Mortgage delinquencies are dropping, with even the worst-hit states showing signs of recovery.

The mortgage delinquency rate for one- to four-unit residential properties dropped at the end of the second quarter to its lowest level since mid-2008, according to the Mortgage Bankers Association's National Delinquency Survey.

The seasonally adjusted rate fell to 6.96% of all loans outstanding at the end of Q2, a drop of 29 basis points from the previous quarter and 62 basis points from a year prior, MBA reported.

Foreclosures, which are not included in the delinquency rate, also fell slightly in Q2, according to MBA. The percentage of loans on which foreclosure actions were initiated dropped from 0.7% in Q1 to 0.64% in Q2, the lowest level since the first quarter of 2007, according to MBA.

"For most of the country, delinquencies and foreclosures have returned to more normal historical levels. Most states are at or only slightly above longer-term averages, and some of the worst-hit states are showing improvement," said Jay Brinkmann, MBA chief economist."For example, while 10 percent of the mortgages in Florida are somewhere in the process of foreclosure, this is down considerably from the high of 14.5 percent two years ago. While Florida leads the country in the rate of foreclosures started, that rate of 1.1 percent is the lowest since mid-2007 and half of what it was three years ago."

MBA's survey results weren't all good news, however, as foreclosure rates in some northeastern states rose, bucking the national downward trend.

"Some of the highest numbers are in New York, New Jersey and Connecticut. The rate of new foreclosures in New York hit an all-time high during the second quarter and is now essentially equal with Florida," Brinkmann said. "The percentage of loans in foreclosure in New Jersey remains about the same as the rates in California, Arizona and Nevada combined. The foreclosure percentages in Connecticut are back to near all-time highs for that state. In contrast, foreclosure starts fell or were unchanged in 43 states and the foreclosure inventory rate either improved or was unchanged in 45 states."