The contract carefully outlines what is it to happen in case the borrower finds himself unable to make payments. It is not as if he's stolen the money; he's loosing the property AND the percentage of mortgage payed so far.
The lender is to keep all the cash received so far, and the ownership of the house as well. If the property happens to have been so overpriced that he's loosing money anyway... so bad. They are supposed to be professionals asserting the risk. If they chose to ignore those risk in order to push a deal more attractive to the customer/borrower, guess what, they gambled and they loose!
The lender is to keep all the cash received so far, and the ownership of the house as well. If the property happens to have been so overpriced that he's loosing money anyway... so bad. They are supposed to be professionals asserting the risk. If they chose to ignore those risk in order to push a deal more attractive to the customer/borrower, guess what, they gambled and they loose!