The whole problem is created by consumers incapable of basic math, and predatory lenders who are aware of that fact, IMO.

Our banking regulation is highly favorable to the banks. It should be completely reformed. The banks would be much less prone to making all of these bad lending decisions if they actually had a fear of not getting paid. As it is, they can borrow an almost unlimited amount of funding to cover their mistakes.

Our education system should be completely reformed. People would be much less prone to taking out these loans if they understood that they had no realistic chance of paying them back.

The current rate freeze by the banks is completely voluntary. They were called into a conference with select government officials, who pointed out that foreclosing on the large number of loans considered probable to default wasn't in their best interest, unless they were looking to enter into the real estate business. Unsuprisingly, they agreed that this was indeed the case.

The fact that it was even necessary for anyone to point this out to the banking industry is indicative that the individual lenders are far, far too insulated from normative market pressures, which should be severely discouraging them from making these types of loans at all.

It all comes back to the central banks distorting influence. I'm continuing to educate myself in this area, but this seems to be a universal factor contributing to an infinite number of problems. Nothing financial is unaffected by the actions or inactions of the Fed.