NEW YORK - U.S. foreclosure activity leaped 46 percent in March from a year earlier, hitting a record high as programs stunting the torrid pace of failing mortgages expired, RealtyTrac reported on Thursday.

The sign for a foreclosed house for sale sits at the property in Denver, Colorado March 4, 2009. (REUTERS/Rick Wilking) A temporary freeze on foreclosures by major banks and government-controlled home finance companies Fannie Mae and Freddie Mac ended before President Barack Obama's massive housing stimulus, unveiled on March 6, could take root.

Filings, which include notice of default, auction sale or bank repossession, jumped 17 percent in March from February.

Filings for the quarter also marked a record high, jumping 24 percent from the same period a year ago.

The March and first-quarter totals were the highest since RealtyTrac began tracking them in January 2005, even as bank repossessions declined.

One in every 159 U.S. households with mortgages got a foreclosure filing in the first three months of this year, RealtyTrac said. Filings were reported on more than 803,000 properties in the quarter.

California, Florida, Arizona, Nevada and Illinois accounted for nearly 60 percent of U.S. foreclosure activity in the first quarter, with a combined 479,516 properties receiving filings.

In the transition from industry freeze to new government rescues, the foreclosure filing floodgates reopened.

After the moratoriums ceased, "we saw an onslaught of notices of default, which is the first stage of foreclosure," Rick Sharga, senior vice president at RealtyTrac, said in an interview.

The rise in filings suggests a backlog had built up due to the moratoriums. The success of the Obama mortgage bailout may not be seen until the autumn, Sharga added.

Activity should peak near year-end. "But unfortunately, these well-intentioned delays in the processing might have the unintended consequence of extending the housing downturn," and further dragging down home prices, he said.

"We still anticipate that we'll see upward of 3 million households receive a foreclosure notice this year, up from 2.4 million last year," Sharga said.

For all of 2005, the last year before the foreclosure spike started in earnest, RealtyTrac reported about 800,000 filings.

Loan servicers are overwhelmed with the volume of failing home loans and many are understaffed to handle modifications.

One national servicer that foreclosed on 2,000 properties in 2006 handled about 21,000 the next year with similar staffing levels, Sharga said. The servicer expects a 50 percent spike in 2008, without approval to increase staff.

UNEMPLOYMENT MAY TRUMP BARGAIN HUNTING

Nevada, Arizona and California had the highest foreclosure rates in the first quarter.

Homes prices and sales soared in these states during the boom years earlier this decade, and now suffer the biggest losses on overbuilding and abandoned investment units.

Nevada led the ranks in the quarter, with one of every 27 households with loans getting a filing, more than five times the national average.

Florida, Illinois, Michigan, Georgia, Idaho, Utah and Oregon were the other states with the highest foreclosure rates.

Households with loans in California represented almost 29 percent of the quarter's total filings, up about 35 percent from last quarter and from a year ago. Nearly 231,000 units received a filing, the state's highest-ever quarterly total.

One silver lining is the growing demand from first-time buyers and investors for these distressed homes, which is helping put a floor under the worst housing market since the Great Depression.

"But it's unlikely that this increased demand will be enough to offset the growing number of foreclosures in the pipeline, accelerated by rising unemployment rates," James J. Saccacio, chief executive of RealtyTrac, said in a statement.

(Editing by Leslie Adler)