The news media is now focusing on what bankruptcy can do to level the battlefield between the mortgage companies and consumers. The sub-prime market is falling! The sub-prime market is falling!
Why should I care about that, one asks? The answer is that the sub-prime mortgage has been one of the major reasons the housing market continued to remain strong in the last few years while the rest of the economy started to sour. The default rate on these loans is very high. Foreclosures have increased 40% to 50% in some states just in the past few months. We all know what interest rates have done in the last two years. As it turns out, bankruptcy may be a way to fight back.