The bank would prefer the borrower to pay back the lolly rather than have to take the property. A bank is not a real estate broker. There is also the risk of censure from the federal government if too many of their e-mortgages are defaulted upon. For these reasons, foreclosures can take a very long time. The bank is in no hurry. 

Fixed rate financial products are good for first time residence buyers, because they are less risky than adjustable rate mortgages. One of the main causes of foreclosure is an adjustable rate mortgage, which has adjusted on a residence owner to the point where the mortgage repayment is no longer affordable. The most common fixed rate mortgage is the 15 year or thirty year fixed rate. There are, however, additional options. You can also get a twenty or even a twenty-five year mortgage.

If your ARM  has an interest-rate that is higher than what is being proffered for a fixed-rate financial product, you might want to refinance. This is mostly dependent upon how long you are going to stay in your dwelling. If you only plan to stay for a few more years, you can stick with your ARM product, but if you plan to stay long-term, you will want to look into a fixed-rate financial package. 

Subprime borrowers are persons who probably have fairly poor credit ratings. They might have a history of lousy financial management, mayhap including collection accounts, repossessions, mayhap even a bankruptcy. 

At any rate, they are perceived to be more likely than the average borrower to default . A subprime financier exists to lend dosh to borrowers he anticipates won't  act responsibly in the repayment of the debt. The interest-rate that a subprime company charges will be higher than usual because of that increased risk. Subprime agents know about the risk; they amply understand that these borrowers can't actually be counted on to pay back their debt.