Big banks put the brakes on foreclosure activity last month as the American foreclosure system faced a major overhaul and homeowners challenged their lenders in court.

The decline in foreclosure actions — from default notices to bank repossessions — dropped the most in states where a court order is required to take back a home; such so-called judicial states do not include California.

Nationally, foreclosure activity fell 14% from January and 27% from February 2010, according to RealtyTrac. That is the largest year-over-year decline since the Irvine data firm began keeping statistics in 2005.

Evidence of a foreclosure slowdown comes as state attorneys general and federal regulators push the banks to revise the way they service loans, consider troubled borrowers for potential mortgage relief and conduct their foreclosure proceedings. Officials last week sent the nation’s biggest mortgage servicers a 27-page list of terms outlining these demands.

“The foreclosure process is stalled, and the seemingly impending settlement is delaying foreclosures,” said Mark Zandi, chief economist for Moody’s Economy.com. “The whole process is slowing down because of these issues.”

Negotiations involve the five largest providers of home loans. They include the arms of four national banks: Bank of America Corp., Wells Fargo & Co., JPMorgan Chase & Co. and Citigroup Inc. Also part of the talks is Ally Financial Inc., the former GMAC, which services loans through its GMAC Mortgage unit.

The wrangling began last year after revelations that some of the nation’s largest financial institutions relied on “robo-signers,” people who signed key court documents used in thousands of foreclosure cases across the country without reading or understanding them. The revelations led several banks to issue foreclosure moratoriums and lawmakers to question the integrity of the entire foreclosure system.

The February decline was probably related, in part, to banks resubmitting foreclosure filings that had been found to be faulty, said Rick Sharga, RealtyTrac senior vice president. About 70,000 foreclosure filings were resubmitted nationally last month, a number RealtyTrac did not include in its February estimates.

Courts have also delivered setbacks to some of the nation’s largest lenders in recent months, ruling on behalf of homeowners in key foreclosure cases. This increased scrutiny is probably leading banks to be more cautious with the way they conduct repossession proceedings, said Walter Hackett, an attorney who represents Inland Empire homeowners.

In seeking a global settlement, government agencies have proposed penalties against banks ranging from $5 billion to $20 billion. That money would be used to fund principal write-downs, officials have said.

But bank executives and Republicans this week began publicly pushing back. “We’ve got to be very careful that we don’t create an environment where we encourage people not to pay, and that’s the danger you have when you get into broad-based principal forgiveness,” Charlie Scharf, chief executive of retail financial services for J.P. Morgan Chase, said in a CNBC interview Wednesday.

Sen. Richard Shelby (R-Ala.) also on Wednesday blasted efforts by the state attorneys general and the Obama administration, calling them a “regulatory shakedown.”

House Republicans sent Treasury Secretary Timothy F. Geithner a letter asking him to explain the government’s legal justification for trying to impose sweeping changes on the way banks process problem loans, the Associated Press reported.

A total of 225,101 properties received a foreclosure filing last month, according to RealtyTrac, meaning 1 in every 577 homes was caught in some stage of the process. Big banks took back 64,643 properties, a 17% decline from January and an 18% drop from February 2010.

In California, 56,229 properties received filings, a 16% decline from January and an 18% decline from February 2010. Banks took back 12,734 properties, a 20% drop from January but a 1% increase from February 2010.

Ginny: I have been a resident at an apartment community for several years and I am in the middle of a one-year lease. The property recently changed ownership and the new owner’s property management company has just sent me a letter demanding that I double the amount of the minimum coverage for my renters insurance policy.

I don’t mind having the renters insurance, as it protects me, but I think that the current minimum of $50,000 is sufficient and I shouldn’t have to pay for a $100,000 policy.

Is it legal for my property manager to demand an increase in my minimum renters insurance coverage while my current lease agreement is still in effect with a $50,000 minimum?

Steven: There are really two issues here. The first is: Can the new owner require you to have a renters insurance policy with a $100,000 minimum? The second is that if the owner can require the new higher minimum, can it require you to obtain such a policy and show proof of the required coverage while you have a valid and binding lease with set terms already in place?

I believe that the new owner can require you to have renters insurance and it can also set the minimum policy limits. Of course, the owner needs to realize that this is an additional expense to its tenants and could be a deterrent or competitive disadvantage if other rental properties in the area do not have the same requirements.

I am an advocate for renters insurance and believe that tenants should make their own decision as to the proper amount of coverage. I will discuss some of the important factors to consider below.

So the real question is the timing of the required change in minimum coverage limits for your renters insurance policy. As with all terms that are set for the term of a lease, you cannot be required to comply with the new terms until the expiration of your current lease unless there is a specific clause allowing for such a change.

This is not very common, but an example would be if you had a long-term lease stating that the rent would be adjusted at some point during the lease.

It is extremely unlikely that your former landlord would have any language allowing for increases in renters insurance minimum coverage during the lease term. So I would suggest you send your new owner’s property manager a brief letter indicating that you are not required to obtain the insurance it is requiring during your lease. Your new owner may not be aware that the change of ownership has no bearing on the validity of your current lease.

The new owner can change the terms at lease renewal but not during the current lease term. The only other exception would be if there is a mutual agreement of both the tenant and the landlord.

To see if you would actually want to consider increasing your renters insurance coverage from $50,000 to another amount, you need to get some professional advice from a competent insurance agent, as there are many important aspects to making sure you have the proper insurance coverage.

While I can give you some general feedback to your question, I strongly suggest you contact your insurance broker and ask about an HO-4 policy.

When done properly, obtaining the right insurance policy with all of the coverage you need plus an understanding of what you don’t need is very personalized. You need to discuss not only policy limits for your contents or possessions, but also the appropriate limits for liability, which would cover you if someone were to be injured in your home.

In other words, you may think that your worldly possessions are worth only $50,000 and that your current policy limits are sufficient. But you need to ask about your current policy’s limits for liability.

Liability coverage is to protect you if someone gets hurt or injured (maybe a slip-and-fall) in your home, and it is my personal opinion that $50,000 is not much coverage to protect you from a liability suit.

You will want to probably start with a basic HO-4 policy, but after consulting with your insurance professional you may also want special coverage or riders added if you have certain valuable collectibles or possessions, or if you participate in certain risky hobbies or activities.

Alternative-living expenses (ALE) is also coverage that may be worth considering.

You will want to evaluate the cost of your customized insurance and see how much of the risk of a covered loss that you are willing to accept yourself. This is known as the deductible (or simply the amount you pay before your insurance policy offers coverage) and you can usually reduce your insurance premiums if you have a higher deductible. But the right level of deductible is also a personal decision that only you can make.

Send your new landlord a letter and make an appointment with your insurance professional. Your landlord may have actually helped you determine that your current renters insurance policy is not exactly what you need. If you still think that your current policy is sufficient, then you will need to convince your landlord that its higher required limits are unreasonable or you will have to find a new place to live.

Federal Housing Administration mortgages, the government-insured loans that have surged in popularity in recent years, will be getting slightly more expensive this spring.

The F.H.A. announced this month that it was raising the annual mortgage insurance premium for borrowers by a quarter of a percentage point — to 1.1 or 1.15 percent of the loan amount for 30-year fixed-rate loans, and 0.25 or 0.50 for 15-year or shorter-term loans.

The higher premium applies to F.H.A. loans taken out on or after April 18.

The agency called the change a “marginal increase” that would be “affordable for almost all home buyers who would qualify for a new loan.” But industry experts say that some consumers, especially those considered marginal borrowers, may now be prevented from buying or refinancing a property.

The annual premium for 30-year loans was already changed in November, to 0.85 percent or 0.9 percent; the level used to be 0.50 percent or 0.55 percent. (The annual premium for 15-year or shorter-term loans, previously zero to 0.25 percent, did not change at that time.)

“It’s going to make fewer people qualify” for the loans, said Michael Moskowitz, the president of Equity Now in New York. “It’s the equivalent of a quarter-point increase in interest.”

The increase does not apply to F.H.A. loans already in place, or to F.H.A. reverse mortgages or home-equity conversion (HECM) loans.

According to the housing administration, the new rate structure would raise the cost of a $157,000 mortgage, a typical F.H.A. loan amount, by about $33 a month, or $396 a year. The agency requires that all borrowers of loans it insures pay the premium. Consumers with non-F.H.A. loans who put down less than 20 percent are typically required by their lenders to take out private mortgage insurance, to insure the lender against the risk of default.

F.H.A. loans are typically taken out by those who cannot qualify under the stiffer down-payment and credit-score requirements of Fannie Mae or Freddie Mac, the government-controlled buyers of most loans.

The housing agency requires at least 3.5 percent, while Fannie Mae typically requires 5 to 15 percent, or more. Last November, F.H.A. began requiring a minimum credit score of 500, and for credit scores below 580 — a level at which Fannie and Freddie do not back loans — a 10 percent down payment.

Last year, more than 19 percent of all residential mortgages, and more than 30 percent of all home purchases, were made with F.H.A. loans. In 2005, F.H.A. loans made up just over 4 percent of residential mortgages, and nearly 5.6 percent of home purchases.

Since the mortgage crisis began in 2008, “F.H.A. has been the only haven for borrowers,” said Sean Welsh, a senior loan officer at Campbell Financial Services in West Haven, Conn.

But the agency’s capital reserves have fallen below levels mandated by Congress, which is why the rise in the annual insurance premium was authorized.

Mr. Welsh said the increase, while “not too bad,” was still “additional pain” atop the November change.

F.H.A. loans used to be the province of niche lenders, but in recent years big banks have entered the market in a big way.

In fact, Wells Fargo recently lowered its minimum required credit score for an F.H.A. loan to 500 from 600. The bank also reduced its required debt-to-income ratio, or the amount of a borrower’s gross monthly income that can go toward paying off debt, to 43 percent. For lower-credit F.H.A. borrowers, the bank raised its minimum down payment to 10 percent.

“We don’t anticipate a significant impact on individual consumers from the mortgage insurance premium hike,” said Tom Goyda, a Wells Fargo spokesman. “F.H.A. is still an important source of funding for first-time home buyers and those who don’t have a lot for a down payment.”