NEW YORK - U.S. mortgage defaults ebbed in some hard-hit cities in the third quarter, but unemployment created new trouble spots as foreclosures set a record in the quarter, real estate data company RealtyTrac said on Wednesday.

Foreclosure activity declined in five of the top 10 metro areas from a year earlier, at least temporarily aided by government programs to modify terms of home loans.

Job loss as well and mortgage rate resets, however, are severely curbing the ability of homeowners to make timely payments. Many metro areas with the 50 highest foreclosure rates had sharp increases in filings during the past three months.

Rising unemployment and a new variety of mortgage resets continue to gradually shift the nation's foreclosure epicenters in the third quarter away from the hot spots of the last two years and toward some metro areas that had avoided the brunt of the first foreclosure wave, James J. Saccacio, RealtyTrac's chief executive, said in the company's quarterly Metropolitan Foreclosure Market Report.

U.S. unemployment reached a 26-year high of 9.8 percent in September.

Foreclosure filings -- which include notice of default, auctions and bank repossessions -- rose 5 percent in the third quarter from the prior quarter and 23 percent from a year ago, RealtyTrac reported earlier this month.

One in every 136 households with a loan got a filing in the quarter, a record since the firm started tracking them in the first quarter of 2005. Filings were reported on more than 937,000 properties in July through September.

All of the cities with the 10 highest foreclosure rates were in California, Florida and Nevada, led by Las Vegas, Nevada; Merced, California; and Cape Coral-Fort Myers, Florida.

Las Vegas had a third-quarter foreclosure activity rate of 5.13 percent, affecting one in 20 households with loans.

Five of the top 10 metro areas, including Merced and Cape Coral-Fort Myers, reported a decrease in foreclosure activity in the quarter from a year ago.

The other big metro areas that saw a decline in foreclosure activity were all in California: Stockton, Modesto, and Vallejo-Fairfield.

Despite a 13 percent drop in foreclosure activity from the second quarter and 11 percent drop from a year ago, Merced had the second highest rate. The Cape Coral-Fort Myers metro area ranked third in foreclosure activity, RealtyTrac reported.

And some cities that haven't been a focal point of the foreclosure crisis showed steep increases in activity in the third quarter.

Boise City-Nampa, Idaho, and Provo-Orem and Salt Lake City in Utah had the biggest year-over-year increases in foreclosure rates among the top 50 areas.

In California, the Chico area posted the biggest year-over-year increase in foreclosure activity, up 98 percent from the third quarter of 2008. Chico, located about 100 miles north of Sacramento, had a 12.8 percent unemployment rate in August, above the state and national averages, RealtyTrac noted.

 As unemployment is likely to stay high and maybe even go a little higher for a while, it means we will continue to see people defaulting and their homes ending up in foreclosure, Jed Kolko, associate director of research at Public Policy Institute of California in San Francisco, said on Tuesday.

The two other looming uncertainties are the fallout from the next wave of adjustable-rate mortgage resets and the degree of success of U.S. loan modification programs, he said, noting the possibility that the government program may have only delayed defaults and foreclosures. (Editing by Leslie Adler)