But the case is different with California housing investors, Patrick F. McMillin and his son, Patrick L. McMillin. The father-and-son team of McMillin Ventures buys foreclosure homes, spends a large amount of money and time fixing them, and sells them to military veterans.

Patrick L. said that military veterans deserve to have a home because they dedicated their lives to serving the country. He added that he and his father are very proud to have found a way to help someone who served in the military.

When father and son established the McMillin Ventures in 2008, they did not plan to buy foreclosure, repair and sell them to military veterans. However, they pointed out that their housing projects are tailor-made for military veterans.

The housing projects of the McMillins are affordable and eligible for low-cost loans guaranteed by the Veterans Affairs (VA, which means that no down payment is needed). Also, buyers are spared the trouble of waiting for weeks for the lenders to decide if they will approve the loans.

So far, eight out of the 12 buyers of McMillins’ houses have been veterans. Both father and son relish the idea of selling to military veterans because their ancestors also served the country.

Meanwhile, the McMillins said that they find it very easy to work with VA-insured buyers, adding that VA loan transactions are often the smoothest to handle. However, the case is different with turning a house in a deplorable condition into someone else’s dream home.

Both father and son said that the buying and rehabilitation process often involves months of waiting for banks to approve the deal and another three months to finish the renovations. When the McMillins buy foreclosure houses, they expect them to be in the worst conditions, with missing fixtures and appliances, illegal room additions, cracked slabs, outmoded electrical lines and malfunctioning plumbing.

To clinch the sale, the McMillins make it a point to meet the prospective buyers before signing the sales contract, adding that it is their way to establish a personal relationship with the buyers.

During the quarter, 6.25 percent of all residential mortgages in the country became delinquent by two months or more, an overwhelming 58-percent increase from nearly 4 percent during the same quarter in 2008 and an increase of almost 8 percent from the previous quarter.

Despite the huge year-over-year increase rate, the quarterly increase rate slowed. The 7.6-percent increase from the previous quarter was lower than the 11-percent jump in the April-June quarter and from the 14 percent jump in the January-March quarter.

According to F.J. Guarrera, a top executive at TransUnion, despite the lower increase rate in defaults, the growth showed the still high number of troubled mortgages. His team expects the pace of mortgage defaults to start declining only in the middle months of next year.

Guarrera contended that mortgage defaults will only reverse their upward direction if unemployment and home values improved significantly.

According to the TransUnion analysis, which is based on the company’s 27-million-account database, the highest rates of mortgage defaults are in states with a glut of lists of foreclosures.

In Nevada, the default rate soared to 14.5 percent from 7.7 percent in the July-September quarter last year. Florida increased its default rate to 13.3 percent from 7.8 percent in 2008.

In Arizona, the delinquency rate also soared to 10.4 percent, an overwhelming increase from 5.5 percent last year. In California, the default rate hit 10.2 percent, another big increase from 5.8 percent in 2008.

These four states occupied the 4 top spots of foreclosure charts in the July-September quarter and in October, with Nevada topping both charts based on pace of foreclosures. Based on number of overall foreclosure filings, California topped both charts, with more than 85,000 of its residential properties getting foreclosure actions in October and more than 250,000 units notified of foreclosure in the July-September quarter.

TransUnion also reported that the average home loan increased in the July-September quarter to $193,121, an increase from $192,287 during the same quarter last year.

The report also showed that the default rate may remain lower than 7 percent in the last quarter of 2009, but still higher than the 4.6-percent rate a year ago. It added that Nevada may hit a default rate of 16 percent, putting the state again on top of charts based on lists of foreclosures.

Butler said that foreclosure actions on 3,815 houses in October represented 38 percent of Phoenix’s overall housing market and that about 45 percent of total home sales in October involved units that had been foreclosed before being sold and resold. He explained that the two percentages meant that foreclosure activity in Phoenix was 66 percent of the overall housing market in October.

Butler also explained that the 45-percent share of foreclosures in total home sales in October was actually slightly less than the share of foreclosure sales in September, but total foreclosure actions in October were higher than those in September. Half of all foreclosure sales sold at about 19 percent below market prices.

The median home sales price in October in Phoenix was $140,000, a 20-percent drop from the median of $175,000 in October 2008. However, the median sales price for Phoenix foreclosed homes climbed up to $153,450, a substantial increase from $136,800 the previous month but a decrease from $159,775 in October 2008.

In North Scottsdale, the sales price median for foreclosed houses in October was $397,560, a drop from $410,000 in the previous month while the median sales price for conventional sales was $460,000, an increase from the previous median of $445,000.

In South Scottsdale, the sales price median for foreclosure homes was $164,000, a decrease from $178,000 in the previous month while the median sales price for conventional sales was $198,000, an increase from the previous median of $190,000.

Nearly 1,400 condo units and townhouses were sold in October, including 535 foreclosure properties. In October last year, a total of 850 units were sold, including 355 foreclosed properties. The median sales price for conventional condo and townhouse sales was $95,750, a drop from $136,750 in October 2008 while the median sales price for foreclosed units was $105,500, a decrease from $119,375 in October 2008.

In October, the median area for a foreclosed single-family house sold was 1,695 square feet, a slight increase from 1,650 square feet in October 2008 while the median area for homes in traditional sales was 1,750 square feet, a drop from 1,765 square feet in October last year.

According to Stephen Zawistowski, science adviser and a top executive of ASPCA, animal shelters and rescues have been struggling because of the overwhelming number of pets brought in by pet owners evicted from foreclosed homes and by families who can no longer afford to feed their pets or no longer have space to care for their pets.

Additionally, donations to animal shelters and rescues have dropped considerably. Joanne Farrell, head of Naples, Florida-based Homeward Bound Greyhounds, which rescues former racing greyhounds, said donations have gone down by more than 50 percent and that the organization now owes food suppliers and veterinarians.

Tink Bechtol, head and founder of Brooke’s Legacy Animal Rescue in Naples, said the pet adoption agency has been getting calls every day from families moving out of their foreclosed homes and asking to have their pets taken care of.

Michael Simonik, head of the Humane Society in Naples, said that the number of abandoned pets have been growing because of the continued rise in foreclosures. Most foreclosed families call animal shelters before they leave their homes, but animal rescues have not been able to accept many of the pets because they do not have enough funds and space.

In Lee County, there are now more pet owners that need help and less people willing to adopt pets. According to Donna Ward, head of Domestic Animal Services, the county program called Our Community Pet Pantry provides pet food to 173 pet owners taking care of 803 animals.

In Collier County, the number of residents willing to adopt unwanted pets has also gone down because of the current downturn.

Meanwhile in California, private donations and government funding for animal shelters have also been drastically reduced. At Daphneyland, a popular rescue organization founded in 2002, donations fell by 40 percent and volunteers had to quit because they need to find second or third jobs to pay their bills and debts.

While pet food banks in the past were visited by donors, now they are deluged by pet owners asking for pet foods.

According to Dawn Smith, head and founder of Daphneyland, if the rescue organization is not able to get more funds, her group will not be able to rescue abandoned pets and may not even be able to survive.

According to a foreclosure monitoring company, only 0.42 percent of residential units in the Philadelphia metro area were in foreclosure in the July-September quarter, putting the Philadelphia, Camden and Wilmington metro area 110th in a ranking of 203 large metro areas based on foreclosure rates.

The Las Vegas metro area, which topped the list had a foreclosure rate of 5.13 percent, and the second, Merced in California, had a rate of 3.72 percent.

Among the foreclosure prevention initiatives in Philadelphia is its conciliation conference program. Under this program, no lender can foreclose on an owner-occupied house without first meeting the distressed homeowner in a meeting together with a certified counselor. The homeowner will also be provided with counseling and legal representation.

The Philadelphia model has been duplicated in other cities such as Pittsburgh, Chicago and Louisville and has helped hundreds of homeowners avoid foreclosure.

In Philadelphia, whenever homeowners receive delinquency notices from their lenders, the city court schedules a conciliation conference. Volunteers working for housing nonprofits visit delinquent homeowners, give them fliers about the conciliation and advise them to call a certain hotline that would link them to a free housing counselor. This process has been effective in communicating with troubled borrowers and containing the number of foreclosed homes.

Conciliation conferences are done every Thursday morning in the courtroom of the Philadelphia City Hall. Volunteer lawyers talk with homeowners and then negotiate with corporate lawyers while borrowers wait.

Some homeowners get modifications that enable them to make lower monthly payments and keep their homes while others who can no longer afford to pay are advised to pursue other options or to accept cash to move out of their homes.

The city conciliation program has been effective in helping implement the federal Home Affordable Modification Program, which is not mandatory for lenders to carry out. It has been common for lenders to reject or ignore loan modification applications without giving explanations.

In Philadelphia, lenders are forced to negotiate because their foreclosure filings will not proceed if they do not first meet with the troubled homeowners. According to the Philadelphia Volunteers for the Indigent Program, the conciliation scheme has helped resolve a lot of foreclosure cases.

With a foreclosure rate of one residential unit out of every 117 units in default or in foreclosure, Orlando ranked ninth in a listing of the 203 biggest metro areas in the U.S. based on rates of foreclosure activity.

More than 7,500 housing units in Orlando received delinquency or foreclosure notices, seven-percent up from just above 7,000 notices filed in October last year. When compared to the previous month however, filings dropped slightly as Orlando posted more than 7,600 notices in September.

One of the reasons for the continued rise in foreclosures in the Orlando metro area compared to last year is the failure of short sales. Short sales can help distressed homeowners avoid foreclosure and keep their credit scores from getting worse. But the difficulty of real estate agents and homeowners in completing short sales have been contributing to the increase in foreclosed homes in Orlando.

According to members of the Orlando Regional Realtor Association, advising distressed homeowners to sell their homes in a short sale to avoid foreclosure and finding buyers to acquire these homes are not very difficult. What is difficult is the process of convincing banks to accept the purchase offers, and when they do accept the offers, they do not have the staff to process the papers.

According to experienced realtors, foreclosure sales take about 5 weeks to complete and conventional house sales take about 7 weeks. Short sales take the longest time – more than 10 weeks. In January, short sales can be completed in 7 weeks, but now, as more troubled families turn to short sales to avoid foreclosure, banks now do not have the personnel to look into the short sale offers.

Short sales take too long some realtors have even declared them as not profitable in terms of the time and effort they invest into short sale negotiations. The same level of effort and time they invest in selling foreclosures, new homes or existing homes could net more, but they still are willing negotiate short sales if the sellers or buyers are also committed.

According to lawyer Justin Clark, who has negotiated hundreds of short sales over the past few years, the short sale process is easier for homeowners who have no second mortgages.

According to the monitoring firm, the total number of residential properties listed for foreclosure auctions this year has reached 1,387, surpassing the total of 1,110 reached last year.

The total foreclosure data for 2009 has already been estimated as the firm has already counted the number of properties to be auctioned off on December 1, which is the last court-administered foreclosure auction in McLennan County for this year.

The total foreclosure postings this year in McLennan is the highest since 2003, the year the firm started tracking foreclosure auctions in the county.

However, postings for the December 1 auction dropped to 105, down by 24 percent from the 139 properties listed for the November auction.

According to the head of the research firm, foreclosures in the county dropped compared to the previous month because most of the bad mortgages have already been taken out, but foreclosures are still to be expected as the unemployment continues to force homeowners into default and ultimately into listing of foreclosed homes.

To help McLennan residents avoid foreclosure, the Waco unit of NeighborWorks has been providing counseling to delinquent borrowers.

Chad Klawetter, spokesperson for the Waco branch, said that the office is overwhelmed because more and more families are asking for help. He added that most of the families did not get risky mortgage loans such as option adjustable mortgage loans; most of them lost their jobs, had reduced working hours or had serious illnesses and had used up all their savings.

Klawetter also said that NeighborWorks has been conducting sessions to warn homeowners about foreclosure prevention scams. In the past, scams happened only in hot spots such as Florida and California, now, according to Klawetter, scams are growing in communities such as McLennan.

According to a nationwide report on foreclosures, the overall number of foreclosure filings nationwide dropped for the third consecutive month in October, as lenders stepped up efforts to lower monthly payments under the Home Affordable Modification Program.

But the number of foreclosure postings in October still surpassed the number of filings in October last year by 19 percent. Over 332,000 residential units throughout the U.S. were put into the foreclosure process in October, with more than 77,000 already in listing of foreclosed homes.

The city was visited by Housing and Urban Development Secretary Shaun Donovan this week to look at the results of the city’s housing programs and how the city has been using federal housing grants.

According to analysts at Warren Group, the city of Fall River has the third highest jobless rate throughout Massachusetts, but the city has been able to contain its effects through its stabilization programs. In September, the city reached the jobless rate of 15.1 percent. Other Massachusetts cities with high jobless rates were Fitchburg, Brockton, Springfield and Lawrence.

Despite the high jobless rate, Fall River posted a lower number of foreclosures in September compared to filings last year. Warren reported a drop of 18 percent in filings.

Secretary Donovan said that he was pleased by a foreclosure report which showed that foreclosure rates in many states have dropped in October. He was also pleased that the pace of foreclosures in Fall River has also declined.

In contrast, the state of Massachusetts posted an increase in foreclosure activity in October, with nearly 900 residential units entering bank foreclosed homes listings during the month. More than 5,400 households across the state received foreclosure actions, marking a foreclosure rate of one out of every 503 residential units in foreclosure.

The foreclosure rate marked an increase of more than 17 percent from the previous month and an increase of more than 49 percent from October last year.

Meanwhile, U.S. Representative Barney Frank, who accompanied Donovan in visiting neighborhoods in Fall River, applauded how Fall River city officials have been using housing grant programs for carrying out infrastructure, housing and job programs to reverse the trend of foreclosures statewide.

Among the community grants received regularly by the city is the yearly Community Development Block Funding of around $3 million. The city distributes this money through local organizations such as Healthfirst, Fall River Office of Economic Development and Community Development and Recreation.

The city also receives an additional grant of $1 million from the national HOME Investment Partnerships scheme for home rehabilitation projects.

Additionally, the city expects to receive funding under the Neighborhood Stabilization Program to finance its program of acquiring and rehabilitating properties in foreclosed homes listings and its plan of demolishing the dilapidated Saint Louis School and the Durfee Tech site.

The conforming loan ceiling of $729,500 was set to expire this year and return to its original ceiling of $625,500. Now, prospective buyers of houses in higher-cost areas such as New York City have a longer time to make their purchase decisions.

Because conforming loans are guaranteed by Freddie Mac and Fannie Mae, lenders are able to provide conforming jumbo loans to buyers of high-priced homes at lower mortgage rates.

Alan Rosenbaum, head of Manhattan-based Guardhill Financial Corporation, the extension of the $729,500 conforming-limit jumbo loan program would have a strong impact on the New York City housing market and other markets that are considered high-cost.

Together with the extension of the federal tax credit program, prospective buyers now of higher-cost residential units have two additional reasons to make their purchases this year or next year, according to Rosenbaum. If buyers find discounted high-end foreclosed homes in New York, then they have more reasons to buy.

Lower mortgage rates were also valid reasons to buy for many homebuyers. During the first week of November, according to Rosenbaum, lenders in the New York area were charging mortgage rates slightly lower than 5 percent for 30-year fixed-rate conventional mortgage loans lower than $417,000, the previous ceiling for conforming loans.

For mortgage loans from $417,000 through $729,500, the mortgage rates were around 5.25 percent while jumbo loans above $729,500 are provided by lenders at around 5.7 percent.

According to Rosenbaum, some lenders also require bigger down payments and higher cash reserves for jumbo loans. Some banks also require that condo or co-op units priced higher than $729,500 are located in condo or co-op complexes with occupancy rates of 75 percent or more.

David Adamo, CEO of Connecticut-based Luxury Mortgage, said that the extension of the conforming loan limit program will rejuvenate the high-end housing sector of New York City. He expects jumbo loans to have lower mortgage rates in the next months as investors step up their demand for securities backed by mortgages because of the extension of the $729,500 conforming limit program.

According to Adamo, lenders issued jumbo loans totaling around $500 billion in 2006 and issued only around $100 billion last year. He expects the jumbo loan total to increase next year.

Since December 2007, the number of housing units foreclosed in Jackson County has reached 1,718 units, and one-third more mortgage loans became delinquent during the same period, according to county records.

This year, 919 houses have been repossessed and 1,855 units have been notified they are already at least three months in default, based on a report from Rogue Federal Credit Union.

According to local real estate analysts, more housing units are expected to go into foreclosure next year because about 2,500 mortgage loans are scheduled to reset to higher interest rates starting next year. As many homeowners are already finding it difficult to pay their lower monthly payments, it is likely that they will be forced to let their homes go into foreclosure when their mortgages reset.

A homeowner who took out an adjustable-rate mortgage loan and who has been paying $1,400 monthly will be required to pay about $2,100 when the loan resets to a higher rate, according to an analyst who made estimates.

To help reduce the number of properties entering house foreclosure listings in Southern Oregon, the nonprofit ACCESS Inc. and the alliance Building Hope have been helping distressed homeowners analyze their financial situation and decide the best option concerning their homes.

According to volunteers working for the two organizations, sometimes they are able to help borrowers modify loans to more affordable monthly payments, but sometimes they have to be honest with homeowners and advise them to think really hard if they are just using up their last savings in trying to save a house they can no longer afford to pay.

Pete Cislo, a volunteer with Building Hope, said he had to advise a couple to stop using their savings to pay their house because the wife was having a baby and they are both unemployed. Cislo explained he never thought the day will come when he would be advising individuals to stop making mortgage payments.

ACCESS Inc. and Building Hope volunteers also said the number of people asking them for assistance has been steadily rising and has overwhelmed them. They also said that there are now a lot of middle-class families asking for help.

According to nonprofit Rogue Federal Credit Union, the number of properties entering house foreclosure listings will continue to increase if the unemployment problem in Southern Oregon is not solved.