More than one million homes had foreclosure filings -- notices of default, auction notices and bank repossessions -- during the first six months of 2012.
NEW YORK (CNNMoney) -- Foreclosures showed few signs of slowing during the first half of the year, with a sharp increase in new filings occurring during the second quarter.
More than one million homes had foreclosure filings -- notices of default, auction notices and bank repossessions -- during the first six months of 2012, up 2% from the previous six months, according to RealtyTrac, an online marketer of foreclosed properties.
And while the number of filings was down 11% from the first six months of 2011, 20 states still saw a marked year-over-year increase. Foreclosure filings in Indiana, Pennsylvania, South Carolina, Connecticut, Florida and Illinois increased by 20% or more.
Even more troubling was a surge in new foreclosure starts that occurred during the second quarter. The number of homes with new foreclosure filings was up 9% from the first quarter and was 6% higher than the second quarter of 2011, marking the first year-over-year increase since the last quarter of 2009.
Much of the uptick is due to the $26 billion foreclosure abuse settlement that was reached in April, said Daren Blomquist, a spokesman for RealtyTrac. Among other things, the settlement set clear guidelines for the banks on how to properly foreclose on delinquent borrowers.
"The mortgage settlement was signed off by a judge in April, and then in May we saw the first year-over-year increase in foreclosure starts in 28 months," he said.
In California, foreclosure starts increased by 18% year-over-year during the month of June, boosting the state's foreclosure rate to the highest in the nation for the first time since RealtyTrac started issuing its report seven years ago. For the quarter, California claimed the fourth highest foreclosure rate behind Nevada, Arizona and Georgia.
"The increases in foreclosure starts will likely translate into more short sales and bank repossessions in the second half of the year and into next year," said Brandon Moore, RealtyTrac's CEO.
Prices, prevention efforts could turn things around: There's a good chance, however, that many of those homes will not end up being repossessed by the banks since government and other foreclosure prevention efforts are getting better at helping borrowers work out their payment problems and save their homes, according to Blomquist.
In addition, stabilizing and, in some areas, rebounding home prices should help many borrowers avoid foreclosure by lifting their home values to a point where they no longer owe more on their homes than they are worth, he said.
Rising prices should also cut down on strategic defaults, which is when mortgage borrowers stop paying their loans off even when they can still afford to do so.
"If home prices are increasing, homeowners are a lot less likely to consider walking away from their mortgages," said Blomquist. "They can see some light at the end of the tunnel, where their homes might become valuable assets again."
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