Virginia has one of the lowest foreclosure rates in the country, but the numbers are rising sharply.

Housing advocates across the state are bracing for the next wave of foreclosures as adjustable-rate mortgage loans reset at higher rates and homeowners struggle to make their monthly payments.

Most foreclosures involve subprime ARMs, loans with above-market interest rates for people with poor or risky credit. A federal freeze on interest rates on some subprime ARMs may help ease the problem.

But Virginia is taking its own course of action.

A governor-appointed committee met for the first time this month to hash out ways to prevent foreclosures and to protect and preserve homeownership in Virginia.

"We view this as a huge crisis," said Jay Speer, who serves on the Foreclosure Prevention Task Force. Speer is executive director of the Virginia Poverty Law Center, a state-sponsored center for legal aid offices across the state.

"People losing their homes is a disaster," he said. "But foreclosure doesn't only hurt these people, it destroys neighborhoods."

Speer said he is encouraged that Gov. Timothy M. Kaine seems to understand the scope of the problem.

"It just needs to be dealt with. Everyone realizes that -- from President Bush on down."

Fraudulent refinancings are contributing to the rise in foreclosures, Speer said. "Many people were sold loans that were no good for them at all."

The pile of paperwork at a closing is daunting, and even financially astute people can be taken in by fine print, Speer said. What's more, he said, legal-aid offices are seeing an explosion in foreclosure-rescue scams. In these cases, perpetrators convince homeowners that they can help them save their homes, when their real purpose is to take possession of the homes.

The number of foreclosures in Virginia is expected to rise to about 14,000 this year, up from 4,354 in 2006, and could hit 20,000 next year, according to Housing Opportunities Made Equal Inc., a housing advocacy group in Richmond.

Virginia has one of the fastest foreclosure processes in the country, said Connie Chamberlin, president and chief executive officer of HOME.

Once a lender notifies a borrower of the intent to foreclose, a person can lose their home in as quickly as two weeks, she said. "For many people, that means they don't have time to deal with the issue."

Virginia can take actions ranging from requiring loan-service companies to credit payments promptly and to provide accurate and timely information about the amount owed, she said.

"We are seeing all kinds of abuses with servicers," Chamberlin said. "We have been told it's just anecdotal, but we have every reason to believe it is happening a lot in Virginia."

Virginia's foreclosure rate is less than half the national rate of houses being repossessed, but the rate of increase is faster.

At the end of the third quarter, 0.73 percent of all mortgage loans in Virginia were in foreclosure, up from 0.3 percent a year earlier, according to the Mortgage Bankers Association.

By comparison, 1.69 percent of all loans in the U.S. were in foreclosure, up from 1.05 percent a year ago.

"The rapid rise in Virginia is disconcerting," said Christine Chmura of Chmura Economics & Analytics in Richmond.

"But it is inconsistent with other indicators," she said. "Virginia is the 16th-fastest in employment growth in the nation. It has one of the lowest unemployment rates in the nation."

Foreclosures are more prevalent in areas such as Northern Virginia, where prices rose quickly, and outlying areas, where people moved into larger houses and took out risky loans, Chmura said.

"The housing industry is clearly in a recession. But other positive factors have offset the slowdown."

Consumer spending is up 5 percent from a year ago. Exports are up 14 percent. Industrial output has grown 2 percent. And information technology is up 20 percent.

"There is no recession in our forecast, although clearly there is more uncertainty due to the housing issue," Chmura said. Contact Carol Hazard at (804) 775-8023 or chazard@timesdispatch.com.