NEW YORK (CNNMoney.com) -- As government and industry scrambled to stem the housing crisis, another 84,868 homes were lost to foreclosure in October, according to a report released Thursday.

Last month 279,561 struggling borrowers received foreclosure filings, including default notices, notices of auction sales and bank repossessions, according to RealtyTrac, an online marketplace for foreclosures. That's a 5% increase from September, and up 25% from October 2007.

"October marks the 34th consecutive month where U.S. foreclosure activity has increased compared to the prior year," said James J. Saccacio, chief executive officer of RealtyTrac, in a statement.

A total of 936,439 homes have been lost to foreclosure since the housing crisis hit in August, 2007.

Foreclosures hit a record high in August when 304,000 homes were in default and 91,000 families lost their houses. Since then, a number of states have adopted legislation to freeze foreclosures and give homeowners a chance to modify their mortgages. These laws have helped slowed the rate of foreclosures.

"The really sobering reality for us is that despite these various state programs that are artificially keeping the numbers down, we are still up 25% from a year ago," said Rick Sharga, senior vice president of RealtyTrac.

Making matters worse is the rapidly deteriorating economy, says Global Insight economist Pat Newport.

"It seems almost every day you hear about another company planning further layoffs," said Newport. When people lose their jobs, they can't make mortgage payments.

And while some homeowners are defaulting because they've fallen on hard times, Newport says that others have simply stopped paying their mortgages. "Falling home prices are providing an incentive for them to walk away from their homes simply because it just isn't worth it," he said.

Home prices have been on a steep decline, with 20 major markets plunging a record 16.6% year-over-year in August according to the most recent data from Case-Shiller. That index has recorded declines for 25 consecutive months.

State laws slow foreclosures

A new law in California, one of the hardest-hit states in the housing crisis, requires banks to contact struggling homeowners 30 days before delivering a notice of default in order to give them time to restructure their plans.

Thanks to that legislation, foreclosures in the state fell 18% from September. But California still had the highest number of foreclosures in the country for October, logging 56,954 filings. That total was down from a peak of more than 100,000 filings in August, but up 13% from October 2007.

Clearly the housing crisis is not relenting. "While the intention behind this legislation - to prevent more foreclosures - is admirable," said Saccacio, "without a more integrated approach that includes significant loan modifications, the net effect may be merely delaying inevitable foreclosures."

The delays may also be masking the problem, said Saccacio. "The apparent slowing of foreclosure activity understates the severity of the foreclosure problem in these states," he said.

Nevada had the highest rate of foreclosures of any state for the 22nd consecutive month in October, with one in every 74 housing homes receiving a foreclosure filing. Arizona had the second highest rate in October, with one in every 149 housing units in default. Florida was third, with one in every 157 homes there in default.

Banks and government step up

Both government agencies and a handful of major lenders have recently introduced new foreclosure prevention programs, but it will take a while before they have an impact.

"It took us the first half of the decade to get into this problem," said Sharga, "so it is probably going to take a couple of years to get out."

On Tuesday the Federal Housing Finance Agency, which oversees mortgage giants Fannie Mae (FNM, Fortune 500) and Freddie Mac (FRE, Fortune 500), unveiled a new program to help eligible borrowers stay in their homes by lowering their monthly payments to 38% of gross household income.

And on Monday Citigroup (C, Fortune 500) announced the Citi Homeownership Assistance Program, which it says will modify $20 billion worth of loans for 130,000 borrowers. Similar housing rescue initiatives were unveiled recently by FDIC-controlled IndyMac Bank, which says it will help as many as 40,000 homeowners, as well as Bank of America (BAC, Fortune 500), which estimates it can rescue 630,000 homes and JPMorgan Chase (JPM, Fortune 500), which expects to help another 400,000 families.

The moves are promising. "This is finally a step in the right direction," said Sharga. "Those are the kind of programs we need to see executed to see the number of foreclosures slow down."

Hurdles remain, including home loans that will be much harder to modify because they've been packaged and securitized into investments.

And Sharga notes that fixing existing loans is only part of the equation; banks must resume lending to new borrowers. "Just freeing up some funds for qualified home buyers would make a huge difference in getting the housing market back on its feet," he said.

Mike Larson, a real estate analyst with Weiss Research, added that falling home prices and the slowing economy will also create strong headwinds for any government relief program.

"You can certainly fix some of these mortgages, you can certainly try to slow the foreclosures," said Larson, "but until home prices stabilize and the economy gets back on its feet, it is going to be a tough slog."