New foreclosure filings dropped 36.5 percent to 794 in Kentucky from August to September, RealtyTrac said Thursday.
The decline improved Kentucky to 38th place among the states in the foreclosure rate, down from 35th in August, RealtyTrac said.
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The September filings were equal to one for every 2,378 households in Kentucky, compared with one for every 1,511 households in August, the California-based foreclosure tracking firm reported.
Even after the September decline, Kentucky's new-foreclosure filings were 5.7 percent higher than in September 2007.
Nationwide, new foreclosures dropped 12.5 percent between August and September, but they remained nearly 21 percent higher than in September 2007, RealtyTrac said.
"One in every 475 U.S. housing units received a foreclosure filing in September," the firm said. The national rate was five times worse than Kentucky's rate.
"Much of the 12.5 percent decrease (nationally) in September can be attributed to changes in state laws that have at least temporarily slowed down the pace at which lenders are moving forward with foreclosures," said James J. Saccacio, chief executive officer of RealtyTrac.
In California, a new law took effect in September that requires lenders to contact borrowers at least 30 days before filing a notice of default, or NOD, the first step in a foreclosure.
NOD filings dropped 51 percent from August, "and that drop had a significant impact on the national numbers, given that California accounts for close to one-third of the nation's foreclosure activity," Saccacio said.
North Carolina passed similar legislation, and NODs dropped 66 percent in September, he said. Meanwhile, Massachusetts saw a 465 percent jump in filings from August to September after a law took effect in May that required lenders to give homeowners 90 days to remedy a default before foreclosure begins.
Massachusetts ranked 17th among the states in September.
Nevada, Florida, California, Arizona, Georgia and Michigan were the top six states in foreclosures in September, RealtyTrac said They accounted for 60 percent of all foreclosures nationwide in the third quarter.