Foreclosure activity jumped in 149 of the country's 206 largest metropolitan areas last year, foreclosure listing firm RealtyTrac Inc., says. (David Zalubowski/Associated Press)

Foreclosure activity increased in almost three-quarters of major U.S. metropolitan areas in 2010 as homeowners struggled with high unemployment rates, a report released by RealtyTrac said in a report released Thursday.

The data-tracking firm said foreclosure activity increased in 149 of the 206 U.S. metropolitan areas with populations of 200,000 or more.

The firm, which tracks notices for defaults, scheduled home auctions and home repossession, said job loss and high unemployment rates were a major contributor to the rising foreclosure rates. The U.S. unemployment rate was 9.4 per cent in December 2010.

"We've actually had a sea change in what's causing foreclosures, from the overheated home prices and bad loans to a second wave of foreclosures actually caused by unemployment and economic displacement," says Rick Sharga, a senior vice-president at RealtyTrac.

Improvements in some hard-hit markets

The data-tracking firm said the 10 metro areas with the highest foreclosure rates all saw a decrease in foreclosure activity from 2009.

“Foreclosure floodwaters receded somewhat in 2010 in the nation’s hardest-hit housing markets,” James J. Saccacio, CEO of RealtyTrac said.

But he said foreclosure levels remained "five to 10 times higher" than historic norms in most hard-hit markets, warning that "deep fault lines of risk remain and could potentially trigger more waves of foreclosure activity in 2011 and beyond."

A foreclosed home is shown on Pine Island in Lee County, Fla. (Chris O'Meara/Associated Press)

The Las Vegas-Paradise metro area posted the highest foreclosure rate in the country, with one in every nine homes receiving a foreclosure filing in 2010 — nearly five times the national average. However, the total number of foreclosure filings in the Las Vegas was down seven per cent from the previous year, the firm said.

The Washington, D.C. area posted the biggest decrease in annual foreclosure activity, dropping 22 per cent.

Three areas in hard-hit California also saw large drops in annual foreclosure activity: Riverside-San Bernardino-Ontario, down 20 per cent; San Diego-Carlsbad-San Marcos, down 17 per cent; and, Los Angeles-Long Beach-Santa Ana, down 16 per cent.

A big reason for the decline is lenders took steps to delay foreclosure actions in these states as they sought to manage the flow of troubled properties coming onto their books. In the final months of last year, several lenders went further, temporarily halting foreclosure activity to deal with allegations of improper evictions.

Most banks have since resumed taking action against borrowers behind in payments, however, and the pace of foreclosures is expected to pick up this year and ultimately outpace 2010 levels.

With files from The Associated Pres