Foreclosure activity was down last month in the Twin Cities, a sign that lenders are looking at options beyond repossession.

RealtyTrac said Thursday the number of default notices, scheduled auctions and bank repossessions in the metro area fell 6 percent from April, to 2,347, and were down 7 percent from a year ago.

Brandon Moore, RealtyTrac's CEO, said it was the 20th consecutive month of year-over-year declines. The drop shows lenders' willingness in the wake of the robo-signing scandal to approve a short sale rather than letting a property enter foreclosure, Moore said.

But nationwide, foreclosure actions rose to 205,990, up 9 percent from April to May.

"It's going to be a bumpy ride down to the bottom of this foreclosure cycle," Moore said.

Across the state, foreclosure sales have fallen slightly over the past year, largely in response to improvements in the economy and efforts by nonprofit agencies to rescue homeowners from foreclosure.

Last month the Minnesota Homeownership Center said there were just over 21,000 sheriff foreclosure sales in 2011 compared with nearly 26,000 in 2010.

Though foreclosure activity is still a "crisis" according to many housing advocates, recent declines in foreclosure proceedings are helping reduce the number of houses that are seriously delinquent and bank-owned but not yet on the market.

This so-called shadow inventory fell 14.8 percent to 1.5 million units (mostly houses and condominiums) from last year, according to a report released Thursday by CoreLogic. This shadow inventory is now at the lowest level in three years.

At the current sales pace, the inventory would last four months, down from six months last year. Erasing, or reducing that shadow inventory is a critical step toward finding a sold bottom for home prices, said Mark Fleming, CoreLogic's chief economist.

"The decline in the shadow inventory is a positive development because it removes some of the downward pressure on house prices," he said.

Jim Buchta • 612-673-7376