The Wall Street Journal recently reported that the subprime loan markets are counting upon significant defaults in order to profit from the loan insurance placed upon each mortgage loan. One of the benefits of our new market driven mortgage loan environment is that more individuals are becoming homeowners than ever before in the United States. Unfortunately, some of those new homeowners are encouraged to borrow more than they can afford. The mortgagees are lowering their loan standards to permit more risky loans to be approved.

Rather than discouraging these lenders from promoting loans that are not as likely to be repaid, the market, driven by foreign investors, encourages these risky loans. Mortgage insurance covers the risk of default sufficiently to allow lenders to profit from the loans even if the borrowers default. The danger for consumers is that they can be encouraged to borrow money which they cannot repay. Although lenders may not care whether the loan defaults, borrowers suffer both financial harm as well as emotional turmoil when they find themselves in a financial bind which is difficult to escape.

Chapter 13 provides relief for new homeowners who may have borrowed more than they can handle. It can't fix every problem, but it can stop foreclosures, save homes, and help consumers learn to budget their money more carefully. If you find yourself with a home loan that is more than you can handle, learn your options in Chapter 13 before you become another loan insurance statistic.