The number of foreclosures fell in the last month as activity continued to slow down due to faulty paperwork, a survey said last week.

Foreclosure numbers fell to a three-year low, with just 69,532 homes seized by banks in April, which is down 8.6% on the previous month and a third less than the same time last year, according to the RealtyTrac data firm.

Meanwhile, the amount of foreclosure filings also fell, totaling 219,258, the seventh straight month they have declined. This is the lowest level they have been at since 2007. Foreclosure filings include auctions, repossessions and default notices.

Approximately 285,000 homes have been seized by banks this year, meaning that the US is on track for around 850,000 foreclosures this year.

There were over a million foreclosures in 2010, and this figure was actually expected to increase in 2011 until foreclosures were stalled by investigations which began at the end of last year.

Currently, the government and some of the largest banks in the US are negotiating what some expect to be a multi-billion dollar settlement due to abuses over the foreclosure process.

State attorneys and industry regulators are negotiating with some of the country’s biggest lenders, including JP Morgan Chase, Bank of America and Wells Fargo. These banks, along with dozens of other mortgage firms are accused of initiating foreclosures on thousands of homes despite not having the correct paperwork to do so.

The states of Arizona, California and Nevada continue to lead the way with the highest foreclosure rates, said the report by RealtyTrac.

Ten states - Arizona, California, Colorado, Florida, Georgia, Illinois, Michigan, Nevada, Ohio and Texas – accounted for over 70% of all US foreclosures, the report said.

This is a far cry from the heady days of 2005, just before the housing crisis began, when banks were seizing just over 100,000 homes per year.