The Mortgage Bankers Association reported last Friday in their National Delinquency Survey that  a record 1.35 million homes were in foreclosure in the third quarter, pushing the foreclosure rate up to 2.97%.

Compared to last year, the number of homeowners falling behind on their mortgages rose to a record 6.99%, up from 5.59%.

This means that one of ten American homeowner with a mortgage are either delinquent, at least a month behind on their payments or in foreclosure at the end of September.

Many of the said homeowners with mortgage are in Florida, Nevada and California which have among the highest delinquency rates in the nation.

In Florida, a striking 7.3 percent of all loans were in foreclosure at the end of September, the highest in the country. In Nevada, foreclosure rate was 5.6 percent and 3.9 percent in California. Nationally, total delinquencies on those loans rose to 3.35 percent in September from 3.07 percent at the end of June, the Mortgage Bankers Association said.

"We have not gone into past recessions with the housing market as weak as it is now, so it is likely that a much higher percentage of delinquencies caused by job losses will go to foreclosure than we have seen in the past," said Jay Brinkmann, MBA's chief economist.

Unemployment rose to 6.7% as payrolls shrunk 533,000 in November, the Bureau of Labor Statistics said Friday which impacts on delinquency. It was the largest monthly job loss in 34 years, and brought the year's total job losses to 1.9 million.

The number of homes going into foreclosure in 2008 is expected to hit 2.2 million, Brinkmann said.