After the recent multibillion-dollar settlement reached between the nation's largest mortgage lenders and state attorneys general, many financial institutions are reviving the foreclosure process across the country.

Specifically, foreclosures increased in 125 of the nation's 212 largest metropolitan areas during the first six months of 2012, according to a report from RealtyTrac. Although activity rose in a majority of cities from the the final six months of 2011, the report found 129 metros posted annual improvements.

"Increasing foreclosure starts in many local markets helped push total foreclosure activity higher in the first half of this year compared to the second half of 2011," said RealtyTrac CEO Brandon Moore. "Those foreclosure starts are welcome news for prospective buyers and real estate brokers in many local markets where a shortage of aggressively priced inventory has been holding up sales activity."

Meanwhile, many of the local markets that recently experienced an increase in foreclosure filings can expect to see a rise in short sale and real estate-owned transactions in the coming month, Moore added.

On a state-by-state basis, California accounted for seven of the top-10 cities with the highest foreclosure rates. Number-one on the list was Stockton, California, with a rate of 2.66 percent of all properties. This was roughly one in every 38 homes in the area. However, even though Stockton had the highest rate in the country, it was actually a 13 percent improvement from the second half of 2011. 

Atlanta was another area that continued to struggle to get its foreclosure rate under control. After the housing market collapse, this city has consistently had one of the highest levels of foreclosure activity, and ranked seventh-highest in the country at the end of June. During the first six months of the year, there were 46,267 homes in some stage of the foreclosure process in Atlanta.  

Although overall activity increased, some metropolitan areas actually experienced notable improvements. For example, activity in Seattle plummeted 24 percent from the second half of 2011, while San Francisco, Detroit, Los Angeles, Boston and San Diego also saw rates fall.

However, as the home inventory across the country continues to thin, an increase in the foreclosure rate could give buyers more options in areas with high demand, but no supply to back it up. During recent years, short sales and REO homes have become more viable options due to their often bargain prices.