[phamilton]

> so over leveraged that it wouldn't take that much for the bank to require a mortgage holder to put in more money to cover the decreased value of the property

That's an interesting contract. For a primary mortgage that would be very unusual in the US. (For a secondary line of credit against the home, the bank would likely freeze the line of credit if the value dropped too far.)

[mhomde]

I'm not super familiar with how it works in the US. But here you loan against the value of your property. If the value plunges you no longer have coverage for your loan and the bank may ask you to cover the difference. This happened in the 90's in Sweden where many even were forced to sell their homes when they couldn't pay.

Many home owners I've talked with is not aware of that this is even a possibility and refuse to acknowledge the risk. I guess it's one of those thing one rather not think about :) Another major difference is that in Sweden, in contrast to the US you can't simply give up the keys to you home and be rid of the debt (as I think it is in the US) but it stays with you.

[phamilton]

It depends on the state, but at least in California there is "no recourse", which means that if you default on the loan, the bank cannot come after your other assets.