NEW YORK (CNNMoney) -- Foreclosure filings in April fell for the third straight month to the lowest level since July 2007.
Total foreclosure activity for April, including default notices, scheduled auctions and bank repossessions, was down 5% from March, according to RealtyTrac.
Bank repossessions declined significantly -- there were 51,415 repossessions last month, down 26% from a year ago, and about half the 102,000 monthly repossessions at the peak in September 2010.
Much of the improvement, however, can be attributed to declines in only a handful of states, especially those that had been hardest hit by the housing crisis and which did not require judicial review of foreclosures.
In Arizona and Nevada, for example, bank repossessions were down roughly 70%. In California, they were more than 50% lower.
States that do require judicial review, however, are only now catching up to foreclosure filings that were put on hold in the wake of the robo-signing scandal in 2010.
The 26 states that require judicial review -- including Florida, New Jersey and Illinois -- continue to see increases in foreclosure activity.
Another factor RealtyTrac cited for the decline in foreclosures was a big increase in short sales, deals in which borrowers sell homes for less than what they owe on their mortgages.
"More distressed loans are being diverted into short sales rather than becoming completed foreclosures," said Brandon Moore, RealtyTrac's CEO.
Banks take a hit on short sales because they forgive the difference between proceeds from the sale and the mortgage balance. But short sales can cost banks less than foreclosures. In fact, several large mortgage lenders are paying out incentives to borrowers who complete a short sale.
On Wednesday, Bank of America (BAC, Fortune 500) said it would give some struggling homeowners payments of up to $30,000 if they sell their homes in short sales. Chase (JPM, Fortune 500) and Wells Fargo (WFC, Fortune 500) also have similar programs in place. 
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