New Jersey , New York and Connecticut got hit with a storm of new foreclosures just days before Superstorm Sandy smashed homes and a knocked out power to missions of homeowners.

RealtyTrac reported foreclosure filings on 186,455 U.S. properties in October, an increase of 3 percent from September but down 19 percent from October 2011.

“We continued to see vastly different foreclosure trends across the country in October, depending primarily on how each state’s foreclosing infrastructure was able to handle the high volume of delinquent loans during the worst of the foreclosure crisis in 2010,” said Daren Blomquist, vice president of RealtyTrac.

“Unfortunately the three states dealing with the biggest rebound in deferred foreclosure activity — New Jersey, New York and Connecticut — also had to deal with the devastation to homes inflicted by super storm Sandy. The foreclosure moratoriums being put into effect as a result of the storm will likely extend the already-lengthy time to foreclose in these states, further prolonging a fundamentally sound housing recovery.”

The three states with the biggest annual increases in foreclosure activity in October were New Jersey (140 percent), New York (123 percent) and Connecticut (41 percent). Other states with sizable increases were Maryland (27 percent), Ohio (24 percent) and Illinois (19 percent).

An analysis of foreclosure activity and inventory in the counties most impacted by super storm Sandy in Connecticut, New Jersey and New York shows foreclosure activity in October was down 8 percent from September but up 92 percent from a year ago, and an estimated $41 billion in foreclosure inventory in those counties.

Florida posted the nation’s highest foreclosure rate for the second month in a row, with one in every 312 housing units with a foreclosure filing in October, followed by Nevada, Illinois, California and Arizona.

Scheduled foreclosure auctions in October increased 9 percent from September, while default notices and bank repossessions (REO) were virtually unchanged from the previous month.

Foreclosure activity increased on a month-over-month basis in more than half of the 212 metro areas tracked in the report, and jumped significantly in some hard-hit metro areas, including Modesto, Calif. (up 68 percent), Sarasota, Fla. (up 53 percent), Las Vegas, Nev. (up 45 percent), Columbus, Ohio (up 61 percent), and Columbia, S.C. (up 58 percent).

Analysis of foreclosure activity and rates in counties

In the 34 counties impacted by Sandy in Connecticut, New Jersey and New York that are being given individual assistance by FEMA, a total of 6,380 properties had foreclosure filings in October, down 8 percent from September but an increase of 92 percent from October 2011. Despite the sharp year-over-year increase, the foreclosure rate in those counties combined was less than half the national average: one in every 1,467 housing units with a foreclosure filing.

As of the end of October, total inventory of properties in some stage of foreclosure or bank owned in these counties was 124,608, up 15 percent from the previous month and up 54 percent from October 2011. The estimated combined market value of foreclosure inventory in the impacted counties was more than $41 billion.

Fannie Mae owned the biggest percentage of REO inventory of any lender in the impacted counties in all three states, with 29 percent in New York, 25 percent in New Jersey, and 22 percent in Connecticut. Other lenders with large percentages of REO inventory in the impacted counties included Wells Fargo, US BankCorp and Deutsche Bank.

Foreclosure starts up slightly

Foreclosure starts — default notices or scheduled foreclosure auctions, depending on the state — were filed for the first time on 89,209 U.S. properties in October, a 2 percent increase from September but still down 19 percent from October 2011 — the third straight month with an annual decrease in foreclosure starts.

Foreclosure starts increased from the previous month in 26 states, including Nevada (54 percent), Tennessee (52 percent), Minnesota (28 percent), North Carolina (26 percent), New York (17 percent) and Georgia (16 percent).

Foreclosure starts increased from a year ago in 15 states, including New Jersey (286 percent), Washington (163 percent), New York (163 percent), Pennsylvania (42 percent), North Carolina (38 percent), and Nevada (20 percent).

Bank repossessions decrease annually for 24th straight month

Lenders completed the foreclosure process on 53,478 U.S. properties in October, down less than 1 percent from the previous month but down 21 percent from October 2011 — the 24th straight month with an annual decrease in REO activity.

REO activity decreased annually in 37 states and the District of Columbia. Some of the biggest decreases were in Oregon (81 percent), Virginia (72 percent), Washington (56 percent), Nevada (50 percent), Texas (41 percent), Michigan (35 percent), Arizona (33 percent), and California (20 percent).

States with some of the biggest annual increases in REO activity included Connecticut (44 percent), Maryland (38 percent), South Carolina (37 percent), New York (33 percent) and Georgia (22 percent).

Florida, Nevada, Illinois post highest state foreclosure rates

Florida registered the nation’s highest state foreclosure rate for the second month in a row. One in every 312 Florida housing units had a foreclosure filing in October — more than twice the national average. A total of 28,783 Florida properties had a foreclosure filing in October, up 2 percent from the previous month and a 12-month high, but the October 2012 total was still 13 percent below the October 2011 total.

A 41 percent monthly increase in overall foreclosure activity helped push the Nevada foreclosure rate to the second highest in the nation in October, up from the nation’s fifth highest foreclosure rate in September. One in every 352 Nevada housing units had a foreclosure filing during the month, twice the national average. Foreclosure starts (NOD) in Nevada increased 54 percent from the previous month and were up 20 percent from a year ago — the first annual increase in Nevada foreclosure starts after 32 consecutive months of annual decreases. Nevada REOs increased 69 percent from the previous month but were still down 50 percent from a year ago.

One in every 356 Illinois housing units had a foreclosure filing in October, the nation’s third highest state foreclosure rate. A total of 14,899 Illinois properties had a foreclosure filing during the month, a 6 percent increase from the previous month and a 19 percent increase from a year ago — the 10th consecutive month where Illinois documented an annual increase in foreclosure activity.

Other states with foreclosure rates among the nation’s 10 highest were California (one in every 379 housing units with a foreclosure filing), Arizona (one in 420 housing units), Georgia (one in every 439 housing units), Ohio (one in every 476 housing units), Colorado (one in 563 housing units), South Carolina (one in every 601 housing units), and Michigan (one in every 607 housing units).

Foreclosure activity increases from previous month in 53 percent of metros

October foreclosure activity increased from the previous month in 113 of the 212 metropolitan statistical areas tracked in the report (53 percent). Six of the metro areas with the 10 highest foreclosure rates documented a monthly increase in foreclosure activity, including Modesto, Calif. (68 percent), Visalia-Porterville, Calif. (58 percent), Palm Bay-Melbourne-Titusville, Fla. (71 percent).

Twenty-six of the metro areas with the 50 highest foreclosure rates documented a monthly increase in foreclosure activity, including Sarasota, Fla. (53 percent), Las Vegas, Nev. (45 percent), Columbus, Ohio (61 percent) and Columbia, S.C. (58 percent).

The Westchester County executive says he’ll have to lay off 126 workers, mostly in social services, to balance next year’s budget.

County Executive Robert Astorino says the layoffs wouldn’t be necessary if workers in Westchester’s largest union had agreed to contribute to health care costs. The union says it’s still negotiating.

Astorino’s $1.72 billion proposal sticks to his no-tax-increase pledge for a third year. He said Wednesday the layoffs are necessary to offset the increased costs of salaries, health care, pensions and Medicaid.

Astorino’s budget would cut funding for three neighborhood health centers and increase the amount parents would pay for day care.

He also proposes borrowing to cover some pension costs and the costs of court-ordered tax reductions.

The county Legislature has until Dec. 27 to adopt a budget.

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The fiscal cliff is a powerful metaphor. It sounds like an impending disaster, but in reality, we’ll wake up on the morning of Jan. 3 and life will be unchanged. Sure, tax rates will nominally be higher, some tax breaks will have been canceled, and the government will be expected to implement major cuts in military and domestic spending. If that continues for several months, it will have an adverse affect on the economy.

(VIDEO: TIME Explains: The Fiscal Cliff)

But letting the law take effect will also have some real benefits. For one thing, on the other side of the cliff, we’ll be a big step closer to the kind of fundamental reform of the tax code that both Democrats and Republicans say they want. Two provisions that limit the deductions and personal exemptions the wealthy can take — similar to the cap on deductions proposed by Mitt Romney — will come back into effect. Capital-gains rates will rise from 15 % to 20%, and dividends will be taxed at normal rates, reducing the incentives for tricks like the notorious “carried-interest loophole.” And instead of a tax system that produces less revenue as a percentage of GDP than at any time since 1950, we’ll move toward one that is adequate to the needs of a modern, dynamic economy. The fiscal cliff is, all by itself, a budget deal and a step toward tax reform. A flawed and dangerous one, to be sure, but a far better starting point for a real budget agreement than the temporary rules of 2012.

(MORE: Fiscal-Cliff Deal? Don’t Hold Your Breath)

Once tax rates and other provisions have returned to their previous levels, as planned, Congress and the White House will have a little time to look at taxes and spending, and decide how best to keep the economy moving, now and in the future. Is it by cutting taxes for low- and middle-income working families, who were hit hardest by the recession and gained little in the George W. Bush years, when most of the benefits of growth went to the top? Or is it another round of tax cuts for those who have gained the most?

Let’s remember also that the fiscal cliff is not a natural phenomenon, it’s the law. None of the tax cuts that will be changed by it were supposed to be permanent in the first place. Some of the cuts, mostly those from the early Obama years, were to provide economic stimulus during the recession. Those should be revisited every couple years, and if we think the economy still needs a boost, we should renew them for another year or two. But the bulk of the tax cuts that expire date from 2001 and ’03. At that time — when our country had budget surpluses — both Democrats and Republicans wanted to cut taxes. But Republicans wanted to cut them by about twice as much and to make much bigger cuts for the wealthy than for the middle class. Rather than compromise with Democrats, Republicans twice employed a special rule, known as reconciliation, to use their narrow congressional majorities to push their version of tax cuts through. Because that special rule can’t be used to make permanent changes that worsen the deficit, they had to put an expiration date on those tax cuts. So the fiscal cliff is a long overdue chance to revisit choices from the past and better address what we need to do for our future.

In the world on the other side of the fiscal cliff, Democrats and Republicans will have no choice but to work together on tax cuts that will be fairer to the middle class and encourage economic growth. And then, over several years, we have an obligation to look closely at Medicare, in particular, and figure out how to slow the growth of health care costs in that program. That work can only begin on the other side of the fiscal cliff.