The number of U.S. homes that received a foreclosure filing fell to a four-year low in 2011 as a slowdown in processing hit the market, RealtyTrac said in a report on Thursday.

Foreclosure filings, which include default notices, scheduled auctions and bank repossessions, slid by 34 percent in 2011, the lowest level since 2007, just as the housing market was starting to crumble. RealtyTrac said there were filings on 1,887,777 homes last year.

Bank seizures of homes fell to 804,423 from 1,050,500 in 2010, also marking the lowest level in four years.

A big part that is inflating the size of the decrease is a continuing extended foreclosure process, said Daren Blomquist, director of marketing communications at RealtyTrac.

Especially in some states, we have a dysfunctional foreclosure process that is bogging down foreclosures, but more importantly, it's bogging down and hampering the housing recovery.

Foreclosure activity slowed following claims in 2010 that lenders had relied on robo-signing where documents were signed without a review of the case files.

Blomquist said there were signs in recent months that in some markets lenders were starting to tackle the backlog and activity will likely increase in 2012.

Nevada ranked as the state with highest foreclosure rate for the fifth year in a row, with one in 16 Nevada homes receiving at least one foreclosure filing in 2011. Even so, Nevada saw a 31 percent decrease in foreclosure activity for the year.

The length of time for foreclosure processing continued to increase in the final quarter of the year. Homes took on average 348 days to move through the process, up from 336 days in the third quarter and 305 days in the fourth quarter of 2010.

Foreclosures took the longest in New York state, where homes foreclosed in the fourth quarter took an average 1,019 days to complete the process.

RealtyTrac also released foreclosure activity for December, which fell to a 49-month low of 205,024 homes, down nearly 9 percent from November. But bank repossessions rose 10 percent to 61,774.

(Reporting By Leah Schnurr; Editing by Leslie Adler)