes remaining within the narrow range seen in the last few months.”

The Refinance Index climbed 17.2 percent and the Purchase Index increased 9 percent after reaching the lowest level in more than 12 years a week earlier.

The four week moving average for the seasonally adjusted Market Index is up 0.4 percent. The four week moving average is down 2.7 percent for the seasonally adjusted Purchase Index, while this average is up 1.8 percent for the Refinance Index.

The average rate on a 30-year fixed loan dropped to 4.95 percent from 5.04 the prior week.

The average rate on a 15-year fixed mortgage fell to 4.27 percent from 4.35 percent. The rate on a one-year adjustable mortgage dropped to 6.77 percent from 6.80 percent.

The share of refinance mortgage increased to 69.1 percent of total applications from 68.1 percent the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 4.8 percent from 4.7 percent of total applications compared to the week earlier.