You have two things going on here, both of them influenced by
governments role in the economy.  1)  Folks are willing to risk
fairly large amounts with the chance to possibly make higher
returns.  The folks arranging these loans rarely hold them but
in fact sell them to people hoping to make more income.  This is
influenced in many ways by the fact that capital gains are taxed at
a lower rate than income.  So the loans get bought and sold,
and folks hoping they sell and make cash, because they'll
get taxed less on the capital gain, than on the interest paid.
So there is only so much interest in actually having the load
serviced.

   2)  Folks often are looking for investments that have some
loss risk aspect to them.  "Losses" can be sold, or bought,
to adjust ones tax position.  They are traded and as such
a very risky loan can become a potential loss to be used,
or sold, to counter the tax effects of other risky but
successful investments.

  Treat capital gains like any other income, and hinder the
ability of losses to be traded like assets, and much of this
phenomenon goes away.