The number of Americans who lost their homes to the bank fell in April as faulty paperwork continued to slow foreclosure activity, which fell to a more than three-year low, a closely watched survey said on Thursday.

Banks seized about 69,532 homes in April, down 8.6 percent from March and a drop of more than a third from a year earlier, real estate data firm RealtyTrac said.

The number of foreclosure filings, which includes default notices, auctions and repossessions, fell to just 219,258 in April, the seventh straight monthly decline and the lowest level since December 2007.

Banks have seized about 285,000 homes so far this year, putting the United States on track for slightly more than 850,000 foreclosures in 2011.

More than a million homes were seized in 2010, and this year's total had been expected to go higher until investigations into the foreclosure process prompted temporary halts from some mortgage servicers late last year.

The government and the largest U.S. banks are in talks for what could be a multibillion dollar settlement over foreclosure abuses.

Regulators and a coalition of state attorneys general are negotiating with the biggest mortgage lenders, including Bank of America, JPMorgan Chase and Wells Fargo.

These banks and other mortgage servicing firms have been accused of foreclosing on thousands of borrowers without having the necessary paperwork.

Nevada, Arizona and California continued to post the highest foreclosure rates in the country, RealtyTrac said.

Just 10 states -- California, Florida, Arizona, Michigan, Nevada, Illinois, Texas, Georgia, Ohio and Colorado -- accounted for more than 70 percent of all foreclosure activity.

In 2005, before the housing bust, banks took over just about 100,000 houses, according to the Irvine, California-based company

(Reporting by Corbett B. Daly; Editing by Leslie Adler)