Except it is 1x risk for example in the US - see jingle mail.
The debt is against the property not the person thus 20x return 1x risk (plus your destroyed credit).
For other countries in the world there is bankrupcy.
Doesn't this only matter if the property is worth less than the mortgage? If the lender can foreclose and sell the property for enough to clear the outstanding mortgage, there's no additional loss beyond the down payment (and any equity paid in since then).
If the down payment was x, how are you out 20x? Let's use real numbers:
House cost: $200,000
Down Payment: $10,000 (5%)
(Time passes...)
Value at foreclosure: $200,000 (no price change)
EDIT: I changed the math on this a few times, updating to reflect that you indeed get your downpayment back (minus fees).
The bank sells the house for $200,000. You get your $10,000 back after paying the $190,000 mortgage balance. But you're not on the hook for anything. You walk away with only a hit to your credit. You went from owing the bank $190,000 to owing $0 and having $10,000 in your pocket.
In your example, you get your deposit back, as 190k covers the debt, extra 10k goes back to owner. (e.g. if 195k was sale price would recieve back 5k etc)
The bank sells the house for $100,000. You don't get your $10,000 back. But you're not on the hook for anything. You walk away minus $10,000 (i.e. 1x) and a hit to your credit. You went from owing the bank $190,000 to owing $0.
right but in this case the house value never changed, so there was never any loss. Suppose the house value went down 5%, then you'd be totally wiped out (ie. you lose your entire deposit).